A Brief History of Six Sigma

A Brief History of Six Sigma

Six Sigma is a methodology focused on reducing defects and variation of a process by focusing on the process customer. The origins of Six Sigma trace back to Statistical Process Control (SPC) and Total Quality Management (TQM). Since the late 1990s, Six Sigma has also adopted many principles of Lean manufacturing developed from the Toyota Production System (TPS) and is hence often referred to as Lean Six Sigma. Over the years, Six Sigma utilization has expanded from mainstream manufacturers such as Maytag and Allied Signal to include industry-leading service providers such as GEICO, Best Buy, and Xerox (Bright Hub Inc., 2010). The U.S. government also employs Six Sigma throughout all military branches. DoD contractors (Northrop Grumman, Boeing, Lockheed Martin, etc.) are required to illustrate Six Sigma proficiency to bid for government contracts. The collapse of the world financial markets in 2008 also brought Six Sigma methodology into the mortgage, banking, and health care industries.

Industry Success Story

Toyota is the most well known business to champion Six Sigma. TQM, Lean, Six Sigma, and now Lean Six Sigma have been corner stones of Toyota’s operations for more than 30 years. Toyota’s house of quality has consistently translated to superior cars at lesser prices for customers. Toyota accomplished this by vigorously focusing on process improvement to reduce waste and optimize workflow. Six Sigma initiatives at Toyota have delivered marked improvements in manufacturing quality, time to market, and inventory balances (Supply, 2009). Toyota’s success in the utilization of Six Sigma hasn’t gone unnoticed. Many corporations, to include GE, have toured Toyota plants and enlisted the help of Toyota’s Six Sigma experts to learn how to solve business critical issues.

Six Sigma Methodology Overview

The Six Sigma methodology can be used to resolve business critical issues, such as excess inventory, by first identifying root causes in the problem area. To accomplish this, an improvement team is formed and the Define, Measure, Analyze, Improve, Control (DMAIC) project steps are followed (iSixSigma, 2010a). Typically, a team of Six Sigma BBs mentored by a Six Sigma MBB or Lean Leader executes large scale, big impact projects, such as excess inventory.

At project launch, the Define phase provides an overview of the improvement project. This includes a statement of the problem along with the specific process to be improved. The process is defined as an equation Y = f (x), where Y becomes the Six Sigma improvement project Y. The Define step also includes the process customer and project definitions. In addition, how the project Y will be measured and what type of data to be collected is stated. For continuous data projects, the measurement unit of the Y (inches, dollars, days, etc.) is acknowledged. Lastly, a process map is created for the process. For an excess inventory project, this will be a portion of the demand management process, such as the order management process. Each of the deliverables of the Define phase is essential in the launching and executing a successful project.

The Measurement phase follows Define and is when the team begins to collect data for analysis. An important activity in the Measure phase is the validation of the measurement system. A Measurement System Analysis (MSA) is critical to a project because it validates measured process variation is not due to the measurement system, but the actual process. For an inventory project, a possible MSA would be to compare a database value of inventory to a physical on-site count of inventory (iSixSigma, 2010a). Following a successful MSA, data is collected to determine the baseline capability at the onset of the Six Sigma project. The MSA coupled with the baseline capability is vital to illustrating improvements following project completion.

Once the Six Sigma project has been clearly defined and the Measure phase completed, analysis to better understand the impact of key process input variables is carried out. This is characteristically referred to as root cause analysis. Execution of this detailed analysis is at the center of the Analyze phase. The Analyze phase often starts with the construction of a Fishbone diagram. A Fishbone diagram consists of a horizontal or curved line (the fish body) representing the Project Y. Angled lines are then drawn (fish bones) to capture all potential process variables (x’s in the Y = f (x) formula). Typical categories of x’s for an excess inventory project include: Process, Material, Measurement, People, and Equipment. Brainstorming sessions are a common mechanism for populating a project Fishbone. Once the Fishbone has been completed, vital x’s are determined by statistically analyzing the impact of each x on the project Y. The x’s are then ranked in order of project opportunity, which is most often illustrated in a pareto or bar graph.

In the Improve phase, the Six Sigma team shifts focus to developing countermeasures to eliminate the exposed root causes (iSixSigma, 2010a). Generating and testing possible solutions; selecting the best solution and designing an implementation plan are the key deliverables of this phase. A team must explore many different possible solutions that include cost benefit analysis when selecting the best project solution (Supply, 2009). For example, if a poorly designed graphical user interface were identified as a root cause for an excess inventory project, a logical solution would be to change the interface. However, if the cost of the interface change far exceeds the value of excess inventory tied to this root cause (as calculated in the Analyze phase), the solution is not acceptable and the team must continue to explore other solutions. Great care should also be taken to evaluate the project environment, especially when individual employees are affected. Too often, to the demise of a project, personal preferences, and organizational cultures are overlooked in the implementation plan. Lastly, in the Improve phase data is gathered to determine if the improved process capability is statistically different than the base-lined process capability.

The last phase of a Six Sigma project, the Control phase, is extremely critical. It is the part of the project that ensures the resultant improvements are sustained long term (iSixSigma, 2010a). In the Control phase, a control plan is written for each root cause and subsequent improvement. This plan ensures that the improvements continue after the team is disbanded and the project is closed. Attributes of an excess inventory control plan could include: ERP system attribute settings; limitation of database access; required user training; increased data monitoring; and improved data visualization.

Future of Six Sigma

"Six Sigma is a quantitative approach that fuels improved effectiveness and efficiency in an organization" (Eckes, 2001, p. xi). To be competitive in today’s marketplace, a business must achieve more with less. Six Sigma’s ability to enable any business this competitive edge will ensure it remains one of the most prevalent improvement methodologies in history (Eckes, 2001).