A method that seeks to improve the quality of the output of a process by identifying and removing the causes of defects, Six Sigma has been helping businesses minimize variability in manufacturing and processes since its inception in 1986.
It uses a set of quality management methods, mainly empirical, statistical methods, and creates a special infrastructure of people within the organizations who are expects in these methods.
The Six Sigma (registered as a Motorola trademark on December 28, 1993) set of techniques and tools was introduced by Bill Smith while working at Motorola in 1986. Following this, Jack Welch, of General Electric, made it central to his business strategy in 1995.
The term itself comes from terminology associated with statistical modeling of manufacturing processes. The maturity of a manufacturing process can be described by a sigma rating indicating its yield or the percentage of defect-free products it creates. A six sigma process is one in which 99.99966% of all opportunities to produce some feature of a part are statistically expected to be free of defects (3.4 defective features per million opportunities). Motorola set a goal of “six sigma” for all of its manufacturing operations, and this goal became a by-word for the management and engineering practices used to achieve it.
Shortly after it was developed, General Electric and Motorola developed separate Six Sigma certification programs as part of the process of implementation. The intention was to develop a unified way of verifying individual’s command of the methods according to a standardized skill level. They classified a person’s progress according to a belt ranking system (Green Belt, Black Belt, etc.)
Following their lead, throughout the 1990s, many organizations began offering certification to their employees. This list has now grown to include professional associations, universities, for-profit training associations and others.
3. Belt System
As the program was designed in levels, full certification can be something that happens over an intensive week long immersion, or incrementally earned over several shorter workshops. This makes it a versatile program to implement across manufacturing or service industries. It is designed to be quick and effective, integrating training, tools, methodology and technology that will enable the business using it to rapidly customize and deploy an improvement strategy that is right for them.
The application of Six Sigma principles usually prove themselves most effective in large organizations. According to leading industry consultants, companies with fewer than 500 employees are less suited to Six Sigma implementation or need to adapt the standard approach to make it work for them. That being said, there are still principles contained in the program that are useful across the board and that even small to mid-size organizations can benefit from.
5. Manufacturing and Finance
After its first application at Motorola in the late 1980s, other internationally recognized firms began experimenting with Six Sigma, many recording significant savings. Examples of these are Johnson and Johnson, with $600 million of reported savings, Texas Instruments, which saved over $500 million as well as Telefonica de Espana, which reported $30 million euros of revenue in the first 10 months.
Six Sigma has also played an important role in helping to improve accuracy of allocation of money in the financial sector. This helps to reduce bank charges, automatic payments, improving accuracy of reporting, reducing documentary credits defects, reducing check collection defects, and reducing variation in collector performance. Two of the financial institutions that have reported considerable improvements in their operations are Bank of America and American Express.
6. Supply Chain
Six Sigma certification was also proven incredibly well-suited to supply chain management. In this field, it is important to ensure that products are delivered to clients at the right time while preserving high-quality standards from the beginning to the end of the supply chain. By changing the schematic diagram for the supply chain, Six Sigma can ensure quality control on products and guarantee delivery deadlines, which are the two major issues involved in the process.