Six Sigma Definitions
History of Six Sigma
Although referred to regularly in today’s working world, the Six Sigma methodology is a relative newcomer to the landscape of theories and practices to work better. In 1986, Bill Smith was the first person to take forward the principle. He was working for Motorola at the time and had been fascinated with ways to improve working practices. Making them more efficient and effective by pushing ahead with quality improvements. Trying to get the most from a manufacturing production line.
The idea that Mr. Smith came up with was to work on a way of minimizing defects in production through continuous improvements. He recognized that every manufacturing and business process could be measured, analyzed and improved upon based on analysis and controlled to stay within that new process. Continuing to do this would reduce variations in process and produce output much more effectively, meeting the desires of the customer.
The 5S tool is a lean tool that allows examination of a process to identify non-value added elements. Although the original 5S words were Japanese, an Anglicized version has been created using the following words: Sort, Straighten, Shine, Standardize and Sustain.
Variance is a calculation across a range of data that shows how spaced out the information is. Similarly the standard deviation will be a spacing value of information. The variance is the result of squaring the standard deviation. So where the Standard Deviation (SD) is often represented by σ (the Greek letter sigma) then variance (VAR) will be represented by σ 2 (sigma squared).
Basics of Lean
Lean is generally referred to as a manufacturing or production improvement methodology. As a term in business, it has a broad based customer focus that concentrates on providing more to the customer. It does this by supplying the product that is just what the customer needs, when needed, in just the right amounts and for the right price, using the minimum materials, equipment, workspace, labor resource and time.
Black Belt Communication
As a Six Sigma Black Belt and project leader you will be expected to undertake a significant amount of communications within and outside of your team.
You should be prepared to communicate regularly within your team and ensure that task and role allocations are clearly explained and understood. You should show confidence in your team and particular green belt members, demonstrating that you can trust them to deliver by shaping a task for them without detailing the specific elements. That is good leadership as much as project management.
Black Belt Role
There are a couple of key differences in the role of the black belt as opposed to that of the green. The main elements are greater statistical knowledge and capability, as well as managerial ability, either in a general sense or as a project manager. There will also be greater experience and general knowledge of the Six Sigma methodology through longer practice and continued use.
Six Sigma - Belts
Within Six Sigma you will often hear reference to different colored belts. The idea of belts is taken directly from the same structure as many martial arts and oriental defense sports. The most common belt you will hear about is the black belt. Black belts are generally the most skilled and capable of people within the Six Sigma arena, often being the lead on projects of particularly significant size.
Cost savings will likely include people savings, where the required numbers of staff to perform an action may reduce. Other cost savings may result from reduced storage times, reduction in packaging waste, new supplier costs or just reduced running times of machinery. All of these are likely to be easy to quantify in terms of dollars by just comparing before and after figures. It may be a slightly staggered approach in realizing staff savings as some initial retraining costs and redeployment costs would have to be borne against the reductions in need costs at the outset.
Six Sigma - Benefits
At the beginning of discussing Six Sigma, we stated that one of the outcomes of a Six Sigma project should be a gain to the business, quantifiable in financial terms. Now that you have an optimized, or range of optimized processes, you need to show the gains to the business and key stakeholders.
For the majority of people trained to green belt capability, there is a natural expectation that they will transition to black belt over time. The increased capability of a black belt is more about their management and leadership skills than their statistical capability.
All Black belts should be able to undertake green belt responsibilities and use their leadership capabilities to manage a project team. They do not have to be project management trained but a general understanding of project methods and responsibilities will help. They should be able to manage people as well as tasks.
Six Sigma Black Belt Salary
The Management and Strategy Institute takes aggregate data and compiles the most up-to-date information to calculate the national average for Six Sigma Black Belt Salaries in the United States each year.
The following information is for:
National Average Six Sigma Black Belt Salary: $94,539.25 / year
This average is for experienced practitioners with multiple real-world projects completed. Entry-level salaries can be significantly lower.
