Revolutionizing the World’s Top Corporations “SIX SIGMA” Essay
Revolutionizing the World’s Top Corporations “SIX SIGMA”
This term paper is designed as a part of the curriculum. It helped me to tap into the power of the Six Sigma movement that’s transforming some of the world’s most successful companies. Six Sigma initiatives have tallied billions of dollars in savings, dramatic increases in speed, strong new customer relationships—in short, remarkable results and rave reviews.
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, around twenty 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 many 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 Six Sigma, rather than 6 Sigma, although in recent years Motorola and GE have each since developed their own sexy Six Sigma logos using the number six and the Greek sigma character. Six Sigma is now a global brand and something of a revolution. But what is Six Sigma? Sigma is a measurement that indicates how a process is performing. Six Sigma stands for Six Standard Deviations (Sigma is the Greek letter used to represent standard deviation in statistics) from mean. Six Sigma methodologies provide the techniques and tools to improve the capability and reduce the defects in any process. Six Sigma is a fact-based, data-driven philosophy of improvement that values defect prevention over defect detection. Philosophy: The philosophical perspective views all works as a process that can be defined, measured, analyzed, improved & controlled (DMAIC). Processes require inputs & produce outputs. If you control the inputs, you will control the outputs. This is generally expressed as the y= f (x) concept. Set of Tools: Six Sigma as a set of tools includes all the qualitative and quantitative techniques used by the six sigma experts to drive process improvement.
A few such tools include statistical process control (SPC), Control charts, failure mode & effects analysis, process mapping etc. Methodology: This view of Six Sigma recognizes the underlying and rigorous approach known as DMAIC. DMAIC defines the steps a Six Sigma practitioner is expected to follow, starting with identifying the problem and ending with the implementation of long-lasting solutions While DMAIC is not only Six Sigma Methodology in use, it is certainly the most widely adopted and recognized. Metrics: In simple terms, Six Sigma quality performance means 3.4 defects per million opportunities
Since the 1920’s the word ‘sigma’ has been used by mathematicians and engineers as a symbol for a unit of measurement in product quality variation. (Note it’s sigma with a small ‘s’ because in this context sigma is a generic unit of measurement.) In the mid-1980’s engineers in Motorola Inc in the USA used ‘Six Sigma’ an an informal name for an in-house initiative for reducing defects in production processes, because it represented a suitably high level of quality. (Note here its Sigma with a big ‘S’ because in this context Six Sigma is a ‘branded’ name for Motorola’s initiative.) (Certain engineers had varying opinions as to whether the very first was Mikal Harry – felt that measuring defects in terms of thousands was an insufficiently rigorous standard. Hence they increased the measurement scale to parts per million, described as ‘defects per million’, which prompted the use of the ‘six sigma’ terminology and adoption of the capitalised ‘Six Sigma’ branded name, given that six sigma was deemed to equate to 3.4 parts – or defects – per million.) In the late-1980’s following the success of the above initiative, Motorola extended the Six Sigma methods to its critical business processes, and significantly Six Sigma became a formalised in-house ‘branded’ name for a performance improvement methodology, i.e., beyond purely ‘defect reduction’, in Motorola Inc.
In 1991 Motorola certified its first ‘Black Belt’ Six Sigma experts, which indicates the beginnings of the formalisation of the accredited training of Six Sigma methods. In 1991 also, Allied Signal, (a large avionics company which merged with Honeywell in 1999), adopted the Six Sigma methods, and claimed significant improvements and cost savings within six months. It seems that Allied Signal’s new CEO Lawrence Bossidy learned of Motorola’s work with Six Sigma and so approached Motorola’s CEO Bob Galvin to learn how it could be used in Allied Signal. In 1995, General Electric’s CEO Jack Welch (Welch knew Bossidy since Bossidy once worked for Welch at GE, and Welch was impressed by Bossidy’s achievements using Six Sigma) decided to implement Six Sigma in GE, and by 1998 GE claimed that Six Sigma had generated over three-quarters of a billion dollars of cost savings. By the mid-1990’s Six Sigma had developed into a transferable ‘branded’ corporate management initiative and methodology, notably in General Electric and other large manufacturing corporations, but also in organizations outside the manufacturing sector.
By the year 2000, Six Sigma was effectively established as an industry in its own right, involving the training, consultancy and implementation of Six Sigma methodology in all sorts of organisations around the world. That is to say, in a little over ten years, Six Sigma quickly became not only a hugely popular methodology used by many corporations for quality and process improvement, Six Sigma also became the subject of many and various training and consultancy products and services around which developed very many Six Sigma support organizations
We can clearly observe from the definitions and history of Six Sigma that many people consider the model to be capable of leveraging huge performance improvements and cost savings. None of this of course happens on its own. Teams and team leaders are an essential part of the Six Sigma methodology. Six Sigma is therefore a methodology which requires and encourages team leaders and teams to take responsibility for implementing the Six Sigma processes. Significantly these people need to be trained in Six Sigma’s methods – especially the use of the measurement and improvement tools, and in communications and relationship skills, necessary to involve and serve the needs of the internal and external customers and suppliers that form the critical processes of the organization’s delivery chains. Training is therefore also an essential element of the Six Sigma methodology, and lots of it. Six Sigma teams and notably Six Sigma team leaders (‘Black Belts’) use a vast array of tools at each stage of Six Sigma implementation to define measure, analyse and control variation in process quality, and to manage people, teams and communications.
