S I X

S I G M A

The Essential Six Sigma

How successful Six Sigma implementation
can improve the bottom line
by
James M. Lucas

OU CAN HARDLY pick

up a news or business
magazine these days
without coming across
an article about Six
Sigma. It originated at
Motorola in the early
1980s, and its implementation
helped the company win the 1988
Malcolm Baldrige National Quality
Award.
Fundamentally, Six Sigma is a
methodology for disciplined quality
improvement. Because this quality
improvement is a prime ingredient
of total quality management (TQM), many companies find adding a Six Sigma program to their current business system gives them all or almost all
the elements of TQM:

[current business system] + [Six Sigma] =

[total quality management (TQM)].
It is often much easier to add a disciplined quality
improvement system, such as Six Sigma, to a companys current business system than it is to implement
a TQM system. Simply put, Six Sigma uses a modified Shewhart cycle (the plan-do-check-act cycle
often attributed to Deming) as its Breakthrough
Strategy for its Americanized kaizen system.
Joseph M. Jurans statement that all quality
improvement occurs on a project-by-project basis
and in no other way1 can be considered an essen-

tial element in the foundation of

Six Sigma, though you seldom see
this statement credited in Six
Sigma literature. Operationally,
Six Sigma is the methodology that
gets more good improvement projects carried out.
A major advantage of Six Sigma
is it does not have quality or
statistics in its name. It is perceived to be a business system
that improves the bottom line and
only brings in technical details as
needed; TQM is perceived to be a
technical quality system owned
by technical specialists rather than all employees.
Six Sigmas simple and effective management
structure is one of its strengths; I could not
describe the management structure used by TQM
in such a succinct fashion. As an example of the
operational effectiveness of Six Sigma, it is worthwhile to point out that GEs implementation is
being widely imitated, while there was little copying of the kaizen program it tried to implement
between 1988 and 1992.

Six Sigmas heroic goal

Six Sigmas goal is the near elimination of defects
from any process, product or servicefar beyond
where virtually all companies are currently operating. The numerical goal is 3.4 defects per million
opportunities (DPMO) while higher levels of defects
are associated with lower sigma levels (see Table 1).
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THE ESSENTIAL SIX SIGMA

This table, except for some changes in the defects

per million column discussed in the sidebar, Six
Sigma and Defects per Million Opportunities (p. 30)
reproduces Table 1 from an article by Mikel J. Harry.2
Harry does not reference the cost of poor quality
(COPQ) information shown in the table, but the goal
does not seem unrealistic.
Juran gave similar numbers when he estimated that,
in the United States, close to a third of the work done
consisted of redoing what had been done before.
Depending on the nature of the industry, the COPQ consumed between 20 and 40% of the total effort.3 Setting
goals involving DPMO uses an easily understood metric
that handles both counts and continuous variables
(whatever their distribution) critical to quality (CTQ).
The identification of CTQ variables is one of the first
steps carried out after a Six Sigma project is identified.
The use of DPMO also avoids the slightly sticky technical point that the Six Sigma goal of 3.4 DPMO is actually
the 4.5 sigma one-tailed probability for a normal distribution. Most Six Sigma proponents explain this as a typical
shift in the mean that happens for most responses.
Due to my experience developing and implementing a product quality management system that recognized and estimated both long-term and short-term
variability,4 I prefer to think of the 4.5 versus 6 sigma
difference as a simplification that recognizes longterm variability.
While the appropriate variance component breakdown is process dependent, it is often appropriate to
consider the short-term variance component to be the
within the day variability and the long-term component the day-to-day variability. Long-term variability
will show up as a shift from goal at any sampling time.

ment process, but the description is less important

than the implementation.
The improvement projects must be integrated with
the overall goals of the organization. The top-level support for and overview of the planning, implementation
and evaluation of projects are important aspects of this
integration. Harry also claims: In essence, Six Sigma is
driven by a divide and conquer strategy, not a continuous improvement philosophy. It rolls out not according
to a vague notion of improving everything we do forever, followed up by a sporadic and disconnected set of
initiatives. Rather, it begins by first dividing the quality
pie into comprehensive compartments, or dimensions,
that form a holistic focus at all levels of the business
enterprise. 6 This last statement explains what is
achieved by top-level support for, and overview of, projects in an effective continuous improvement system.

