Introduction
Many of the operational improvement processes have emerged through the school of Total Quality Management (TQM). Currently, it has developed as a strategic tool in most of the manufacturing and service organizations to respond to the market and competitive needs in the business world. Today Quality management has become a representation of broad strategy built on the pedestal of continuous improvement involving total organization with prime focus on quality. Quality management is a process of undertaking every aspect of production or service keeping end customer and quality awareness in mind. Now, quality is a deliberate and conscious management strategy that is included in all organizational processes. By implementing the process of constant improvement the companies attract the customers with low priced and high quality products. The quality practices ultimately culminated in Six Sigma, which achieves 99.99927% error/defect free results.
Six Sigma is considered as one of the advanced methodology for executing TQM. It is an innovative approach for continuous process improvement which covers almost all the elements of TQM. Having Six Sigma program in the company is considered as very beneficial in cost reductions and productivity improvements and affects larger dimensions than other tools of TQM. Many companies consider Six-sigma as a strategic as well as tactical tool to improve profit margins by reducing wastage of resources, product defects, costs and enhancing quality through process improvements. The approach is rational and appeals to reason more than other tools of TQM. Traditional approach to TQM is to try to improve everything in the organization, but Six Sigma chooses any one aspect of the organization for improvement beginning with understanding of customer preferences, dependence on hard data, statistical evidence, rigorous attention to details, and economic reasons for all improvement initiative. The practitioners of six-sigma consider it as high involvement project rathen than fitting standardizes templates, techniques and tools. The approach integrates both strategic and tactical issues related to production, distribution, technology, people performance and training. The companies that aim to develop specific and distinct competencies are attracted towards Six Sigma and adopt it in their processes sooner.
Definition and Scope of Six Sigma
The Greek letter sigma (s) represents standard deviation, or how much a variable deviates from its average value. Under the Six Sigma methodology, errors, mistakes or deficiencies are described in terms of "defects" per million opportunities, with the score of Six Sigma equal to 3.4 defects per million results. Six Sigma, in simple terms, is a total organizational performance improvement strategy with a purpose to reduce the number of mistakes/defects in any outcomes, to as low as 3.4 times per million results. Six Sigma is a measure of variation about the average or standard deviation of mean in a process in manufacturing or services. There are many definitions for Six Sigma, for example, Tomkins (1997) defines Six Sigma as a scheme with a purpose of elimination of defects from every product, process and transaction. Another definition by Snee (2004), state that Six Sigma as a business improvement method that search for causes of mistakes or defects in business processes, and eliminate them by focusing on results that are of prime importance to customers or business.
The statistical approach enables the implementing organizations to achieve significant improvements in costs through design and observation of business activities for minimizing all types of wastes and non-value adding activities and maximizing customer satisfaction. Voelkel, J.G (2002) observed that though quality improvement plans are useful, they however do not yield breakthrough improvements in bottom line and quality. Six Sigma is a combination of right managerial, financial and practical elements that improves the processes, products and business in superior ways than other quality tools.
In most places practitioners and certified individuals lead the Six Sigma programs, and because of this it has acquired a strong perspective that are advocated as having universal applications (Goh & Xie, 2004). Park (1999) believed that Six Sigma presents a new paradigm of innovative management in the 21st century, which emphasises statistical measurement, strategy and quality practices.
Strategic and Tactical competency for Six Sigma
For implementing six-sigma, some organizational infrastructure needs to be in place. For example, the company must establish a data based decision system with focus on objective measurements of outcomes. The data requirements must be defined in advance and information systems to overcome the cultural hurdles must be put in place. A team of qualified process owners, who has the capability to develop best practices, must create cross-functional coordination and participate in teamwork. In comparison to other TQM tools, six-sigma allows a company to focus on smaller and specific functions of the enterprise. The selected issues and problems affect the success of six-sigma partially. Since Six Sigma projects emphasize economic benefit, it must focus on an appropriate process or product improvements. Even if the projects do not attempt total organizational change, the smaller attempts impact the total business. One principle is that the projects and activities must be connected to customer needs, core business processes and competitive advantage.
