Page 1 of 3

Chapter 1: Overview of Six Sigma

This chapter is an introduction to Six Sigma. It aims to give a basic idea of Six Sigma, its application, scope and origin. However, Six Sigma is a complex concept involving principles of statistics and process dynamics. We shall define Six Sigma only later once you have an understanding of the principles. Learning Objectives This module will: 1. 2. 3. 4. Give a basic overview of what Six Sigma is Define the objective of Six Sigma Enable you to see why a company should implement Six Sigma Allow you to differentiate between Six Sigma and the Breakthrough strategy 5. Give you an insight into the origin of Six Sigma. What is Six Sigma? A statistical concept that says that a process is operating so well that it allows for less than 3.4 defects per million opportunities. The Greek letter in statistics measures the variation of all the outputs in a process. If a process allows for outputs to be acceptable only if they fall within Six Sigma or Six standard deviations from the average for all outputs in the process, then you have a process that is essentially delivering no defective outputs at all. Six Sigma is a long-term strategy and takes 3 to 5 years to implement. It is applicable to all types of industries and companies, be they manufacturing or services. Objective of Six Sigma The objective of the `Six Sigma' approach is to move towards zero defect level. It encompasses all facets of business, such as planning, operations, maintenance, delivery, and quality, which can lead to customer dissatisfaction. Six Sigma is based on a foundation of Metrics. These metrices can be organizational objectives (example On-Time delivery), departmental objectives (such as Cycle-time reduction) or process objectives (such as Orders processed). It might be worthwhile linking this concept with ISO 9001-2000, which has a strong inclination for Metrices.

Copyright 2004, All Rights Reserved. Edutech Dimensions Pvt. Ltd.

Page 2 of 3

It creates a better process by eliminating opportunities for defects even before they can occur. This has a direct impact on the bottom line in terms of: 1. Reduced costs 2. Improved customer service 3. Waste elimination When we say a process is `Six Sigma', we are saying that it is the best in its class. Such a level of capability will result in having only something like 3 to 4 nonconformances in a million opportunities. Six Sigma Impact on Cost Research and studies show that Six Sigma has had a direct impact on Cost of Quality by directly contributing to all the components of Quality cost. Why Six Sigma? In any industry, organization or daily process, when you dont know what you dont know, the hidden costs are huge. In a Jam manufacturing unit, the nozzle filling up the bottles often fills either excess or less than the specified quantity. In the former case, jam over flows out of the bottles thus soiling the bottles as well as the conveyor belt. For bottles that have a lesser quantity of jam, it is poured manually into the bottles, and in this process too the result is sticky bottles. To clean the bottles, hot water has to be sprayed to avoid damaging the bottles that contained hot jam. Thus we see that a single error often goes unnoticed or is not given much importance. But when all the possible errors that exist in a system are considered, the monitory impact on overall productivity, customer satisfaction and profitability multiplies dramatically. Six Sigma helps you identify what you dont know, indicates what you should know, and helps reduce the errors and rework that cost you time, money, opportunities and customers. Why Six Sigma? Six Sigmas focus is on the process rather than on the final outcome. But why should companies focus on the process rather than on the final outcome? Final outcomes or results are dictated by what happens during the process.

Copyright 2004, All Rights Reserved. Edutech Dimensions Pvt. Ltd.

Page 3 of 3

You may have set an objective; say, develop some new solution in record time. But if your emphasis was on the final outcome and you did not really keep a check on the process, then, when you are asked to develop the same software again, you may well repeat the same mistakes, come across the same problems and all you have is your memory to fall back on. On the contrary, if the process was documented, you or anyone else can repeatedly produce the same output again and again. You would also avoid making the same mistakes. You might even manage to reduce the development cycle. By focusing on collecting and improving process measures, you would eventually improve the entire process. Six Sigma and the Implementation Strategy A business can improve its profitability dramatically in every sphere by using the Six Sigma Implementation Strategy. Six Sigma and the Implementation Strategy are two distinct aspects. Six Sigma is the philosophy with the goal of reducing the defects frequency to 3.4 defects per million opportunities. The Implementation Strategy provides the means to achieve that goal through a highly focused system of problem solving. Implementation Strategy is also called Breakthrough strategy (term coined by the Six Sigma Academy) Summary Six Sigma is a statistical concept whereby a process is it is operating so well that it allows for less than 3.4 defects per million opportunities. If a process accepts outputs only if they fall within Six Sigma from the average for all outputs, then it is essentially delivering no defective outputs at all. Six Sigma has two major goals; Cost reduction and Total customer satisfaction. Implementation Strategy provides the means to achieve Six Sigma goal through a highly focused system of problem solving.

Copyright 2004, All Rights Reserved. Edutech Dimensions Pvt. Ltd.