Change Implementation Techniques for Creating a Sense of Urgency

Technique 2.50 Six Sigma

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Introduction

"...Six Sigma is expensive and intense, and it can be as much about efficiencies and cutting costs (including people) as it is about improvement of products and services. But it is also creative, inclusive and effective......it is both a technique and philosophy based on the desire to eliminate waste and to improve performance as far as technically possible. It uses statistical analysis to reduce defects in products and services and parallels of this with an organisational culture focused on customers......it is a way to focus employees on quality, a method of implementing cultural change and establishing a common language across the company. It also creates clearly defined performance goals..."

Elisabeth Kazi, 2005

. The Sigma are used to indicate the number of defects occurring in a process, ie 6 Sigma refers to 2.4 defects per million opportunities; and 2 Sigma level refers to 308,537 defects; 3 Sigma, 66,807; 4 Sigma, 6210; 5 Sigma just 233 defects per million

The process

. Definition

Initially need to indentify what the customer values and find optimal processes to deliver this. Existing processes are benchmarked against this so that defects can be defined. It is important to include all staff who have a working knowledge of the process

. Measurement

This is the second step and involves measuring the number of defects occurring per unit

. Analysis

Statistical analysis is used to identify the perfect process and your process, with the goal being to continuously reduce variation and defects

. Improvements

Changes are being introduced so that processes and results can improve

. Control

Any future variations that may develop are monitored and controlled; risks are assessed; new products and processes are designed to be subject to as little variation as possible

Comments

. Remember: it is an expensive process that usually needs outside consultants to introduce.

. Training involves being accredited and obtaining certain levels (called "belts" as in martial arts), ie a green belt is achieved after initial training; black belts reflect responsibility for teaching the technique and advising management; black belts are the experts who are responsible for integrating the technique into the strategic framework of the organisation

. 6 Sigma came out of the quality movement and culture in Japan that was influenced by Denning and Juran after World War 2 and was based on the need to study variations in processes as there was too much inefficiency and falling levels of customer satisfaction.

. Companies like Motorola, AlliedSignal, Citibank, American Express, Boeing, DuPont, Telstra, BHP Billiton, WMC, ANZ and GE have successfully used 6 Sigma corporate-wide

. It is linked with other theories, such as lean consumption, TQM, etc that referred to removal of waste across organisations and increased responsiveness to customers' needs with flexibility to respond to changes in demand

. It challenges the traditional thinking about economies of scale by encouraging just-in-time inventory control, shorter series of production runs to handle customer needs or cellular manufacturing, standardisation of parts, continuous improvement, etc

. It has application for the service industry as well as manufacturing/engineering. Even though the definition and analysis of the processes may be more difficult for services, the technique is the same as it is based on facts and decision-making and stresses quantification to improve quality. For banks, cutting costs and improving customer relationships occurred by reducing time to process loan and credit card applications; it has also been used in the governance framework to increase efficiency, reduce costs and improve customer satisfaction

. The biggest cost in the technique is reworking processes that appear to be working well. The collection and interpretation of data can be time-consuming; the high level of training is another major cost. Furthermore, 6 Sigma is a long-term process, that needs constant re-evaluation and assessment in order to be successful

. On the downside, 6 Sigma has been criticised for discouraging innovation and forward thinking

(source: Elisabeth Kazi, 2005)

 

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