...THE SIX SIGMA WAY This page intentionally left blank. THE SIX SIGMA WAY How GE, Motorola, and Other Top Companies Are Honing Their Performance PETER S. PANDE ROBERT P. NEUMAN ROLAND R. CAVANAGH McGraw-Hill New York San Francisco Washington, D.C. Auckland Bogotá Caracas Lisbon London Madrid Mexico City Milan Montreal New Delhi San Juan Singapore Sydney Tokyo Toronto Copyright © 2000 by The McGraw-Hill Companies, Inc. All rights reserved. Manufactured in the United States of America. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written permission of the publisher. 0-07-137667-4 The material in this eBook also appears in the print version of this title: 0-07-135806-4. All trademarks are trademarks of their respective owners. Rather than put a trademark symbol after every occurrence of a trademarked name, we use names in an editorial fashion only, and to the benefit of the trademark owner, with no intention of infringement of the trademark. Where such designations appear in this book, they have been printed with initial caps. McGraw-Hill eBooks are available at special quantity discounts to use as premiums and sales promotions, or for use in corporate training programs. For more information, please contact George Hoare, Special Sales, at george_hoare@mcgraw-hill.com or (212) 904-4069. ...
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...six sigma six sigma training, history, definitions - six sigma and quality management glossary Six Sigma is now according to many business development and quality improvement experts, the most popular management methodology in history. Six Sigma is certainly a very big industry in its own right, and Six Sigma is now an enormous 'brand' in the world of corporate development. Six Sigma began in 1986 as a statistically-based method to reduce variation in electronic manufacturing processes in Motorola Inc in the USA. Today, twenty-something years on, Six Sigma is used as an all-encompassing business performance methodology, all over the world, in organizations as diverse as local government departments, prisons, hospitals, the armed forces, banks, and multi-nationals corporations. While Six Sigma implementation continues apace in many of the world's largest corporations, many organizations and suppliers in the consulting and training communities have also seized on the Six Sigma concept, to package and provide all sorts of Six Sigma 'branded' training products and consultancy and services. Six Sigma has also spawned manay and various business books on the subject. Six Sigma, it might seem, is taking over the world. Interestingly while Six Sigma has become a very widely used 'generic' term, the name Six Sigma is actually a registered trademark of Motorola Inc., in the USA, who first pioneered Six Sigma methods in the 1980's. The original and technically correct spelling seems to be...
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...history of Six-Sigma The roots of Six Sigma as a measurement standard go back to Carl Frederick Gauss (1777-1885) who introduced the concept of normal curve. Six Sigma as a measurement standard in product variation can be traced back to the 1920´s when Walter Shewhart showed that three sigma, from the mean is the point where a process requires correction. As history would seem to have it, the beginnings of Six Sigma really come from 1979 when an exasperated Motorola executive named Art Sundry said, at a meeting, “The real problem at Motorola is that our quality stinks!”. Apparently, this statement led to series of activities that in turn led to the discovery of the crucial correlation between higher quality and lower development costs in manufacturing products of all kinds. The problem was that the common thought was that quality initiatives simply cost too much money. What Motorola realized is that if these initiatives were done right, improving quality would actually reduce costs. Motorola decided to take the approach that high quality products should actually cost less to produce. Motorola reasoned that the highest quality producer should be the lowest cost producer. THEORETICAL ANALYSIS OF THE CONCEPT OF SIX-SIGMA What is Six-Sigma Six-Sigma has at least three different meanings depending upon the context; there is not one answer to what is Six-Sigma. The first answer to what is Six-Sigma is that it is a management philosophy. Six-Sigma is a customer...
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...The Impact of ‘Lean’ The purpose of this module: This module will look at how to manage within a lean environment and what considerations need to be taken account of when making management decisions. We will then look at the impact of lean across several industry sectors and conclude my looking at the way Lean and Six Sigma have become closely integrated. Timing: 60 – 90 minutes Lean Process Management When you start to undertake Lean reviews within an organization you have the opportunity to integrate it into the corporate strategy and long term vision for the business. Agreeing to review all production areas within a business to ensure they are efficient using lean methodology can make a big difference to the way you perform and deliver. Lean Process Management Many organizations use the balanced scorecard to report on their performance. The balanced scorecard reports on performance by four quadrants or areas to demonstrate how the business is moving towards its vision or corporate strategy. These areas are Financial, Customer, internal business processes and learning and growth. Lean has significant overlap with these areas to help develop and achieve the corporate goals. Lean Process Management It focuses on the customer and their values, it measures structured improvements, often with financial values, it puts quality and internal process improvement as a continual cycle and it engages with all employees offering ...
