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Six Sigma is a systematic and robust approach to improvement, which focuses on the customer and other key stakeholders. Six Sigma calls for a change of thinking. When Jack Welch, former General Electric CEO, introduced Six Sigma, he said:

We are going to shift the paradigm from fixing products to fixing and developing processes, so they produce nothing but perfection or close to it.

In the 1980s Motorola CEO Bob Galvin struggled to compete with foreign manufacturers. Motorola set a goal of tenfold improvement in five years, with a plan focused on global competitiveness, participative management, quality improvement and training. Quality engineer Bill Smith coined the name of the improvement measurements: Six Sigma. All Motorola employees underwent training, and Six Sigma became the standard for all Motorola business processes.

Considering the core of Six Sigma

A sigma, or standard deviation, is a measure of variation that reveals the average difference between any one item and the overall average of a larger population of items. Sigma is represented by the lower-case Greek letter σ.

Introducing a simple example

Suppose you want to estimate the height of people in your organisation. Measuring everyone isn’t practical, so you take a representative sample of 30 people’s heights. You work out the mean average height for the group – as an example – say this is 5 foot, 7 inches. You then calculate the difference between each person’s height and the mean average height. In broad terms, one sigma, or standard deviation, is the average of those differences. The smaller the number, the less variation there is in the population of things you are measuring. Conversely, the larger the number, the more variation. In our example, imagine the standard deviation is one inch, though it might be any number in theory.

Figure 1-2 shows the likely percentage of the population within plus one and minus one standard deviation from the mean, plus two and minus two standard deviations from the mean, and so on. Assuming your sample is representative, you can see how your information provides a good picture of the heights of all the people in your organisation. You find that approximately two-thirds of them are between 5 foot 6 inches and 5 foot 8 inches tall, about 95 per cent are in the range 5 foot 5 inches to 5 foot 9 inches, and about 99.73 per cent are between 5 foot 4 inches and 5 foot 10 inches.

© John Morgan and Martin Brenig-Jones

Figure 1-2: Standard deviation.

In reality, the calculation is a little more involved and uses a rather forbidding formula – as shown in Figure 1-3.

© John Morgan and Martin Brenig-Jones

Figure 1-3: Standard deviation formula.

Using n – 1 makes an allowance for the fact that we’re looking at a sample and not the whole population. In practice, though, when the sample size is over 30, there’s little difference between using n or n – 1. When we refer to a ‘population’ this could relate to people or things that have already been processed, for example a population of completed and despatched insurance policies or hairdryers.

The process sigma values are calculated by looking at our performance against the customer requirements – see the next section.

Practising process sigma in the workplace

In the real world you probably don’t measure the height of your colleagues. Imagine instead that in your organisation you issue products that have been requested by your customers. You take a representative sample of fulfilled orders and measure the cycle time for each order – the time taken from receiving the order to issuing the product (in some organisations this is referred to as lead time). Figure 1-4 shows the cycle times for your company’s orders.

© John Morgan and Martin Brenig-Jones

Figure 1-4: Histogram showing the time taken to process orders.

You can see the range of your company’s performance. The cycle time varies from as short as one day to as long as seven days.

But the customer expects delivery in five days or less. In Lean Six Sigma speak, a customer requirement is called a CTQ – Critical To Quality. CTQs are referred to in Chapter 2 and described in more detail in Chapter 4, but essentially they express the customers’ requirements in a way that is measurable. CTQs are a vital element in Lean Six Sigma and provide the basis of your process measurement set. In our example, the CTQ is five days or less, but the average performance in Figure 1-4 is four days. Remember that this is the average; your customers experience the whole range of your performance.

Too many organisations use averages as a convenient way of making their performance sound better than it really is.

In the example provided in Figure 1-4, all the orders that take more than five days are defects for the customer in Six Sigma language. Orders that take five days or less meet the CTQ. We show this situation in Figure 1-5. We could express the performance as the percentage or proportion of orders processed within five days or we can work out the process sigma value. The process sigma value is calculated by looking at your performance against the customer requirement, the CTQ, and taking into account the number of defects involved where you fail to meet it (that is, all those cases that took more than five days).

© John Morgan and Martin Brenig-Jones

Figure 1-5: Highlighting defects.

We explain the process sigma calculation in the next section.