Business Process Re-engineering (BPR)
Business Process Re-engineering (BPR) is the analysis and design of workflows and processes within an organization. Defining a business process as a set of logically related tasks performed to achieve a defined business outcome.
Cause and Effect Diagram
Cause and effect diagrams are often referred to as Fishbone diagrams because of the nature of their shape. They are graphical representations of brainstorming and think-tank periods when looking at all the potential causes of a underlying processes factors to be investigated at analyze stages or generate potential failures to be addressed later on.
There are many definitions of change management and there is much confusion around the term. It does not relate to project management or technology changes, but relates to the experience people have of something changing within their workplace. How they are affected and how the business needs to consider the impact of change upon its workforce through the linking of technology, training, Human Resources, environment and communications to not only deliver changes but to successfully bring about a change within the workplace that is accepted and embraced by the workforce.
Closing a Project
At the end of the control phase of the DMAIC journey, the organizations financial department or company accountant should confirm the benefits in dollars. The Champion or sponsor will then take these agreed figures into the business and discuss their value and what it means. This will begin the process of confirming benefits and developing a plan for benefits monitoring that will become the responsibility of the business. Only once everything is agreed upon and the business is ready, can the project begin to be closed down.
Effective communication is vital for the success of a Six Sigma project. Team communication is often overlooked when individual teammates are focused on their responsibilities. The result can be missed deadlines, confusion, and frustration if information is not supplied to all parties in a timely fashion. In any Six Sigma deployment, a communication plan will be indispensable, outlining the why, what, who, where, and how of project communication.
Most businesses have a culture which dominates the way they do things. This can likely be something that reflects the personalities of the people who have developed the business or simply evolved over time.
It can be difficult to get a grasp of the nature of a culture at first, but using an experienced change management professional who has either experienced cultural assessments or works within the culture already can give insight into this. It is important to understand the culture’s tendencies and these are a sample of the typical questions that can be answered in gaining an understanding of a company’s culture.
Deciding on a Project
Deployment is the use of Six Sigma in examining the quality of an area of the business. Six Sigma Projects should be selected on the basis of their cost-benefit analysis.
Six Sigma - DMADV
The DMADV project methodology, known as DFSS ("Design For Six Sigma"), features five phases:
The core parts of this equation are described as followed:
Estimating The Baseline
Statistical probability will allow you to develop confidence intervals and formal estimates based upon the numbers and size of the data pot you have. No matter what information you come up with, it is key to the success of the Six Sigma project that this baseline is agreed upon with the process owner, champion and key stakeholders as the starting point from which improvement is to be developed.
Future State Value Stream Mapping
A future state Value Stream Map (VSM), identifies the new process and functions that are Lean within the Six Sigma Lean project you've just compiled.
One of the key requirements for introducing any Six Sigma change is gaining the buy-in of the business and the people impacted. This can be no easy feat, but considering what we have discussed above about change management and cultural awareness, then it is possible.
Green Belt Role
Someone who is qualified to a Six Sigma Green belt standard has all the knowledge and capability to organize and run a Six Sigma project. They should have a good and solid understanding of the DMAIC process, a number of Six Sigma tools within their toolkit and an understanding of how process changes can be implemented.
Green Belt Communication
One of the most frequent activities that a Green Belt will undertake will be communications. This may be communicating within the team or outside it. It is therefore important that a green belt understands how best to communicate in an assertive but not aggressive manner and can clearly articulate themselves to all manner of people, irrespective of their position within the business.
As well as the strategic impact of Lean, there is the need to consider how the impact of its integration is reflected at lower levels within the business. If your work area has had a Lean review, then it is likely that you have changed the way you work.
Given that you have measured and monitored everything through the project process, it would make sense that you measure the baseline impact of the new process within the business. There should be impacts to the customer as well as financial impacts of the change.