Six Sigma implementation

Six Sigma implementation is top-down: The CEO is

usually the driving force, and an executive management team provides the Champion for each project.
The Champion is responsible for the success of the project, providing necessary resources and breaking down
organizational barriers. It is typical for a large part of a
Champions bonus to be tied to his or her success in
achieving Six Sigma goals. (The fraction is 40% at GE.7)
Getting upper management Champions involved in the
project selection process helps guarantee the projects
will have a large impact on the business.
The project leader is called a Black Belt (BB). It is
important to select BBs with different experience levels and pay grades because there is a wide range of
projects. However, all BB candidates should have a
history of accomplishment. Employees selected for BB
The Breakthrough Strategy
training should be on the fast track.
A BB assignment typically lasts for two years during
The Breakthrough Strategy is usually presented as a
which the BB leads from eight to 12 projects, each lastfour-step improvement process: measure, analyze,
ing approximately one quarter. (Large projects are broimprove, control. This is very much like the Shewhart
ken down into segments of approximately one quarter.)
plan-do-check-act cycle. A define step is often added
The projects will likely come from different business
before the measure step; and recently Harry described
areas, thereby giving the BB a broader view of the busian eight-step process beginning with recognize and
ness. Reporting on the projects and documenting their
ending with standardize and integrate. 5 There are
impact are important aspects of the BB experience. They
numerous descriptions of the steps in an improveenhance the fast-track aspects of the BB experience.
TABLE 1
Six Sigma Process Capability
The project team members are called Green
Belts
(GBs), and they do not spend all their
Sigma
Defects per million
Cost of poor quality
time
on
projects. GBs receive training similar
6 sigma
3.4 defects per million
<10% of sales
World-class
to that of BBs, but possibly for less time. They
5 sigma
230 defects per million
10 to 15% of sales
typically get their training to participate in an
4 sigma
6,200 defects per million
15 to 20% of sales
Industry average
important project for their business.
3 sigma
67,000 defects per million
20 to 30% of sales
It is important to note Six Sigma project par2 sigma
310,000 defects per million
30 to 40% of sales
Noncompetitive
ticipants such as BBs and GBs tend to be
agents of change who thrive in the new busi1 sigma
700,000 defects per million
ness climate of constant change. They are
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open to new ideas and are used to rigorously evaluating new ideas. For this reason a company should train
a large number of employees. For example, as of
January 1998, employees at GE will not be considered
for promotion to any management job without BB or
GB training.
Master Black Belts (MBBs) are resources for the project teams. MBBs are often experienced BBs who have
worked on many projects. They generally have
knowledge of advanced tools, business and leadership training, and teaching experience. A primary
MBB responsibility is training and mentoring new BBs
in the organization.

Project evaluation
All Six Sigma projects are rigorously evaluated for
financial impact. The CFO is an important member of
the executive management team, and most project
teams have a member from
finance who documents the financial impact. The expectation is that
each project has a financial impact
of about $175,000. Therefore, each
BB has a financial impact of about
$1 million per year from the four
to six projects per year he or she
leads.8 Because project-to-project
cost savings are highly variable, I
think these expectations are median or modal values with a higher
arithmetic mean financial impact.
More important than the financial impact of individual projects is the cumulative financial effect on the
organization. Larry Bossity, CEO of Allied Signal,
says, With $1.5 billion in estimated savings already
achieved, Six Sigma is one of the most ambitious projects we have ever undertaken. Its been a major factor
in the companys improved performance.9
GE started Six Sigma in 1995 and claimed net benefits by 1997. In 1998, the company claimed benefits of
$1.2 billion and costs of $450 million for a net benefit
of $750 million.10 The companys 1999 annual report
claimed a net benefit of more than $2 billion. I believe
companies that emphasize financial metrics will likely
have a more successful Six Sigma implementation
than those that emphasize other metrics, such as number of people trained.
While the rule of thumb says one BB per 100
employees and one MBB per 100 BBs are adequate,
recent implementation experience suggests the BB to
MBB ratio should be closer to 10 to 1.11 Rigorous project
evaluation allows the number of BBs to be chosen
rationally. As long as the projects have large returns,
there cant be too many projects. There have been no
reports yet of diminishing returns because too many
projects were attempted.