When an organization decides to implement Six Sigma, first the executive team has to decide the strategy – which might typically be termed an improvement initiative, and this base strategy should focus on the essential processes necessary to meet customer expectations. This could amount to twenty or thirty business process. At the top level these are the main processes that enable the organization to add value to goods and services and supply them to customers. Implicit within this is an understanding of what the customers – internal and external – actually want and need. A team of managers (‘Black Belts’ normally) who ‘own’ this processes is responsible for: identifying and understanding these processes in detail, and also understanding the levels of quality (especially tolerance of variation) that customers (internal and external) expect, and then Measuring the effectiveness and efficiency of each process performance – notably the ‘sigma’ performance – ie., is the number of defects per million operations (pro-rate if appropriate of course). The theory is entirely logical: understanding and then improving the most important ‘delivery-chain’ processes will naturally increase efficiency, customer satisfaction, competitive advantage, and profitability. Easily said – tricky to achieve – which is what the Six Sigma methodology is for.
SIX SIGMA PROCESS
The term “six sigma process” comes from the notion that if one has six standard deviations between the process mean and the nearest specification limit, as shown in the graph, practically no items will fail to meet specifications. This is based on the calculation method employed in process capability studies. Capability studies measure the number of standard deviations between the process mean and the nearest specification limit in sigma units. As process standard deviation goes up, or the mean of the process moves away from the centre of the tolerance, fewer standard deviations will fit between the mean and the nearest specification limit, decreasing the sigma number and increasing the likelihood of items outside specification
SCALE OF MEASUREMENT
The table below gives long-term DPMO values corresponding to various short-term sigma levels. It must be understood that these figures assume that the process mean will shift by 1.5 sigma toward the side with the critical specification limit. In other words, they assume that after the initial study determining the short-term sigma level, the long-termCpk value will turn out to be 0.5 less than the short-term Cpk value. So, for example, the Defective parts per million opportunities (DPMO) figure given for 1 sigma assumes that the long-term process mean will be 0.5 sigma beyond the specification limit (Cpk = –0.17), rather than 1 sigma within it, as it was in the short-term study (Cpk = 0.33). Note that the defect percentages indicate only defects exceeding the specification limit to which the process mean is nearest. Defects beyond the far specification limit are not included in the percentages.
Six Sigma projects follow two project methodologies inspired by Deming’s Plan-Do-Check-Act Cycle. These methodologies, composed of five phases each, bear the acronyms DMAIC and DMADV. DMAIC is used for projects aimed at improving an existing business process. DMADV is used for projects aimed at creating a new product or process design. The DMAIC project methodology has five phases: Define the problem, the voice of the customer, and the project goals, specifically. Measure key aspects of the current process and collect relevant data. Analyze the data to investigate and verify cause-and-effect relationships. Determine what the relationships are, and attempt to ensure that all factors have been considered. Seek out root cause of the defect under investigation. Improve or optimize the current process based upon data analysis using techniques such as design of experiments, poka yoke or mistake proofing, and standard work to create a new, future state process. Set up pilot runs to establish process capability. Control the future state process to ensure that any deviations from target are corrected before they result in defects. Implement control systems such as statistical process control, production boards, visual workplaces, and continuously monitor the process. Some organizations add a Recognize step at the beginning, which is to recognize the right problem to work on, thus yielding an RDMAIC methodology.
DMADV or DFSS
The DMADV project methodology, known as DFSS (“Design For Six Sigma”),[features five phases: Define design goals that are consistent with customer demands and the enterprise strategy. Measure and identify CTQs (characteristics that are Critical To Quality), product capabilities, production process capability, and risks. Analyze to develop and design alternatives, create a high-level design and evaluate design capability to select the best design. Design details, optimize the design, and plan for design verification. This phase may require simulations. Verify the design, set up pilot runs, implement the production process and hand it over to the process owner(s).
THE TOOLS AND THEMES
Like most great inventions, Six Sigma is not “all new.” While some themes of Six Sigma arise out of fairly recent breakthroughs in management thinking, others have their foundation in common sense.
Before you dismiss that origin as no big deal, we’d remind you of a saying: “Common sense is the least common of the senses.” From a “tools” perspective, Six Sigma is a pretty vast universe. The more we have learned over the years about the Six Sigma system, the more we have come to see it as a way to link together—and even to implement—many otherwise disconnected ideas, trends, and tools in business today. Some of the “hot topics” that have direct application or can complement a Six Sigma initiative include: e-Commerce and Services
Enterprise Resource Planning
Customer Relationship Management systems
Strategic business partnerships
The “process-centred organization”
Six Themes of Six Sigma
We’ll close out this introductory look at Six Sigma by distilling the critical elements of this leadership system into six “themes.” These principles—supported by the many Six Sigma tools and methods we’ll be presenting throughout this book—will give you a preview of how we’ll help you make Six Sigma work for your business.
