What is Six Sigma: Pete Pande and Larry Holpp

Financial analysts have examined companies by comparing their pre-ISO or other process improvements with post-quality performance. In order to perform a similar evaluation of firms that have engaged in Six Sigma transformations, I needed to understand the basic elements of Six Sigma.

This very short book, under 100 pages, explains the fundamental concepts of Six Sigma. After introducing the term Six Sigma to the uninformed reader, it relates the process to various organizational structures and industries and outlines the types of implementations. Characterizing implementations as 'on-ramps', the author distinguished the three types, (1) the business transformation--the complete over-haul, (2) strategic improvement--limited overhaul of a single process or business unit, and (3) problem solving, targeted improvement by investigating significant issues and discovering the problems' root causes. Individuals that engage in the Six Sigma process include Black Belts--the full-time person dedicated to the process, the Master Black Belt-- the process coach, Green Belts--a person trained in Six Sigma skill but one who has functional responsibilities, the Champion and/or Sponsor--the initiator and the executive support, and the Implementation Leader-- the orchestrator of the Six Sigma effort.

Six Sigma contains a number of phases, referred to as DMAIC--define, measure, analyze, improve, and control. The authors elaborated on these steps:

Define the problem
Measuring the problem: Quantifying inputs, processes, and outputs
Focusing on the customer: Documenting the VOC (voice of the customer)
Analyzing root cause
Calculating Sigma
Managing risks
Improve:Measuring results
Control : Sustaining change

To calculate Sigma requires three pieces of information, the unit of work or item delivered to the customer, the "'requirement' that makes the unit good or bad for the customer" and the "number of requirements, or defects opportunities, for each unit" (p. 37). The formula that results from this information follows:

(incidents of defect 1) + (incidents of defect 2) + (incidents of defect 3)
__________________________________________________

500 X 3 (the number of incident types)

The decimal result is call defects per opportunity (DPO).

Six Sigma employs a number of tools to facilitate the process--brainstorming, affinity diagramming, multivoting, structure tree (tree diagram), high-level process map or the SIPOC diagram (Supplier, Input, Process, Output, Customer) , Flowchart (process map), and cause-and-effect (fishbone) diagrams. Teams gather the requisite data through sampling with clear operational definitions, Voice of the Customer methods (market research, requirement analysis concepts, data warehousing, and data mining. To communicate the findings, six sigma participants display data in checksheets and spreadsheets. They verify the data obtained through Measurement Systems Analysis (MSA), which affirms the repeatability and reproducibility (Gage R & R) of the analyzed results. Types of charts and graphs range from Pareto charts, histogram, trend charts, and scatter plot or correlation diagrams. Statistical analysis of the data can test significance, correlation and regression, and controlled experiments (designed of experiments)--"conducting controlled assessments of how a process or product performs, usually testing two or more characteristics under different conditions" (p. 65).

These skills contribute to a successful six sigma process, project management, problem analysis and failure mode and effects analysis, stakeholder analysis, force field diagrams, and process documentation. Six Sigma fits within the Balanced Scorecard framework by supplying the means to ascertain the measures--the performance, trends, and issues, on the dashboard.