General Questions About Six Sigma
1. How is Six Sigma different from TQM?
While Six Sigma is certainly different from previous initiatives, it builds on many of the aspects of previous improvement initiatives, especially TQM. Like most of these initiatives, TQM had much to offer and was fundamentally sound technically, but often lacked a deployment process and the associated managerial and leadership components needed to drive fundamental change.
Some of the components of TQM that are found in Six Sigma are:
A customer orientation and focus
A process view of work
A continuous improvement mindset
A goal of improving all aspects and functions of the organization
Data-based decision making
The use of statistical tools on a broad basis
There is very little disagreement about the value of these positive aspects of TQM. So how does Six Sigma go beyond these and drive sustained tangible benefits on a massive scale, something TQM struggled to do?
In Chapter 1 we described Six Sigma as having a managerial initiative aspect and a methods and tools aspect. Most of the methods and tools listed were applied in TQM initiatives, so they are not new. Nor do they guarantee success. The most important contribution of Six Sigma in this technical area has been the introduction of a roadmap (DMAIC) that shows how to link and integrate the tools into an overall approach to improvement. This roadmap enables trained Black Belts to quickly improve virtually any process. They don't have to invent a new methodology to solve each new problem. The DMAIC roadmap has been a huge breakthrough for Six Sigma. Such an integrated approach was sorely missing in most TQM implementations.
It is on the managerial initiative aspect, however, that Six Sigma really stands out as bringing something new to the party. Specifically, Six Sigma provides the needed leadership and infrastructure to enable the methods and tools to be successfully deployed on a large scale. Leadership and infrastructure were also not part of most TQM implementations. In our experience, TQM typically suffered from the following deficiencies:
Led by midlevel managers while senior leaders worried about the “really important stuff”
Not directed at achieving tangible, budgeted results
Did not obtain the services of the top talent
Lacked formal processes for project selection and review
Lacked financial scrutiny to budget for and validate financial savings
Did not have well-defined roles
Was implemented by part time resources
Fortunately, the three major success factors in Six Sigma deployment address each of these issues:
Committed leadership
Top talent
Supporting infrastructure
Chapter 3 explains each of these in greater detail. If TQM had each of these success factors in place, it would also have been hugely successful. If your Six Sigma implementation looks like a rehash of TQM, it is probably accomplishing nothing more than giving Scott Adams more material for Dilbert™ cartoons. A properly deployed Six Sigma initiative that has each of the success factors noted will not look like a rehash of TQM.
Six Sigma has the best combination of technical and nontechnical aspects that we have seen, but it is certainly possible that another even better methodology exists or will be developed in the future.
2. How should Six Sigma fit with other existing quality systems?
This question is discussed at length in Chapter 7, so we will only summarize here. Six Sigma is a methodology for making breakthrough improvements. It was never intended as a system for managing quality in an ongoing manner, nor was it intended to define the proper criteria for world-class quality management. We do not do Six Sigma instead of ISO 9000 or Baldrige assessment. For example, many customers, especially in the European Community, require ISO 9000 compliance. Being a Six Sigma company does not satisfy this requirement; you will still need to comply with ISO 9000.
Fortunately, there are logical linkages between these systems. For example, in Chapter 7 we discussed how to move from Six Sigma being an initiative to being the way you work. It takes a considerable amount of effort to take everything you have accomplished through Six Sigma and institutionalize it into daily operations. ISO 9000 compliance can provide considerable help here. In essence, ISO 9000 requires that you “say what you do” and “do what you say”. Therefore, if you modify your ISO 9000 documentation to say what you are doing with Six Sigma, the quality audits and other ISO infrastructure that ensures compliance will also ensure that you continue to “do what you said” about Six Sigma. You can then dismantle that part of the Six Sigma infrastructure that is redundant.
