Six Sigma was developed around 20 years ago in 1980 and Motorola Company is believed to be the creator of this methodology. The concept of Six Sigma was mainly based on strict Japanese approaches to TQM, used in manufacturing processes. Here defects could be easily identified and measured. (Henderson & Evan 2000) This methodology focuses on reducing variation supported by use of data, while coming closer to providing customers with exactly what they want. Six Sigma enables less variation this means better quality and better customer performance.
Main Six sigma approaches lead to cost reduction and profit increase. Process improvements projects are conducted according to predefined steps that when followed carefully support the successful process improvements.
Braunsheidel et al, 2011 defines Six Sigma as "[. . .] a comprehensive and flexible system for achieving, sustaining and maximizing business success. Six Sigma is uniquely driven by close understanding of customer needs, disciplined use of facts, data and statistical analysis, and diligent attention to managing, improving, and reinventing business processes".
It should be noted that Six Sigma derives its name from the high quality output that it strives to achieve. Six Sigma refers to a defect level of lower than 3.4 defects per million opportunities. Table 1.1 illustrates defect levels across different stages of Sigma adaptation.
Level
Yield %
Defects per million
1 Sigma
30.9
690,000
2 Sigma
69.2
308,000
3 Sigma
93.26
66,810
4 Sigma
99.37
6,210
5 Sigma
99.98
320
6 Sigma
99.9997
3.4
Figure 1.1 Sigma Levels
In 1982, as per request from Motorola's CEO to reduce the quality costs by half, engineers decided to focus on measuring defects produced during the manufacturing process per million opportunities. Through the research it has been observed that there is an enormous need to amend the analytical methods and product design. Company employed a vast number of quality tools in order to improve the identified processes. Motorola has been extremely successful in this approach and it was not a surprise that other companies decided to follow, i.e. Texas Instruments, Allied Signal, Eastman Kodak, Borg-Warner Automotive, GenCorp, Navistar International and Siebe plc. (Henderson & Evan 2000)
It has been very clear to the manufacturing companies that other disciplines apart from manufacturing could apply the Six Sigma methodology. Functions such as distribution, marketing and logistics focused their attention on implementing the discussed standards by eliminating defects throughout the processes.
Motorola decided to publish their findings by developing the tools curriculum and creating "Six Sigma practitioner qualifications". All these accomplishments resulted in Motorola being awarded with Malcolm Baldrige Award in 1988. (Henderson & Evan 2000)
Since the introduction of Six Sigma in the late 80's the process itself evolved over time. Numerous companies adopted the approach and it became a way of doing the successful business. Due to the fact that it has been widely used by different organizations and companies, Six Sigma has been transformed into business excellence philosophy that eliminated waste, reduced variation, and what is more important, increased profits. It became the business management strategy that enforced changes in the culture that organizations lived. Six Sigma methodology is used to support process improvements mainly in identifying and removing defects.
Six Sigma Methodology
Six Sigma methodology is based on three principles: customer-focus, continuous improvement and teamwork but emphasizes innovation. They are influenced by methods that support activities such as analyzing processes, gathering data, innovation and continuous improvement. (Eng 2011)
Six Sigma uses a set of methods such as: DMAIC and various tools i.e. 5 Whys; Cause & effects diagram ( fishbone or Ishikawa Diagram); Check sheet; Control Chart; Failure mode and effects analysis (FMEA); Histograms; Pareto Chart; Quality Function Deployment (QFD); Root Cause Analysis; Scatter Diagrams. Tools as listed will be described further in the chapter.
Six Sigma would not work properly without the involvement of people within the organization. They are awarded Black and Green Belts and thanks to available extensive training they become knowledgeable and are well able to implement Six Sigma methods into process improvements.
Henderson et al, 2000, suggests why companies should implement Six Sigma despite the lengthy process and costs that need to be applied:
Some of the key reasons listed: (Henderson & Evan 2000)pp 264 - 265
To be responsive to and focused on the customer base: We realized early on that just as our customers were instituting changes, we also needed to change some of our processes so that we could be more responsive.
To improve product and service performance: The goal of Six Sigma is to improve product and service performance by reducing defects inherent in the processes and materials used to produce them
To improve financial performance and profitability of business:
To be able to quantify its quality programs. The Six Sigma process strives to eliminate those defects by forcing a company to quantify its quality.
To be considered as a supplier for a business.
Another important goal of Six Sigma is to control the processes before the product is received by the customer. Manufacturers use various techniques to measure the progress such as regular customer surveys and daily manufacturing checks. On the other hand, data collection and statistical analysis measure the performance of the existing processes. (Henderson & Evan 2000) It is worth mentioning that the methodology that was applied initially to manufacturing processes only, is used in all aspects of business today, i.e. program execution, product development, new business acquisition, customer service, accounting etc.
Furthermore, as specified by Henderson et al, 2000, "the goal of Six Sigma is to improve product and service performance by reducing defects inherent in the processes and materials used to produce them."
Six Sigma Tools
Six Sigma methodology involves technique that is organised in a logical manner. Each stage involves a set of tools and methods that help to apply it and lead to problem solving and improvements. The best known methodology is DMAIC it may resemble in its structure earlier discussed PDCA cycle introduced by Deming. It is very important to mention that DMAIC focuses on the customer satisfaction, reducing variability in product and process designs.
