Six sigma is a systematic approach used by organizations to enhance business profitability, overall business performance, productivity, reduce company's working cost and improve customer satisfaction.
It is a rigorous analytical methodology and uses business data and statistical analysis, follows disciplined techniques to help a company reduce operational cost, achieve high profitability and end problems (defects/errors/bugs) in any possible area.
It is a proven and very efficient approach to help organizations improve business processes and set up correct and disciplined strategies to improve the predictability of business processes.
Statistical thinking in six sigma methodology is process driven i.e., it marks everything as a process and suggests that the processes need to be understood and studied rigorously to improve them, hence contributing towards reduction of defects and enhancement in profitability.
It was first derived/implemented by Motorola in early 80s during the quest to formulate/find out processes which can help in reduction of failure at all levels in production. The challenge needed in-depth and accurate study and analysis of various processes used, and understanding the cause of failures to lower the defects and increase profit.
Why Six Sigma is So Important?
Six sigma refers to 99.997% perfection rate i.e., 3.4 parts per million. If a company is producing only 3.4 defective products per million units of the product, then it is considered to have achieved six sigma level.
Top-notch companies around the world generally are considered to be operating on around 99% perfection, which suggests that there can be further improvement and reduction in defects, hence helping a company to increase profitability.
This improvement can save millions of dollars for the companies which are wasted in various unnecessary processing and defects that lead to customer dissatisfaction.
It uses process data and analytical techniques to find out various process variables. Once the process variables are obtained, they help in developing the exact understanding of various processes. This understanding/data is then used to improve the processes and help in reducing defects/losses in other areas of the organization.
Due to its simplicity, it is very easy to add and integrate into any organization if all the processes are properly followed.
Six Sigma Methodology Steps
In this step, the team responsible for the implementation of the methodology in the organization collectively defines various goals and subgoals. This step puts emphasizes on customer satisfaction, identification of root causes of any identified defect, improvement and establishment of infrastructure to help meet the defined goals and subgoals.
This step involves activities such as preparing various metrics based on the data available in hand, more data collection activities, basic data packets creation or sampling, etc.
This step involves analysis of defects using 'cause and effect' and other diagrams, study of possible modes of failure i.e., root cause analysis etc., to prepare various charts to improve the process, and control and watch the process improvement activities.
This step can help in establishing the facts about processes being used in terms of their effectiveness, contribution to six sigma methodology success, defect rates, and to what extent these processes help in achieving the organization level success, etc., and can help in achieving various goals.
This step involves utilization of data collection, metrics and analysis done during the define, measure and analysis steps. Improvised techniques are brought into action and applied to the process improvement model. The team working on the methodology application, may experiment with various techniques to help in process improvement.
In this step, all the techniques being utilized for process improvement are monitored and adherence to procedural methodology is assured. Various charts based on the techniques being utilized against time frame are used to help keep a check on the successful execution of the methodology.
It's very important to understand the six sigma and its application for any industry/organization. It not only emphasizes on reduction of defects (only 3.4 per million), it also gives a significant importance to customer satisfaction and customer voice.
There are three types of expertise levels in six sigma implementation: Green Belt, Black Belt Practitioner and Black Belt (Master). The degree of expertise and skill sets increases from Green Belt to Black Belt (Master).
Cost of six sigma methodology implementation in an organization depends on the organizational needs; it varies based on deployment and utilization of the six sigma trained resources in various projects or on an organization level.