What’s in this article:
What exactly is Six Sigma?
Where did it come from?
So, how does Six Sigma work?
Why bother to improve processes?
What else can it do?
When to use Six Sigma?
What does a Six Sigma consultant do?
When not to use Six Sigma!
What’s this all mean for you?
Have a small business, but no systems?
Have you ever wondered how some businesses seem to operate like well-oiled machines, with processes that are efficient, effective, and free from errors? Well, it’s no accident! Many of those successful businesses turned to a methodology called Six Sigma to achieve these results.
Six Sigma is like the “superhero” of process improvement, swooping in to identify and eliminate defects, reduce variability, and improve quality. It’s been used by big names like GE, Ford, and IBM, and has helped businesses in a wide range of industries to save money, boost efficiency, and keep customers happy.
So if you’re ready to learn about Six Sigma and how it can inspire your small business, stick with us! In this blog post, we’re going to demystify and explain how it works. By the end, you’ll fully understand why businesses using Six Sigma are crushing it!
What exactly is Six Sigma?
Alright, so let’s start with the basics: what is Six Sigma? Well, it’s a methodology that’s used to improve the quality of an existing process by minimising defects while maximising efficiency. It’s a data-driven approach which uses statistical analysis to identify and eliminate sources of variation and waste in a process.
Phew, that was a mouthful! Let’s explain it in a way that’s easier to digest!
Imagine there’s a small bakery that makes cookies. The bakery owner wants to ensure that all the cookies that come out of the oven are perfect, and that there are no burnt or undercooked ones.
To make sure the cookies are perfect, the bakery owner can use the Six Sigma method. They start by measuring how many cookies come out perfectly, as well as how many are burnt or undercooked. Then, they figure out what might be causing the cookies to burn or be undercooked; such as the oven temperature being too high or too low, or the baking time being too short or too long.
Once the cause of the problem is found, the bakery owner can come up with a plan to fix it. For example, they might adjust the oven temperature or baking time.
By using Six Sigma, they’ve now ensured that all the cookies coming out of the oven are perfect – every time. That means the customers will be happy and will keep coming back, which means the bakery will make more money!
To sum it up: Six Sigma is a data-driven methodology that seeks to improve quality by finding and fixing the root causes of defects and errors. It’s like it finds and treats the underlying disease, rather than just the symptoms.
Okay, so now that you know what Six Sigma is, let’s talk about how it came about in the first place!
Where did it come from?
Six Sigma was originally developed by Motorola way back in the 1980s. Being a technology company, they wanted to work out a way to improve the quality of processes and products by reducing defects and variability. They knew if they did this, it would increase customer satisfaction and profitability. And so Six Sigma was born!
As an aside, the name “Six Sigma” derives from its ultimate end-goal: a process is considered to be “six sigma quality” when it’s operating with a process sigma level of six, meaning it produces only 3.4 defects per million opportunities.
The method worked so well that, not surprisingly, Six Sigma started to be utilised by other businesses, too. Today businesses of all sizes and across all industries use it; including manufacturing, healthcare, finance, and service industries. They’ve grasped the method because they know it will improve processes, reduce costs, and increase efficiency. Six Sigma is widely recognized as a “best practice” in process improvement.
“Six Sigma has been a key driver in our efforts to improve customer satisfaction, reduce costs, and increase efficiency. The data-driven approach and focus on continuous improvement have helped us to achieve sustainable success.”
– Mary Barra, CEO of General Motors
So, how does Six Sigma work?
Because businesses are so different, there’s no “single bullet” to fix a problem, which is why Six Sigma has a variety of tools in its toolkit. By using the best of many techniques, its ability to get to the core of a business’s issues is pretty spectacular.
Whilst, not a complete list, here are some of the most common tools used:
1. DMAIC
One could say that DMAIC is Six Sigma’s core problem-solving methodology because it ends up creating a roadmap for success, guiding businesses from how to identify the problem to finding a solution and making sure it sticks. It stands for:
- Define
- Measure
- Analyze
- Improve
- Control
Define: First, you must Define the problem or opportunity you’re addressing. This means clearly defining the goals and scope of the project, as well as the customer’s needs and expectations.
