Six Sigma

Six Sigma is a tool from the "lean" organization productivity

toolkit and particularly concerned with of output and
services of an organization in terms of quality, productivity
and effectiveness. It provides targets to be achieved by that
organization. The concept originated with the Motorola
organization. Six Sigma is allied to the zero defects (zee-
dee) drive.

Six sigma as a management aid to quality is used to assess

the level of quality obtaining in an organization or to set
targets for a required quality level. The actions needed to
attain these levels is the hard bit, which requires the use of
various management tools available for the purpose.

Why "sigma"?

Those who have met the Greek letter "sigma" in terms of

statistical analyses may be inclined to switch off at this
stage, but the concept of Six Sigma has little to worry
anyone on that score. In fact, it is an extremely simple
concept to comprehend. Almost the only connection with
statistical method is the level of defect parts or actions that
must be attained to satisfy the Six Sigma requirement. So,
be not dismayed but read on.

Those readers who are familiar with statistics will know that
the Greek letter sigma (σ) is the symbol for the standard
deviation of a sample of data. In the present context it
refers to a level of services and output to be attained by the
organization.

Parameters are selected on which to base the measures

which are most important to the organization (usually in
percentages), such as level of defects found in products
completed, customer complaints, errors made in invoices
and similar parameters often allied to quality of service and
manufacture as, for example, in quality control. It is very
much customer oriented.

For example, suppose a company dispatches one thousand

orders to customers over a period and out of these there are
six that contain errors (e.g. incorrect contents). What level
of sigma does this signify? The answer is found in the tables
of probability published in most textbooks on the subject of
statistical method (although few publish these beyond 3 or 4
sigma levels). For the non-mathematical reader these are
translated into plain English in the table given below. In the
present example (equivalent to 6,000 defective orders out
of a million dispatched) this equates to the sigma level 4, as
stated in the table. To achieve Six Sigma quality there
should be fewer than 4 defectives per million. As one will
appreciate, this is an extremely high target to achieve and
needs a great deal of improvement in the company's
procedures and operation.

The six-sigma concept requires active cooperation and,

importantly, action from employees and management alike.
These people can be organized into teams headed by a
trained and experienced Six Sigma team leader or "black
belt". Six Sigma has adopted competence levels of the
martial arts to indicate the competences, levels of
knowledge and training of team members. One important
concept is not to accept one's competence level but to strive
to improve on it.
Jack Welch former chairman of General Electric is quoted
(1997) as saying that "Six Sigma changes how management
operates" and "Six Sigma is about putting into practice the
notions of working smarter, not harder" (ref: 4
below). These are very pertinent aims which sum up the
concept extremely well.

How is it done?

Continuous improvement is key to achieving these

extremely high levels of quality and effectiveness. Examples
of its tools and approaches are:

• Training employees to be aware of bad practices and

suggest improvements
• Training employees in what is needed to achieve the
sigma levels
• Methods improvements to create more effective and
efficient working methods
• Improvement of working conditions to be more
compatible with the concept
• Improvements in the plant maintenance procedures,
using its tools such as FMEA (failure mode and effect
analysis).

Extract from standard tables of probabilities (adjusted

as explained below)

Defects per million opportunities (rounded):

Defects: 67,000 6,000 230 3
Sigma level: 3 4 5 6

Important note: The above figures do not relate directly to

the values found in tables of probabilities. Due allowance
has been made for possible swings of about 1.5 sigma
around the given textbook values. This has been adopted as
generally accepted practice.

ix Sigma Versus Three Sigma

The traditional quality model of process capability differed from Six Sigma in two
fundamental respects:
 1. It was applied only to manufacturing processes, while Six Sigma is applied
to all important business processes.
2. It stipulated that a "capable" process was one that had a process standard
deviation of no more than one-sixth of the total allowable spread, where
Six Sigma requires the process standard deviation be no more than one-
twelfth of the total allowable spread.