Though some companies think GEs brand of Six

Sigma is extreme, a quality director says, Its disproportionate; GE is 2.5 times bigger than us [in terms of
employees], but is going to have 50 times the number
of BBs.12 I also know of a 3,000-person organization
training 100 BBs with the goal of achieving $100 million per year in cost savings. This is more than three
times the 1% rule of thumb number. We will soon
learn if this larger BB ratio is successful. Getting the
correct number of BBs for your organization is important because a major cost of Six Sigma is backfilling
for the employees who become BBs.

Training issues
BB training usually includes four weeks of classroom
training, a week per month over four months. The
remaining time is spent working on projects while
being mentored by a MBB. The training can be succinctly described as three weeks of
statistical tools: a week of basic statistics, including data analysis and
the seven tools, a week of design of
experiments and a week of quality
control. This statistical training is
combined with a week of softer
skills including project selection,
project management and project
evaluation, team selection and
.
team building. Each week of training may include topics from every
area. More training details can be found elsewhere.13, 14
The training has a large trainer-to-trainer variability,
and much of the training is in lecture format rather
than interactive. But the training is still effective
because the trainees are motivated and use their training immediately. There are project reviews on many
days, and work on projects is carried on when BBs
and MBBs are not in training.
Members of the management team certify a BB after
he or she has led two successful project teams; usually
one is under the guidance of a MBB, and the other is
done more independently. The MBB is also certified.
Certification as a MBB usually requires 20 successful
projects, about half while a BB and the remainder
while mentoring BBs.

Getting the correct number of

BBs for your organization is
important because a major cost
of Six Sigma is backfilling for the
employees who become BBs

Six Sigmas success will encourage others

Six Sigma is a business system with many statistical
aspects, and it naturally fits the business systems of
most companies. It is an operational system that speeds
up improvement by getting the right projects conducted in the right way. It drives out fear by making
employees agents of change rather than resisters to
change. It has been successful for the companies that
have adopted it, and this success will encourage other
companies to adopt it.
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THE ESSENTIAL SIX SIGMA

Sigma Limits and Defects per Million Opportunities

The relationship between the sigma level (SL) of a process
and the defects per million opportunities (DPMO) is calculated
using the cumulative distribution function (F(z)) of the normal
distribution where F(z) is the probability of observing a value
less than z. The F(z) values below were calculated using the
NORMSDIST(z) function in Excel 2000.
Our calculations show the SL ranging from 0 to 7 in steps of
0.25 in the first column. The second and third columns calculate
F(SL + 1.5) and F(1.5 - SL). The 1.5 accounts for the 1.5 shift
assumed by Six Sigma. These values from the cumulative distribution function are used in further calculations. The fourth column
(probability good) gives the probability of an observation that is
not a defect. The values in this column are simply the difference
between the second and third columns:
probability good = F(SL + 1.5) - F(1.5 - SL)
The fifth column calculates the probability of a defect as 1 (probability good). The last column converts the probability of a
defect to DPMO by multiplying by 1,000,000.
Our defect counts for SL < 3.5 are slightly larger than the
counts shown by Mikel J. Harry because, for these cases, it is
necessary to consider both tails of the distribution.1 When only
one tail of the distribution is considered, the DPMO values are
calculated as one million times the second column (1,000,000 x
F(1.5 - SL)).
When DPMO calculations are carried out to the nearest
defect, the one-tail approximation differs from the correct twotail value for all SL < 3.5. The most extreme example is that the
one-tail zero sigma DPMO value is 933,193 instead of one million. There is no difference between the one-tail approximation
and the correct two-tail calculation when the SL is > 1 and the
calculations are carried out to only two significant figures. We
recommend using the single tail approximation and using only
two significant figures when the SL is greater than 1. For smaller SL values, it is necessary to consider both tails of the distribution (see Table 1).
The third or fourth column of the table can be used to convert the observed probability of a defect to a SL. Robert J.
Gnibus gives a one-tail approximation that usually works adequately; however, it will give incorrect answers when the probability of a defect is large.2
Gnibus second example concerns processing speeds of
mortgage customers, where "all the defects (loans in a monthly
sample taking more than five days to process) are counted, and

