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MANAGEMENT LIBRARY
Six Sigma
by Mikel Harry and Richard Schroeder

Why Read It?

Six Sigma is a management instrument that is designed to optimize processes so that they attain zero-fault quality. The authors use practice-based examples to show how the concept can be applied and what it can do for companies of various sizes and in various branches of industry. The book should therefore be of interest to anyone who is interested in improving quality and thereby market share, customer satisfaction, and, ultimately, profits.

Getting Started
Under the Six Sigma system, say the authors, processes are organized in such a way that faults and errors cannot occur. It is intended to change fundamentally the ways in which businesses conduct their operations and to have a direct and improving effect on profit margins. Instead of planning projects years ahead in the future, Six Sigma concentrates on attaining financial goals in twelve-month stages.

Contribution
1. The path to change There are six areas, according to the authors, to which the Six Sigma program applies:

improving processes improving products and services looking after shareholders improving design improvements in suppliers training and appointing staff

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2. Being better is cheaper Since quality saves the company money, say the authors, it is sensible to produce a product or service in such a way that you get it right first time. Quality costs can be improved in the following key areas:

basic organizational competence deviations in industrial processes deviations in the business process the technical design process and documentation the quality of technical data supplier competence

3. Benchmarking: discovering who really is the best According to the authors, quantitative benchmarking enables a company to evaluate performance in every area. Standard indices are used for performance and ability. Performance can then be compared not only between different areas in-house, but against other companies as well. 4. Changing what companies measure: a Six Sigma credo Statistics alone, however, do not bring about a breakthrough, though they are a very powerful instrument for changing the playing field on which the company operates. Measuring systems (metrics) create, say the authors, a common language and permit process measurements to be communicated openly and honestly. 5. Uncovering the hidden factory Harry and Schroeder suggest that companies inadvertently create ad hoc systems and processes (hidden factories) that are designed to correct faults that occur during production processes. These take up space, time, and resources unnecessarily. As the incidence of faults increases, hidden factories expand and costs escalate. 6. Six Sigma: the breakthrough strategy The integration of Six Sigma takes place in four stages, which the authors label as follows:

Identification: In this phase managers begin to ask questions about processes instead of simply looking at the end product. Characterization: Quality criteria for the process are described and measured at this stage. Optimization: This is a phase of improvement and control in which enhanced processing capability is first maximized then preserved. Institutionalization: In the final stage quality is standardized and integrated and the Six Sigma strategy is woven into the corporate culture.

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7. Measuring performance on the Sigma scale Over a particular period the processing average may run according to plan, but as time goes on, for various reasons, it may deviate. Such distortions and fluctuations are catered for in the Six Sigma strategy, say the authors. The strategy allows for them when assessing process capability. 8. Implementation The authors identify the following principles as requisite for carrying out a Six Sigma strategy successfully:

highly visible top-down promotion of the initiatives by management a measuring system so that progress can be followed internal and external benchmarking of products, services, and processes stretch goals to focus employees on changing processes further training for all levels champions and black belts to encourage the initiative

9. Six Sigma players The most important internal actors in Six Sigma, say the authors, are these:

Champions who ensure that all key company functions are linked to Six Sigma Black Belt Masters who work with the Champions to co-ordinate project selection and project training Black Belts who apply the instrumentation and knowledge of the Six Sigma strategy to specific products Green Belts who are workers through the organization who carry out Six Sigma as part of their normal work.

10. Guidelines for project selection Six Sigma projects need to be tied in with the highest levels of company strategy and directly support specific business objectives. Where projects are designed to improve company productivity both top-level management and the operational level in individual plants must be in accord, and people must be appointed to be responsible for the project and to carry it out.

Context
Mikel Harry and Richard Schroeder developed their comprehensive quality management initiative, Six Sigma, at Motorola in the 1980s. It is compatible with quality norm ISO 9000. Its goal is the achievement of zero-fault quality both in production processes and in the service sector. The main criticism that has been leveled at Six Sigma is that it neglects the employees side of things and tolerates the loss of jobs that may result from radical process optimization and achieving the greatest possible cost savings.

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BUSINESS: The Ultimate Resource

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The Best Sources of Help

Harry, Mikel, and Richard Schroeder. Six Sigma: The Breakthrough Management Strategy Revolutionizing the Worlds Top Corporations. New York: Bantam Doubleday Dell Books, 2002.

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