DMAIC is an abbreviation of five words, which define fine stages of the process: define measure, analyse, improve and finally control.
Define - when starting the project, define stage is applied where any problems within the process or service are identified. At this point the technical requirements are reviewed. Based on meeting customer expectations the process is reviewed in terms of quality, cost and delivery. Any variations in the process are studied under the above requirements.
Measure - in this stage core measures are identified with consideration of Six Sigma tools for instance, metrics and analysis techniques, all relevant data is gathered.
Analyse - in this stage project team works on determining the causes of the problems that were identified at the earlier stages. The most common tools used are hypothesis tests, correlation and regression analysis, and analysis of variance, etc.
Improve - in this section of the project, summary of the activities is formed based on creation, selection and implementation of the solutions. Information gathered serves as an aid to identify key points on how to modify and optimize the services.
Control - in this final stage, project team focuses on assuring that improvements implemented at the earlier stages are successful and sustained
Figure 1.2 in the appendices' section refers to distinctive tools and techniques that could be used at different stages of DMAIC.
Limitations of Six Sigma
Six Sigma process improvements become highly popular in the manufacturing sector as a quality control system that helps to reduce the production defects and is directed at removing non value add processes from production flow. Companies that have adopted Six Sigma methodology focus mainly on process improvements programs that are conducted by their own employees. Typically they start off well and team members show great interest, however over the time participants start losing their interest and go back to the old ways of doing things. (Chakravorty 2010)
Similar research on Six Sigma application has been performed by Kumar et al, 2008. They have introduced a concept of methodology myths that have been questioned throughout the years. I would like to discuss three of them in detail.
In the literature there are strong statements that Six Sigma is not a fresh concept, what is more, it just a new name that has been used as the methodology that is present for several years. In their article Kumar et al, 2008, state that it uses the same techniques and tools as TQM. DMAIC could be compared to PDCA and many organisations make the mistake of confusing the two methodologies and linking Six Sigma with quality initiative such as TQM. (Kumar et al. 2008) However when comparing the two methodologies it is worth mentioning, that TQM did not emphasise the aspects that are important for Six Sigma. First of all, focus on core business improvements and cost savings. All projects conducted in accordance with DMAIC should be progressed until clear savings are identified. Secondly, stages are applied in a sequential manner. Finally, it involves vast amount of professionals who are trained as champions with awarded titles such as Black, Green and Yellow Belts. (Kumar et al. 2008) Methodology is applied by members of teams that would form multidepartment teams focusing on decision making based on root cause analysis of defects at all levels in the organisation. DMAIC phases perform as a filter to steer the team into eliminating non value add activities in the processes.
Another myth presented by Kumar et al, is that Six Sigma application before implemented requires organisation to invest huge costs in training of its employees. Such training is necessary for the professionals to lead the teams throughout process improvements. However, there is a great benefit from that, once the basics of the concepts are understood at all levels in the organisation the specific strategy can be developed to facilitate the changes. Successful completion of the project brings the return on investment and gives significant values to the organisation.
Finally, as presented by Kumar et al, Six Sigma is not cost effective. They are of the opinion that massive investments in the training and application bring enormous risks into the business strategy. As noted it takes a lot of time and effort before costs savings are generated and improve profitability.
Chakravorty, in his article, discusses the example of the airplane industry that implemented more than 100 improvement projects to discover that more than a half was unsuccessful. (Chakravorty 2010) He compares the process to the way the metal spring reacts when it is pulled with increased force i.e. it stretches to the extent to allow enough space to absorb the pressure enforced. (Chakravorty 2010) Chakravorty explains that employees involved in the process improvements behave the same way. They stretch themselves in order to resolve the problems and find the solutions.
It is flagged that most of the projects in the airplane company failed mainly due to the fact that project experts, assigned to supervise the teams, moved to different tasks. The leader, the knowledge and the expertise were lost at that point and team members found it difficult to follow the steps of the projects on their own. What is more, they were not able to agree on the common goals. As the guidance was lost and the pressure from managers to produce the results was increased, participants chose to return to their old habits to produce satisfactory results. The performance of the groups started significantly decreasing and eventually they stopped working on delivering significant and objective solutions. Instead, teams directed the improvement efforts to their own departments. (Chakravorty 2010)
Chakravorty, in the article, suggests four lessons that should be learned and that could potentially be used as a reference when conducting and selecting the projects for process improvements.
First of all, Six Sigma experts should be available at all times to supervise the projects. Secondly, "performance appraisals need to be tied to successful implementation of process improvements". (Chakravorty 2010) It has been proven on numerous occasions that appraisals in various forms allow the participants to stay motivated. Thirdly, Chakravorty states that teams when formed, should have between six and nine members. Due to the fact that the team is kept relatively small, all participants are involved in the process and it is easier to agree the common goals. And lastly, management should be actively involved in the process improvement projects. It ensures clear communication flow and more accurate assessments are made on the decisions and findings from the research. (Chakravorty 2010)
Chakravorty in his article outlined very important matters that will be closely looked at during the research performed in Company A for the purpose of this thesis. It will be very interesting to find out if any of the above reasons caused some of the projects to fail.