The companies that have implemented and practiced six-sigma share that the most important factor that determines success is continued support and enthusiasm from top management (Henderson and Evans, 2000). In the success stories of Six Sigma in Motorola, Dow Chemicals, Ford, GE, and Allied Signal (Motwani et al., 2004) the CEOs were the most important factor that made it successful. CEOs personally support, encourage, participate and actively involved in the initiatives and continuity. Top management must ensure the linkage between the six-sigma initiative and business strategy, customer needs, employee participation, and supplier compliances. Domestically, the company management must initiate appropriate changes in the organizational structure, infrastructure resources, cultural practices, communication styles and training.
According to Wilkinson, Redman, et.al (1998), for implementing Six Sigma several competences and organizational infrastructure are required. The researchers have identified four principles and practices that must act together for a quality program to succeed. These principles are customer orientation, continuous improvement, employee engagement, and perception that organization is part of a larger value chain. Esrig-Tena & Bou-Llusar (2005) consider these competencies as the basic requirements for quality management. According to them a company not only must have required resources, but also have the ability to integrate the individual assets and resources. Rather than singular efforts, the Six Sigma programs integrate operations, customer needs and employee participation. Many quality programs stress the need for effective leadership; however six-sigma programs demand institutionalized efforts. Six Sigma program certainly requires leaders, but a compartmentalized leadership is observed in the organizations. The Six Sigma companies own a set of in-house experts developed through formal learning / training (such as Black Belts, Green Belts, etc.). The certified experts develop management steps for the processes, i.e. process map, criterion for satisfying internal or external customers, and application of statistical analysis on the gathered data.
Critique on Six Sigma
A critical evaluation by Banuelas & Antony (2002) shows that only less than ten percent of the companies that adopted six-sigma have affected significantly to the balance sheets. There are only few stories that are stellar; most of the stories in the literature are mediocre in nature. Most narrations about Six Sigma whether successful or failure highlight about the principles of quality, and attribute the failures to lack of ability in implementing the program (Zabada, Rivers & Munchus, 1998). An integral part of the organizational component involves ways to improve process performance through employee and customer participation (Esrig-Tena & Bou-Llusar, 2005). The paper is focused on investigating the impact of employee participation and customer involvement in six-sigma implementation, and tests their significance through a case study.
DMAIC
Many times Six Sigma is equated with DMAIC methodology. A majority of the Six Sigma practitioners use DMAIC for implementing the process. The DMAIC methodology is globally considered and defined as consisting of five phases. The five phases to DMAIC methodology of Six Sigma program are define, measure, analyze, improve and control. In certain programs, there are only four phases (Measure, Analyze, Improve and Control) included. Define deliverables are considered as a priori work in the project or are taken as part of ‘Measure’ phase.
The DMAIC methodology is very effective when a product or process in a company is not meeting customer needs, specification or the organisation is not performing adequately.
The DMAIC methodology may be broken down as follows: Define the project goals and the customer (internal and external) needs. The major components of define phase include development of a project charter, creation of a problem statement, identification of customers, definition of process boundaries, and decision on outcomes critical to quality. Measure the chosen process to establish the current performance levels. The elements of measure phase are process mapping, decision on type of data, and assessment of current level of process performance. Analyze and resolve the root cause(s) of errors, mistakes and defects. The tools used in analysis phase are why-why analysis, pareto charts, segregation of causes, and cause & effect diagram. Improve the process by eradicating the root causes. There are many innovative methods used in this phase. Some of the usual ones include matrix diagram, zero defect programs, employee motivational schemes, Kaizen, 5S, TPM, Quality circles, etc. Control future process performance. This phase is about maintaining the gains achieved in the improve phase. This marks as the end of the cycle with focus on total implementation of improvement programs, periodic reviews of quality solutions and strict adherence to measures decided in the beginning of the project.
DFSS This is yet another Six Sigma methodology. DFSS is an acronym (Design For Six Sigma). The phases or steps of this methodology are not clearly defined as in DMAIC. Every company or training organization that undertakes this methodology will define it differently. A company usually implements DFSS to fit its business, industry or culture. Sometimes, a company engages consultants who have a readymade version of DFSS. Researchers indicate that because of the variations in the implementation of DFSS, it is considered as an approach rather than as a specific methodology. DFSS is used in situation where there is a need to design or re-design a product or service from scratch. From a statistical angle the expected process Sigma level of a product or service is 4.5 (maximum one defect per thousand outcomes), but it can go till six Sigma or higher. Maintaining low defect level for a product or service from the beginning denotes that customer expectations and needs are clearly understood before a design is completed and launched.