Theme One: Genuine Focus on the Customer
During the big Total Quality push of the 1980s and 1990s, dozens of companies wrote policies and mission statements vowing to “meet or exceed customer expectations and requirements.” Unfortunately, however, few businesses tried very hard to improve their understanding of customers’ requirements or expectations. Even when they did, customer data-gathering typically was a one-time or short-lived initiative that ignored the dynamic nature of customer needs. In Six Sigma, customer focus becomes the top priority. For example, the measures of Six Sigma performance begin with the customer. Six Sigma improvements are defined by their impact on customer satisfaction and value. We’ll look at why and how your business can define customer requirements, measure performance against them, and stay on top of new developments and unmet needs.
Theme Two: Data- and Fact-Driven Management
Six Sigma takes the concept of “management by fact” to a new, more powerful level. Despite the attention paid in recent years to measures, improved information systems, knowledge management, etc., it should come as no shock to you to hear that many business decisions are still being based on opinions and assumptions. Six Sigma discipline begins by clarifying what measures are key to gauging business performance; then it applies data and analysis so as to build an understanding of key variables and optimize results. At a more down-to-earth level, Six Sigma helps managers answer two essential questions to support fact-driven decisions and solutions:
1. What data/information do I really need?
2. How do we use that data/information to maximum benefit?
Theme Three: Process Focus, Management, and Improvement
In Six Sigma, processes are where the action is. Whether designing products and services, measuring performance, improving efficiency and customer satisfaction—or even running the business—Six Sigma positions the process as the key vehicle of success. One of the most remarkable breakthroughs in Six Sigma efforts to date has been convincing leaders and managers—particularly in the service-based functions and industries—that mastering processes is not just a necessary evil but actually a way to build competitive advantage in delivering value to customers. There are many more people to convince— with huge dollar opportunities tied up in those activities.
Theme Four: Proactive Management
Most simply, being “proactive” signifies acting in advance of events— the opposite of being “reactive.” In the real world, though, proactive management means making habits out of what are, too often, neglected business practices: defining ambitious goals and reviewing them frequently; setting clear priorities; focusing on problem prevention versus fire fighting; questioning why we do things instead of blindly defending them as “how we do things here.” Being truly proactive, far from being boring or overly analytical, is actually a starting point for creativity and effective change. Reactively bouncing from crisis to crisis makes you very busy—giving a false impression that you’re on top of things. In reality, it’s a sign of a manager or an organization that’s lost control. Six Sigma, as we’ll see, encompasses tools and practices that replace reactive habits with a dynamic, responsive, proactive style of management. Considering today’s slim-margin-for-error competitive environment, being proactive is (as the airline commercial said) “the only way to fly.”
Theme Five: Boundary less Collaboration
“Boundary less” is one of Jack Welch’s mantras for business success. Years before launching Six Sigma, GE’s chairman was working to break down barriers and improve teamwork, up, down, and across organizational lines. The opportunities available through improved collaboration with in companies and with their vendors and customers are huge. Billions of dollars are left on the table (or on the floor) every day, because of disconnects and outright competition between groups that should be working for a common cause: providing value to customers. As noted above, Six Sigma expands opportunities for collaboration as people learn how their roles fit into the “big picture” and can recognize and measure the interdependence of activities in all parts of Process. Boundary less collaboration in Six Sigma does not mean selfless sacrifice, but it does require an understanding of both the real needs of end users and of the flow of work through a process or a supply chain. Moreover, it demands an attitude that is committed to using customer and process knowledge to benefit all parties. Thus, the Six Sigma system can create an environment and management structures that support true teamwork.
Theme Six: Drive for Perfection; Tolerance
This last theme may seem contradictory. How can you be driven to achieve perfection and yet also tolerate failure? In essence, though, the two ideas are complementary. No company will get anywhere close to Six Sigma without launching new ideas and approaches—which always involve some risk. If people who see a possible path to better service, lower costs, new capabilities, etc. (i.e. ways to be closer-to-perfect) are too afraid of the consequences of mistakes, they’ll never try. The result: stagnation, putrefaction, death. Fortunately, the techniques we’ll review for improving performance include a significant dose of risk management (if you’re going to fail, make it a safe failure). The bottom line, though, is that any company that makes Six Sigma its goal will have to constantly push to be evermore- perfect (since the customer’s definition of “perfect” will always be changing) while being willing to accept—and manage—occasional setbacks.
SOME SUCCESS STORIES
Seeing the impact that Six Sigma is having on some leading companies sets the stage for understanding how it can impact your business. As we relate some of these results, we’ll also be reviewing the history that has brought Six Sigma to the forefront
Six Sigma has forever changed GE. Everyone—from the Six Sigma zealots emerging from their Black Belt tours, to the engineers, the auditors, and the scientists, to the senior leadership that will take this Company into the new millennium—is a true believer in Six Sigma, the way this Company now works.” —GE Chairman John F. Welch1 When a high-profile corporate leader* starts using words like “unbalanced” or “lunatics” in connection with the future of the company—you might expect a plunge in the company’s share price. At General Electric, however, that passion and drive behind Six Sigma have produced some very positive results. The hard numbers behind GE’s Six Sigma initiative tell just part of the story. From an initial year or so of break-even efforts, the payoff has accelerated: $750 million by the end of 1998, a forecasted $1.5 billion by the end of 1999, and expectations of more billions down the road. Some Wall Street analysts have predicted $5 billion in gains from the effort, early in the decade. GE’s operating margins—for decades in the 10 percent range—continue to hit new records quarter after quarter. The numbers are now consistently above 15 percent, and even higher in some periods. GE leaders cite this margin expansion as the most visible evidence of the financial contribution made by Six Sigma.
