Six Sigma Philosophy

There are number of six sigma approaches.  In some cases the differences are very significant.  Harry’s (2000) approach is taken as a sample for discussion in this chapter, because of its popularity.  However, there may be better six sigma approaches or you can develop one.

Six Sigma initiative is a management process with two objectives:

• Generate immediate improvements to profit margins, an effective problem solving methodology.
• Fundamentally change the way the people perceived and think about the future of the business (Harry 2000)

In short-term six sigma breakthrough strategy is a systematic road map for reducing variability in a process through assimilation and organization of information that increases bottom line results.

Harry’s Breakthrough Strategy

Harry’s Breakthrough strategy is an eight-step process –namely: recognize, define, measure, analyze, improve, control, standardize and integrate. This eight step methodology is to a large extent similar to the Juran’s Universal sequence for breakthroughs. In Juran’s approach the steps are used to solve the problems once identified and approved by the management. However Juran has not specified the steps to be followed by the management for identifying the projects and the management of the whole process.

Harry’s eight step methodology is not just meant for problem solving rather it is to be applied at the three levels – business, operation, and process.

At each level the steps are applied differently and the focus and time-line are different. The key is that the overall strategic business goals should act as a link between the three levels.

Six Sigma Implementation

The salient features of Harry’s approach to six sigma implementation are described below:

• Leadership is provided by a team of deployment champions, project champions at corporate and department levels respectively. This team is similar to Quality Improvement Council in Juran’s approach.
• The experts referred to as black belts, work full time on projects at process level to solve critical problems and achieve bottom line results. In Juran’s approach black belt is equivalent to the diagnostician.
• Black belts are trained by master black belts on statistics, quantitative benchmarking, process control techniques, experimental design and design for manufacturability.
• There is a well structured project management approach. The champions select projects based on business strategy and the projects are defined precisely and the gains calculated, prioritized, then meticulously implemented and reviewed.

To achieve the long-term cultural change, six sigma focuses on training all employees in the breakthrough strategy in such a way that they make the methodology integral to improving everything they do. Green Belts, work on six sigma projects as part-time activity. They have limited six sigma responsibility and their energies are focused on projects that tie directly to their day-to-day work.

This aspect of six sigma, is largely in agreement with Deming’s philosophy of participate style. Thus six sigma approach is a fine blend of Juran and Deming approaches.

Deming’s Philosophy: Quality Improvement through Involvement

Juran’s approach as described above is focused on results. In contrast to this, Deming advocates a philosophy, which calls for transformation of the organizational culture. The focus is on the long – term survival of the firm, not on quarterly profits. The central theme of his approach is reducing variation in processes and products.

Variation is of two types –Common cause variation and Special cause variation.

Statistical thinking will help distinguish between these two types of variation. Special cause variation can be improved by local actions, which can be taken up by operators. Further the Common cause variation can be reduced by actions on the system, which can be taken by the management alone. Deming states that 94% of the problems are management controllable (his earlier estimate is 85%).

In Deming’s view, a major cultural change in the organization is essential for competing with today’s of world-class companies. Deming has given the following 14 points framework for transforming the management culture:

• Provide all employees with a statement of the aims and purpose of the company.  The management must demonstrate constantly their commitment to this statement.
• Learn the new philosophy, top management and every body.
• Understand the purpose of inspection, for improvement of processes and reduction of cost.
• End the practice of awarding business on the basis of price tag alone.
• Improve constantly and forever the system of production and service.
• Institute training.
• Teach and institute leadership.
• Drive out fear.  Build trust.  Create a climate for innovation.
• Optimize the efforts of teams, groups, and staff areas toward the aims and objectives of the company.
• Eliminate exhortations for the work force.
• Eliminate numerical quotas for production.  Instead, learn and institute methods for improvement.
• Remove barriers that rob people of the pride of workmanship.
• Encourage education and self-improvement for everyone.
• Take action to accomplish the transformation.