REFERENCES
1. Joseph M. Juran, Managerial Breakthrough (New York:
McGraw-Hill, 1964).
2. Mikel J. Harry, Six Sigma: A Breakthrough Strategy for
Profitability, Quality Progress, May 1998.
3. Joseph M. Juran and A. Blanton Godfrey, Jurans Quality
Handbook, fifth edition (New York: McGraw-Hill, 1999).
4. Donald W. Marquardt, ed., PQM: Product Quality
Management (Wilmington, DE: E.I. DuPont de Nemours & Co.
Inc., Quality Management and Technology Center, 1991). A more
accessible and shorter version is published here in Joseph M.
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it is determined that there are 600 loans in the 1,000 applications

processed last month that dont meet this new customer
requirement."
For this example, the probability of a defect is 600 / 1,000 =
0.6; the rule for our example (Table 1) is to pick the largest SL
whose probability of a defect value is larger than the observed
probability of a defect. Table 1 shows the SL is 1.25 because the
SL has the probability of a defect = 0.602. Gnibus one-tail
approximation uses the NORMSINV function in Excel to calculate the z value for the corresponding probability good. The
one-tail approximation (with a 1.5 shift) is:
SL = 1.5 + NORMSINV (probability good)
For the example:
SL = 1.5 + NORMSINV (0.4) = 1.5 + (-0.253) = 1.247
Gnibus rounded this to a SL of 1.2, while the correct value is
closer to 1.3. Again, the one-tail approximation for SL gives a
value close to the correct answer because the SL > 1.
Gnibus third example shows his and Harrys one-tail
approximations both agree when SL = 1.0; both give 690,000
DPMO where the correct DPMO value is 700,000. When the
fraction of defects is larger, the one-tail approximation can give
meaningless answers. The one-tail approximation will give
negative SL values when the probability of a defect is greater
than 0.933.
This can be clearly seen in an additional example. Pretend
you want to test the computation skills of 1,000 students and
give them slide rules to assist them with their calculations.
Slide rules are outdated computing aids, so most of the students will be unsatisfied. If you find the SL number for the
number of satisfied students, you will be faced with two cases:
zero students who are satisfied and 66 students who are satisfied. The SLs are zero and 0.25, respectively, when you use
two-sided limits. Using the one-sided approximation gives -
for the first SL and zero for the second.
Note I am pointing out technical errors in a basic table used
by Harry to sell Six Sigma to management. This means that it is
worthwhile to question other aspects of Six Sigma.
REFERENCES
1. Mikel J. Harry, Six Sigma: A Breakthrough Strategy for
Profitability, Quality Progress, May 1998.
2. Robert J. Gnibus, Six Sigmas Missing Link, Quality Progress,
November 2000.

Juran, Jurans Quality Handbook (see reference 3).