Improvements from Services to Manufacturing
The financial “big picture,” though, is just a reflection of the many individual successes GE has achieved through its Six Sigma initiative. For example:
✦ A Six Sigma team at GE’s Lighting unit repaired problems in its billing to one of its top customers—Wal-Mart—cutting invoice defects and disputes by 98 percent, speeding payment, and creating better productivity for both companies.
✦ A group led by a staff attorney—a Six Sigma team leader—at one of GE Capital’s service businesses streamlined the contract review process, leading to faster completion of deals—in other words, more responsive service to customers—and annual savings of $1 million.
✦ GE’s Power Systems group addressed a major irritant with its utility company customers, simply by developing a better understanding of their requirements and improving the documentation provided along with new power equipment. The result: Utilities can respond more effectively to their regulatory agencies, and both the utilities and GE have saved hundreds of thousands of dollars a year.
✦ The Medical Systems business—GEMS—used Six Sigma design techniques to create a breakthrough in medical scanning technology. Patients can now get a full-body scan in half a minute, versus three minutes or more with previous technology. Hospitals can increase their usage of the equipment and achieve a lower cost per scan, as well.
✦ GE Capital Mortgage analyzed the processes at one of its top performing branches and—expanding these “best practices” across its other 42 branches—improved the rate of a caller reaching a “live” GE person from 76 to 99 percent. Beyond the much greater convenience and responsiveness to customers, the improved process is translating into millions of dollars in new business.
The Actions behind the Results
GE’s successes are the result of a “passionate” commitment and effort. Notes Welch: “In nearly four decades with GE I have never seen any Company initiative move so willingly and so rapidly in pursuit of a big idea.”2 Tens of thousands of GE managers and associates have been trained in Six Sigma methods—a hefty investment in time and money (which is appropriately deducted from the gains cited earlier). The training has gone well beyond “Black Belts” and teams to include every manager and professional at GE—and many front-line people as well. They’ve instilled a new vocabulary revolving around customers, processes, and measurement. While dollars and statistical tools seem to get the most publicity, the emphasis on customers is probably the most remarkable element of Six Sigma at GE. As Jack Welch explains it: The best Six Sigma projects begin not inside the business but outside it, focused on answering the question—how can we make the customer more competitive? What is critical to the customer’s success? . . . One thing we have discovered with certainty is that anything we do that makes the customer more successful inevitably results in a financial return for us.
AlliedSignal—with the new name of “Honeywell” following its 1999merger—is a Six Sigma success story that connects Motorola and GE. It was CEO Larry Bossidy—a long time GE executive, who took the helm at Allied in 1991—who convinced Jack Welch that Six Sigma was an approach worth considering. (Welch had been one of the few top managers not to become enamoured of the TQM movement in the 1980s and early 1990s). Allied began its own quality improvement activities in the early 1990s, and by 1999 was saving more than $600 million a year, thanks to the widespread employee training in and application of Six Sigma principles.5 Not only were Allied’s Six Sigma teams reducing the costs of reworking defects, they were applying the same principles to the design of new products like aircraft engines, reducing the time from design to certification from 42 to 33 months. The company credits Six Sigma with a 6 percent productivity increase in 1998 and with its record profit margins of 13 percent. Since the Six Sigma effort began, the firm’s market value had—through fiscal year 1998—climbed to a compounded 27 percent per year. Allied’s leaders view Six Sigma as “more than just numbers—it’s a statement of our determination to pursue a standard of excellence using every tool at our disposal and never hesitating to reinvent the way we do things.” As one of Allied’s Six Sigma directors puts it: “It’s changed the way we think and the way we communicate. We never used to talk about the process or the customer; now they’re part of our everyday conversation.” AlliedSignal’s Six Sigma leadership has helped it earn recognition as the world’s best-diversified company and the most admired global aerospace company .
There are many well known companies that have implemented Six Sigma programs and reached astounding results. Companies like General Electric, Motorola, Ford, Honeywell and American standard have all reaped the benefits of successful Six Sigma quality programs. Motorola claims to have saved $17 billion from 1986 to 2004 by successfully implementing their strategies throughout all departments of the company. The other companies have achieved staggering results such as cutting invoice defects and disputes, streamlined contract processes, reduction in project duration, waste elimination, reduced energy costs and increased production capacity. By understanding the philosophy and deploying the program, these companies have succeeded in making themselves more efficient and more profitable for their stakeholders. Companies wishing to make changes to their quality system should research this and consider Six Sigma as an option.
It is clear that many companies have capitalized on the application of Six Sigma to their business model. If we look deeper into the appeal of Six Sigma, past the historical quantitative gains, we will find several benefits that companies find attractive. 1. “Generates sustained success” – The only way to sustain a high level of growth is to continually innovate and remake the organization. A Six Sigma process creates the skills and culture to achieve this continuous process improvement cycle. 2. “Sets a performance goal for everyone” – a company is made up of multiple departments with different tasks and objectives. Six Sigma provides a common objective for all departments to be as close to perfect as possible. The idea is that if you understand the customer’s requirements, then you can measure for defects. 3. “Enhances Customer Value” – The focus of Six Sigma is understanding what the customer requirements are and delivering a product or service within those requirements. 4. “Increases the rate of improvement” – Six Sigma helps a company stay on top of it’s improvement efforts by constantly updating requirements and identifying defects before they happen.
