Learning Objectives
LO 13-1: Discuss the origins of Six Sigma.
Six Sigma was developed by Motorola in 1897. General Electric was the first company to advocate Six Sigma after Motorola. However, its use has become more widespread and it is estimated that Six Sigma has saved Fortune 500 companies more than $400 billion. Six Sigma uses defects per million opportunities as a standard performance metric. Six Sigma is used by many companies to generate cost savings or increase sales through process improvements.
LO 13-2: Identify the linkages between lean programs and Six Sigma.
Lean and Six Sigma have many similarities and the two philosophies complement each other. One of the main elements of lean is continuous improvement; this is an area that Six Sigma supports as well. With lean, one may address optimizing facility layouts, reducing batch sizes and setup times, etc. These lean initiatives are monitored by using statistical quality control charts, or made possible by reducing delivery problems, etc., activities which come under the Six Sigma umbrella. In a nutshell, lean is about reducing waste and Six Sigma is about improving quality, which helps reduce waste.
LO 13-3: Summarize the notable contributions to Six Sigma.
One could view Six Sigma as one step in the evolution of quality management. Six Sigma has been built upon and incorporates the concepts of other quality management philosophies. Deming’s Theory of Management with its 14 Points of Managements are closely related to Six Sigma principles. Crosby’s four absolutes of quality also mirror Six Sigma principles; for example, he emphasized that the performance standard is zero defects. Juran’s philosophy concerning the importance of top management commitment, the need for continuous improve, training, etc. is similar to Deming’s and Crosby’s and echoes the Six Sigma philosophy as well. In addition to the contributions of these philosophies in developing the foundation of Six Sigma, two programs help drive the use of Six Sigma. The Malcolm Baldrige National Quality Award’s objective is to stimulate U.S. companies to improve quality and productivity. An international effort that drives the use of Six Sigma is the ISO standards.
LO 13-4: Apply the various statistical tools of Six Sigma.
The following are Six Sigma tools that one uses to collect and analyze data in order to facilitate continuous improvement. Process diagrams (process maps or flow diagrams) show the flow of products or customers through the process. Check sheets are a simple yet effective data collection tool. Pareto charts support the analysis of data by showing the magnitude of problems, from largest to smallest. Cause-and-effect diagrams (fishbone diagrams or Ishikawa diagrams) are used to brainstorm the causes of a problem and support root cause analysis.
LO 13-5: Explain the new applications of Six Sigma.
There are two new applications of Six Sigma, revenue management (or yield management) and the Theory of Constraints (TOC). By applying Six Sigma to revenue management, a firm can reduce costs while maximizing revenues, which will increase profits. Six Sigma can further improve a firm’s financial performance by identifying root causes of defects, improving forecasts, etc. Six Sigma can improve bottleneck processes that are identified using TOC by finding the root causes and improving capacities, etc.
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