Six Sigma in the Contemporary Business Environment

Topics: Six Sigma, Lean manufacturing, Business process Pages: 11 (3445 words) Published: February 2, 2009
The discerning customers nowadays are better educated and are able to recognize the quality of products or services, rather than just looking at the price. As competition between organizations grows more intense, many different factors and dimensions would be considered by the customers when they are going to measure the quality (Stevenson, 1999). In order to remain competitive among those rigorous competitions in the dynamic changing business environment, organizations have to maintain and enhance the quality of the products or services being delivered.

“Quality is consistent conformance to customers’ exceptions” (Slack, Chambers and Johnston, 2007). There is no definite definition for quality since it varies in different circumstances. For example, manufacturing would focus on producing products which are error-free and conform precisely to their design specifications while service providers would focus on providing services which are fit for its purpose. Moreover, it is subject to customer’s expectations against their perceptions of the product or service.

The Six Sigma is a quality approach to measuring, improving and managing quality and operations performance. It emphasizes the importance of reducing variation in process performance so as to achieve true customer satisfaction by delivering “products as promised, with no defects, with no early-life failures and when the product did not fail excessively in service” (Slack, Chambers and Johnston, 2007). It was first popularized by Motorola in the 1980s, and because of its successful deployment, many companies worldwide have then adopted Six Sigma, such as General Electric Company and Honeywell are very successful examples to demonstrate how it is beneficial to organizations, provided that it is implemented properly (Antony, Kumar and Banuelas, 2006).

This report is designed to demonstrate the understanding of the principles and concepts of Six Sigma, the necessities for designing, organizing and the methodologies for deploying it to the organizations, how significant is its benefit to the organizations, how it makes organizations remain competitive in the contemporary business environment, and finally to examine some implementation problems of Six Sigma, why it fails in some organizations and what are the critical factors to make it success.

2What is Six Sigma?
“The Six-Sigma quality initiative means going from approximately 35,000 defects per million operations to fewer than 4 defects per million in every element in every process that this company engages in every day.” – Jack Welch, Former Chairman of General Electric

Welch gives a statistical definition to Six Sigma. Since every activity has variability which can be modeled by following a normal distribution, if we can reduce this variability (i.e. the standard deviation of the normal distribution) of, say a manufacturing line, that means we can reduce the product defect rate. In fact, the term “sigma” is a Greek symbol “σ” representing the standard deviation from the mean of a normal distribution (Pham, 2006).

To achieve Six Sigma, the process must not produce more than 3.4 defects per million opportunities (DPMO). Another way for us to understand the statistical meaning of the difference between a normal distribution and a Six Sigma calculation chart is “just think of it being 1.5 sigma shifts to every value in the normal distribution” (Berger, 2003).

The term “defect” stated above is a measure of how much the activity varies from a specific point or target. In the business environment, it can be described as anything outside of customer expectations. The philosophy of Six Sigma is to reduce variation through understanding and improving business processes so that the outputs are consistent, conforming to the standard specified, minimizing defects and thus saving unnecessary cost. This applies to almost any processes which are not perfect because the number of sigma...
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