5. “Promotes Learning” – Six sigma brings experts together with novices to manage the process and teach the Six Sigma way of business. Companies that use Six Sigma view it as learning tool that is critical to their success. 6. “Executes strategic change” – Six Sigma gives you a better understanding of your company processes. The philosophy is tied back to the company goals so when it’s time for change there is a higher probability of success.”
Just like any other quality improvement initiatives we have seen in the past, Six Sigma has its own limitations. The following are some of the limitations of Six Sigma which create opportunities for future research :
1. “Kills Creativity” – Six Sigma gives emphasis on the rigidity of the process which basically contradicts the innovation and kills the creativity. The innovative approach implies deviations in production, the redundancy, the unusual solutions, insufficient study which are opposite to Six Sigma principles.
2. “Role of consultants” – The use of “Black Belts” as itinerant change agents has (controversially) fostered an industry of training and certification. Critics argue there is overselling of Six Sigma by too great a number of consulting firms, many of which claim expertise in Six Sigma when they have only a rudimentary understanding of the tools and techniques involved.
3. “Rigid” – A more direct criticism is the “rigid” nature of Six Sigma with its over-reliance on methods and tools. In most cases, more attention is paid to reducing variation and searching for any significant factors and less attention is paid to developing robustness in the first place (which can altogether eliminate the need for reducing variation.)
4. “Criticism of the 1.5 sigma shift” – The 1.5 sigma shift has also become contentious because it results in stated “sigma levels” that reflect short-term rather than long-term performance: a process that has long-term defect levels corresponding to 4.
5 sigma performance is, by Six Sigma convention, described as a “six sigma process.”. The accepted Six Sigma scoring system thus cannot be equated to actual normal distribution probabilities for the stated number of standard deviations, and this has been a key bone of contention over how Six Sigma measures are defined.
In pharmaceutical industry, adoption of the Six Sigma technique helped the industry reduce wastage and rework involved in the production. It was said that 5-10% of medicines produced during a period were to be discarded or modified due to the defects. The adoption of Six Sigma helped the pharmaceutical companies to reduce the errors in the production.
Airline industry had to adopt the Six Sigma metrics for its survival. The increased cost of fuel, the competition driven by low budget airlines, etc has made the need for lower cost without a hit to quality the need of the hour. The number of errors in handling the calls from customers, and ticketing is to be minimised drastically. It was with this intention that the airline industry adopted Six Sigma into the organisation. Indian companies like Kingfisher, Jet Airways, and Indian Airlines, all have adopted Six Sigma technique into its process.
Hospitality services are another industry which benefited by the adoption of Six Sigma techniques. Providing personalised service to each and every customer by bending to their demands within a limited time without comprising the quality was aided by the Six Sigma matrices. The Six Sigma technique is adopted in every field from maintaining full occupancy to efficient housekeeping, ensuring a balanced inventory supply, and to minimise wastage in the inventory. Starwood hotels and resorts Inc was the first company to adopt Six Sigma in the hospitality sector.
Steel industries like TISCO use this technique to minimise the inadequacies in the design, imperfect products, etc. I. Logistics, insurance, call centres, all embrace the Six Sigma techniques for improving the quality of service provided by them. Six Sigma goes in to the details of improving customer service, generating business expansion and gaining knowledge about the service sectors business processes. Most service industries revolve around areas of finance, human resources and sales and marketing. Hence, Six Sigma delves deeply into the subject of soft skill. Irrespective of the type of industry, all companies have to adopt Six Sigma techniques as quality and timely delivery are crucial for their survival.
SOME COMMON CONFUSUIONS
KAIZEN – “Kaizen”, is a Japanese word, meaning “improvement”, or “change for the better” refers to philosophy or practices that focus upon continuous improvement of processes in manufacturing, engineering, and business management. When used in the business sense and applied to the workplace, kaizen refers to activities that continually improve all functions, and involves all employees from the CEO to the assembly line workers. It also applies to processes, such as purchasing and logistics that cross organizational boundaries into the supply chain. By improving standardized activities and processes, kaizen aims to eliminate waste (see lean manufacturing). Kaizen was first implemented in several Japanese businesses after the Second World War, influenced in part by American business and quality management teachers who visited the country. It has since spread throughout the world] and is now being implemented in many other venues besides just business and productivity. Six Sigma process involves employees at every level to improve a process. The theory is that a machine operator is best suited to identify the waste surrounding that machine. Employees participate in KAIZENS (a sort of quality circle) to eliminate all the waste along the process of delivering to customers. Everything left over is meaningful and profitable work. Generally, the employees themselves are empowered to recognize the need for an improvement, and to make that change immediately.
LEAN SIX SIGMA – “Lean Six Sigma” is a synergized managerial concept of Lean and Six Sigma that results in the elimination of the seven kinds of wastes (classified as Defects, Overproduction, Transportation, Waiting, Inventory, Motion and Over-Processing) and provision of goods and service at a rate of 3.4 defects per million opportunities Six Sigma as well is far more data-driven than Lean Six Sigma (and Lean). A Six Sigma level is, again, 3.4 defects per million; a Five Sigma level is 233 defects per million, and so on. As Michael L. George describes, every Six Sigma improvement requires “a measure to define the capability of any process.” This reliance upon precise measurement is what makes the DMAIC processlengthy; a DMAIC project may require thousands of measurements before project leaders can analyze the results. Lean Six Sigma does not ignore measurement where it is required, but does not rely upon it absolutely.
