Management: Six Sigma

Six Sigma – Not Just For Manufacturing
Although the Six Sigma methodology originally started out as a way to improve processes and products in a manufacturing environment, today it has grown to encompass a broad range of industries. As companies begin to realize the benefits a total quality improvement cycle can have upon the organization they are adopting Six Sigma and its practices into their own fold.
Organizations not only receive the quality benefit of Six Sigma in their products and processes, but also significant cash savings can be realized as part of adapting such a process. In one example, GE realized a savings of close to $300 million dollars in the first year of implementation of Six Sigma.
Health care organizations can see benefits that not only affect the bottom line of the company, but also affect the quality of care and overall recovery rate for patients. In one example a hospital used Six Sigma practices to significantly reduce the amount of time it took to get heart attack patients from ER to the cardiac care unit by close to 41 minutes.
As a result the fatality rate of heart attack patients dropped significantly and the quality of care for those patients improved over 300%.
Financial institutions are using Six Sigma as a way to manage both their customer satisfaction expectations as well as risk management initiatives. By using the methodologies and improvement cycles of Six Sigma Bank of America realized close to $2 billion dollars in benefits as well as a 25% increase in customer satisfaction.
The construction industry can sometimes be paralleled to the manufacturing industry. Instead of producing the end-product in a factory the construction industry produces the product at various job sites. As such many of the same improvements the manufacturing industry has seen have also been adapted to the construction industry.
Savings of man hours and costs across various projects have not only resulted in lower costs but also in higher quality buildings and infrastructure.
The Insurance industry is one of the most paper-intensive industries in the world. Claims processing, underwriting and adjustments all take significant amounts of time to collect data and process it in order to make decisions and assist customers.
By utilizing the Six Sigma approach major players in the industry including CIGNA and American Family have seen claim processing times be reduced by up to 50% as well as more analytic assignment of risk factors based on underwriting data.
So how can Six Sigma benefit your particular organization? Start by looking at what your organization produces – be it a service or a physical product. Then look at areas that are known to have defects or are in need of improvement.
By realizing that any product or service is a continuous cycle of improvements you begin to understand the Six Sigma approach. Instead of drastic changes all at once, Six Sigma provides a process by which small changes are constantly adapted to projects and then measured against past data to judge the quality of the improvement.