Each one of these points is aimed at reducing variation.  It is important to note that these points are not in any order and the implementation sequence is not prescribed.  These 14 points caused some confusion and misunderstanding among businesspeople, as they are only end states and how to reach there is not suggested.  However, Deming applied the underlying foundations of the 14 points in what he called “A System of Profound Knowledge”.  Deming’s Profound Knowledge System consists of the following four interrelated elements:

1. Appreciation for a System.
2. Understanding the Variation.
3. Theory of Knowledge.
4. Psychology.

One need not be an expert in all or even one.  The real power is in the synergy of the four elements.

Although Deming believes that quality improvement reduces costs, he rejects the use of cost of quality (COQ) to select projects or as a measurement of quality improvement projects.

Deming believed that COQ accounting is far too crude to capture all the benefits (for example, morale) of improving quality, so the use of COQ will lead to severe errors in quality related decision-making. Instead he favours focusing on the entire business as a system, i.e. global optimization rather than local optimization.

Deming’s approach is designed for participate management style. People are viewed as primarily being self-motivated and self-controlled. Operators are to be trained in the use of simple statistical tools, so that they may monitor, control and improve the system they work in. Managers should focus on education and counseling.

The need for participate style makes Deming’s approach difficult to implement and takes longer time to see bottom line impact. The Japanese companies have followed this approach.

Six Sigma = Juran + Deming

A popular aspect of six-sigma approach is the breakthrough methodology – implementing projects for bottom line results. However, a less acknowledged aspect of six sigma approach is cultural change in the organization. Six Sigma implementation is NOT complete till the cultural change is achieved.

Many quality professionals are busy in discussing, how six sigma is different from Total Quality Management (TQM).  However, this chapter highlights that six-sigma approach is a blend of the two popular TQM philosophies, namely Juran and Deming.

Juran Philosophy: Breakthrough Approach

Juran’s prescriptions focus on the following three major quality activities, called “Juran’s quality trilogy”:

1. Quality Planning – the process of preparing to meet quality goals.
2. Quality Control – the process of maintaining performance in day-to-day operations.
3. Quality Improvement – the process of achieving breakthrough levels of performance in the process.

Juran defines quality, as conformance to specifications and the management has to focus on maintaining the quality by working on all the three aspects.  However, traditional managers are busy in control function only. Control is the process of detecting and correcting adverse change, as soon as it happens, so that the status is maintained and the control activities are directed towards worker controllable quality problems.

Worker controllable problems contribute to 20% of the total loss.  On the other hand, management controllable problems amount for 80% of all losses. No exhortation or slogans demanding zero defects are able to solve them; only management action on the system leads to breakthroughs. Juran has recognized the need for achievement of breakthroughs about 30 years back.

By definition, Breakthrough is an improvement, which takes us to an unprecedented level of performance; it is an organized creation of beneficial change. Juran believes that annual costs are the key factor in breakthroughs.

Juran recommends a well-structured approach with the following salient features:

• Establish specific goals, clear priorities and responsibilities. The projects may be selected based on different targets: quality, productivity, cost of quality, safety etc.
• Appoint a Quality Improvement Council, a group of senior managers to guide and support the overall program. Such councils may be established at several levels – corporate, division, function and plant.
• Senior management leadership to provide support, review progress, make improvement an element in merit rating system and provision of rewards and recognition.
• Deployment experts called diagnosticians to discover the causes of defects, wastage etc. Diagnostic skills are the ability to design experiments for data collection and analyze scientifically. Diagnosticians work full time in this functional role and structurally they may be centralized or attached to departments.
• Follow the universal sequence of events for making improvements. (See Chapter 10, for the details)

Juran’s approach has helped several companies in achieving breakthroughs. Juran’s approach primarily focuses on authoritative style of management.  In this approach employees are motivated by the economic rewards they get, if they meet the objectives set by the Annual Quality Program. The primary emphasis is on tasks; the morale of employees is secondary. Juran’s approach can be readily implemented in any organization, as it needs only structural changes and it does not call for cultural change.