Similarly, Six Sigma does not provide a template for evaluating an organization's overall quality management efforts. It does not dictate quality policy, strategies for working with suppliers on a corporate (versus an individual project) basis, quality awareness training of rank and file employees, labor relations, or structure of quality auditing. Since Six Sigma is project-oriented, there is still a need for development and deployment of overall quality policy, and ongoing quality systems to ensure you follow the quality policy. This is where the Malcolm Baldrige criteria can still play an important role. Some corporations choose to formally apply for the Baldrige Award, while many others simply use the published criteria as a benchmark to assess their own quality management efforts.
The Baldrige criteria provide one generally respected overview of the most important aspects that organizations need to consider in quality management. Six Sigma does not provide a replacement for this holistic overview. It is, however, a proven approach for succeeding in many of these Baldrige criteria, such as tangible business results. Again, there is a good linkage rather than a competition here. In summary, you should integrate Six Sigma with existing quality management systems, rather than trying to make Six Sigma something it is not.
3. How do I convince my leadership if they are not committed?
For the reasons discussed in Chapter 3, Six Sigma cannot succeed without committed leadership. Unfortunately, many business leaders will find themselves in a situation where they wish to implement Six Sigma, but their CEO is not convinced. Our advice is to proceed cautiously until top leadership is willing to truly commit. One approach to convince them is to use a partial deployment of Six Sigma, as explained in Chapter 4.
In a partial deployment, an organizational unit (division, business unit, plant, etc.) deploys Six Sigma completely within that one unit, where there is leadership commitment. Obviously, the leadership above this unit needs to be aware of the partial deployment, and agree not to interfere. Once the partial deployment has successfully improved the bottom-line, senior leadership will become convinced and willing to commit to a full deployment. Another option is to arrange for executives from Six Sigma success stories like AlliedSignal, GE, or DuPont to meet with your senior leadership.
4. How can we speed up Six Sigma implementation?
Like any major change effort, institutionalization of Six Sigma takes time. Fortunately, it pays its own way with project savings, so there isn't a long wait for tangible benefits. Nevertheless, some executives will be anxious to make the effort go even faster. First you should recognize that you speed up implementation by following the Six Sigma process. We are reminded of an AlliedSignal manager's admonishment: “Six Sigma works if you follow the process. If Six Sigma is not working you are not following the process.” Taking short cuts will invariably slow the implementation down rather than speed it up. Conceptually, there is no limit to how fast you can go. If you wish to go twice as fast, you just need twice as many Black Belts and projects. This gives leaders a lot of leeway, in that they can go at whatever pace they would like. However, there are some practical constraints that limit the overall pace of the effort.
For example, you can pull only so many employees away from their existing work before operations come to a screeching halt, and you are no longer serving the needs of your customers. Someone has to keep the standard products and services going while others are focused on improvement. In addition, most organizations, including Six Sigma providers, will be limited in the number of qualified MBBs they can make available to train new Black Belts and Green Belts. More and more projects will also strain your project selection and review systems. Obviously, leaders have more to do than select and review projects. So while in theory you can go as fast as you want, there are some practical considerations that limit your speed. We don't know of anyone who has fully deployed Six Sigma in less than five years. Leaders should be impatient, but not unrealistic.
Some shortcuts that we do not recommend include:
Making Black Belts part time so that you can have more of them
Shortening the training, or putting large numbers of Black Belts (over 30) in each training session
Giving the four weeks of Black Belt training consecutively without breaks between weeks
Targeting project completion for two to three months instead of four to six months
Taking the first or last shortcut obviously doesn't actually save anything; you just have divided everything in half. The second and third shortcuts result in less learning in the classroom. These do save training time, but generally produce less benefit from each project. Anything can be improved, including Six Sigma training, but we have not seen effective Black Belt training done in significantly less than four weeks in manufacturing. In non-manufacturing areas such as finance, we have seen shorter training work because some topics do not need to be covered in as much detail, e.g., experimental design (see Hoerl [2001]).