TOTAL QUALITY MANAGEMENT – “Total Quality Management” or TQM is an integrative philosophy of management for continuously improving the quality of products and processes. TQM functions on the premise that the quality of products and processes is the responsibility of everyone who is involved with the creation or consumption of the products or services offered by an organization. In other words, TQM requires the involvement of management, workforce, suppliers, and customers, in order to meet or exceed customer expectations.
TQM, as its name suggests, concerns itself entirely with quality. All efforts, finances and techniques are directed at improving quality as much as possible. While Six Sigma is certainly concerned with quality as well, it extends its focus to other issues such as product cycle time and cost. Because of this difference, Six Sigma can be much more complex to implement but also can create farther-reaching benefits. The goals of TQM and Six Sigma differ in significant ways. Total Quality Management has no specific goals or endpoints at which management can aim. Basically, the goal of TQM is to always become “better,” an objective that can become both a blessing and a curse as it continually inspires both motivation and frustration. Six Sigma, on the other hand, has the very tangible goal of 3.4 defects per million. This target gives the philosophy its name, as the amount is six standard deviations (represented by the Greek letter sigma) from the centre of a bell curve According to Six Sigma specialist Thomas Pryzdek, TQM originally featured vague and abstract guidelines that were difficult, if not impossible, for most managers to turn into tangible and implementable strategies. Six Sigma attempts to fix this problem by creating specific areas to target for improvement. In lieu of general statements about quality improvement, the Six Sigma philosophy pinpoints sectors of specialized focus.
• Analyze – Is the discovery of variations Six Sigma programs are deployed from the Top down and implemented from the bottom up. (Cariera and Trudell, 2006) You must have upper managements buy-in and full support. This support must be communicated effectively through the organization. Upper management must be willing to invest in training for their employees and willing to embrace the changes that will come out of the initiative. Although Six Sigma can involve some complex statistical theories and measurement tools, the barriers to successful implementations usually come from “behavioural” resistance rather than “technical” issues. (Kumar, 2006) The following are what Kumar considers “Fundamental rules for significant change”:
• Always include affected individuals in both planning and implementing improvements.
• Provide sufficient time for employees to change.
• Confine improvements to only those changes essential to remove the identified root cause(s).
• Respect an individual’s perceptions by listening and responding to his/her concerns.
• Ensure leadership participation in the program.
• Provide timely feedback to affected individuals.
These are all key points to implementing Six Sigma, however to a Six Sigma critic’s point, there is nothing really new here. This is very similar to many other management and quality philosophies. Regardless of what name you give it, these fundamentals are imperative for instituting positive change in an organization. Perhaps by applying these fundamentals under a recognized program such as Six Sigma, there will be a better chance for success. Each phase is important in its own right; however the key thing for long lasting results in understanding the Control phase. The control phase must include a plan for continuous review and improvement. The DMAIC roadmap should be looked at as a circular process rather than linear. During the control phase companies must continually look for new opportunities then restart the process at Design.
Mumbai Dabbawalas, a perfect example of SIX SIGMA.
-Dr. Pawan Agrawal
The food is cooked at home. Tiffin is yours. They [dabbawalas] will simply deliver it from your home to your workplace before lunch time and deliver the empty tiffin box back in the evening at your home as well. Why would you want dabbawala to carry your tiffin? There are two reasons. One is that the Mumbai local trains have lines extending 60-70 km and two, they are crowded. If you have to reach office at 9, you must start at 6. But you wouldn’t want to wake your loved ones at 5 and have them prepare the tiffin for you; that’s where Dabbawala can help you. Another reason is that even if you start at 8, you won’t be able to carry your own tiffin because of how crowded the trains are. So, for these two reasons, Dabbawala has been in the business [of carrying your home food to your office] for the last 120 years. There’s a group of people called Varkari Sampradaya in Maharashtra; they are the devotees of Lord Vitthala and there’s a place called Pandharpur, the town of the temple of Vitthala. When they go to that place, they wear a ‘tulasi mala’. And when a person wears this mala, he will never drink or smoke because Lord Vitthala doesn’t like it and the same principle is brought into practice here. Dabbawalas feel that their customer is their Lord Vitthala. These people are poor, they are working in difficult situations, they are not qualified and they don’t use technology, and yet, they possess all these qualities and work with passion and commitment.
Dabbawala was started in 1890 by Mr. Mahadeo Havaji Bachche. He was once asked by a Parsi working in the Britisher’s rank, “Will you bring my tiffin from my home?” He simply answered “Yes, I will, no problem.” From that day onwards, he started to collect tiffins from homes and delivering them to the respective workplaces. In 1890, there was one dabbawala and one customer, and now, there are 5000 dabbawalas and 200,000 customers, which means, one dabbawala carries approximately 40 tiffins. The maximum weight comes to 65-70kg; carrying that much weight in the crowded local trains is a lot of hard work. Why do they do it then? Work is worship. And, as far as qualification is concerned, you will see that the average literacy rate is 8th grade schooling; which means the dabbawalas are illiterate and yet they have managed to achieve a Six Sigma quality rating, which means only one wrong service in a 6 million deliveries. Ownership is a feeling that an employee has to instil in oneself, and unless you get that feeling of ownership you cannot work excellently. In 120 years, it has never happened that a dabbawala has failed to deliver. It’s impossible. They will never tell you that “the trains are late today,” and even if Mumbai trains are late, the tiffins can’t be late. The dabbawala knows that if he’s not going in time, his customer will eat outside food, pay money for it and waste time. The dabbawala knows the consequences of going late. So he always goes on time.
