Six Sigma (6σ) is a quality management method used by companies that employs statistical tools to describe, measure, analyse, improve and monitor business processes. Jack Welch, who popularised the methodology when he was CEO of General Electrics, repeatedly emphasised that Six Sigma keeps an entire company focussed on customer needs. When putting Six Sigma into practice, the entire management team and every part of the organisation must be committed to ensuring that every stage of work is designed to benefit customers.
In statistics, sigma (σ) is a value that represents variation or distribution from an average. In the case of normal or Gaussian distribution, it is known as standard deviation. One sigma to the right and left of an average value is where the curve turns and is quite close to the average. Standard deviation is expressed in the same units as the values in the measurement series.
The company sets a target range for its performance that centres around the target value. The boundaries of this range are known as the specification limit. However, the aim is not to set the range so that it simply encompasses all the key business data, but rather to run the business so that all the key data falls inside this range. A statistical value of six sigma represents a sensible specification limit.
If these values were to be plotted on a normal distribution curve, the following would apply: 68.3 percent of the values would fall within a standard deviation around the average µ. 95.4 percent of the values would fall within the range µ ± 2σ, that is two sigma to the right and left of the average and thus four sigma in total. 99.7 percent of the values would fall within the range µ ± 3σ. This is the target that gives the system its name – Six Sigma.
The average quality level in most companies is normally between three and four sigma. That corresponds to 93.3 to 99.4 percent success. When a process has reached a Six Sigma (6σ) standard, it results in just 3.4 errors per million possibilities of error. As a result, the number or error-free processes is 99.99966 percent. In short, when it comes to quality management, Six Sigma means zero-error quality.
The most famous Six Sigma method is the DMAIC cycle, which stands for define, measure, analyse, improve, control. The cycle is a way of making existing processes measurable so that they can be improved over the long term. The overriding aim is always customer satisfaction. The method is based on dividing up all corporate processes into the smallest possible steps to produce several individual value-creation targets that will support the design and more importantly the optimisation of individual processes. These processes are modified separately and in the context of the upstream and downstream processes. This approach requires a great deal of communication.
The primary task of Six Sigma managers or consultants is to organise the framework for communication that will ensure the Six-Sigma mindset becomes a work ethic for each and every employee.
The psychological management concept of Six Sigma is based on defined roles that follow a clear hierarchy whereby specially trained personnel take on clearly defined tasks. These personnel are ranked using a system of coloured belts similar to that used in Japanese martial arts.
At the top of the hierarchy is the Master Black Belt, who acts as the head coach. Green belts are usually found in middle management – engineers, state-certified technicians, buyers, planners and master craftsmen. Operating under the guidance of a Black Belt, Green Belts lead projects and appoint others to head up additional projects.
Where the methodology is used
At present, Six Sigma is used by many large companies in the manufacturing industry, the service sector and increasingly in the financial services industry. Since around the Millennium, companies have been using Six Sigma in combination with other lean production methods, which has given rise to terms such as Lean Sigma, Lean Six Sigma and Six Sigma + Lean.