Capability Maturity Model – CMM

Software Engineering Institute (SEI) at Mellon University has developed CMM model to help improve software development processes.CMM is a process maturity frame work, which is inspired by the quality guru; Philip Crosby’s Quality management maturity grid described in the book Quality is Free

Many software quality experts think six sigma is to be implemented after the CMM level five is achieved.However, six sigma can be implemented simultaneously with CMM implementation to get faster and better results.The following table summarizes the six sigma linkage at all the five maturity levels:

Design for Six Sigma (DFSS) is applicable to the software development, as it is similar to product development.Instead of using project approach the DFSS steps and techniques have to be fully integrated into the core software development processes.Improvement projects can be taken as special BB and GB projects.Further, DMAIC approach can be used for such improvement projects.

In software companies, six sigma can also be applied to support processes to address other organizational problems.For example, projects in HRD, Network maintenance, etc

COPC-2000

COPC standard is specifically developed for call center industry and later extended to Business Process Outsourcing (BPO) companies as well.Unlike ISO-9001:2000, this standard uses the language used in the call center industry and also specifies the key customer-Related Processes (KCRPs) and Key Support Processes (KSPs) to be controlled.Further, for each type of call center and BPO it specifies detailed metrics to be controlled in the standard.

The companies implementing COPC need to achieve some benchmark levels to get certified.Thus it is more performance oriented and six sigma can help achieve these benchmarks.The following criterion is used for certification of COPC standard:

• Meet or exceed targeted performance levels for at least 50% of the metrics, and
• Exhibit sustained improvement in a total of 75% of the metrics.

Further, meeting targeted performance levels is defined as meeting targets 2/3^rds of the time in a six months period. The specific requirements of the COPC standard and the suggested application of six sigma is as follows:

1.3 Business strategies and plans – the financial and non-financial targets can be converted to six sigma projects and prepare an annual project plan.

1.4 Reviewing performance – six sigma tollgates is an effective way of reviewing and the supporting the above improvement plans.

2.1 Developing new CSP end-user servicing capabilities – develop Critical-to-Quality (CTQs) and Critical-to-Process (CTPs) based on Voice of Customer and Quality Function Deployment (QFD).

2.2 Implementing new products, services, programs and clients – DFSS approach completely address this requirement.

2.3 Process control – FMEAs can be used to identify high risk KCRPs and make procedures to reduce the risk of failure and thus ensuring consistent performance to clients.Further, control charts can be used to achieve process stability.

2.4 Process improvement – the four step approach described in 2.3.3 is similar to the DMAIC approach. DMAIC is a structured and scientific approach to find root causes.

2.6 Transaction monitoring – detailed control plans can be developed to monitor the transactions.

2.6.2 Individuals performing the monitoring calibrated – Accuracy, repeatability and reproducibility studies can be done to qualify the quality analysts performing transaction monitoring

2.8 Contingency planning – the FMEAs can be used extensively to prioritize the risks and plan steps to reduce the risk to acceptable levels.

2.9 CUIKA: Performance data to be Collected, Usable, Integrity, Known to people and lead to Actions – Six Sigma is very strong in data management. Appropriate statistical techniques can be used to convert the basic data into information, and then it can be used by decision makers in a better way.Further, measurement system analysis (MSA) techniques can be used to quantify the data integrity measures.

2.10 Data Security – the FMEAs can be used extensively to prioritize the risks and plan steps to reduce the risk to acceptable levels.

ISO-9001:2000 and TS-16949

ISO-9001:2000 is based on the process approach.Clause 4.1.e and clause 8 require that all the processes are monitored, measured and analyzed and improved.Six Sigma is very strong in measurement, analysis and control.Further, the following clauses are fully addressed by six sigma: (The points presented in Italic are TS-16949 requirements and the points in normal font are ISO-9001:2000 requirements)

5.1.1 Process efficiency – adopt six sigma metrics such as DPMO, Rolled throughput yield.

5.2 Customer focus – Balance Scorecard can be implemented to bring focus on customers and internal process at the top management level.

5.4.1 Quality Objectives – convert the quality objectives into six sigma Green Belt and Black Belt projects.

5.6.1.1 Quality management system performance – Tollgate review at every stage of problem solving (DMAIC) is very effective way of management reviews.