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...| |Who: |W.James McNerney |Former CEO of 3M | | |George Buckley |Current CEO of 3M | |Facts | |What: |McNerney implemented Six Sigma approach to process and business improvement companywide: for existing process- the five step | | |DMAIC Model; for new product development- Design for Six Sigma; laid off 8000 workers (11% of the workforce); slashed capital | | |expenditures | | |Buckley continued Six Sigma in manufacturing and administrative areas but reduced in R&D; invested more in R&D and new | | |manufacturing plants | |Why: |McNerney: | | |Decrease production defects and...
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...manufacturing training and six sigma training are two of the most valuable skills in business today. Businesses of all types are utilizing six sigma, lean manufacturing, and lean six sigma as the primary continuous improvement methodology.Our Lean Manufacturing Certification course, delivered worldwide to individuals, colleges, and training centers, includes all of the major concepts in a single course. Definition: What does it mean to be "Six Sigma"? Six Sigma at many organizations simply means a measure of quality that strives for near perfection. But the statistical implications of a Six Sigma program go well beyond the qualitative eradication of customer-perceptible defects. It's a methodology that is well rooted in mathematics and statistics. The objective of Six Sigma Quality is to reduce process output variation so that on a long term basis, which is the customer's aggregate experience with our process over time, this will result in no more than 3.4 defect Parts per Million opportunities (DPMO). What Is Six Sigma ? Six Sigma is a meticulous methodology that make use of information management by facts and statistical analysis to define, measure and improve a company's operational performance, practices and systems. It identifies and prevents "defects" in manufacturing and service-related processes to anticipate, and achieve or exceed total customer satisfaction. What is the Six Sigma Objective? The primary objective of the Six Sigma methodology is the implementation...
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...Six Sigma Brief History of Six Sigma The roots of Six Sigma as a measurement standard can be traced back to Carl Frederick Gauss (1777-1855) who introduced the concept of the normal curve. Six Sigma as a measurement standard in product variation can be traced back to the 1920′s when Walter Shewhart showed that three sigma from the mean is the point where a process requires correction. Many measurement standards (Cpk, Zero Defects, etc.) later came on the scene but credit for coining the term “Six Sigma” goes to a Motorola engineer named Bill Smith (“Six Sigma” is a federally registered trademark of Motorola). The evolution of six sigma began in the late 1970s, when a Japanese firm took over a Motorola factory that manufactured television sets in the United States and the Japanese promptly set about making drastic changes to the way the factory operated. Motorola recognized that its quality was poor and management decided to take quality seriously. When Bob Galvin became Motorola's CEO in 1981, he challenged his company to achieve a tenfold improvement in performance over a five-year period. On January 15, 1987, Galvin launched a long term quality program, called “The Six Sigma Quality Program”. The program was a corporate program which established Six Sigma as the required capability level to approach the standard of 3.4 Defects per Million Opportunities (DPMO). The Corporate Policy Committee of Motorola then updated their quality goal as follows: “Improve product and...
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...business practices and products. Six Sigma at many organizations simply means a measure of quality that strives for near perfection. Six Sigma is a disciplined, data-driven approach and methodology for eliminating defects (driving towards six standard deviations between the mean and the nearest specification limit) in any process -- from manufacturing to transactional and from product to service. The statistical representation of Six Sigma describes quantitatively how a process is performing. To achieve Six Sigma, a process must not produce more than 3.4 defects per million opportunities. A Six Sigma defect is defined as anything outside of customer specifications. A Six Sigma opportunity is then the total quantity of chances for a defect. Process sigma can easily be calculated using a Six Sigma calculator. The fundamental objective of the Six Sigma methodology is the implementation of a measurement-based strategy that focuses on process improvement and variation reduction through the application of Six Sigma improvement projects. This is accomplished through the use of two Six Sigma sub-methodologies: DMAIC and DMADV. The Six Sigma DMAIC process (define, measure, analyze, improve, control) is an improvement system for existing processes falling below specification and looking for incremental improvement. The Six Sigma DMADV process (define, measure, analyze, design, verify) is an improvement system used to develop new processes or products at Six Sigma quality levels. It can also...