DFSS is a unique tool and method of Six Sigma to the production of new products, services and processes. Design for Six Sigma has three major mechanisms i.e. product line management, design and new product development, and the Six Sigma tools that are applied in the process of design.
Organizations that used Six Sigma for reduction in variations
Samsung Electronics Corporation (SEC)
SEC has used Six Sigma in development and design of products, manufacturing, marketing and growth of employees. The company began Six Sigma process in 1999 with training to key personnel. The training was provided by Juran Institute Inc. After three years of continuous training the total number of employees with Master Black Belts, Black Belts and Green Belts certification reached fifteen thousand. The top management was keen in the Six Sigma program. The Black Belts were expected to guide several Six Sigma projects per year. The projects were measured on return on investment. Promotion and incentives were awarded to employees who participated in the program. From the year 2000, Six Sigma was implemented in manufacturing using DMAIC methodology. Later it was applied to design of products and transactional processes of business. Internal and external customer needs and interactions were very critical in improving the processes. Through an intranet site, the company provided statistical materials, benchmarking measures, value added reports to senior management and other information. Global organizational learning was evident through the Six Sigma methodologies applied across enterprise. Consistency in the manufacturing, design and transactional processes was achieved in a span of three to five years time.
GE Capital
GE holds Six Sigma as an all encompassing quality initiative, and it considers process improvement can help the organization to achieve its goals. GE Capital began its business transformation program through Six Sigma with a focus on what customer’s value or customer need. The customer needs were translated into business goals that trickled throughout the organization. GE used several methodologies as strategy, of which major tools were Six Sigma and Lean to bring out continuous improvements. The implementation team agreed on a set of specific metrics to ensure that they were working toward achieving corporate objectives. Through years of business practice, they built a culture of continuous process improvement and embraced change as a strategic and competitive advantage. One of the major achievements of GE through Six Sigma was reduction in variations of over processing the cases.
Oracle
Oracle presents yet another important case study of Six Sigma application. It applied the statistical principles to its Call centers. Tasks in call centers are highly repetitive, cost efficient,
critical, and processes are clearly defined. Cost of service was calculated on per-call basis, and was between US$5 and US$10. Improvements in customer service were bound to have a significant improvement in customer satisfaction and a decrease in operational costs. Oracle case demonstrates the use of the Six Sigma methodology service call for a large, diversified high-technology company, ABC Enterprises. ABC Company sold computer hardware, peripherals, software, and other electronics materials to consumers. Because of the downturn in the market, there was pressure on Oracle to reduce call centre costs. The products that ABC was getting increasingly commoditized, and customer satisfaction was critical to the business.
The company decided to implement Six Sigma using DMAIC. Prior to implementation of DMAIC process, it was important to identify the real problem. Preliminary analysis and assessment by the internal Six Sigma experts at ABC indicated that the major metric in the call center was the average talk time. Average talk time highly impacted the profitability of the process. It was not only the time that the call takers spent on the phone, but also the time they spent after the call. The average talk time, therefore, was the key driver of the people-costs in any call center. Using DMAIC methodology the average talk time was reduced per employee leading to better profits for the organization.
DOW Chemicals
Dow Chemicals has adopted the Six Sigma methodology (apart from operations and logistics) to the safety and health of its employees. Unique projects in Dow that applied the Six Sigma methodology include: reduction in stress injuries, reduction in vehicle accidents, improved safety of visitors and contract workers, and off-the-job safety process improvement. These projects have been key achievements of Dow's Environmental, Health and Safety Goals, in the year 2005. There was remarkable reduction in injury and illness by 90% to 0.24. Dow's Environmental Health and Safety section has found the Six Sigma methodology useful in identifying and validating root causes of accidents and injuries that were difficult to identify because of their subjectivity. The achievements reached through Six Sigma are still sustained and expects the benefits to be realized in coming years.
Ford Motor Company
Ford Motor Company, worked with Six Sigma principles to streamline its logistics operations. Prior to implementation of the Six Sigma program, logistics in Ford had unnecessary costs, discrepancies in inbound carriers, and shipping delays. There was a need to develop a centralized logistics network and streamline supplier shipments and carrier schedules. Using Six Sigma principles the company utilized trucks at ninety five percent capacities and reduced assembly line inventory by fifteen percent. The regular suppliers were trained to meet the supply standards set by Ford. Combining the Six Sigma methodology and information technology the company began to manage logistics costs real time basis.
REFERENCES
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