The people of Mumbai say with confidence that “our lunch can go wrong but not the Mumbai dabbawalas.” So nobody can stop you from being punctual.. Let me speak about (mukadal) group leaders. A group has 10, 20, or 25 dabbawalas, depending on the density of customers in your area, and their in-charge is the group leader. The responsibility to keep the dabbawalas and the customers happy is on the group leader. Despite the fact that he doesn’t get even a rupee extra for the extra10% that he works, he feels proud to be a group leader. For example, the group leader also takes care of the train passes of the dabbawalas, to check whether they have expired or not; he reminds the dabbawalas in case their passes are about to expire in the next 2-3 days and also buys the pass for the dabbawala if he fails to do so himself in order to ensure that timely delivery doesn’t suffer. I will tell you an instance of how one dabbawala performs duty in one day. He collects 40tiffin’s from a particular area and drops them in the Vile Parle railway station because his customer is from Vile Parle. He can’t deliver all of them because he would have to go all over Mumbai, so he leaves these 40 there. That’s his first job. His second job is to collect 35-40 tiffins from his group leader and deliver them to Dadar. His third job is to deliver 30 tiffins to Chavani Road, and in the fourth job from Chavani Road, he delivers 30 Tiffin’s to Churchgate. His fifth job is to go from Church Gate to deliver 30 tiffins to NarimanPoint.
Finally, in his sixth job, he delivers 30 tiffins to Express Tower to the customers before lunch time and after lunch, he will reroute back to his original area and deliver the same tiffins from where he had collected them. After all this, Forbes has found 1 erroneous delivery out of 6 million deliveries, but they don’t accept that either. They are unhappy that that one error has occurred. Twelve years ago, some people from Delhi came to Dabbawala and said they want to do research on Dabbawala; they prepared a project and went back to Delhi. They called after 3 months and informed Dabbawala about Six Sigma. Dabbawalas didn’t know what it meant. They told Dabbawala it was a big honour so Dabbawala asked them to send it across. They were told to go to Delhi and collect it. Sixteen dabbawalas went to Delhi to collect the Six Sigma certification. People work so hard for three and Four Sigma but dabbawalas got Six Sigma because they didn’t care about the certification and cared only about customer satisfaction. It is a big achievement especially without the use of technology. Even if the dabbawalas use technology in the form of mobile phones, they can’t because both their hands are used in delivering tiffins. Technology is useless for them for delivery. And after all this, they charge only 400 rupees per month for delivery.
So, the question arises is that, why do they charge so less. They say customers are poor. If they want more income, they work extra. Dabbawala then gave me an example of a teacher, who earns only Rs 5000 per month as a government rule. He said, “Despite the teacher’s double graduation, I earn more than him, so I’m happy.” For example, some customers refuse to pay bonus, but the dabbawalas don’t disrupt their services. So I asked one of them why, he said, “the customer is my God, he has paid me 12 months’ of salary so it’s ok if he doesn’t pay me one month’s bonus.” Despite the disputes there has never been a police or a court case. Every 15 days they have a meeting. The disputing dabbawalas resolve their disputes and if they can’t, the president takes a call and they follow his judgment without questioning. Dabbawalas feel satisfied. I asked one customer, what he thinks about the dabbawalas. He said, “Excellent. When I get my salary I am afraid of carrying it in the local train because it’s so crowded and I can get robbed so instead, after I have lunch, I put the money in the empty dabba and send to my wife.” Dabbawalas are very honest.
If you do services consistently and with discipline, then the customer, at some point of time, will believe that you are God. In one day, one dabbawala handles 500 tiffins. There is a 79-year-old man who is a dabbawala, nobody’s forcing him, but he still works because he thinks he can still provide service to his customers. The dabbawalas use bicycles. Another thing is the coding system; about 100 years ago, they were using colour codes. Then when Mumbai grew and the number of customers increased, they started using alphabets; A for Andheri, B for Bandra, etc. And today, they write a proper code with details of the source, destination and all the dabbawalas involved in that particular delivery. When this tiffin is coded and then washed, sometimes the coding becomes unclear, so the dabbawala takes colour out of his pocket and overwrites the code. He doesn’t complain about it, he just finishes the job. Due to the overcrowded Mumbai local trains, some people enter the luggage department, and when they do, the tiffins stick to their heads. So they start fighting with the dabbawalas and the dabbawalas also fight with them but only till the station arrives, because after that they’re more interested in the delivery. They use carts for longer distances. In running local trains, they sort the tiffins to save time. Risk is there, but it’s there everywhere. You must work with the situation.
