Six Sigma, Information Technology & You: Creating A Happy Customer
With today's global marketplace, coatings companies face three competing demands - maximize margins, ensure product performance and comply with environmental regulations. To meet these demands, companies are seeking quality- and process-control systems that enable them to advance product quality and improve responsiveness to customer needs, while lowering costs. One such system is Six Sigma.
In 1988, based largely on its work with the then-unique quality-control process, Motorola became one of the first companies to receive the Malcolm Baldrige National Quality Award. Since then, awareness of Six Sigma and its benefits have grown steadily. In the process industry, leading companies such as 3M, AlliedSignal, Dow, DuPont and GE have completed or are in the middle of Six Sigma implementations.
Dow, in its 1998 annual report, candidly acknowledged the dramatic impact of Six Sigma, observing that: "Six Sigma is much more than a cost-reduction or quality program. It is a high-impact, all-encompassing effort that will literally change the way we operate. Six Sigma will not only increase the bottom line by achieving greater efficiencies, but will grow the top line by accelerating the introduction of new products, and developing those products with the direct participation of our customers."
But what exactly is Six Sigma and how does it work? Is it right for your company? Here are some of the answers.
What Is Six Sigma?The term sigma is taken from a letter in the Greek alphabet and is used in statistics as a measure of variation.
Sigma measures the capability of a process to perform defect-free work. With Six Sigma, the common measurement index is "defects per unit," where a unit can be virtually anything - a component part, piece of material, a line of code, or time to market. The sigma value indicates how often defects are likely to occur. As sigma increases, cost and cycle time go down while customer satisfaction goes up.
The fundamental objective of Six Sigma is customer satisfaction through continuous improvement in quality. Six Sigma is the goal, which means products and processes will experience only 3.4 defects per million opportunities or 99.999966% good. To illustrate, if you played 100 rounds of golf a year, and played at:
- 2 sigma - you'd miss 6 putts per round
- 3 sigma - you'd miss 1 putt per round
- 4 sigma - you'd miss 1 putt every 9 rounds
- 5 sigma - you'd miss 1 putt every 2.33 years
- 6 sigma - you'd miss 1 putt every 163 years
Using the Six Sigma initiative companies will focus on achieving specific Primary Performance Drivers. These may include resource use, technical advancement, risk management, speed to market technical performance. The goal is for these Primary Performance Drivers to become core competencies.
How Does Six Sigma Work?Originally Six Sigma was for the production floor, but some companies are implementing the process in all departments. Other initiatives for measuring quality have traditionally focused on the cost of quality, but with Six Sigma, the belief is that quality is free, in that the more you work toward zero-defect production, the happier customer and bigger return on investment you'll have.
The Six Sigma methodology allows all processes to be reduced to a common denominator - defects per unit and sigma. By doing so, it provides organizations with a common quality language crucial to measuring real quality gains and for benchmarking one process, product, and practice against another. Because it creates and institutionalizes this common quality language and goal, Six Sigma significantly heightens quality awareness and provides a framework for identifying and maintaining process improvements. Briefly, Six Sigma uses the following general steps.
- Define. A quality team identifies a suitable pro-ject based on business objectives, customer needs and feed back. The team identifies Critical to Quality (CTQ) characteristics and items that will have an impact on quality.
- Measure. The team identifies the key internal processes that influence CTQs and measures the defects related to those processes.
- Analyze. The team discovers why the defects are generated and identifies key variables.
- Improve. The team confirms the key variables and quantifies their effects on the CTQs. The team identifies the maximum acceptable ranges of key variables and validates a system for measuring deviations and variables. The team modifies the process to stay within the acceptable ranges.
- Control. The tools are put in place to ensure the key variables remain within the maximum accept-able ranges.
Who Leads the Six Sigma Effort?As with any major organizational effort, to succeed, Six Sigma must have buy in and support at the highest corporate levels. Preferably, the initiative will not only have executive-level support, but also a true executive suite "champion." In a rapidly emerging trend, as companies have begun to understand and fully embrace Six Sigma, they are creating executive level Six Sigma positions responsible for overseeing role out of the initiative.
At its core, though, Six Sigma is really a grass-roots-level managed initiative, driven in day-to-day practice by production level workers and managers. A key element of the methodology's success lies in the identification, training and placement of "production level" Six Sigma experts, called Master Black Belts (MBB), throughout the organization. The ideal MBB has a technical background, understands basic statistics, and has application experience using problem solving and quality tools. They need to be fully capable of independently training and coaching other employees - helping them achieve Master Black Belt status, and providing strategic and tactical assistance to executive level Six Sigma champions and management during the course of implementation.