6.2.2 Competence, awareness and training – Green Belts and Black Belts certification are problem solving competencies.Typically Green Belt training can be given to every employee in the company.Further, six sigma will also take care of evaluating the effectiveness of the actions.

6.2.2.1 Product design skills – Design for Six Sigma (DFSS) is very effective for designers.

6.2.2.4 Employee motivation and empowerment – six sigma teams are given special reward and recognition, which will help in employee motivation.

6.3.1 Plant, facility and equipment planning – DFSS approach can be used to design the new plants and new equipment.

6.3.2 Contingency plans – DFSS approach can be used to identify risks and implement plans to reduce the risk and also identify prioritized contingency plans.

7.2.1 Determination of requirements related to the product – develop Critical-to-Quality (CTQs) and Critical-to-Process (CTPs) based on Voice of Customer and Quality Function Deployment (QFD).

7.3 Design and development – DFSS approach completely address this requirement.

7.5.2 Validation of processes for production and service provision – Typically, in six sigma validation is done through Design of Experiments (DoE)

8.1.2 Knowledge of basic statistical concepts – Black Belt and Green Belt are trained extensively in application of statistical methods.

8.2.3.1 Monitoring and measurement of processes – based on the process studies six sigma projects can be defined.

8.4 Analysis of data – six sigma is very strong on the statistical analysis

8.5 Improvement – The main focus of Six Sigma is on breakthrough improvement only.

8.5.1.1 Continual improvement of the organization – six sigma is the benchmarking practice and well established system

8.5.1.2 Manufacturing process improvement – six sigma is very strong on the variation reduction and the projects can be prioritized.

Quality Management Systems

Quality management systems are a good foundation for any quality journey.Today, many standards and third party certification programs are very popular, such as ISO-9001:2000, TS-16949, COPC and CMM.The ISO-9001:2000 is a generic standard and can be applied by any company.However, industry specific quality management systems are gaining popularity, such as TS-16949, COPC and CMM for Automotive, Call center/BPO and software respectively. Large number of companies are already certified or in the process of certification.Some of the questions raised by these companies regarding six sigma are:

• We are ISO-9001:2000 certified can we implement six sigma?
• We are planning to implement CMM level 5 and should we wait till the assessment is complete?
• If we implement six sigma, do we still need to go for COPC?

Quality management systems are basic systems to stream line the processes in the company.All these standards also expect the company to adopt a continuous improvement approach and demonstrate improvements in all processes.Further, they are not prescribing any specific philosophy to be adopted.There are several continuous improvement philosophies, such as Kaizen, TPM, QC, BPR etc.Six Sigma is also a continuous improvement philosophy and fully meets the requirements of all these quality management systems. Integration of Six sigma initiative with all the above quality management systems is discussed in the following sections – in general and specific to each standard.

Six Sigma and Quality Management Systems

Six Sigma can be implemented by certified companies and also by the companies just starting the implementation of the quality management systems.

Six Sigma approach can be used to improve the effectiveness of the quality management system.One of the limitation of the quality management systems is the company will be focusing on developing large number of procedures, work instructions (typically the number could be few hundreds).However, realistically no one can focus on so many areas.Six Sigma approach is based on pareto principle, only 20% of these procedures are responsible for 80% value addition or risk.However, either internal or external auditors might not have audited most of these critical procedures even once in 10 years period.Some of them could be very critical processes from the company point of view.It would be a good idea to categorize the processes into critical, major and minor from customer perspective and define the type of control accordingly.

Further, in developing systems Design for Six Sigma (DFSS) methodology can be used to create robust processes.Robust process is one which is insensitive to noise in the inputs and process and deliver consistent results.This is one of the best ways of integrating six sigma with the quality management systems.

Six Sigma tools can be integrated into quality management procedures.For example, when writing a process for developing new product, service or software, six sigma tools such as QFD, Pugh’s concept selection matrix etc. can be specified at appropriate steps.This will make six sigma a way of working in the company and is the most effective way of implementing six sigma.

The following sections highlight the integration of six sigma with some of the popular quality management systems.