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Wednesday, June 6, 2018

The Basics of Six Sigma

Six Sigma's goal is process improvement and variation reduction. By improving processes and reducing defects, customer satisfaction is naturally improved.

Minimizing defects in production through continuous improvement. Six Sigma focuses on measuring the impact of an improvement project and uses the following phases:

  • Defining
  • Measuring
  • Analyzing
  • Improving, and
  • Controlling

We've seen this before in the DMAIC process that we discussed when talking about KPIs & the Importance of Measurement.

A sigma is a measurement of variance and denotes the variance from a mean average of an event. "Six Sigma" assumes a failure rate of 3.4 parts per million or 99.9997%. Six Sigma focuses on efficiencies and reducing costs. It also accounts for the "cost" of poor quality and works to reduce it.

Reducing Poor Quality

We've talked about Quality and Customer service before, but it bears repeating again. To reduce poor quality, there are certain actions that need to be taken:
  • Understand who your customers are and what matters to them.
  • Understand customer feedback (the Voice of the Customer) and see how that applies to your product/service & then prioritizing resolution based on the issues related to your product
  • Understand your internal processes and what causes variation
  • Understand the right metrics to measure and how to standardize
  • Understand what causes a defect and how it can be addressed
Once you realize that every process can be measured and analyzed, it's not too far a leap to understand improvements based on the analysis are possible. By continuing this process of improvement (continuous improvements) you can gradually reduce variations and improve the final product.

The Meaning of Six Sigma

I talked in an earlier post about 99% uptime and how great that sounds but in reality, it's pretty horrible. 99% uptime actually equates to -

  • Unsafe drinking water almost 15 minutes each day. 
  • 5,000 incorrect surgical operations per week. 
  • Two airplane accidents at most U.S. major airports each day. 
  • 200,000 wrong drug prescriptions each year. 
  • No electricity for almost 7 hours each month.
As you can see, that's a pretty dire state of affairs. By contrast:
  • At the 1st Sigma level - 690,000 defective parts/million occur
  • At the 2nd Sigma level - 308,538 defective parts/million occur
  • At the 3rd Sigma level - 66,807 defective parts/million occur
  • At the 4th Sigma level - 6,210 defective parts/million occur
  • At the 5th Sigma level - 233 defective parts/million occur 
  • At the 6th Sigma level - 3.4 defective parts/million occur (99.9997%)
Business success depends on improving business process and results in combination with great customer service. Some tangible and realistic benefits based on implementing the methodologies promoted by Six Sigma include:
  • Reduced repair times
  • Increased customer satisfaction
  • Reduced order delays
  • Reduced defects
  • Increase productivity
  • Decreased Measurement Error

History of Continuous Improvement

Shewart and Deming helped define quality in the early 1900s. In 1920 Walter Shewart explained that three sigma is the point at which a process needs to be corrected. This is where a product would need to be remade as it would fail a quality audit. Edwards Deming, on the other hand, pointed to management and made it clear that it is their responsibility to improve the systems so that workers can work more effectively. Based on his research, management owned 80% of the quality problems and the workers could only influence 20% ... by the way, any chance you've seen that ratio before?

If that name sounds familiar then you've probably heard of the Deming Cycle before (pictured above). Deming taught something called the System of Profound Knowledge which had four related parts. The theory of (1) Optimization, (2) Variation, (3) Knowledge, and (4) Psychology.