Measure: Next, you’ll Measure the current performance of the process, collecting data on key performance indicators (KPIs) and establishing a baseline for comparison.
Analyse: Then, you’ll Analyse the data to identify the root causes of any issues and to determine where improvements can be made.
Improve: The Improve phase involves developing and implementing solutions that will address the root causes of the problem and improve the process.
Control: Finally, in the Control phase, you’ll put systems in place to sustain the improvements made, ensuring that the process remains on track and within the desired performance parameters.
2. Process mapping
As its name implies, this tool is used to visually represent a business process from start to finish. By creating a map of the process, businesses can identify areas of waste or inefficiency.
3. Statistical Process Control (SPC)
This method uses statistical analysis to monitor a process and identify when it is out of control. SPC helps businesses identify and correct issues before they lead to defects.
4. Failure Mode and Effects Analysis (FMEA)
Ideal for big ventures, this tool analyses each step in a process and determines the potential ways it could fail, the severity of the failure, and the likelihood of the failure occurring. Once identified, a plan can be developed to prevent or mitigate the risks associated with those failures.
5. Control Charts
This method monitors a process’s performance and detects changes in the process over time. Data points are plotted on a graph to help identify any patterns or trends that may be occurring, and allow teams to take action before significant problems arise.
6. Root Cause Analysis
As its name implies, this involves a systematic approach to identifying the factors that contribute to a problem and determining the actions needed to prevent it from happening again. By getting to the root cause of a problem, businesses can implement targeted solutions that effectively address the issue and prevent it from recurring in the future.
7. Design of Experiments (DOE)
This tool is used to identify the factors that affect a process and optimise it for maximum efficiency. By conducting experiments and analysing the results, businesses can make data-driven decisions to improve their processes.
8. Measurement System Analysis (MSA)
This method evaluates the accuracy and reliability of a company’s measurement system. It assesses the sources of variation in measurement data, such as equipment or operator errors, and provides a framework for improving the measurement process.
“The Six Sigma approach has been a cornerstone of our continuous improvement efforts, helping us to identify and eliminate waste, reduce variability, and improve overall efficiency.”
– Jim McNerney, former CEO of The Boeing Company
This chart is a bar graph that shows the frequency of problems or defects in a process. It helps businesses identify which problems are most significant and prioritise their efforts accordingly.
10. Regression Analysis
This tool identifies and analyses relationships between variables to predict outcomes. It helps to identify and measure how different factors affect each other and their impact on the end result. It’s useful in finding patterns and trends, making predictions, and improving processes.
11. Hypothesis Testing
This is a statistical tool used to determine if a process change or improvement has actually made a significant difference in the outcome. It involves setting up a null hypothesis and an alternative hypothesis, collecting data, and performing statistical tests to determine if the results support the null or alternative hypothesis. It is used throughout the DMAIC process to verify improvements and ensure that changes to a process are effective and sustainable.
12. Kaizen Events
This method is a type of “rapid improvement” workshop that lasts a few days to a week. The goal is to make small but impactful improvements that can be implemented quickly. Kaizen events involve cross-functional teams that work together to identify and eliminate waste, improve process flow, and increase efficiency.
13. Value Stream Mapping
This tool visualises the flow of materials and information in a process, from supplier to customer. By creating a detailed map of the process, teams can better understand how value can be added and where bottlenecks or delays are. It can then be used to streamline the process and eliminate non-value-added activities, leading to increased efficiency, quality, and customer satisfaction.
14. Fishbone diagrams
Also known as Ishikawa diagrams, these are used to identify the root causes of a problem. The diagram resembles a fish skeleton, with the problem at the head and the causes branching off like bones.
Yes, that’s a lot of tools to have in its toolkit! But remember, businesses are unique so a wide range of methods is necessary. And it’s most likely that only a handful of the tools will be engaged at any one time, depending on the problem and the industry.
Okay, so let’s put the mapping, diagrams, and charts aside. If a business already has systems in place, why would they go through the hassle to review them? After all, implementing the likes of Six Sigma is no small task, is it really worth doing?
Glad you asked…
Why bother to improve processes?