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...What Is Six Sigma? Six Sigma – what does it mean? Six Sigma at many organizations simply means a measure of quality that strives for near perfection. Six Sigma is a disciplined, data-driven approach and methodology for eliminating defects (driving toward six standard deviations between the mean and the nearest specification limit) in any process from manufacturing to transactional and from product to service. The statistical representation of Six Sigma describes quantitatively how a process is performing. To achieve Six Sigma, a process must not produce more than 3.4 defects per million opportunities. A Six Sigma defect is defined as anything outside of customer specifications. A Six Sigma opportunity is then the total quantity of chances for a defect. Process sigma can easily be calculated using a Six Sigma calculator. The fundamental objective of the Six Sigma methodology is the implementation of a measurementbased strategy that focuses on process improvement and variation reduction through the application of Six Sigma improvement projects. This is accomplished through the use of two Six Sigma submethodologies: DMAIC and DMADV. The Six Sigma DMAIC process (define, measure, analyze, improve, control) is an improvement system for existing processes falling below specification and looking for incremental improvement. The Six Sigma DMADV process (define, measure, analyze, design, verify) is an improvement system used to develop new processes or products at Six Sigma quality levels...
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...way you do things) is something we all do everyday. So what is all the Fuss About? There is a lot of mystique associated with process improvement, lots of jargon and multiple methodologies but process improvement is very easy. There are only three simple questions that you need to get your mind around: 1. What is your purpose? A process is series of actions or steps taken to achieve an end. And that end is all important. If your process is to work well you must be very clear what the thing is that you are producing. The “purpose” of the process should be obvious. It is difficult to cook a great meal if you aren’t clear what you want to eat, the same is true for any other process. 2. Who is your customer? The only person who can tell you if you are meeting your purpose is your customer. That is the person you are working for. You only have one customer; it is the person who is handing over the cash, the person who is paying for what you are doing. 3. Is your customer happy? If everything your process does focuses on meeting that customer need, nothing more and nothing less, and there is no way you could make it better, then you have the perfect process. Process improvement is simply about changing the way you do things to meet customer needs, hence the picture. Why is it so Hard? The problem with process improvement is that organisations don’t focus on what the paying customer wants, they focus on what senior managers want, or stake holders...
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...Six Sigma – A Management Philosophy Executive Summary I chose this topic because it was something that I’ve heard a great deal about, but have very little experience with. At my company, MetLife, there has been some recent investigation into Six Sigma and how it can help improve our Financial Reporting processes. While Six Sigma can involve some very complex statistical theory, especially in the world of manufacturing, I wanted to concentrate more on the Management philosophy and how it can implemented in a service type organization. Introduction History After World War II, the Japanese were left to rebuild their destroyed economy. They had to figure out a way to rebuild with very little resources other than human capital. Japanese leaders realized that to compete in the world market they must make drastic changes to quality management. (Kumar, 2006) Throughout the 50’s and 60’s, with the help of quality gurus like Deming and Juran, the Japanese made rapid improvements in quality of the production of goods and services. Meanwhile, the United States did very little to change their methods of operation. At the time, the United States was the main source for goods and services in the western world. There was very little incentive to concentrate on expensive quality improvement projects that would hurt the short-term bottom line. Instead, the focus was on production and performance. (Kumar, 2006). By the early 80’s, Japan had solidified it’s...