If greater speed is desired, the first action we would recommend is to choose an experienced Six Sigma provider, who can help the organization hit the ground running. Secondly, it is possible to increase the dedicated resources (see Question 15 for typical numbers). You can do this within reason and still increase the speed of both deployment and results. Another option is to hire experienced external resources, including Black Belts, who can come in and deliver results quickly with minimal direction. External resources will not be familiar with your organization or your processes, so it will take some time for these people to build credibility with the organization as well as learn the processes you use to run your business. In summary, it is certainly possible to increase speed of deployment, but there are no shortcuts.
5. How does Six Sigma apply outside of manufacturing?
This topic was discussed in Chapter 6. We provide here some additional perspectives to complement it. In our experience, Six Sigma applies equally well to non-manufacturing and manufacturing. There are several reasons why the common misconception persists that Six Sigma primarily applies to manufacturing. First of all, Motorola pioneered Six Sigma in electronics manufacturing. Therefore, much of the early media publications and training materials were oriented towards electronics manufacturing.
Secondly, manufacturing is perhaps the easiest place to apply the process thinking that is integral to Six Sigma. In manufacturing it is not difficult to see the process—just follow the pipes! It is much harder to “see” the closing process in accounting, or the procurement process. Thirdly, as we discussed in Chapter 6, manufacturing usually has the best measurement processes in the company. This is primarily due to the fact that you are required to keep close track of raw materials and finished goods to account for your debits and credits.
The good measurement systems have two immediate impacts that lead to easier implementation of Six Sigma. First of all, the waste and rework in manufacturing has managerial visibility. If you are losing 20% of your finished products as waste, the cost of this problem is visible to management. On the other hand, the cost of financial analysts reworking the numbers five or six times in the budgeting process until management is willing to accept them is invisible. You cannot look at standard financial reports and immediately see that you are wasting huge amounts of analysts' time (and therefore huge amounts of money) by this rework, because you are not measuring it.
The second way that better measurement systems make application easier in manufacturing is that once you begin the Six Sigma project, the data needed for analysis are more readily available. For example, in most factories a measurement system for waste is already in place for accounting purposes. This will help bring visibility of the waste problem to management, as noted above. In addition, however, once a Six Sigma project is chartered, the team will be able to hit the ground running on the project because the data they need are readily available. Conversely, if you want to work on reducing rework in your budgeting process, you must first figure out how to measure the time spent on rework, and implement a measurement system.
Implementing measurement systems is rarely easy, especially when people are involved. Often people are suspicious that Big Brother will be watching them, and managers sometimes worry that the data collected will expose the inadequacies of their operations. Without strong leadership, there will likely be stiff resistance to implementing the measurement system. Black Belts with manufacturing experience may become frustrated and suggest: “Hey, why don't we do something back in manufacturing?”
Unfortunately, overemphasis on manufacturing has several negative consequences. It certainly limits the level of tangible impact Six Sigma can have. Even in a manufacturing business, such as automobiles, a very small percentage of employees actually work on the assembly line. A much larger percentage work in non-manufacturing processes, such as design, procurement, marketing, finance, human resources, and so on. No improvements will be made in these other areas if Six Sigma is not applied there, and minimal improvements will be made if there is token application. In addition, it will be impossible to change the “genetic code” of the business, that is, to fundamentally change the culture, if only people in manufacturing have been directly involved. Without universal involvement, Six Sigma will likely be just a short-lived efficiency initiative.
Another subtler problem with “tunnel vision” on manufacturing is that it leads to a “victim mentality.” Those working in manufacturing begin to feel that every improvement effort is solely focused on them. The implications of this are obvious: all your problems are in manufacturing. Finance is fine, marketing is fine, logistics is fine, everybody else is fine, but manufacturing is a mess. This perception can further sabotage the already strained relations between manufacturing and other functions. Conversely, if Six Sigma is applied across the board, then the message is that you can all improve, and indeed are expected to do so.
