In this series of posts we shall look at Six Sigma, a methodology or approach implemented to perfection by GE during the reign of arguably the greatest manager in the 21st century, Jack Welch.
Six Sigma reinforces the modern philosophy of working smarter not harder by bringing astounding results while requiring lesser time of work because of the kind of efficiency it brings to the table. Manager and top corporations in the world have taken a seat back watching GE, led by Jack Welch; execute Six Sigma to perfection as they became the most valued company in the world.
Six Sigma Definitions
Green Belts are people who work on the implementation of Six Sigma approach and have undergone a considerable amount of training, understand Six Sigma approach and see its day to day usage.
Black Belt is identified to champions who teach and mentor Six Sigma in their businesses to the junior ones in Six Sigma. They can also be identified as the progression from Green Belt to Black Belt Six Sigma entities. The power of Six Sigma cannot be denied and companies who learned to use this methodology well saw increased in sales and their status in the industry.
Master Black Belt is the top level management who approves budget for Six Sigma implementation and measures the return of investment and results the Six Sigma has brought to the organization.
What is Six Sigma?
Six Sigma upholds a revolutionary way of thinking where the business and business entities aim to work smarter than harder which results in delivering quality output through reduction of defects and efficient operational implementation specifically targeting exceeding customer satisfaction.
What are the benefits of using Six Sigma
Businesses that use Six Sigma correctly are expected to become high performer businesses through the quality of their offerings, reduction in operational expenses, innovation in processes, obsession for customer satisfaction and the flexibility and capability to scale the business to meet customer demands.
Why Six Sigma?
There are a lot of systems that emphasize on quality output but what makes Six Sigma special? Six Sigma has a distinct characteristic of having an obsession with the customers. For Six Sigma, the customer is at the core of the business and should work to exceeding customer expectations. My manager at my previous company at SGV & Co. (Arthur Andersen member firm prior to today’s Ernst & Young member firm distinction) told me that “exceeding client expectations” is at the core of our business and thus, the firm I worked remains to be the Philippines Premier Professional Services Firm for more than 50 years and counting.
Aside from its focus on the customer, Six Sigma gained world recognition when Jack Welch led the perfect execution of this system that propelled the company in a streak as the most valuable organization in the world during his reign. As Jack Welch boasts during his annual report, GE saved more than $2 billion dollars in three years.
How do we learn Six Sigma?
Ramping up on Six Sigma looks very simple with a short list of components to learn about but mastering it to perfection is complex and takes time to master.
1. Metrics – A set of measurable metrics is required to identify the performance level of the business. Sigma is variation on a given performance “x” to a base value defined as “n”.
My first job after graduation, six years ago, was with Coca-Cola Bottlers of the Philippines Inc. and my job required me to move from one plant to another helping out in the implementation of SAP (Systems Products and Processing). I was amazed at the manufacturing operation of Coca-Cola as during break time I would tour the plant looking at the process from washing of the bottles, filling the bottle with coke, putting the cover on it up to its arrangement in the case. I remembered asking the plant supervisor how many bottles of coke are reject items and he answered it was a very small number of bottles.
Using the production of Coca-cola products we shall define the following parameters:
Let x = number of reject coke bottles, n = 1 million bottles of coke produced.
Sigma Level 6 = 3.5 x / per n = 3.5 reject bottles of coke / 1 million bottles of coke produced = 99.99966 good products / per 1 million bottles of coke produced
Sigma Level 5 = 300 x / per n = 300 reject bottles of coke / 1 million bottles of coke produced = 99.9997 good products / per 1 million bottles of coke produced
With Level 6 and Level 5 Sigma examples you would see that the Level Six Sigma indicates least number of defects per a million production and as the Sigma Level goes down, the number of defects goes up.
Hence, As Six Sigma Level increases, the number of defects per million production decreases.
We shall discuss more about measurable metrics in the succeeding posts.
2. Results – What level of Six Sigma do we want to accomplish? Sigma Level 6 is an ambitious goal especially when you realize after calculations that you’re Sigma is at Level 0. The higher the Sigma Level, the more happy customers we have.
Going back to the Coca-Cola example, the supervisor told me a story about a customer who returned a bottle of coke because the person complained of something (which I would not be discussing here). I asked the plant supervisor how many times have that happened and replied it happened only once in his ten years with the company. That’s excellent and if we assume that they are able to sell millions of coke bottles in a month then multiply that by ten years, it seems Coca-Cola have produced a very small number of defects in the range of a Sigma higher than 6. But of course, it takes more metrics and processed to determine the exact number of defects rather than rely on the answer of the supervisor. The point I am driving is that Sigma gives a business a goal on how many happy customers they want to see. Six Sigma after all has an obsession to customers.
3. System – The enabler for Six Sigma is the system the implements Six Sigma itself, without the managements’ initiative and dedication to implementing this approach, Six Sigma would not achieve success in the organization.
Who are the people behind the system of Six Sigma?
Top to Bottom. The top management and shareholders is the key to start the Six Sigma drive which has the responsibility to enforce the initiative company wide, conduct means to educate their senior managers and levels, provide the system and processes and trickle down the initiative to the customer facing stakeholders.
Simply put, the entire organization should function as one to achieve Six Sigma, become successful and reap the results as a high performer organization.
We have given you an overview of Six Sigma from definition of terms, benefits up to the elements on learning Six Sigma. In the succeeding posts, we shall discuss deeper on Six Sigma.
[tags]Six Sigma, Jack Welch, GE[/tags]