These differences are far more profound than one might realize. By addressing all
business processes, Six Sigma not only treats manufacturing as part of a larger
system, it removes the narrow, inward focus of the traditional approach.
Customers care about more than just how well a product is manufactured. Price,
service, financing terms, style, availability, frequency of updates and
enhancements, technical support, and a host of other items are also important.
Also, Six Sigma benefits others besides customers. When operations become
more cost-effective and the product design cycle shortens, owners or investors
benefit too. When employees become more productive their pay can be
increased. Six Sigma's broad scope means that it provides benefits to all
stakeholders in the organization.
The second point also has implications that are not obvious. Six Sigma is,
basically, a process quality goal, where sigma is a statistical measure of
variability in a process (see Chapter 7). As such it falls into the category of a
process capability technique. The traditional quality paradigm defined a process
as capable if the process natural spread, plus and minus Three Sigma, was less
than the engineering tolerance. Under the assumption of normality, this Three
Sigma quality level translates to a process yield of 99.73%. A later refinement
considered the process location as well as its spread and tightened the minimum
acceptance criterion so that the process mean was at least four sigma from the
nearest engineering requirement. Six Sigma requires that processes operate such
that the nearest engineering requirement is at least Six Sigma from the process
mean.
Six Sigma also applies to attribute data, such as counts of things gone wrong.
This is accomplished by converting the Six Sigma requirement to equivalent
conformance levels, as illustrated in Figure 3.3.

Six Sigma also applies to attribute data, such as counts of things gone wrong.
This is accomplished by converting the Six Sigma requirement to equivalent
conformance levels, as illustrated in Figure 3.3.
Figure 3.3. Sigma levels and equivalent conformance rates.

One of Motorola's most significant contributions was to change the discussion of

quality from one where quality levels were measured in percent (parts-per-
hundred), to a discussion of parts-per-million or even parts-per-billion. Motorola
correctly pointed out that modern technology was so complex that old ideas
about "acceptable quality levels" could no longer be tolerated. Modern business
requires near perfect quality levels.

One puzzling aspect of the "official" Six Sigma literature is that it states that a
process operating at Six Sigma will produce 3.4 parts-per-million (PPM) non-
conformances. However, if a special normal distribution table is consulted (very
few go out to Six Sigma) one finds that the expected non-conformances are
0.002 PPM (2 parts-per-billion, or PPB). The difference occurs because Motorola
presumes that the process mean can drift 1.5 sigma in either direction. The area
of a normal distribution beyond 4.5 sigma from the mean is indeed 3.4 PPM.
Since control charts will easily detect any process shift of this magnitude in a
single sample, the 3.4 PPM represents a very conservative upper bound on the
non-conformance rate. See Appendix Table 18.

In contrast to Six Sigma quality, the old Three Sigma quality standard of 99.73%
translates to 2,700 PPM failures, even if we assume zero drift. For processes with
a series of steps, the overall yield is the product of the yields of the different
steps. For example, if we had a simple two step process where step #1 had a
yield of 80% and step #2 had a yield of 90%, then the overall yield would be 0.8
x 0.9 = 0.72 = 72%. Note that the overall yield from processes involving a series
of steps is always less than the yield of the step with the lowest yield. If Three
Sigma quality levels (99.97% yield) are obtained from every step in a ten step
process, the quality level at the end of the process will contain 26,674 defects per
million! Considering that the complexity of modern processes is usually far
greater than ten steps, it is easy to see that Six Sigma quality isn't optional; it's
required if the organization is to remain viable.
The requirement of extremely high quality is not limited to multiple-stage
manufacturing processes. Consider what Three Sigma quality would mean if
applied to other processes:

• Virtually no modern computer would function.

• 10,800,000 healthcare claims would be mishandled each year.
• 18,900 US Savings bonds would be lost every month.
• 54,000 checks would be lost each night by a single large bank.
• 4,050 invoices would be sent out incorrectly each month by a modest-
sized telecommunications company.
• 540,000 erroneous call details would be recorded each day from a regional
telecommunications company.
• 270,000,000 (270 million) erroneous credit card transactions would be
recorded each year in the United States.

With numbers like these, it's easy to see that the modern world
demands extremely high levels of error free performance. Six
Sigma arose in response to this realization.