One suggestion for dealing with the measurement issue in non-manufacturing applications is to begin in areas where good measurement systems already exist and where the savings are immediately obvious. Accounts payable and accounts receivable are examples. In order to satisfy accounting needs there are generally good measurement systems not only on the amounts in these accounts, but also on the timing of billing and payment. Another advantage of applications in these areas is that there is usually lots of money to be made by improving the process, all of which is easily quantified because of the measurement systems.
For example, by collecting faster in accounts receivable you can benefit from the time value of money, and also avoid costly delinquencies and defaults. One Black Belt project in collections at GE (see Chapter 2) produced just under $3 million in annual savings. By paying your invoices just in time to receive early payment discounts, you are able to hold your money longer on average, but still receive all available discounts. This typically amounts to huge savings, and as previously noted, these savings are easily quantified.
Manufacturing operations have typically been the focus of previous improvement initiatives, and have often been analyzed and “tweaked” on a daily basis by engineers trained in the scientific method. Therefore, in some instances making further improvements, even with an approach as powerful as Six Sigma, requires a lot of analysis and hard work. Fortunately (or perhaps unfortunately), most non-manufacturing operations have not been subject to major improvement initiatives, and employees in these areas have usually been held accountable for conformance to standard practices (generally accepted accounting principles, or GAAP, for example) rather than for engineering-type improvement efforts. The net result is that there is typically a great deal of “low-hanging fruit” that can be quickly harvested through Six Sigma. Why any business would want to narrowly focus on manufacturing without picking up this low hanging financial fruit is not clear to us.
6. How does Six Sigma apply to design?
DFSS was discussed in Chapter 6, so we provide only a short summary of this discussion here. Six Sigma applies to both product and process design (recall the GE LightSpeed digital CT scanner mentioned in Chapter 2). Conceptually, design can be considered a process, and Six Sigma can be applied in a straightforward manner to improve this process. In most cases, however, organizations wish to apply Six Sigma to the design of a specific new product or service. Six Sigma applies here as well. What is needed is a different roadmap more tailored to design. If a team applies the DMAIC roadmap to designing a new product, it will likely stumble in the measure phase, since there is no existing process on which to take measurements.
GE developed the DMADV (define, measure, analyze, design, verify) roadmap (adopted by many others since then) to apply to design projects. The focus of each phase is as follows:
Analyze— develop the high-level or conceptual design; predict CTQ performance
Design— add details to high-level design; refine predictions; develop control plan
Verify— pilot the design under realistic conditions to measure actual CTQ performance
This approach to DFSS maintains the key technical elements of DMAIC:
Disciplined approach
Use of metrics throughout the process
Use of analytical tools
Emphasis on variation
Data-based decision making
One unique challenge in DFSS is estimation of financial benefits. Since you are typically avoiding problems rather than fixing them, it is much more difficult to determine an auditable savings figure. Many organizations have not attempted to report financial savings from DFSS projects.
7. How does Six Sigma apply to smaller companies?
There is nothing unique about large companies that would make Six Sigma deployment easier for them. On the contrary, in large companies the middle management layer may have their own opinions about Six Sigma, and slow the initiative barring strong senior leadership. We have found that it is generally easier to introduce radical change to smaller companies because there are fewer organizational layers between the CEO and the front line workers. To use a nautical analogy, it is easier to turn a small ship than an aircraft carrier. We believe that the main reason Six Sigma is generally associated with large companies is that firms such as Motorola, AlliedSignal, and GE have been more frequently discussed in the media.
Admittedly there are unique challenges in smaller companies. For example, small companies will lose the economies of scale when setting up MBB or Black Belt training. A small company may not have 20–30 Black Belts to put into a class together, and may have to use very small class sizes (effective for learning, but less efficient for training), or utilize public courses. Small companies operate in a lean environment with employees assigned numerous jobs. A small company may also not have the opportunity to benchmark internally that a large conglomerate like GE or DuPont has. Instituting any new formal infrastructure may be difficult in very small firms. However, the infrastructure may not need to be formal. The key point is that there must be a supporting infrastructure; for most organizations, it must be formal to work, but it is possible that a very small company can do this informally. It is important to make sure that all the infrastructure roles are being carried out.