Calculating process sigma values

Process sigma values provide a way of comparing performances of different processes, which can help you to prioritise projects. The process sigma value represents the population of cases that meet the CTQs right first time. Sigma values are often expressed as defects per million opportunities (DPMO), rather than per hundred or per thousand, to emphasise the need for world-class performance.

Not all organisations using Six Sigma calculate process sigma values. Some organisations just use the number of defects or the percentage of orders meeting CTQs to show their performance. Either way, if benchmarking is to be meaningful, the calculations must be made in a consistent manner.

Figure 1-6 includes ‘yield’ figures – the right first time percentage. You can see that Six Sigma performance equates to only 3.4 DPMO.

© John Morgan and Martin Brenig-Jones

Figure 1-6: Abridged process sigma conversion table.

Recognising that you’re looking at ‘first pass’ performance is important. If you make an error but correct it before the order goes to the customer, you still count the defect because the rework activity costs you time and effort. And remember that you’re looking at defects. Your customer may have several CTQs relating to an order – for example, speed, accuracy and completeness – thus more than one defect may exist in the transaction.

So, for example, you could have a situation whereby the speed of delivery CTQ was met, but the accuracy and completeness CTQs were missed. The outcome would be one defective (see the bullet list below) as a result of these two defects. In calculating sigma values for your processes, you need to understand the following key terms:

✔ Unit: The item produced or processed.

✔ Defect: Any event that does not meet the specification of a CTQ.

✔ Defect opportunity: Any event that provides a chance of not meeting a customer CTQ. The number of defect opportunities will equal the number of CTQs.

✔ Defective: A unit with one or more defects.

In manufacturing processes you may find that the number of defect opportunities is determined differently, taking full account of all the different defects that can occur within a part. The key is to calculate the process sigma values in a consistent way.

You can work out your process sigma performance against the CTQs as shown in Figure 1-7. We have a sample of 500 processed units. The customer has three CTQs, so we have three defect opportunities. The CTQs are related to speed, accuracy and completeness. We find 57 defects. With software, you can determine a precise process sigma value, but with the abridged table in Figure 1-6, find the sigma value that’s closest to your DPMO number of 38000. As you can see, this is 3.3.

© John Morgan and Martin Brenig-Jones

Figure 1-7: Calculating process sigma values.

A difference exists between process sigma and standard deviation (see the ‘Introducing a simple example’ section earlier in this chapter for how to work out standard deviations). This results from Motorola adjusting the tables to reflect the variation being experienced in its processes. This adjustment is referred to as a 1.5 sigma shift, reflecting the extent of the adjustment. Although this adjustment related to its processes, rightly or wrongly, everyone adopting Six Sigma has apparently also adopted the adjusted sigma scale. Incidentally, without this adjustment, Six Sigma would equate to 0.002 DPMO as opposed to 3.4 DPMO – so, even harder to achieve.

When we talk about Six Sigma performance before the adjustment, we’re talking about plus and minus six standard deviations, which embrace 99.999998 per cent of the data. And we are talking about the percentage of cases that are right first time in terms of meeting the requirements of the customer. Taking account of the adjustment, we’re still looking at a truly demanding standard, with 99.999666 per cent of cases right first time in meeting the CTQs.

Clarifying the major points of Six Sigma

The five key principles of Six Sigma are:

✔ Understand the CTQs of your customers and stakeholders. To deliver the best customer experience, you need to know what your customer wants – his requirements and expectations. You need to listen to and understand the voice of the customer (VOC), which we talk about in Chapter 4.

✔ Understand your organisation’s processes and ensure they reflect your customers’ CTQs. You need to know how your processes work and what they’re trying to achieve. A clear objective for each process should exist, focused on the customer requirements – the CTQs.

✔ Manage by fact and reduce variation. Measurement and management by fact enables more effective decision-making. By understanding variation, you can work out when and when not to take action.

✔ Involve and equip the people in the process. To be truly effective you need to equip the people in your organisation to be able, and to feel able, to challenge and improve their processes and the way they work.

✔ Undertake improvement activity in a systematic way. Working systematically helps you avoid jumping to conclusions and solutions. Six Sigma uses a system called DMAIC (Define, Measure, Analyse, Improve and Control) to improve existing processes. We cover DMAIC in Chapter 2. In designing new processes, we use DMADV.

A natural synergy exists between Lean and Six Sigma – your organisation needs both. Many people think of Lean as focusing on improving the efficiency of processes, and Six Sigma as concentrating on their effectiveness. The reality is that both approaches tackle efficiency and effectiveness.