The focus of MBB training is on the development of an in-depth understanding of the Six Sigma philosophy, theory and application tactics. These include advanced applications in the areas of descriptive statistics, inferential statistics, non-parametric statistics, quantitative benchmarking, process control techniques, process diagnostic methods and experiment design, as well as organizational/group dynamics that will change process. This knowledge is acquired to facilitate breakthrough improvement in key processes. The ultimate goal is for Black Belts to accomplish the following.
What Is IT's Role In Six Sigma?Six Sigma literally means reducing defects per million to 3.4 or 99.999966% good. There are two challenges implicit in Six Sigma. The first, obviously, is to achieve the 3.4 defects per million goal. A second, and equally important, challenge is maintaining Six Sigma once that defect goal is achieved. Information technology (IT) plays a crucial role in helping companies meet both challenges.
Heavily driven by quantitative analysis and the assumption that all processes must, to be efficient, be repeatable - a lynch pin of Six Sigma is process control and consistency. But how do you gain this consistency and create control? The answer is through the integration of sophisticated, well-tailored IT solutions into key processes.
Take, for example, the product development process. Today, an organization's product development information is often scattered across many geographically separate R&D facilities, in paper-based systems such as notebooks and files, or in isolated stand-alone computer systems that are cumbersome or impossible to use effectively. Product development knowledge that is crucial to creating a controlled and consistent product development process is inaccessible, unknown and unleveraged by the company. Skilled R&D, marketing and manufacturing professionals, because they are isolated from each other and unable to access and share this valuable intellectual asset store - are forced to constantly reinvent the wheel each time they create a new formula or product. The result is an inconsistent and inefficient process prone to error.
Management has no consistent visibility into the product development process, making it difficult to problem solve, do risk analyses and make quality, strategic decisions. Fresh, potentially profitable market opportunities go untapped - because new products and technologies are either not consistently developed - or may be late to market. The integrity of R&D and new product information are put at risk due to the need for manual entry of approved formula and product data.
Through IT, companies can maximize the performance of product development resources and bring them in-line with Six Sigma. For example, at the beginning of a product development project, Marketing creates a "profile" for a new product that includes all the aesthetic and functional performance benefits the product must deliver. Those requirements can be linked to technical parameters and specifications stored in a centralized relational database. The database then links these parameters to formulas that have been previously developed and tested.
Rather than spending hours, or in some cases days, searching through lab notebooks and paper files, lab personnel can now instantaneously search all existing formulas for one that satisfies the marketing profile requirements. They are able to review all associated formula data and significantly advance the development process in a matter of minutes. A guidelines and restrictions database saves additional time and effort by enabling staff to ensure new formulas meet all regulatory requirements and internal corporate policies. All laboratory work adds value.
The system also makes R&D and new product specification data available enterprise wide, and provides sophisticated workflow management tools that automate approval processes and notification of key staff. This speeds the approval of new formula variations and eliminates the need to re-conduct expensive testing programs - saving both time and money and accelerating speed-to-market.
Approved formulas and product information are accurately communicated to the manufacturing or enterprise resource planning systems by a direct interface. Costly data entry errors are prevented and complete, accurate bills of material are easily generated. As a result, costly data entry errors that, in many cases may not be discovered until production is under way, are prevented.
Most importantly, an IT-driven product development system creates, and puts in place, the crucial infrastructure needed to effectively manage, in a controllable, consistent and repeatable manner, the complex processes associated with product development - enabling it to be successfully integrated into the greater corporate Six Sigma effort. At the heart of this integration is a stage-gate process that companies use to monitor the product development process and make go-no-go decisions about the development of specific new product. The goal is to ensure the efficiency of the product development process at its genesis, by green lighting the bring-to-market development of only those new products with the highest odds of success.
Is Six Sigma Right For My Company?Six Sigma is, both from an organizational and dollar standpoint, a significant investment. The evidence, thus far, strongly suggests that for large companies, such as GE, Dow and DuPont, the benefits of Six Sigma dramatically outweigh the costs. GE has publicly stated that they expect to save more than $6 billion by way of their Six Sigma initiative. For mid-sized companies, particularly those with a healthy growth trajectory, Six Sigma's potential is also strong.
Modest-growth mid-tier companies, and smaller organizations, may still want to consider a Six Sigma initiative, but before doing so should do a careful cost analysis. A primary cost of Six Sigma is the personnel charge involved in identifying and training Black Belts. Initially, because Six Sigma itself was so new, the supply of available Six Sigma trainers was very limited, making training extremely expensive. Today, numerous organizations, usually owned and staffed by Black Belt-level veterans of the early Six Sigma efforts, exist.
No matter what the organization's size, the real question for any company considering Six Sigma is this: In today's increasingly competitive world economy, can you afford not to be 99.999966% good?