In the 1980s, engineers at Motorola Corporation developed Six Sigma as a business improvement methodology. They discovered the mathematically derived point where the cost of eliminating an error/defect is greater than the cost of living with (and repairing) the defect. That is, there is an acceptable point of imperfection—and any quality improvement made beyond that point is more expensive than the expected cost savings offixing the imperfection. Motorola explained that Six Sigma (which represents 3.4 defects per million) is the optimum level to balance quality and cost. This discovery forced Motorola to assess quality levels by measuring defects in millions rather than thousands, which had been the traditional method.
This change enabled a vast improvement in the ability to assess and improve quality levels. Six sigma enabled Motorola to cost-efficiently perform defect-free more than 90 % of the time, resulting in significant savings.
Lean and Six Sigma have both been popular brands of performance improve-ment initiatives in the last decade. Both of those programmes can coexist inde-pendently. Organisations wishing to knit both programmes together have done so using the“Lean Sigma” term. It may be useful to clarify that this is absolutely fine as these approaches can be deployed to achieve complementary objectives. Six Sigma, originally developed by Motorola in the 1980s, is effectively a quality management approach which is aimed at defect and process control. Its name indicates its strong statistical origin, relating to a very low level of acceptable defects per million opportunities and therefore a high-quality standard, whereas Lean focuses more heavily on the velocity of the end-to-end process and the cost of non-value-added activities involved in that process. Both will claim to be strongly driven by customer value through the process.
Whilst Lean and Six Sigma differ, they are also complementary. The methods that are deployed within Six Sigma can be used comfortably within a Lean improvement initiative. Usually, Six Sigma will deploy a“define, measure, analyse, improve, and control” (DMAIC)-driven loop and this is analogous to the other
“plan–do–evaluate” and “map–do” cycles defined within parallel improvement approaches. A Six Sigma programme will depend on the collection, cleansing, and analysis of significant amounts of statistical data. This can involve a lot of work and organisations with limited capable resources can struggle with this. Six Sigma will often require training many employees in new, sometimes quite complex, statistical analysis methods, with successful delegates being presented with different coloured
“belts” to signify capability in the style of martial artists. The appropriateness of this approach to the culture of the business must be considered and a clear cost justi-fication produced before implementation. Both approaches can therefore be implemented separately to achieve parallel objectives, or as mutually comple-mentary components within an integrated programme. They both help companies respond to increasingly demanding customer needs through a model of operational excellence that creates delivery agility.
This change enabled a vast improvement in the ability to assess and improve quality levels. Six Sigma enabled Motorola to cost-efficiently perform defect-free more than 90 % of the time, resulting in significant savings. Its objective is to find and eliminate causes of defects or mistakes in processes by focusing on outputs.
The empirical evidence states that even a Sigma level of 6 though gives:
• 500 surgical operations failed per week,
• 1000 letters lost per hour, and
• every day 15,000 cheques charged to a wrong account.
Lean is often erroneously portrayed as being in competition with other inno-vative ideas. Recently, this centres on the debate involving Lean and Six Sigma.
Womack and Jones (2005) suggest that the gulf between the two camps can be partly explained by the role of consultants who tend to master only one of the tools.
It should never be seen as an either/or proposition. Frequently, both Lean and Six Sigma are treated too narrowly by organisations since complexity, variations, and mistakes should play a part in all approaches to quality. If the focus is too narrow,
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Six Sigma does not lend itself to complexity or mistakes. Certain critics argue that Toyota has not placed too much emphasis on Six Sigma. Nonetheless, it should be recognised that Toyota makes heavy use of poka-yoke and heijunka in conjunction with line stops and andon boards to expose problems quickly. In recent years, the author has discovered that when the two ideologies are combined, the outcome is speed. Toyota has verified that by combining and narrowing processes, it can help to meet milestones. Decisions are delayed as long as possible, ensuring that they are based on the maximum amount of information.
By definition, any Lean Sigma programme is eclectic in style. Perhaps such pro-grammes should really be termed“Lean–Sigma–TPM–TQM–JIT programmes”, because complementary building blocks from all such philosophies can be found deeply embedded within such programmes. Obviously, the author feels that it does not really matter which banner isflown, as long as essential levels of understanding and commitment are secured from the outset. Six Sigma is a process improvement methodology that has been proved to make step function improvement in any business environment. Six Sigma is driven by quality. It uses facts and data focused on cus-tomer value. As mentioned, it is not a one-time project tofix a problem. It is not a
“Flash in the Pan” or a “Flavour of the month” programme that will go away. Six Sigma is a structured way to approach your business issues. If Six Sigma is embraced and implemented into your organisation’s culture, the evidence proceeds to show that the organisation will indeed achieve about a 20 % margin improvement, 15 % capacity improvement, and/or a 20 % capital reduction. As Six Sigma defines customer value as a product or service that is received by a customer at the right:
• location,
• cost, and
• time.
and delivers all of these as defined by the customer, not you.