5. Mikel J. Harry, Framework for Business Leadership,
Quality Progress, April 2000.
6. Ibid.
7. GE Capitol Service, The Center for Learning &
Organizational Excellence, May 1999.
8. Mikel J. Harry, Six Sigma: A Breakthrough Strategy for
Profitability, see reference 2.
9. William J. Hill, Six Sigma at Allied Signal Inc.,
Presentation at the 1999 Q&P Research Conference, May 1999.
10. GE Capitol Service, The Center for Learning &

TABLE 1

Relationship Between SL and DPMO

SL

F(SL + 1.5)

F(1.5 - SL)

Probability good

Probability of a defect

DPMO

0.933192771

0.933192771

0.25

0.959940886

0.894350161

0.065590726

0.934409274

934,409.2745

0.5

0.977249938

0.84134474

0.135905198

0.864094802

864,094.8023

0.75

0.987775567

0.77337272

0.214402846

0.785597154

785,597.1537

0.99379032

0.691462467

0.302327853

0.697672147

697,672.1472

1.25

0.997020181

0.598706274

0.398313908

0.601686092

601,686.0924

1.5

0.998650033

0.5

0.498650033

0.501349967

501,349.967

1.75

0.999422914

0.401293726

0.598129187

0.401870813

401,870.8127

0.999767327

0.308537533

0.691229794

0.308770206

308,770.206

2.25

0.999911555

0.22662728

0.773284276

0.226715724

226,715.7243

2.5

0.999968314

0.15865526

0.841313054

0.158686946

158,686.9458

2.75

0.999989304

0.105649839

0.894339465

0.105660535

105,660.5348

0.999996599

0.066807229

0.93318937

0.06681063

66,810.6296

3.25

0.999998982

0.040059114

0.959939868

0.040060132

40,060.1319

3.5

0.999999713

0.022750062

0.977249651

0.022750349

22,750.34914
12,224.50961

1,000,000

3.75

0.999999924

0.012224433

0.98777549

0.01222451

0.999999981

0.00620968

0.993790301

0.006209699

6,209.698895

4.25

0.999999996

0.002979819

0.997020177

0.002979823

2,979.823064

4.5

0.999999999

0.001349967

0.998650032

0.001349968

1,349.968213

4.75

0.000577086

0.999422913

0.000577087

577.0866996

0.000232673

0.999767327

0.000232673

232.673414

5.25

8.84446E-05

0.999911555

8.84446E-05

88.44459787

5.5

3.1686E-05

0.999968314

3.1686E-05

31.6860359

5.75

1.06957E-05

0.999989304

1.06957E-05

10.69568586

3.4008E-06

0.999996599

3.4008E-06

3.400803094

6.25

1.01833E-06

0.999998982

1.01833E-06

1.0183285

6.5

2.87105E-07

0.999999713

2.87105E-07

0.287105

6.75

7.62014E-08

0.999999924

7.62014E-08

0.076201358

1.90364E-08

0.999999981

1.90364E-08

0.019036399

SL Sigma level

DPMO Defects per million opportunities

Organizational Excellence, see reference 7.

11. Kymm K. Hockman, moderator, Steve Caffrey, Roger
Hoerl, Patrick Meehan, Staffing and Deployment Strategies to
Support Six Sigma Implementation: A Panel Discussion, ASQs
Annual Quality Congress, May 2000.
12. Ann Walmsley, Six Sigma Enigma, The Globe and Mail
Report on Business Magazine, October 1997.
13. Roger W. Hoerl, Six Sigma and the Future of the Quality
Profession, Quality Progress, June 1998.
14. Gerald J. Hahn, William J. Hill, Roger W. Hoerl and
Stephen A. Zinkgraf, The Impact of Six Sigma ImprovementA

Glimpse Into the Future of Statistics, The American Statistician,

August 1999.
JAMES M. LUCAS is a Grand Master Back Belt at J. M. Lucas

and Associates in Wilmington, DE. He earned a doctorate in statistics from Texas A&M and is a Fellow of ASQ. Lucas also
received ASQs 1999 Shewhart Medal. If you would like to comment on this article, please post your remarks on the Quality
Progress Discussion Board on www.asqnet.org, or e-mail them to
editor@asq.org. QP
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