Other unique considerations with small companies include: the typically lean organizational structure, making it harder to dedicate Black Belts; the fact that most employees do more than one job—leading to frequent distractions; and the need for Black Belts and MBBs to be experienced with this particular business. We have found that each of these concerns can be adequately addressed with proper planning. Conversely, if they are used as excuses, the initiative is not likely to succeed.
8. How does Six Sigma apply to government or non-profit organizations?
While making a profit is not the objective of government or nonprofit organizations, they still need to produce tangible results subject to financial constraints. Budget issues, that is, not having enough money to do what they really want to do, are a constant concern for both government and non-profits. By eliminating waste in government agencies, public schools, and non-profit organizations, there will be money saved, meaning more for services or less of a need to raise taxes or tuition. Certainly, being able to do more with less would be of significant value to government, including state-funded universities, and non-profits.
Unfortunately, local, state, or federal governments are not generally expected to produce continuous improvement. The public has accepted as fact the supposition that to do more requires more money. For example, while many may whine about the rising cost of postage stamps, very few seriously challenge the U.S. Postal Service's need to raise prices to keep up with inflation. However, many business leaders have been asked to hold costs steady in times of inflation, or even to lower costs while enhancing services, and they have relied on improvement methods like Six Sigma to accomplish these goals. There is no reason why Six Sigma could not be used to eliminate waste and rework in the U.S. Postal Service, for example, thereby avoiding or delaying the need for price increases. We are not intending to single out the U.S. Postal Service; the same argument could be made for the Department of Defense, the Commerce Department, local and state government organizations, and so on.
On a similar note, tuition at most universities in the United States has been increasing at a rate faster than inflation for many years. While there are certainly valid reasons for additional expenditures, such as wiring classrooms and dorms for the Internet, these unavoidable increases have not been offset by savings from productivity and cost reductions. Again, there is no societal expectation for universities to reduce waste and rework in their operations, hence the increasing tuitions are met with minimal pubic outcry. However, major universities have billion-dollar budgets that have the same accounts-payable and accounts-receivable savings opportunities as businesses. In addition, Six Sigma could be used to improve the educational experience of students, as well as other non-financial measures. Recall that some Six Sigma projects will be more focused on enhanced customer satisfaction than on directly saving money.
Relative to non-profit organizations, improvement initiatives such as Six Sigma offer a potential solution to their funding gaps. By eliminating waste and rework you are able to do more with the same or less money. Roger Hoerl met with executives of the Wildwood Institute, a non-profit organization for the neurologically impaired, as part of a GE-Wildwood discussion of Six Sigma. After the interaction, Managing Director Bill Sofko Jr. noted, “Many of the concepts you introduced with regard to Six Sigma are directly applicable to our situation here at Wildwood” (personal communication). Why, one might ask? Because, Sofko noted, “…we are trying to improve the quality and cost effectiveness of current services while we pioneer new approaches as well.”
GE volunteers have, in fact, completed Six Sigma projects with a number of non-profit organizations. Sofko also pointed out another benefit of quantitative approaches such as Six Sigma for non-profits: “Long-term survival in human services will necessitate that we become better able to measure our results and articulate them in terms that our multiple and varied customers understand and value.” In other words, many supporters of non-profits want tangible evidence of the impact of their contributions. Again, we can consider projects focused on enhanced customer satisfaction rather than on direct cost savings.
9. How do I use Six Sigma to improve the top line?
Most of the published benefits of Six Sigma have involved bottom-line improvements—cost savings from reduced waste and rework. However, Six Sigma is also extremely valuable in improving the top line, growing sales, and market share. Top-line growth and internal savings are a powerful combination. This issue was discussed at length in Chapter 6, so we will simply highlight the key points here.