The concept and principles of Six Sigma are very transparent and unmistakable making them clearly recognisable, namely:
• understand the critical-to-quality (CTQ) requirements of our customers and stakeholders,
• understand our processes ensuring they reflect these CTQs,
• manage by fact,
• measurement and management by fact enables more effective decision-making,
• by understanding variation, we also know when to take action and when not to,
• involve and equip the people in the process, and
• undertake improvement activity in a systematic way.
Whilst the concept of Six Sigma began in the manufacturing arena decades ago, the idea that organisations can improve quality levels and work “defect-free” is currently being used by public sector organisation of all types and sizes. Naturally, as Six Sigma permeates into today’s complex, sophisticated government landscape, the methodology is“tweaked” to satisfy unique needs of individual public bodies.
But no matter how it is deployed, there is an overall framework that drives Six Sigma towards improving government performance. Common Six Sigma traits include:
• a process of improving quality by gathering data, understanding and controlling variation, and improving predictability of the organisation’s business processes,
• a formalised DMAIC process that is the blueprint for Six Sigma improvements (The DMAIC process will be described in greater detail later in this paper);
• a strong emphasis on value. Six Sigma projects focus on high return areas where the greatest benefits can be gained; and
• internal cultural change, beginning with support from leaders and champions.
By defining, measuring, and analysing a business’s processes, Six Sigma is able to improve the effectiveness of its operations as well as to design services of a quality that is likely to suit the needs of potential customers. More importantly, not addressing the quality issues can in time result in less efficient processes. Six Sigma uses facts and data to understand, reduce, and control variation in your business processes and variation that you now may be compensating for and which costs you money. This is not about analysing reports which you may receive on a weekly or monthly basis. Go and see what is happening out in the workplace and collect real data on how things are done. One local authority chief executive would listen to contact centre recordings to understand what was actually taking place. It is the difference between what you think is happening and what is really happening.
There is variation everywhere. To reduce it or eliminate it, you first have to understand it. Understanding and addressing variation helps you predict outcomes that you had to compensate for before and outcomes that impact your customer needs. In Six Sigma, these facts and data on the variation are collected and analysed to come up with conclusions, which lead to better decisions.
Used properly, Lean and Six Sigma can help organisations to maintain high standards of services, despite the cuts. The call has been to do“more with less”—in other words, to be more efficient. But care must be taken to ensure that the focus is not solely on taking the money out; it needs to be reiterated that this to a degree is the easy bit. There are, in fact, two ways in which to increase value:
• one, by reducing waste and thus the cost of a product or service and
• the other, by increasing value-adding activities.
The challenge for most organisations is to reduce spend whilst retaining or even improving service delivery. The call therefore is “better with less”. Whilst the concept of Six Sigma began in the manufacturing arena decades ago, the idea that organisations can improve quality levels and work“defect-free” is currently being used by public sector organisation of all types and sizes. Naturally, as Six Sigma permeates into today’s complex, sophisticated landscape, the methodology is
“tweaked” to satisfy unique needs of individual organisations. However, no matter how it is deployed, there is an overall framework that drives Six Sigma towards improving overall organisational performance as intimated earlier. By defining, measuring, and analysing a business’s processes, Six Sigma is able to improve the
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effectiveness of its operations as well as to design services of a quality that is likely to suit the needs of potential customers. More importantly, not addressing the quality issues can in time result in less efficient processes.
Six sigma uses facts and data to understand, reduce, and control variation in your business processes and variation that you now compensate for which costs you money. This is not about analysing reports which you may receive on a weekly or monthly basis. It is concerned with what is happening out in the workplace and collecting real data on how things are done. It is the difference between what you think is happening and what is really happening. There is variation everywhere. To reduce it or eliminate it, you first have to understand it. Understanding and addressing variation helps you predict outcomes that you had to compensate for before and outcomes that impact your customer needs. In Six Sigma, these facts and data on the variation are collected and analysed to come up with conclusions, which lead to better decisions.