Six Sigma – A Business Process Improvement Methodology

Six Sigma Roles

Six Sigma is seen by many people as a process oriented way to reach improvements through reducing variation and measuring the outputs of each driven project. It is supported by an infrastructure of specialists called Champions, Master Black Belts, Black Belts, Green Belts and Yellow Belts.

Six Sigma Roles

  1. Champion:  The Champion is the person responsible for instilling the vision of Six Sigma and communicating it across the firm. The Champion should receive Six Sigma training in order to be an effective leader. While most likely not as knowledgeable in the use of specific tools in Six Sigma, a Champion must have an understanding of what the Black and Green Belts are doing in order to relay updates and accomplishments to upper management and throughout the company. The champion also assists the Black Belts by dedicating resources, assists in choosing projects, and is the advocate for the Black and Green Belts.
  2. Master Black Belt: A master Black Belt is a Black Belt that has had extensive experience with the Six Sigma methodology. When a firm first tries to implement a Six Sigma program it may be necessary to hire the services of a master Black Belt to help facilitate correct implementation and initial success. The Master Black Belt can act as a coach to the Black and Green Belts by drawing on extensive experience relating past problems and how they were solved. The Master Black Belt can also evaluate project results and give feedback to Black and Green Belts on performance and implementation.
  3. Black Belt: The rank of Black Belt is achieved through a proper accreditation program that teaches the Six Sigma process and tests understanding of the tools to be used. Black Belts have a strong understanding of statistical methods of data collection and analysis and must have experience in past Six Sigma projects. Their full time responsibility is to Six Sigma projects. Black Belts work as project managers and are responsible for all the traditional roles of that assignment, communicating often with the Champion throughout a process. If there are no Black Belts in an organization it might be necessary to train some and secure the services of a Master Black Belt to mentor and develop new Black Belts.
  4. Green Belt: Green Belts are essentially assistants to the Black Belts in their job. Effective Green Belts have an understanding of statistics but don’t have the expertise and experience with the Six Sigma tools and projects like Black Belts. Green Belts typically do the leg work under Black Belt direction such as data collection and so on. However, it is important for Green Belts to be involved with the whole process of choosing projects, analyzing processes, using Six Sigma tools, and improving processes so that they can achieve the level of Black Belt and advance into a leadership role.
  5. Yellow Belt: Yellow Belts typically have a basic knowledge of Six Sigma, but does not lead projects on their own. They are often responsible for the development of process maps to support Six Sigma projects.  Yellow belts must know  how to integrate Six Sigma methodologies for the improvement of production and transactional systems to better meet customer expectations and bottom-line objectives of their organization. Yellow Belts may often be responsible for running smaller process improvement projects using the PDCA (Plan, Do, Check, Act) methodology.

Six Sigma and Cost Reduction

In the past, conventional wisdom said that high levels of quality cost more in the long run than poorer quality, raising the price you had to ask for your product and making you less competitive. Balancing quality with cost was thought to be the key to economic survival. The surprising discovery of companies which initially developed Six Sigma, or world-class, quality is that the best quality does not cost more. It actually costs less. The reason for this is something called cost-of-quality. Cost-of-quality is actually the cost of deviating from quality— paying for things like rework, scrap and warranty claims. Making things right the first time— even if it takes more effort to get to that level of performance—actually costs much less than creating then finding and fixing defects.

Benefits of Six Sigma

  • Reduced production costs:  By significantly lowering defect rates, the company can eliminate wastage of materials and inefficient use of labor which is associated with defects. this will reduce the cost of goods sold for each unit of output and therefore add significantly to the company’s gross margin or allow the company to sell its products at a lower price in order to generate higher revenues.
  • Reduced overhead costs: By significantly lowering defect rates, and implementing process improvements so that similar defects don’t recur, the company can reduce the amount of time that senior management and middle management spends resolving problems associated with high levels of defects. This also frees up management to focus on more value-added activities.
  • Improved Customer Satisfaction: Many organizations  had recurring problems associated with shipping products to customers which didn’t meet customer specifications and therefore caused the customer to be unhappy and sometimes even cancel orders. By significantly lowering defect rates, the company will be able to consistently ship products to customers which strictly meet the customer’s specifications and therefore increase customer satisfaction. Increased customer satisfaction reduces the likelihood of losing orders from customers while increasing the likelihood that the customer will place larger orders with the company. This can mean significantly higher revenues for the company. Furthermore, the cost of acquiring new customers is high so companies those have lower customer turnover will have lower sales and marketing expenses as a percent of total revenue.
  • Reduced Cycle Times: The longer it takes for inventory to move through the production process, the higher the production costs since slow moving inventory must be moved, stored, counted, retrieved and faces greater risk of becoming damaged or not meeting specifications. However, with Six Sigma, fewer problems arise during a manufacturing process, which means that the process can consistently be completed more quickly and therefore production costs, especially labor costs per unit produced, are lower. In addition to reducing production costs, quicker turnaround times are often a selling point for many customers who want the product delivered as soon as possible.
  • On-Time-Delivery:  A common problem for many organizations  is a high rate of delayed shipments or deliveries to customers. The variations which can be eliminated in a Six Sigma project can include variations in delivery time. Therefore, Six Sigma can be used to help ensure consistent on-time- delivery.
  • Greater ease of expansion: A company with a significant emphasis on process improvement and elimination of the sources of defects will have a deep understanding of the potential causes of problems in expansion projects, as well as systems in place for measuring and identifying the sources of those problems. Therefore problems are less likely to occur as the company expands its production, and if they do occur, they are likely to be resolved more quickly.
  • Higher expectations: By aiming for 3.4 defects per million defect opportunities, it allows the company to set high expectations. Higher expectations themselves can lead to higher performance since they reduce the risk of complacency. Furthermore, Six Sigma programs introduce many new measurements which help to discover and monitor recurring problems and therefore create more of a sense of urgency to get those problems resolved.
  • Positive Changes to Corporate Culture: Six Sigma is as much about people excellence as it is about technical excellence. Employees often wonder how they are going to solve a difficult problem, but when they are given the tools to ask the right questions, measure the right things, correlate a problem with a solution and plan a course of action, they can find solutions to the problem more easily. Therefore, with Six Sigma, the company’s corporate culture shifts to one that includes a systematic approach to problem solving and a pro-active attitude among employees. Successful Six Sigma programs also contribute to the overall sense of pride of the company’s employees.

Lean Six Sigma

Essentially, Six Sigma and Lean systems have the same goal. They both seek to eliminate waste and create the most efficient system possible, but they take different approaches toward how achieving this goal. In simplest terms, the main difference between Lean and Six Sigma is that they identify the root cause of waste differently.  

The Six Sigma methodology is aimed at the reduction of variation in the process, which in turn reduces or eliminates production of defects. The stand – alone methodology does not tackle the issues with the process flow though. On the other hand, lean thinking is aimed at identification and elimination of non – value added activities, which smoothens the process flow.

Six Sigma uses statistical tools to define and identify process variation, whereas Lean uses descriptive tools such as flowcharts, value stream process mapping etc to visualize the flow of the process and isolate the waste (non – value added activities).  The limitations of the Six Sigma methodology , with respect to smoothening of process flow, are removed by the integration of Lean thinking and its tools into the approach. The fusion of Lean and Six Sigma, known as Lean Six Sigma, is being adopted widely by many industries in their efforts to refine their processes into providing maximum value at a Six Sigma quality level.

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