For example, they lost some income and customers because of some instances. In 1969, customers stopped taking food. In 1975, there was a railway strike; the dabbawalas lost one month’s income. In 1982, 40,000 meal workers went on strike. Till today they’re on strike. A lot of people lost their lives. Dabbawalas have gone through all this and come out shining. They have been featured on multiple channels and have been awarded multiple awards. These 50 Indians have influenced Mumbai: Tata, Birla, Ambani, Thakarey, Shahrukh Khan, Amitabh Bachhan and Mumbai Dabbawala. Somebody took a survey in Mumbai about the likes of people, and Dabbawala was one of them. I am not a Dabbawala. I’m not involved in any of the operations at all. I have done a Ph.D. on this subject and my topic was ‘A study of logistics in supply chain management of Dabbawala in Mumbai.’ It took a lot of years to complete my Ph.D. But, two days into the research, I was taken aback by the passion of these people. I decided to do the research whether or not I complete my Ph.D. Prince Charles came to Mumbai in 2003. Six months before his visit, Mr. Jeetendra Jain, in the British Council of India, contacted dabbawala to arrange a visit. Dabbawala first refused and then, after realizing that Prince Charles is Britain’s royalty in the manner of a king, he agreed, but, with two conditions.
First one was that Prince Charles should come at the Dabbawala’s convenience — between 11 and 11.40 because that’s when they’re free. Second, Prince Charles must go to Dabbawala himself. Where to? The footpath. Prince Charles accepted these conditions. Richard Branson came to Mumbai. He wanted a photo with Dabbawala to put it up in his office in London to send a message to his employees to work like Dabbawalas. That’s the impact of Mumbai Dabbawala. There was an inauguration of a book written by Shobha Bondre. This was inaugurated by the then Chief Minister of Maharashtra, Mr. Vilasrao Deshmukh. The chief minister said that for every program he goes an hour late but for a dabbawala program he came 5 minutes early because he was scared that if he came late the Dabbawalas will go away.
How the Dabbawalas works?
1. Collecting food dabbas
2. Sorting +Grouping
6. Collecting empty dabbas
A collecting dabbawala, usually on bicycle, collects dabbas either from a worker’s home or from the dabba makers. The dabbas have some sort of distinguishing mark on them, such as a colour or symbol.
2. Sorting + Grouping
The dabbawala then takes them to a designated sorting place, where he and other collecting dabbawalas sort (and sometimes bundle) the lunch boxes into groups.
The grouped boxes are put in the coaches of trains, with markings to identify the destination of the box (usually there is a designated car for the boxes).
The markings include the railway station to unload the boxes and the building address where the box has to be delivered. At each station, boxes are handed over to a local dabbawala.
The local dabbawala delivers the dabbas to the respective places.
6. Collecting empty dabbas
The empty boxes, after lunch, are again collected and sent back to the respective houses or dabba makers
Factors contributing to their success
1. Cost efficient and faster delivery :
The dabbawalas charge a nominal monthly fee which is affordable and they have an efficient delivery network which makes them deliver on time.
2. Highly reliable:
On time delivery for all the “dabbas” and hardly any errors. All deliveries have ensured 100% customer satisfaction. There are cost best in time management and have been awarded six sigma rating.
3. Using Mumbai’s railway network :
Using the Mumbai sub urban railways for their daily transportation from homes to the offices. Thus making it a cheaper and more efficient system.
They have a flat hierarchical in the organisation. Just 3 levels of organisation: carriers, supervisors and committee members. This flat structureimplies a wide span of control. Every supervisor has about 4-5 carriers under him.
Six Sigma looks at all work as a series of processes with inherent variations, which can cause waste or inefficiency. Focusing on those processes with greatest impact on business performance, as defined by leadership teams, the methodology involves statistical analysis to quantify repeated common cause variations – which can then be reduced by the Six Sigma team. Six Sigma becomes a continuous process for quality improvement and cost reduction flowing throughout the company. Originally developed from a Japanese quality control process for manufacturing electronic semi-conductors, Six Sigma developed the capability of reducing problems or issues effecting customer expectations on key business processes. Six Sigma has provided the opportunity to drive forward important customer focused initiatives across the Cummins global organisation. As an improvement and cost reduction process, Six Sigma is equally valid for marketing and product development as well as manufacturing and customer services. Six Sigma improvement projects and techniques are now the cornerstone of Cummins continued success in cost reduction and quality improvement.
http://www.experts123.com/q/who-invented-six-sigma.html as on 11/10/2012 http://en.wikipedia.org/wiki/Six_sigma as on 11/10/2012
http://www.benchmarksixsigma.com/ on 12/10/2012
http://www.6sigma.us/six-sigma.php as on 13/10/2012
http://www.businessballs.com/sixsigma.html as on 13/10/2012
http://www.benchmarksixsigma.com/ as on 13/10/2012
Pede, Peter.S (2002), Mc-Graw Hill, The Six Sigma Way (from 029-72) De Feo, Joseph A.; Barnard, William (2005). JURAN Institute’s Six Sigma Breakthrough and Beyond – Quality Performance Breakthrough Methods. New York, NY: McGraw-Hill Professional. ISBN 0-07-142227-7 (from p235- 245). Ramias, Alan, The Mists of Six Sigma, (2005), BP Trends (from p5-9) Eckes, George, Six Sigma for Everyone, 2003, John Wiley & Sons, Inc., Hoboken, NJ. (p 155-169)