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...Abstract: This paper hypothesises that, whilst Six Sigma as a change and improvement strategy is delivering significant business benefit to practitioner organisations, it has not been successfully adapted to deliver similar benefits across supply chains. It demonstrates by reference to the literature that most published applications of Six Sigma in supply chains are related to the application of traditional internal Six Sigma methodologies to the internal processes of a supplier to the “Six Sigma Organisation”. In this paper, the issues particular to an application of Six Sigma in a broader supply chain context are discussed, with reference to specific supply chain issues. It is concluded that Six Sigma does have something novel to offer organisations over and above the contribution of existing approaches to supply chain improvement, and a conceptual model is proposed that is consistent with the literature and has potential to support such an introduction. Although rooted in the supply chain realm, SCOR adherents see a role for the methodology as the gatekeeper – identifying the projects most likely to render ROI using SCOR, Lean or Six Sigma. There is already a natural link between Lean and Six Sigma at the program and project execution level. The model integrates the Balanced Scorecard, SCOR model (Supply Chain Reference model) and Six Sigma DMAIC (define, measure, analyse and improve) methodology in a two-level framework. This is a strategic-level cycle, developing focused...
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...info@hospitalityupgrade.com. Management By Tina McCrossan Six Sigma Does it fit in hospitality? Depending upon whom you talk to, Six Sigma is either the most important new direction for change management in hospitality, or it’s a waste of time that has introduced armies of green and black belts getting in the way of doing business. Believers on both sides of the debate have a lot to say about why, in spite of this polarization, the methodology seems to be working in some organizations. Six Sigma leads companies down some interesting paths. You take your best people away from what they did before. You tell them to find, quantify, fix and measure results in any aspect of the business operation which attracts their interest. That’s a formula for organizational anxiety. However if approached correctly, Six Sigma programs don’t have to breed conflict. In hospitality many necessary projects never get funded because of the unique capital budget challenges in the industry. Wolfgang Ebenbichler, the former VP of F&B at the Gaylord Opryland, said, “Everyone has projects they know need to get done to achieve forecasted growth, but can’t seem to get corporate approval. Six Sigma specialists are trained to quantify benefits and long-term effects on revenues and profitability – they can get those vital projects off the ground.” Often an alliance is formed between operations teams who want projects funded and Six Sigma teams who can document the necessary ROI to get...
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...Title: Importance of Six Sigma in Human Resource Management ABSTRACT Implementing six sigma methodology in HR functions raises the questions like how can HR be measured?’, ‘How can you apply 3.4 defects per million opportunity rule to HR when no organization would have a million employees?’ There is a high expectation from customers for every organization. To meet this expectation it has become imperative on the part of every department to perform to the best of its potential. The HR cannot afford to be an exception. Hence HR cannot afford to keep off from using Six Sigma tools and techniques to improve the processes of its own department. Why should the HR professional care what Six Sigma is or how it can be applied in the HR function? This paper illustrates the importance of six sigma methodology in Human Resource management. Interacting with few Black Belt experts who are working on six sigma projects in various companies, this paper also illustrate on 5 C’s factors such as change, communication, captain, consideration and choosing project which plays a vital role in successful implementation of six sigma methodologies in HR functions. Key words: Six Sigma, Human Resource Management, 5 C’s. INTRODUCTION Perfection is an endless dream. Man’s quest for flawless performance in all his work is taking him to the pursuit of constant improvement. Defects are dangerous, they have consequences much worse than earlier they use to. So, modern times have compelled the...
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...Sigma Significance of Six Sigma By Suhasini Pratapagiri Stratford University INTRODUCTION: WHAT IS SIX SIGMA? Six Sigma is a highly disciplined process that helps a company focus on developing and delivering near perfect products and services. Six Sigma at many organizations simply means a measure of quality that strives for near perfection. Six Sigma is a disciplined, data-driven approach and methodology for eliminating defects (driving toward six standard deviations between the mean and the nearest specification limit) in any process – from manufacturing to transactional and from product to service. The fundamental objective of the Six Sigma methodology is the implementation of a measurement-based strategy that focuses on process improvement and variation reduction through the application of Six Sigma improvement projects. This is accomplished through the use of two Six Sigma sub-methodologies: DMAIC and DMADV. The Six Sigma DMAIC process (define, measure, analyze, improve, control) is an improvement system for existing processes falling below specification and looking for incremental improvement. The Six Sigma DMADV process (define, measure, analyze, design, verify) is an improvement system used to develop new processes or products at Six Sigma quality levels. It can also be employed if a current process requires more than just incremental improvement. Both Six Sigma processes are executed by Six Sigma Green Belts and Six Sigma Black Belts, and are overseen...
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