CHAPTER 1

General Six Sigma

INTRODUCTION

In a slow economy, companies no longer have the luxury of business as usual.Organizations must try to prevent quality issues, quickly identify and solveproblems if they do occur, and drive down costs by increasing efficiencies. SixSigma has proven its value in all these areas, and it is already in use at manylarge manufacturing companies.

However, businesses of all sizes and types can benefit from the use of SixSigma. Accounting firms, service companies, stock brokers, grocery stores,charities, government agencies, suppliers of healthcare, and virtually anyorganization making a product or supplying a service can gain from Six Sigmause. The intent of this book is to broaden its use into these other areas.

In the healthcare field, for example, there is much controversy on how tocontrol rising medical costs. Yet there are few hard statistics related to thesuccess of competing medical treatments. The need for good data analysis in thehealthcare field makes Six Sigma a natural fit. As one specific example, in theUnited States, eight billion dollars per year is spent on various prostatecancer treatments. The costs of the various treatment options range from $2,000to well over $50,000. Yet, according to a study by the Agency for HealthcareResearch and Quality (February 4, 2008, U.S. Department of Health and HumanServices Agency for Healthcare Research and Quality), no one treatment has beenproven superior to the others. The agency also noted that there is a lack ofgood comparative studies. Dr. Jim Yong Kim, a physician and the president ofDartmouth College, reiterated this in an interview on Bill MoyersJournal (September 11, 2009). Dr. Kim said that work done at Dartmouthshowed great variation in outcomes between various hospitals and doctors, and hesuggested that healthcare professionals needed to learn from industry and startusing processes like Six Sigma to improve and reduce the costs of healthdelivery.

Six Sigma experts often make Six Sigma complex and intimidating. But the basicSix Sigma concepts are quite simple. Six Sigma on a Budget makes thewhole process of implementing Six Sigma easy. This book walks readers throughdetailed and applicable examples and problems that enable anyone with a highschool level of math ability and access to Microsoft's Excel to quicklybecome proficient in Six Sigma. There is no reason to hire expensive Six Sigmaexperts or spend a large number of hours learning everything related to SixSigma before beginning to apply this methodology. Aspects of Six Sigma can beimplemented after reading just a few chapters of this book.

THE HISTORY OF SIX SIGMA

Motorola developed much of the Six Sigma methodology in the 1980s. Motorola wasputting large numbers of transistors into their electronic devices and everytransistor had to work or the device failed. So Motorola decided they needed atighter quality criteria based on defects per million rather than thetraditional defects-per-thousand measure. The initial quality goal for the SixSigma methodology was no more than three defects per million parts.

Then, in the 1990s, Jack Welch, CEO of General Electric, popularized Six Sigmaby dictating its use across the whole of GE. The resultant profit and qualitygains GE touted caused Six Sigma to be implemented in many large corporations.The Six Sigma-generated savings claimed are $16 billion at Motorola, $800million at Allied Signal, and $12 billion at GE in its first five years of use.

Lean manufacturing, a spin-off of traditional Six Sigma, got its start at Toyotain Japan. In lean Six Sigma, manufacturing costs are reduced by reducing leadtime, reducing work-in-process, minimizing wasted motion, and optimizingmaterial flow.

THE SIX SIGMA GOAL

The Six Sigma methodology uses a specific problem-solving approach and Six Sigmatools to improve processes and products. This methodology is data driven.

The original goal of the Six Sigma methodology was to reduce unacceptableproducts to no more than three defects per million parts. Currently in mostcompanies the Six Sigma goal is to make product that satisfies the customer andminimizes supplier losses to the point that it is not cost effective to pursuetighter quality.

MANAGEMENT'S ROLE

Many Six Sigma books advise that Six Sigma can't be implemented without completemanagement commitment and the addition of dedicated Six Sigma personnel. Thishas been one of the criticisms of Six Sigma: that excessive time and money spenton Six Sigma can pull funds and manpower from other company needs. This bookemphasizes that Six Sigma can be implemented for little cost and with littlefanfare!

SIX SIGMA TITLES

The primary implementers of Six Sigma projects are called green belts. Theseproject leaders are trained in all the common Six Sigma tools and work as teamleaders on Six Sigma projects. Six Sigma black belts generally have a higherlevel of Six Sigma expertise and are proficient in Six Sigma specific software.Master black belts generally have management responsibility for the Six Sigmaorganization, especially if Six Sigma is set up as a separate organization.

Anyone completing Six Sigma on a Budget will have the same level ofexpertise as a traditional Six Sigma green belt. There is no need for blackbelts or master black belts.

SIX SIGMA TEAMS

Six Sigma teams are very fluid, with their composition based on a project'sneeds and the stage of the project. The most important factor on Six Sigma teamsis that every area affected by a project be represented. This could includeengineers, quality inspectors, people assembling or doing a task, people buyingrelated materials or shipping product, and the customer.

WHAT WE HAVE LEARNED IN CHAPTER 1

* Motorola was the first large company to implement Six Sigma in the 1980s.Other large companies, like Allied Signal and GE, soon followed Motorola's lead.

* The Six Sigma methodology uses a specific problem-solving approach and selectSix Sigma tools to improve processes and products.

* The initial Six Sigma quality goal was no more than three defects...