Almost all Six Sigma projects will produce intangible top line benefits by improving the products and services that customers see. Satisfied and delighted customers generally lead to more business. However, it is hard to attribute top line growth directly to a specific internal improvement project. The major means of using Six Sigma to directly increase top line growth are:
Using Design for Six Sigma (DFSS) to create new and better products and associated services (say, handling logistics for customers)
Increasing process capacity when the product line is sold out
Applying Six Sigma to sales and marketing processes
Improving the service processes that directly touch the customer, such as delivery, billing, and customer service (leading to more sales)
Taking Six Sigma directly to the customer with “at the customer, for the customer” projects (leading to more sales)
10. How do I reduce the bureaucracy of Six Sigma?
Whenever organizations are set up, some level of bureaucracy will creep in. Since Six Sigma does indeed introduce a new infrastructure, it is susceptible to this phenomenon. A key fact to remember is that bureaucracy focuses on the letter of the law rather than on the spirit. This is why many legal institutions, which are required to follow the letter of the law, come across as very bureaucratic. The U.S. Internal Revenue Service (IRS) is one example that immediately comes to mind.
Your Six Sigma infrastructure should focus not on rigidly following rules, but rather on the results you are trying to achieve. Generally, the rules help you achieve the results and therefore should be followed. However, whenever the rules do not help but rather hinder your efforts, you should either change the rules or violate the rules, assuming there are no legal or ethical issues in doing so. It is the responsibility of Six Sigma leadership to ensure that your infrastructure is focused on delivering tangible results, not on counting the number of Black Belts, completed projects, or management reviews. Certainly, there is nothing wrong with counting such things, but these metrics are means to an end, not an end in themselves. Senior executives should be looking for signs of bureaucracy when performing audits of the overall deployment.
11. How do I select a Six Sigma provider?
Selection of a Six Sigma provider is a very personal decision, much like selecting a family doctor. The provider should have impressive credentials, but organizations should also feel that they have a good relationship built on trust with the provider. The provider that worked well with Company X may not be the right provider for Company Y. The process we recommend for selection of a provider is this:
Develop overall company philosophy and principles relative to Six Sigma
Develop tangible criteria for providers
Develop a candidate list, based on research, word of mouth, and benchmarking
Interview the candidate list of providers
Select the most desired provider
Negotiate with desired provider; repeat previous step if these negotiations are unsuccessful
Announce final decision
This approach is obviously very different from the “bid” approach in which providers are asked to submit a bid for Six Sigma services, and then the company goes with the lowest bidder. The bid approach is certainly appropriate in certain situations, such as short-term needs for commodities. However, few people would want to follow the bid approach to select a family doctor! You want to go with the best doctor you can find, unless his or her price is unrealistic.
The reason we suggest starting with your overall philosophy and principles relative to Six Sigma is that consistency with these strategic values should be a primary consideration in developing the original list of candidates, and of course in interacting with them. For example, if the company wishes to become self-sufficient within a couple of years, it should look only at providers who promote this philosophy.
Of course, credentials, track record, and testimonials from existing customers are also relevant factors in the decision. You should base your specific criteria for provider selection on these values, but in more specific form. For example, if your principle is that the provider should deliver tailored training, your specific criterion might be that the provider must have experience in your industry. On the other hand, you may want a provider who is not experienced in your industry and who will bring a fresh perspective to your organization.
We strongly recommend face-to-face interviews with candidate providers. This is too critical a decision to be made via emails or conference calls; remember that the relationship with the provider is as important as the tangible qualifications it may have. Table A-2 lists potential questions to ask candidate providers. No doubt there will be other, more company-specific questions that you will add to this list. Price and terms are obviously still important, so it is possible that you will not be able to reach agreeable terms with your most desired provider. If this occurs, you move on to your second choice. However, using the existence of multiple vendors to leverage price is dangerous unless you feel comfortable with the capabilities of each of the vendors you are considering.
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