The first steps in an operational efficiency improvement plan are to control costs, value chains, cost accounting, eliminate waste and seek new sources of profitability.
Once these initial steps are completed, the company is more efficient, more customer-focused, and a culture of continuous improvement is in place.
The second step is to put the customer at the center of the company, with a level of service close to perfection thanks to the reduction of variability and of the risk of errors in the processes impacting the customer or the income statement.
Thanks to statistical tools and the “voice of the customer” concept, Six Sigma makes it possible to reach these objectives and to move towards “total quality”.
What are the 3 benefits to expect from a Six Sigma initiative?
· Implementation of a diagnostic approach allowing to treat the causes rather than the symptoms and to reduce the variability of the processes and thus, the number of errors
· Centralization of the entire organization towards the customer and his needs, to create products or services that meet them in an optimal way
· Implementation of an industrial operation, aiming at quality by measuring performance and setting up a continuous (and benevolent!) improvement.
What is Six Sigma?
Six Sigma is a statistical concept, aiming to measure the variation of a process based on the customer’s needs. From a mathematical point of view, Six Sigma represents a process whose variation is so low that the defect rate is 0.0003%.
But more than a statistical tool, Six Sigma is also a management philosophy, focusing on:
· The desire to continually improve its ability to meet customer needs
· Ongoing analysis of business process efficiency
· The implementation of relevant performance measurement tools
In a few words, Six Sigma is a systemic, scientific, diagnostic and pragmatic approach aiming at solving problems by eliminating their causes and reaching a quality level of 99.9997%.
Why would you want to achieve this 99.9997% quality level, and not just 99%?
From a statistical point of view, a quality or confidence level of 99% is rarely sufficient.
For example, in a country like the United States, with a quality level of 99%, we would have one hour of undrinkable water per month, one missed landing per day at major airports, 500 surgical errors per week, or 22,000 checks debited from the wrong bank account each week.
On the other hand, a process with a 6-sigma level generates 3.4 defects per million opportunities.
What is the Six Sigma methodology based on?
First, the method is based on three major concepts: the customer, the process and the measurement.
Thus, the objectives of a Six Sigma project are:
· Define measurable customer expectations: CTQs (Critical to Quality)
· Establish reliable measures to calculate process performance against these CTQs
· Use statistical tools to isolate the causes that have a significant negative impact on this performance
· Find solutions to eradicate these causes
· Implement tools or indicators to verify that the solutions implemented have eradicated the causes of variation and increased the sigma level of the process
The project methodology is therefore built in five phases, each of which must meet one of these objectives. This is the DMAIC method, for Define, Measure, Analyze, Implement and Control.
Secondly, the methodology is based on a professional certification that attests to the level of expertise of the participants:
· Green Belts (GB) have knowledge of the DMAIC approach and can use some of the tools in their field of expertise
· Black Belts (BB) are experts in the method and can use all the tools on large projects
· The Master Black Belts (MBB) provide coaching and mentoring around the method and master all the tools that they can use on projects the size of a company.
Why dissociate Lean and Six Sigma, when on the contrary, it is very common to associate them?
Six Sigma methodology is cumbersome to implement and can be extremely disruptive to an organization. To be successful, a Six Sigma initiative must be accompanied by an extensive change management process.
Thus, I see Six Sigma as the culmination of an already mature operational excellence initiative, having given the company a culture of continuous improvement and transformation.
Moreover, as a Six Sigma project is relatively long (about 6 months on average), it is advisable to accompany it with projects allowing to realize tangible gains quickly, and thus to put oneself in a management by example situation.
And this is precisely the objective of the Lean methodology. It aims to implement quick wins to eradicate wasteful tasks in the process (waiting, duplicate work, non-value-added tasks) through short workshops over a week to a month.
This methodology seems to be ideal to “prepare the ground” and move forward with a transformation or operational efficiency initiative, before considering Six Sigma approaches.
Six Sigma is originally an industrial method. Finally, is it adaptable to the world of Services?
Many service companies (Finance, Banking, Consulting, R&D) have already launched Six Sigma initiatives. It is true that the methodology originated in the industrial world: it was developed by Motorola and went global under the impulse of General Electric. However, many support processes, or processes related to service activities, can be handled in an industrial way: Back and Middle-Office, Accounting, IT, Development, DevOps, Purchasing, Finance, Digital Marketing…
In addition, the Six Sigma methodology can be particularly effective in supporting STP (Straight-through Processing) or outsourcing / offshoring projects.
Finally, Six Sigma can be used to optimize any type of process, provided it is used pragmatically. The major advance of Six Sigma in the services world is the institutionalization of the “voice of the customer” concept.
How does a Six Sigma project work?
A Six Sigma project follows a well-defined methodology: DMAIC. If the framework is extremely well defined, the success of the projects will depend on the ability to use it in a pragmatic and efficient way, by using the right tools at the right time, even if it means skipping the methodology itself.
1. DEFINE: define the problem to be solved and the objectives
· BPO Triangle (Business case, Problem, Objectives)
· Project Team and Sponsor
· Voice of the customer (VOC) and critical needs (CTQs)
· Multi-Generational Plan (MGP)
· Macro view of the process (SIPOC)
· Quick Wins
2. MEASURE: measure the current performance of the process
· Complete process mapping
· Value Stream Analysis
· Data Collection Plan
· Descriptive statistics
· Process performance measurement (Sigma)
· Quick Wins
3. ANALYZE: analyze the causes of the problem (of non-quality)
· Identification of potential causes of non-quality
· Identification of sources of variation
· Hypothesis testing
· Validation of sources and their causes
· Modeling the problem: y=f(x)+sigma
· Quick wins
4. IMPLEMENT: implement the target process
· Generation of ideas and potential solutions
· Selection of the target solution, expected gains (ROI)
· Risk analysis (FMEA)
· Quick wins
5. CONTROL : control the results obtained
· Implementation of the target solution
· Putting the process under control (KPIs)
· Measurement of the new performance achieved (sigma)
· Validation of gains (ROI)
· Switch to “Business as Usual”
· Continuous improvement
Initially published on arnaudrioche.net