Although Lean principles were developed for manufacturing, it is now recognized within a whole range of business sectors. Service industries, government, and retail are all taking up the idea as a way to improve customer delivery.
ISO9000 series of certifications are governed by the “International Standards Organization” – ISO. They cover a range of methods for documenting quality standards and approaches within the workplace. However the ISO certification only confirms correct and proper documentation is maintained, kept accessible, and held by a business.
JiT (Just in Time)
JiT or Just-in-Time examines the way delivery is scheduled at each stage of the process, so that only those items required arrive when they can be used.
Kaizen – a workshop or event to identify waste areas or functions.
Lean, Kaizen Workshop
To get to the future state you undertake a workshop that looks at each and every element of the current state and see what can be done to make it better. This workshop is the Kaizen experience.
Kanban is a scheduling system for lean and just-in-time (JIT) production. Kanban is a system to control the logistical chain from a production point of view, and is not an inventory control system.
The Language of Lean
Lean Six Sigma has its own terminology and phrases that a Lean practitioner will need to be aware of. This training module will walk you through many of the key items you'll need to know.
Lean Process Management
When you start to undertake Lean reviews within an organization, you have the opportunity to integrate it into the corporate strategy and long term vision for the business. Agreeing to review all production areas within a business to ensure they are efficient using Lean methodology can make a big difference to the way you perform and deliver.
Value Stream Examples
Every VSM will be different but there are key elements that are required within it. It should include the Process steps, in some form of process map. Storage, inventory or volumes at each point of the process.
Information flows detailing things like order requests, scheduling or shipping information. There should be a box score, or activity score for timing and other metrics associated with key activities.
A timeline or timing indicator should underpin the whole VSM, showing timing for each stage as you move from left to right, indicating lead times and activity times for each part of the process.
Linked to the final output or customer end box in the far left, you should indicate the customer demand or need for the product within the process. This is sometimes called the Takt box which comes from the original Toyota systems manufacturing system name.
Lean Value Stream
Value Stream – this describes the activities that provide the customer with value in delivering their product. We will explore this in far more detail in the next chapter, but it is a core element to lean as it describes the parts of the process that meet the customer needs and so add value to the process as opposed to those that are not needed because they have no value.
Lean Value Stream in Action
One of the most important elements about lean is to understand its focus on the customer or consumer. Whenever a process is looked at it is considered from a view of the desire and needs of the customer. Answering questions about what they want, when they want it and at the right price are part of the process of identifying customer value to a process. When you know what the value is to the customer then you examine the process to see how effectively you are meeting those needs. In Lean you deliver your products to the customer via a value stream.
Six Sigma - Lessons Learned
Managing tasks during a project.
There are some organizations that will allow a Green belt to run a small value project and deliver upon it. However for most businesses, a Six Sigma project will be led by a Six Sigma Black Belt with support from 1-3 Green Belts depending on the size of the project. The role of the Green Belt will include the following:
Many production environments measure their performance in terms of yield or their wastage rate. If 100 products are created and 98 of them are usable then the yield is calculated as 98%. What is not accounted for in this metric is any reworking. What if every 100 unusable products are put through part of the process again, and again 98 of these become usable – it can make things difficult to understand.
Six Sigma concentrates on 3 types of process measurements. Usually all metrics and data held for a process can be summarized by all or some of these. Measurements are made in terms of cost, quality or time.
Muda, Mura, Muri
When an organization has decided to become a Six Sigma aligned business, that means they will be looking at the way they currently do business and seeing how they can improve upon it across the board using a waste-removal and process improvement approach.
Following a successful analyze stage, new practices to replace those currently in existence should have been created. The new process may have new process flow, conditions within which it operates, or both. To optimize the new process or minimize variation in outcome, simulations or controlled experiments may be needed.
Operational Excellence is a philosophy of leadership, teamwork and problem solving resulting in continuous improvement throughout the organization. This is accomplished by focusing on the needs of the customer, empowering employees, and optimizing existing activities in the process. It stresses the need to continually improve by promoting a stronger team using greater ownership of activities and making the environment better for both employees and customers.