Braunscheidel et al (2011) in their research state that there is very little evidence published on application and implementation of Six Sigma methodology. Literature gives very detailed definitions of the approach that should be taken however it does not clarify the impact on the actual performance. (Braunscheidel et al. 2011) In the journal, it is proven that when teams do not follow the steps in rigorous way, it very often leads to failure in the process improvement projects.
The research performed by Nonthaleerak & Hendry (2008) on multiple Thai companies that implemented Six Sigma explains various weaknesses that could potentially lead to failure of the projects. Some of their findings relate to the exact steps in DMAIC methodology that were incorrectly applied. For instance, in define stage main emphasis should be put on the alignment of company goals with the selection of projects. Another important fact relates to the lack of supervision provided by the management to ensure the support for identified fields for improvement. The coaching and advise from Six Sigma exerts was not available and the knowledge of employees conducting the projects around Six Sigma tools and techniques were not satisfactory.
Braunscheidel et al (2011) discusses the approach that should be applied for successful implementation of Six Sigma which includes structure, improvement procedure and focus on metrics. However their research does not answer the question: "why process improvements fail?". In their work they focus mainly on pressures that are implied on organisations to adopt Six Sigma. Pressures are identified as: "coercive - from customer requirements; mimetic - from environment uncertainty; normative - from professionalisation" (Braunscheidel et al. 2011)
In their article Braunscheidel et al (2011) prove that companies that adopted Six Sigma approach in many cases reported significant improvements. However there is no evidence of projects that were unsuccessful and what caused the failure.
When Six Sigma is implemented in a successful manner it brings many benefits to the organisation. However, it is not easily achieved. Companies that are employing Six Sigma are faced with many challenges that are listed in the research performed by Aboelmaged (2011). In his article Aboelmaged specifies a list of barriers that can impact process improvements and Six Sigma adoption. (Ref Figure 1) Aboelmaged (2011) among the challenges lists "limited resources, lack of support, inadequate selection of Six Sigma projects and inadequate organizational structure". (Snee 2001) While performing his research, Aboelmaged (2011) focuses on two types of organisations: large and SMEs. He shows that listed in Figure 1 barriers differently affect those organizations however they equally affect the process improvements.
In the paragraph below top four barriers will be discussed as per article by Aboelmaged (2011).
Lack of knowledge about Six Sigma and lack of dedicated professionals were considered as the most influential barberries by Aboelmaged. Examples listed above have been classified by Aboelmaged as the most important factors "that specify Six Sigma awareness and create the desire to implement its methodology" (Aboelmaged 2011). Third important aspect discussed by the author was the insufficient financial or human resources, and finally lack of top management support. Aboelmaged explains this phenomenon and links it to the knowledge barrier mentioned previously. "Top management cannot support any new quality initiative without being exposed to enough knowledge and awareness about it." (Aboelmaged 2011)
Study performed by Hendry et al (2005) strictly relates to complexity of Six Sigma tools. She indicates that most of the techniques can be easily followed by engineers, however when it comes to using statistical tools, they prove to be too difficult to apply by different background employees. Moreover, this theory proposed by Hendry et al (2005) underlines the importance of involvement of Six Sigma experts in the projects.
In his article Aboelmaged proves that barriers affecting implementation of Six Sigma exist however they can be overcome when special attention is given to them. He states clearly that not all 28 barriers, as listed in Figure 1, affect the implementation of methodology and they differently affect organizations depending on their structure. Those barriers will be taken into consideration when performing research for the thesis proposed. Table created by Aboelmaged will assist when identifying the issues that cause the project improvement failures in Company A.
Discussing the barriers that were flagged by above researchers, that could possibly influence the implementation and successful outcomes of the Six Sigma projects, it is worth looking at the employees themselves. As previously mentioned the motivation of the participants decreased with time and various factors influenced the change in their behaviour. At this point it is appropriate to mention the study called the Hawthorne effect. This experiment was performed by Elton Mayo between 1924 and 1932 on the factory workers in Hawthorne Works plant. (Franke & Kaul 1978) It was mainly focused on productivity of the workers. Initially the experiment was conducted to check if the level of light has any influence on the participants. However, very quickly Mayo realised that the productivity improved due to a different reason. Employees of Hawthorne Works changed their behaviour because they were observed and they were fully aware of this fact. Researchers put a lot of interest in the employees and showed a lot of attention towards them that proved to improve the productivity. Findings of the experiment were published and discussed mainly as the phenomenon of the "Informal Organisation". Franke et al 1978, analysed "workers' interactions within the organization, such as the social interaction between workers and supervisors" (Muldoon 2011). Outcomes of the experiment proved that some people work harder and tend to perform a lot better when take active part in the experiment.
Due to the fact that the research performed in Company A will be conducted mainly as an action research one of the tools used to collect data will be observation of the process improvement teams. As part of the research the Hawthorne effect will be referenced to analyse the motivation and productivity of the observed teams and to examine whether it has the effect on the group productivity.
