What Is Six Sigma?
Knowledge is power. —Francis Bacon (1561-1626)
o you know, do you really know, what’s going on in your organization? The assertion that knowledge is power rings as true today as it did four centuries ago. In any industry, organization, or daily process, when you don’t know what you don’t know, it’s going to cost you. For too many organizations the costs (often hidden) of defects and waste in the way they operate are huge. Having processes in which errors occasionally occur may not seem such a big deal. But when you consider how many errors may be lurking in company-wide processes, the monetary impact on overall productivity, customer satisfaction, and profitability multiplies dramatically! The Six Sigma approach to managing is all about helping you identify what you don’t know as well as emphasizing what you should know, and taking action to reduce the errors and rework that cost you time, money, opportunities, and customers. Six Sigma translates that knowledge into opportunities for business growth.
Six Sigma for Managers Many companies believe that dealing with errors is just part of the cost of doing business. But you don’t have to accept that faulty logic. With Six Sigma, you can eliminate most errors, reduce your costs, and better satisfy your customers.
Process Any repetitive action—be it in a transactional, manufacturing, or services environment.The Six Sigma methodology collects data on variations in outputs associated with each process, so that it can be improved and those variations reduced.
Six Sigma Defined and Explained
Six sigma is a statistical concept that measures a process in terms of defects. Achieving six sigma means your processes are delivering only 3.4 defects per million opportunities (DPMO)—in other words, they are working nearly perfectly. Sigma (the Greek letter σ) is a term in statistics that measures something called standard deviation. In its business use, it indicates defects in the outputs of a process, and Sigma A term used in statistics to represent stanhelps us to understand dard deviation, an indicator how far the process deviof the degree of variation in a set of ates from perfection. measurements or a process. (We’ll get into the statistics Six sigma A statistical concept that in later chapters.) measures a process in terms of A sigma represents defects—at the six sigma level, there 691462.5 defects per milare only 3.4 defects per million lion opportunities, which opportunities. Six Sigma is also a phitranslates to a percentage losophy of managing that focuses on of nondefective outputs of eliminating defects through practices only 30.854%. That’s obvithat emphasize understanding, measuring, and improving processes. ously really poor performance. If we have processes functioning at a three sigma level, this means we’re allowing 66807.2 errors per million opportunities, or delivering 93.319% nondefective outputs. That’s much better, but we’re still wasting
What Is Six Sigma?
money and disappointing Defect A measurable charour customers. acteristic of the process or How well are your its output that is not within the acceptable customer limits, i.e., processes operating? Are not conforming to specifications. Six they three sigma? Four Sigma is about practices that help you sigma? Five? eliminate defects and always deliver Most organizations in products and services that meet custhe U.S. are operating at tomer specifications.The sigma level three to four sigma quality of a process is calculated in terms of levels. That means they the number of defects in ratio to the could be losing up to 25% number of opportunities for defects. of their total revenue due to processes that deliver too many defects—defects that take up time and effort to repair as well as creating unhappy customers. Is that good enough? The answer is simple. No it’s not when you could be doing a lot better. Helping you do that is what this book is about. The...