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Deploying Six Sigma To Bolster Processes and the Bottom Line

  • ID: 42695
  • Report
  • July 2002
  • 133 pages
  • American Productivity & Quality Center, APQC
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Six Sigma is the fastest growing business management system. Centered around a powerful problem-solving and process-optimization methodology, Six Sigma is credited with saving billions of dollars for companies during the past 10 years. Developed by Motorola in the mid-1980s, Six Sigma became well known after General Electric’s Jack Welch made it a central focus of GE’s business strategy in 1995. In recent years the main thrust of Six Sigma is the application of statistical methodologies and other tools to improve processes that are aligned with the overall needs of the business. Improvements and breakthrough results are accomplished through a project-by-project execution of the Define-Measure-Analyze-Improve-Control (DMAIC) methodology that is orchestrated by dedicated practitioners called Six Sigma Black Belts. Whereas the techniques of Six Sigma are most often associated with manufacturing, the techniques are also being applied extensively to transactional and administrative business processes. Six Sigma should not be viewed as a quality program that is commissioned to reduce defects but as a methodology that helps companies better meet the needs of their business.

Six Sigma can be the best thing that ever happened to a company. Or a company can find Six Sigma to be a dismal failure. Why have organizations abandoned Six Sigma or been disappointed by the return on their investment? It all depends on implementation. Organizations need to follow a systematic process or road map that leads them to a Six Sigma strategy built on long-lasting process improvements with significant bottom-line results. You have to approach change wisely and avoid just playing games with numbers. Like most change initiatives, a Six Sigma business strategy requires unwavering and consistent ownership and leadership by top management, especially the CEO. Many quality programs have failed or been abandoned by wasting valuable resources in people and funds because that commitment was missing. Too often, Six Sigma is relegated to the quality function, which has neither the resources nor organizational support to roll out Six Sigma.

In other cases, because of their previous experience with quality programs, organizations often think that they are going to initiate Six Sigma by conducting a series of courses through the training department, like they might have done with Total Quality Management (TQM), but the tools of Six Sigma have not been applied.

This study summarizes the approaches and lessons learned by several organizations that have successfully implemented Six Sigma. Best practices are highlighted in key areas of implementation. From the summary of approaches and selection of best practices, companies can determine how to either initiate or improve their Six Sigma implementation.

STUDY FOCUS AND PURPOSE

The purpose of this multiclient benchmarking study is to identify and examine best practices in deploying Six Sigma to bolster business processes and the bottom line. The goal of the study is to enable participants to identify any performance gaps or opportunities for improvement by comparing their own Six Sigma programs to others. This forum also affords participants the opportunity to gain a better understanding of issues and challenges involved in deploying Six Sigma in transactional and service areas. Twenty-one organizations participated in the consortium learning forum by attending a series of planning sessions, completing data-gathering surveys, and/or attending or hosting on-site interviews. Of those 21 organizations, 14 sponsored the study.
Eight organizations, including one of the sponsor organizations, were identified as having strong Six Sigma programs in transactional or service areas and were invited to participate in the study as benchmarking partners.

Drawing on input from Subject Matter Expert (SME) Forrest W. Breyfogle, III and secondary research literature, the APQC study team identified three key areas for research. These areas guided the design of the data collection instruments and were the basis on which findings have been developed. A brief description of the three areas follows.

1. Six Sigma infrastructure and implementation
- Gaining buy-in and project sponsorship
- Creating an infrastructure

2. Six Sigma training and project execution
- Training Belts and others
- Selecting projects
- Creating effective metrics
- Collecting data
- Applying statistical tools to business processes
- Executing projects

3. Six Sigma impact
- Measuring the financial and nonfinancial impact of Six Sigma
- Sustaining change

The remainder of the report examines successful practices in detail. Chapter One focuses on creating a Six Sigma infrastructure. Chapter Two details Six Sigma implementation. Chapter Three focuses on Six Sigma training. Chapter Four details project selection and execution, and Chapter Five details the impact of Six Sigma at bestpractice partners. Following the chapters are case studies summarizing each site visit to a best-practice partner. Industry Representation Participating companies represented many industries: aerospace, chemical and petroleum, electronics, healthcare and pharmaceutical, insurance, manufacturing, telecomm and utilities, transportation, and financial services. Eleven of the organizations reported data for the whole organization, and five of them reported data for a specific business unit or department. The majority of the organizations reported annual revenues or operating budgets of more than $1 billion.

CONSORTIUM LEARNING FORUM METHODOLOGY

The consortium learning forum methodology was developed in 1993 and serves as one of the premier methods for successful benchmarking in the world. It was
recognized by the European Center for Total Quality Management in 1995 as first
among 10 leading benchmarking organizations’ models. It is an extremely powerful tool for identifying best and innovative practices and for facilitating the actual transfer of these practices.

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- Sponsor and Partner Organizations

A listing of the sponsor organizations in this study, as well as the best-practice (“partner”) organizations that were benchmarked for their innovation and advancement in deploying Six Sigma.

- Executive Summary

A bird’s-eye view of the study, presenting the key findings discovered and the methodology used throughout the course of the study. The findings are explored in detail in following sections.

- Study Findings

An in-depth look at the findings of this study. The findings are supported by quantitative data and qualitative examples of practices employed by the
partner organizations.

- Partner Organization Case Studies

Background information on the partner organizations as well as their innovative business management practices.
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