No matter how efficient and profitable a business thinks it is, if processes are in use, then there’s always room for improvement! Just a small tweak in a process could save unimaginable amounts of money or reduce a huge volume of waste – or both!
So it’s no surprise that the main reasons why businesses use Six Sigma are to implement cost-saving improvements which will naturally increase profits.
Just take GE for example, who were one of the largest and earliest adopters of Six Sigma. They reported saving billions of dollars through using Six Sigma programs.
Both Bank of America and Honeywell have also said they saved hundreds of millions of dollars each from their Six Sigma efforts.
“Six Sigma has enabled us to systematically identify and eliminate the root causes of defects and minimize variability in all of our processes. This has resulted in significant improvements in quality and productivity, as well as cost savings.”
– Jack Welch, former CEO of General Electric
Cost savings that drop straight to your bottom line (profit) should be a (more than) sufficient reason to make a business want to improve its existing processes. But if that’s not enough, here are a few more.
Process improvement will:
- Enhance the overall efficiency of your business.
- Improve your product and service quality.
- Increase your competitiveness in the marketplace.
- Boost employee morale.
- Build customer satisfaction and loyalty.
- Fine-tune risk management.
- Lead innovation in your industry.
We can hear you thinking right now, “Will it really be THAT good?” After all, the companies getting such stellar results happen to be large multinational entities. Are there other worthwhile outcomes of Six Sigma for small businesses?
What else can it do?
Six Sigma can also help a business:
- Become more efficient: By reducing waste and streamlining processes, a business can become more efficient, which can lead to cost savings and improved productivity.
- Improver product or service quality: By addressing inefficiencies and improving processes, a business can improve the quality of its products or services.
- Get the advantage on competitors: A business that consistently improves its processes can gain a competitive advantage in the marketplace by offering higher quality products and services at a lower cost.
- Achieve high job satisfaction from employees: When processes are streamlined and improved, employees often have a clearer understanding of their roles and responsibilities, which can lead to improved job satisfaction and morale.
- Keep customers happy and loyal: By continuously improving processes, a business can ensure that its products and services meet or exceed customer expectations, leading to increased customer loyalty and satisfaction.
- Create a low-risk workplace: By reducing variability and waste in processes, a business can reduce the risks associated with its operations and improve its ability to respond to unexpected events.
- Innovate and create more: By continuously improving processes, a business can foster a culture of innovation and improvement, which can lead to the development of new and better products, services, and processes.
- Increase profits and lower costs: As mentioned earlier, this is one of the key reasons why businesses use Six Sigma. The combination of increased efficiency, improved quality, and reduced risk can lead to improved financial performance, including increased profits, reduced costs, and improved return on investment.
“Six Sigma has been a game-changer for us. By using a data-driven approach to identify and eliminate sources of waste and variability, we’ve been able to improve quality, increase efficiency, and deliver better results for our customers.”
– Marlyin Hewson, CEO of Lockheed Martin
The answer is, yes. And no. There will be times when you should use Six Sigma and there are times when you shouldn’t. Let’s dive into the former first.
When to use Six Sigma?
Technically, Six Sigma can be used in any business, in any industry, and at any time. But it might not always be cost-effective or produce the results you want. So knowing when to use it is going to ensure the outcomes you really want.
As such, it’s critical to understand that the Six Sigma methodology should be used when:
- Your business already has systems in place, and
- You want to solve a specific problem or improve a particular process.
In addition to the above, Six Sigma outcomes will knock your socks off in situations when:
- High-priority problems are presented, such as getting high levels of customer complaints, long turnaround times, or too many defects.
- Improvement for complex processes is needed, such as multi-step manufacturing processes or supply chain management.
- A need for increased efficiency is identified which can lead to cost savings and improved productivity.
- A need for increased quality is identified to improve products or services, reduce defects, and increase customer satisfaction.
- You need to regain your competitiveness by offering higher quality products and services at a lower cost.
- You need to get risk management under control, which can reduce the risks associated with operations and improve a business’s ability to respond to unexpected events.
Because there are so many “moving parts” to a business, and employees are already busy doing their jobs, it’s not always easy to commence the Six Sigma methodology on your own. Which is exactly why Six Sigma consultants exist!
What does a Six Sigma consultant do?