When the agreement to close the project has been achieved, then it is time to close. One of the final acts of the project lead will be to ensure the business has all the necessary tools to maintain and monitor the improvement into the future.
The benefits plan will be passed on with its detail as described above. The control plan will be handed over to the process owner together with all associated documents agreeing how continued compliance will be achieved. The Champion will also get a copy of these documents as the executive level sponsor for the project that is likely to be required to report to the finance or executive boards of the business on the success of the Six Sigma Project.
PERT Diagram (PERT)
A PERT chart is a project management tool used to schedule, organize, and coordinate tasks within a project. Designed to analyze and represent the tasks involved in completing a given project. First developed by the United States Navy in the 1950s, it is commonly used in conjunction with the critical path method (CPM)
In this second stage of DMAIC, a detailed process level map is developed for the current state of the process – the as-is process. This map works down on the elements defined in the high level map by adding in decision points and showing options at each choice box of the process.
Having identified that variation may in fact exist and likely points within the process that contribute to this through analysis of said variation, exercises are now required to pinpoint the specific changes required.
Not dissimilar to a flowchart, a process map is a fundamental tool throughout all stages of the DMAIC Six Sigma Project work. It can be used to demonstrate a high level process flow, detail elements within a process, be part of the simulation activities, costing processes and communication of the new process.
Information at the outset from which the rest of the project will be held accountable and be shaped. It is recommended that the Project Charter should identify and state the following on the actual document:
The Key project information is defined in the Project Charter. The Project Charter is an informal contract that is created at the start of the project to profile the working arrangement of the project and the information that develops as the project progresses.
There are a few key things that define a project.
It has an end goal to achieve – a desired outcome
It has a schedule or timeline for delivery
It has a budget
It has a plan of activity
It has a sponsor and manager
It has project team members
It has structure and documentation of activity
It is monitored on progress and reports achievement
A quick read through the above and you will immediately see the overlap between Six Sigma projects and general project management. Thus a Six Sigma project can be ‘project managed’ - following whatever project management philosophy suits, but having this structured, accountable and sequential approach to activity.
The project scope can be identified as all elements of the delivery process up to the point of departure from the warehouse. That can include placing the order, transporting the order details to the warehouse, packaging, transportation of goods on site and collection arrangements.
Push & Pull
Supplies and components are ‘pulled’ through system to arrive where they are needed when they are needed.
Goal: Achieve the minimal level of resources required to add the necessary value in the production system.
Failed attempts at an idea are common in business. Not to be feared, they are a testament to the value of the idea rather than a suppression of the idea. In fact, most great opportunities aren’t realized on the first attempt of an idea’s execution but rather as the perfected evolution of previous failures. This is why they call Six Sigma "Continuous Improvement".
Six Sigma - Roles
There are a couple of other important roles for consideration within any Six Sigma Project.
There are 3 main types of software that may be used within a Six Sigma project - software that is used in day to day activity, task specific software, and statistical analysis software.
A spaghetti diagram is best used to illustrate the measures and movements within a location of process activity. It will usually be created after a period of observation. A simple example is shown below.
Using a spaghetti chart can enable you to see the area of most activity. Particularly when examining the non-value items or options to bring together frequently interacting areas.
Stakeholders are members who affect or can be affected by an organization's actions. The key stakeholders of a Six Sigma project must be consulted and updated on a regular basis.
There are several ways of solidifying standardization, but the key contributors are:
Throughout a Six Sigma project it is evident that there is a large amount of reliance upon statistical analysis. In the very early stages we stated that its use of statistics is one of the key elements that separate Six Sigma from many other quality methodologies.
Language & Terms
Six Sigma has a unique terminology. A few of the terms you'll need to be familiar with are:
- ‘function’ relates to a process or application – e.g. the manufacturing process is a function.
