What is Six Sigma? Six Sigma is a set of practices and methodologies that uses statistics, numbers and data to improve process and optimize company production. The Six Sigma was originally developed by Motorola in the 1980s and was initiated based on a number of quality improvement technologies including quality control, TQM (Total Quality Management) and Zero Defects.
Apart from Motorola itself, other major established companies that adopt Six Sigma includes General Electric, Bank of America, Merryl Lynch and so on. In Malaysia, it is pretty much widely used in manufacturing (OEM & ODM) e.g. Flextronics, Samsung, Siemens VDO and Agilent Technologies as well as other industry e.g. UEM, Dutch Lady, TM and AIA Malaysia, just to name a few.
If you study statistics in school, most likely you have been introduced with the ‘Sigma’ symbol, where it is used to represent a standard deviation. Again, do not worry too much if you have not come across it. Reason being is that you’d probably pass out to see the standard deviation formula, which looks like the following:
What you need to understand about standard deviation is actually used to describe how much variation exists in a set of data, group of items, or a process.
To easily explain further the Six Sigma terminology, let me pick an analogy of study made by Pete Pande and Larry Holpp who presented the idea in their published book, “What is Six Sigma?”.
Suppose that you run a pizza business and deliver pizzas to offices in the neighborhood area. According to your contract with one of your major customers, everyday pizzas will be delivered fresh and hot, and will be delivered between 11.45pm to 12.15pm. Here the ‘11.45pm to 12.15pm delivery window’ will form as part of the ‘requirement’, while the window outside of 11.45pm and 12.15pm will be considered ‘defect’. You agree to give your customer a 50% discount if the delivery falls on the ‘defect’ window. At the same time, you will pay bonus to your staff whenever the pizzas are delivered within the ‘requirement’.
In this process, here is how Six Sigma is used as a measure. If the pizzas are delivered within requirement 68% of time, the process is only at ‘2 Sigma level’ (If you plan to do some calculation, think back of the formula before). If pizzas are delivered 93% of time, the operation is at ‘3 Sigma level’. A performance of 99.4% of time will convert to 4 Sigma.
To obtain a Six Sigma level, the pizza delivery must be 99.9997% all the time! Practically, this means a perfect delivery, or statistically about 3 to 4 late (or too early) deliveries out of 1 million!
Is Six Sigma Suitable for All Industries?
A few companies have tried to implement Six Sigma in their organization but met with failure. The most popular one is the case of a former CEO of General Electric by the name of Bob Nardelli who tried to adapt it to retail industry. The result is an overwhelming failure because Six Sigma uses ‘defect’ structure where retail industry is very much related to ‘people’. Home Depot in America also tried to adopt Six Sigma but much without success.
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