An actual Superhero is needed to wield around such a critical and impactful tool like Six Sigma. And that’s where a Six Sigma consultant comes in. They’re trained to quickly assess, identify and plan improvements using “tried and true” techniques.
Here are some of their key “superpower” responsibilities:
- Identify specific areas that can benefit from process improvement.
- Develop project plans that outline the steps and resources required to achieve the desired results.
- Collect and analyse data to identify areas of waste and variability.
- Improve processes, based on the data collected and analysed to increase efficiency, reduce waste, and improve quality.
- Facilitate project teams that are cross-functional to implement the improvements business-wide, this ensures all team members understand any changes or updates to their roles and responsibilities.
- Monitor and measure results to ensure improvements are, in fact, being made. If necessary, they’ll provide feedback to the team on how to further improve the process.
- Provide training on Six Sigma methodologies and tools to help the team sustain and build upon their improvements over time.
- Stay current with industry trends in order to provide the best solutions for their clients.
As you can see, a Six Sigma consultant juggles a lot of balls when they’re helping a business. Whilst it can be complicated, it’s a rewarding role because ultimately the consultant helps a business run more efficiently and profitably over the long-term.
But what if your business isn’t that big or you don’t have the extra cash to spend on engaging a consultant? What then?
It’s now time to discuss when it’s not ideal to implement Six Sigma.
When not to use Six Sigma!
After talking up Six Sigma and its “superhero” powers up to this point, it might seem strange to be highlighting why not to use it. But we have to be real here – you’re a small business wanting to make money – and we want to help you do just that. So, let’s talk about those times when it’s not all that helpful.
Six Sigma should not be used when a business:
- Doesn’t have any existing systems or processes in place, such as what might be the case for a new business or one that’s been so busy they never created systems in the first place,
- Lacks resources including time, money, and personnel, all of which are critical for the proper implementation of Six Sigma.
- Doesn’t have data that can be measured, such as those which operate in highly creative or innovative environments.
- Can’t commit to change from all levels of the organisation. If there is a lack of commitment to the process improvement program, it may not be successful.
- Has strong resistance to change, such as employees not wanting to modify how they do their work.
- Can’t see the long-term goal, because Six Sigma is a long-term process improvement program that requires sustained effort and commitment. If a business is looking for short-term gains or quick fixes, Six Sigma may not be the right approach.
What’s this all mean for you?
In addition to being a meaningful way for businesses to improve overall, Six Sigma also shows the world the importance of having efficient processes in place. You cannot improve upon what you cannot measure, and the only way a business can improve is to get systems into place first.
So, if you’re an existing business currently using complex processes and are experiencing wastage yet need to ratchet up profits, then engaging a Six Sigma consultant should be your next move. Literally.
On the other hand, if you’re just starting out or don’t have any systems in place yet, you really need to carve out some time to get the systems “ball rolling”. Otherwise, you might end up trapped in your own business.
Have a small business, but no systems?
When most business owners take their first steps, the thought of creating systems and processes is far from their minds. And we get that.
After all, getting a business off the ground while maintaining the constant juggle of tasks, employees, and customers is more than enough, right?
But what ends up happening, as your business takes flight, is that you (the business owner) become “bogged down” in a never-ending To-Do list and that even applies to those enterprises which are thriving.
You don’t feel like the business owner anymore, you feel like an employee with the most restrictions, obligations, and liabilities to the business!
Sound like you? Have a great business but ZERO time for anything but that business?
You’re probably in this spot because there are no processes in place to allow you the breathing room to step back (and out) so you can finally enjoy the fruits of your labor.
Thankfully, you’re not alone and we can help!
Systemology makes it easy to clone yourself and your best team members so that the business can scale without single-person dependency. You must evolve from being an employee of a business you own – to a business owner.
The solution to the problem is the development of your business systems. That is, the non-urgent but extremely important, detail-oriented task of extracting, organizing, and optimizing how your business functions.
So it’s time to capture those things which you do (that you shouldn’t be doing) and start creating systems. Then as your business thrives as you remove yourself from it through using systemology, the Six Sigma process improvement (if needed) will happen down the line.
“Someday” won’t happen until you decide, make today the day you changed your business for the better.