- ‘variation’ refers to a difference from the expected or likely outcome
- ‘variance’ and ‘standard deviation’ are statistical terms of measuring such variations.
- ‘error’ refers to the amount of difference, or variation from the perfect expected outcome
Referred to as the "Seven Wastes", TIMWOOD stands for Transport, Inventory, Motion, Waiting, Over-processing, Overproduction, Defects.
When you have a number of events, you can compare the variances of each event to see if there are lower variances with each observation period. A good use of this occurs through the Analysis and Improve stages of DMAIC when you are trying to determine optimized processes. Looking at the variances with each simulation or walk-through can allow you to determine which processes are most effective and should be considered. When considering variances, tolerance levels come into play. A tolerance is the room around which a set value can fluctuate and an allowable tolerance is given in all functionality. The aim of Six Sigma is to reduce that tolerance need as much as possible.
Total Quality Management
Total Quality Management – or TQM, is one of the most popular quality methodologies around. Next to Six Sigma it is probably one of the most tool driven methods but does not have the mathematical or statistical relations found within Six Sigma. TQM relies on examining problems and proposing solutions that need to be accepted by the populous – in effect a democratized solutions process. It identifies ‘good ideas’ but does not necessarily identify the best.
Value Stream Mapping
A value stream map (VSM) is a graphical representation of all the elements that make up a process or production. It includes all information sources as well as describing the resources at each stage and how they have arrived. It will be mapped as a start to finish process map with the far left being the ‘start’ and ‘conclusion/output’ at the far right.
The term value stream is used in Six Sigma as a descriptor of the necessary factors that contribute to the value of a product or service from the viewpoint of the customer. It is directly lifted from the lean methodology and shows the overlap of the two methodologies very clearly.
‘Variation’ - refers to a difference from the expected or likely outcome
‘Variance’ and ‘Standard Deviation’ - statistical terms of measuring such variations.
When examining and analyzing data we expect there to be a variation in the data as the output and results of any measurement activity is unlikely to be 100% consistent. The core principle of Six Sigma is about reduction of errors and variations.
So now you have a new and improved process you are ready to implement it. Yes? Even in the most simple of changes, caution and awareness of impact are necessary before going ahead and making the change. Communication among all departments cannot be underestimated at this point.
Lean is about not just reducing waste but optimizing how you remove that waste by maximizing efficiency and logistics.
What Is Lean
Lean is a manufacturing process that was developed by Toyota in 1988. It is based upon 2 key principles – the removal of irregularity and the removal of irrelevance. That is attempting to get uniformity within production and removing wasteful processes. It uses a whole set of tools: Kanban – enabling just in time delivery within production, so that stock is not held waiting to be used and TIMWOOD – an acronym for Transport, Inventory, Motion, Waiting, Overproduction, Over processing and Defects – all the areas for examination of savings, are probably the most commonly referenced.
Why is DMAIC used
Every Six Sigma project will follow the same process in a systematic and uniform method known as DMAIC, an acronym made up from the first letters of each element – Define, Measure, Analyze, Improve, Control. This is a formalized problem solving method which is designed to improve the effectiveness and ultimate efficiency of the organization.
When improving the process of a complex task, or the risks are high, DMAIC should be the method used to resolve the issue. Its discipline discourages a team from skipping crucial steps. It increases the chances of a successful project which makes DMAIC a process most projects should follow.
This first stage sets the context within which the Six Sigma project is to be performed.
The second stage is where the starting point metrics are recorded to baseline the current performance level and constraints of the process to be worked.
The third stage reviews the metrics. Using a variety of tools gains and understanding of the cause and effects interactivity within the system being looked at.
The fourth stage will look at how to change elements for the better, but with validated metrics and tools to prove the worth of the improvements.
The final stage puts in place the communications and plans to ensure the maintenance and longevity of the changes, identifying how they will be sustained.