Globalisation and instant access to
information, products, and services has redefined the way companies
function Ė old business models no longer work. The competitive
environment leaves no room for error. Organisations must delight
their customers and constantly look for new ways to exceed
expectations. But how do they do it? The answer may lie in Six
Sigma, now a buzzword in corporate management circles.
Six Sigma is a management philosophy
that propagates setting extremely high objectives, collecting data
and analysing results to a minute degree so as to reduce defects in
products and services. Sigma is the Greek symbol for standard
deviation in Statistics. This standard deviation measures the number
of variations in a process.
Six Sigma is a disciplined approach to business process improvement.
It helps achieve significant quality and performance improvements
without requiring significant
Although Six Sigma was started in Motorola in its manufacturing
division, it eventually evolved and was used in other non-manufacturing
companies such as Allied Signal and GE. It has since been used by
Ford, Caterpillar, Microsoft, Seagate, Siemens and also Merrill
Lynch. Six Sigma is now used in several management initiatives and
can be applied to any sector where the control of variation is
desired, such as services, call centres, medical and insurance
Incidentally, Mumbaiís super-efficient dabbawalas were given a Six
Sigma rating by Forbes magazine. About 5,000 dabbawalas work daily
in a finely tuned system to deliver tiffins in an exercise that
beings at 9 am and ends at 5 pm. According to the article, only one
mistake for every eight million deliveries is their norm.
How does six
Sigma work ??
Six Sigma is a data-driven, customer-focused management methodology
that improves the process performance, decreases levels of variation
and maintains consistent quality of the output. This result is a
reduction in defects and improvement in product quality, profits and
The philosophy behind Six Sigma is that by measuring how
many defects are in a process, you can figure out how to
systematically eliminate them and get as
near to perfection as possible. For a company to
achieve Six Sigma, it cannot produce more than 3.4 defects per
million parts (or opportunities). In almost any
sector, including accounts, customer-service, logistics and
marketing, every process can be analysed in terms of its
adherence to Critical To Quality (CTQ) parameters.
This is because defects can be present whether itís a customer
transaction, an engineering design, a banking transaction, or
even in the time it takes to treat a patient at a hospital.
Thus, any process that deviates from an ideal level can cost
extra time, labour, and material.
Over time, Six Sigma serves as a mechanism for cultural
transformation in organisations by making managers more
data-oriented and using sound techniques in decision-making.
Many organisations today do not promote managers or staff
until they have been trained in Six Sigma.
Six Sigma helps companies focus on the customer. Its system
helps companies identify and manage the key input variables
that have a major impact on output. This helps them optimise
processes and save money by eliminating defects and reducing
variation in processes.
Typically, companies use a project-based approach in
implementing Six Sigma. Each project helps the company save
from Rs. 10 to a crore, depending on the size of the company
and the project.
Six Sigma Methodologies
Six Sigma DMAIC : It is a process that Defines, Measures,
Analyses, Improves, and Controls existing processes that fall
below the Six Sigma specification.
Six Sigma DMADV: Defines, Measures, Analyses, Designs, and
Verifies new processes or products that are trying to achieve
Six Sigma quality.
Design For Six Sigma: Six Sigma can also be used to create a
brand new business process from scratch using Design For Six
There are three levels of training in the Six Sigma quality
system: Black Belts, Green Belts and Yellow Belts. An external
Six Sigma expert trains Master Black Belts. Black Belts are
the on-site experts who will develop and lead cross-functional
teams, and advise management on prioritising, planning and
launching Six Sigma projects. They are the ones who are
directly responsible for the execution of projects in a Six
The Master Black Belts then train black, green and yellow
belts. Green Belts are the organisationís employees who
execute Six Sigma in their jobs. They have less Six Sigma
responsibility and their efforts are focused on projects that
are directly related to their daily work.
contributing to its success
Since Six Sigma employs a strongly data-driven approach and places
emphasis on measurement at every stage, ensuring the availability of
reliable data is critical. If the process selected does not meet
this requirement, the methodology is unlikely to work.
Six Sigma is heavy on Statistics, but process change is about
mindset too, and so the people aspect receives considerable focus.
Establishing the Six Sigma management system is critical to success.
The company needs to also make a commitment to have full time Black
Belts. These Black Belts should be selected carefully from within the
organisation and their career planned carefully to send the
right signals to other employees.
The selection of Black Belts is important. In the initial phase of
implementation, there is a mix of uncertainty, and a resistance to
change. Therefore, in addition to the senior managementís
commitment, the quality of the Black Belt is also very critical. The
Black Belt should have leadership qualities in addition to technical
capabilities to remove the barriers fast.
Constant communication and involvement of all stakeholders at all
stages are a must to ensure the project stays focused and does not
lose momentum. Only then will the project be able to draw the energy
for its sustenance from all the stakeholders involved, rather than
from just the identified owners or champions.
It is advisable to clearly articulate the benefits in terms people
can relate to. For example, rather than simply
portraying reduction of defect density as a goal,
it is a good idea to translate that reduction into the cost savings
the customer will get.
The senior management needs to also be absolutely in accord and
committed to bring this discipline. Six Sigma initiatives are
long-term and hence require ample commitment, dedicated resources
and willingness to look at everything critically. Managementís
commitment and their role in getting goals and identification of the
right projects is critical.
Today large and small companies have launched Six Sigma initiatives.
However, for many it is just joining the bandwagon. At times people
think every problem will have a Six Sigma solution, which is not the
case. There are certain problems, which need a quick-fix solution
and then there are problems related to culture and people that
cannot be addressed using Six Sigma.
However, some companies, which took the effort to build the
necessary infrastructure early on, have reaped the benefits of Six
Sigma over the years and saved crores of rupees. Six Sigma has
evolved into a global movement to enhance the mechanisms for
If companies want to remain competitive, they must invest in their
core competencies. And seeing the positive results of Six Sigma on a
firmís competitiveness, it is indeed a proposition that makes smart