Six Sigma Deployment In Smaller Organizations
Six Sigma is not just for large multinational corporations. While there are difficulties inherent in implementing Six Sigma in a small company rather than a large business they can be overcome. Six Sigma can work in any size business because the nature of Six Sigma is dependent upon characteristics inherent in any business, not on the size of a business. Smaller organizations frequently are short on resources and expertise in change initiatives. However, they also have more flexible process flows, a shorter decision-making chain, and higher visibility of senior management. Smaller organizations can actually effectively establish Six Sigma faster than large businesses if deployment scope is correctly managed.
Scope of Deployment
Six Sigma is designed for all-inclusive deployment across an organization. However, s maller organizations do have constraints that limit their ability to initiate a large scale Six Sigma implementation. If your organization does not have the resources to create an infrastructure for organization-wide Six Sigma deployment then start with a pilot program.
One of the beauties of Six Sigma is that its central methodology is scalable. Six Sigma, emphasizes intensive training and extensive analysis—qualitative characteristics that work regardless of the size of the organization. Likewise, Six Sigma DMAIC (design, measure, analyze, improve, and control) discipline s work no matter the size of the organization or even the size of the Six Sigma project. Even a small Six Sigma project can yield significant results. Breakthrough improvements in processes and bottom-line profitability come not from quantity of resources, but the quality and the intelligence with which they are employed.
Small and medium-sized organizations may not have the resources of larger companies; however, in most cases, smaller organizations can be more nimble, flexible, and focused on results. Approaching initial implementation of Six Sigma through a pilot program will yield tangible results without overwhelming your resources from a small “quick-hit” project. These results can then be replicated throughout the organization, in many cases even faster than in a large organization.
Issues Critical to Smaller Organizations
When deploying a pilot Six Sigma project there are several important issues to consider inherent to smaller organizations. First, the choice of a project is critical. The pilot project will set the tone for Six Sigma deployment, so it should be a good one that can show significant and visible results in a reasonably short period of time. The project must clearly address one or more business goals thereby contributing to one or more core enterprise measures. Each project must also be completable within three to four months, so careful upfront scoping is essential. Projects must be continually tracked and updated for line management during existing business reviews.
Another issue is training. In smaller organizations, training budgets and especially time available to devote personnel for training is limited. Thus, it is not always practical for personnel to be absent from their day-to-day duties to attend months of training. Fortunately, there are some Six Sigma consultants who can deliver required Six Sigma training in an accelerated format and even onsite. Thus, smaller organizations can give their people the needed training with less disruption to their normal business, improving internal synergy while providing greater organizational flexibility.
Six Sigma implementation teams can encounter critical resource restrictions, often due to a personnel limitation where people are available for project functions only on a part-time basis. It is essential at project inception that the right people are involved, doing the right things. A small but committed force of the right people with proper training, given the proper authority will go far in getting things started. Good and fluid communication is also critical.
Upon successful completion of the Six Sigma pilot, the scale of the deployment is then expanded to other areas of the organization, incorporating the lessons learned from the pilot project. Just as it is much harder for a large ship to turn than a small ship, smaller organizations can change and adapt more quickly than large organizations. That does not mean that small organizations will automatically be successful when deploying Six Sigma, but making change take place and getting buy in to the changes are easier.

Six Sigma Tools
Statistics are at the heart of Six Sigma’s powerful methodology for quality improvement. It pays to get to know some of the most important of the Six Sigma statistical tools.
Control Charts
The control chart is the fundamental tool of statistical process control; a proven technique for improving productivity. It monitors the variation of key characteristics and indicates the range of variability that is built into a system. Control charts provide diagnostic information about process capability that can be used to analyze variation in process data to demonstrate whether a process is operating consistently. The bounds of the control chart are marked by upper and lower control limits that are calculated by applying statistical formulas to data from the process. Data points that fall outside these bounds represent variations due to irregular causes, which can then be identified and eliminated. Control charts are effective in defect prevention and will help ensure that your process performs consistently. From them, you can, in a precise manner, monitor, control, and improve on process performance over time. This will allow you to be able to predict fluctuations, lower costs and ensure the process has a higher effective capacity.
Failure Modes and Effects Analysis (FMEA)
FMEA is a powerful structured approach that helps you to identify and counter weak points in the early conception phase of products and processes. Using FMEA allows you to analyze any system or subsystem in manufacturing or service industries in the early stages of the process. This systematic methodology identifies potential failure modes in a system caused by either design or process deficiencies. It also identifies critical or significant design or process characteristics that require special controls to prevent or detect failure modes. FMEA improves the quality of products and services and processes by preventing problems from occurring. It documents and tracks action taken to reduce risk while it integrates with the DMAIC methodology.
A histogram is used to graphically summarize the distribution of a data set. A histogram is constructed by dividing the range of data into equally sized segments. This data tool enables you to quickly and easily answer several important questions: what distribution does the data have? What is the most common system response? Is the data symmetric or does it contain outliers?
Pareto Chart
A pareto chart is used to graphically summarize the relative importance of the differences between groups of data. A pareto chart is constructed by dividing the range of data into groups. The vertical axis of the pareto chart is the cumulative percentage, and the horizontal axis of the pareto chart is the groups of response variables. Unlike the histogram, the pareto chart is ordered in descending frequency magnitude. The Pareto Chart allows you to focus your efforts to achieve the greatest improvements by identifying the largest issues facing the process. It identifies the 20% of sources that are causing 80% of the problems.