What is Six Sigma?
Six Sigma is a continuous process improvement methodology, based on statistical concepts. It’s designed to increase company profitability through one key motivation: zero defects in a product’s lifecycle.
Six Sigma companies such as General Electric and Motorola have made the methodology famous through successfully saving millions of dollars per year with it, and boasting quality levels of 3.3 defects per 1000 000 opportunities.
The name’s mathematical roots
“Sigma” is a letter in the Greek alphabet: σ, used in statistics to represent the deviation from an expected outcome, or the mean.
Example If you flipped a coin 10, 100, 1000, or 10000 times, you may expect the result to be 50-50% between heads and tails, so a mean of 50%. Though that seems a logical expectation, the actual result, if you conducted a trial and recorded the outputs, could appear, for example, like this:
It shows that the more times a coin is flipped, the closer we come to the mean, the expected 50% for heads and tails.
The deviation from the mean is in how far the results differ from the expected return. In statistics, 6 σ would be the deviation between -3 points and +3 points from the mean.
And in Six Sigma process improvement methodology, the 6 stands for the number of possible levels of a process rating, achieved through a DPMO calculation (defects per million opportunities). The rating corresponds to the reduction in the number of defects a company achieved.
Defects are costly
Customers and suppliers do business with companies they can trust. If a company has achieved a 6 sigma rating in their process, it means that out of 1000 000 opportunities in that process, only 3.3 would differ from what is expected, which can indicate that - at the very least - 999 996 customers were satisfied in that process.
Defects - variations from the mean - are costly to a business. When customers don’t get what they were expecting, it can lead to the following results, in turn directly costing the company more though customers who are:
- demanding refunds
- requesting discounts
- bad-mouthing the company
- issuing items for a re-work.
All of the above will likely reduce the revenue of the business. For that reason, ensuring that a company’s processes achieve the highest Sigma rating possible, will yield immediate financial benefits.
How Six Sigma will help your Kanban-based Lean operation
Six Sigma has a defined project methodology for improving any process. While working with your Kanban team, you will collect data that can point to specific required changes. Cycle times may constantly vary, or there might be a lack of standardization.
A Kanban practitioner can address their process improvement with methods such as the 5S, Gemba walk or Poka-Yoke, alongside Six Sigma’s statistical control. However, keep in mind that given Six Sigma’s requirement of mathematical analysis expertise, it is not the recommended first choice when tackling the low hanging fruits in process improvement. Make sure to first have the right team on board, and enough data for them to use the method appropriately.
Lean Six Sigma is a combination of Lean and Six Sigma, that uses performance and improvement methods to eliminate the seven kinds of waste, by use of the DMAIC (Define, measure, analyze, improve and control) processes in the improvement cycles.
How to use the DMAIC method?
Six Sigma practitioners suggest using the define - measure - analyze - improve - control method to ensure the changes that you bring are correct and lasting.
Step 1: Define
At this stage, you and your team should identify the problem, detail its nature, name the stakeholders it affects, and mark the proposed high-level fix timeline. It’s beneficial to map this out on a charter, to gain a full understanding of what it is you want to achieve.
You might decide to look at the design process, because it’s the one with the most variability. The chart could look as follows:
Step 2: Measure
While every step in the DMAIC process is important, it is Six Sigma’s heavy reliance on statistical data that allows it to be grounded in objectivity. The Measure phase is where your team baselines the process to be able to measure the improvements after making changes.
Your team’s design process stage lasts between 1 to 7 weeks. You need to find an objective starting point for your comparison data: gather information on where the 1-7 weeks data came from, how far back was this cycle time being measured, how does it distribute across the range, and decide if that’s enough data, or if additional metrics should be drawn before you can move on.
Step 3: Analyze
In this phase you should try to determine what is causing defects in the process. To help with the task, in Six Sigma it’s common to use Pareto charts, histograms, run charts, or an FMEA, as a last resort, due to its high cost and time consumption. The key goal of this step is finding proof that what has been analyzed is indeed the root cause of the problem.
The information found might lead to an iterative process of the data in Measure, and perhaps even Define, phases being updated.
You could determine that it’s the time taken to receive feedback from stakeholders and the number of design iterations that lead to the variance of 1 to 7 weeks.
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Step 4: Improve
Only here is where the improvement team implements its new solutions. The DMAIC method shows that defining, measuring, and analyzing are important enough to precede the implementation of a solution. It’s recommended to be done through trying and testing, and a good idea is to introduce one change at a time.
For their design process, the team might decide to pilot 2 iterations on proposed designs and reserve the third iteration for the approved design.
Step 5: Control
Now your team can create the foundation for process disciplines, update the required ways of working, establish metrics to continue to be measured, and determine benefit realization as well as a hand over process to the process owner.
The team could decide to build a limit of 2 design iterations into their Kanban board, and measure the time taken to complete reviews. A roadshow could be done with the stakeholders to explain the new ways of working and their benefits.
How are Six Sigma and Lean different?
We can see that Six Sigma is different from Lean. It’s a lot more data-driven and its focus is on quality and reduction of errors and variation.
While Lean is a combination of various methods aimed at bringing more value to the customer, Six Sigma is a toolbox with multiple statistical analysis methods focused on reducing defects and errors in a process. Lean, in its mindset, is a bottom-up approach, driving improvement from the ground levels up, while Six Sigma is a top-down avenue of running improvement projects, to crack the tough nuts.
But process managers quickly saw the opportunities of synergizing Six Sigma with Lean, to reduce errors and waste, while continuously improving all aspects of a process to advance a company’s position and service offering. While there is no necessity in joining the two approaches, their combination can reap benefits, when done right and coordinated by skilled managers.
Thanks to marrying the 2 methods: Lean and Six Sigma, you should be able to:
- Achieve a more grounded and defined vision for your projects,
- Create a defined framework for measuring progress effectively,
- Increase profits by cutting down waste and reducing the cycle time,
- Easily find ways to continuously improve your processes.