What is Six Sigma – History

Six Sigma Methodology has its origin from Motorola, has an interesting history. Sigma is Greek for the letter ‘S’, and the term ‘sigma’ has been used for many years by statisticians, mathematicians and engineers, as a measurement unit of statistical variation till it was integrated into the quality System and business strategy by Motorola in 1987.

The seeds of this concept go back to 19790 when the Japanese management took over a TV manufacturing division of Motorola.  The Japanese concentrated on the quality of the output and actually reduced the defects to 5% of defects when the same unit was managed by Motorola. This result made the Motorola Management to take serious note of Quality.

The actual push came in Motorola only after 1981, When Bob Gavin became the CEO of Motorola. He targeted a 10 fold increase in performance within a 5 year period.

The Motorola Engineers Bill Smith or Mikal Harry – felt that measuring defects in terms of thousands was Not Sufficient for achieving a rigorous standard. They increased the measurement scale to parts per million, described as ‘defects per million’, which prompted the use the the ‘six sigma’ terminology and adoption of the capitalized ‘Six Sigma’ branded name, given that six sigma was deemed to equate to 3.4 parts – or defects – per million opportunities.

This has caught the eye of Gavin and launched the program Called “The Six Sigma Quality Program” on 15th Jan 1987. Stringent Targets were set to achieve Six Sigma Capability in 5 years. Astronomical Targets like 10 fold increase by 1989, and 100 fold increase by 1991 and Six sigma capability by 1992. A deep Sense of urgency was shown and every part of the organization was made to obsess with Six Sigma.

Soon after the success of Motorola, Allied Signal ( Now a part of Honeywell) plunged into this concept and achieved success.

The biggest push to Six-Sigma was given by Jack Welch the CEO of General Electric (GE) in 1995. He believed the possible improvement that can be achieved by this change and imbibed into the culture of the company. There were rewards, targets and training which were incorporated. By 1998, GE Reported a savings of more than three quarters of billion in profits.

By the year 2000, Six Sigma was effectively established as an industry in its own right, involving the training, consultancy and implementation of Six Sigma methodology in all sorts of organizations around the world.

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Originally posted 2011-03-21 16:55:00.

How to set improvement goal for Six Sigma Project

Improvement-goalThis is a general question asked especially when Six Sigma approach is used for Improvement is what is supposed to be my improvement goal for Six Sigma Project. In cases where the project is taken up for Problem Solving, the goal setting is straight forward. In this case the goal is to solve the problem. (or Meet the Requirements)

However, it is very tough in case of Improvement Projects. Various methods are available for setting the goal. However, there is some pre work to be done in this case.

1. Collect all the metrics which are generated f
rom the process you want to improve, (Example – Delivery rate, Quality, Defects, Customer Satisfaction, Effort ……)
2. Prioritize and identify the Primary Metric. Primary could be anything where you can improve upon. (Start with what is important to customer)
3. Baseline the Primary Metric and its relation with the secondary metrics. (This is needed to know what will happen when your primary metric moves and optimize the goal setting.)

Now the billion dollar question ” How much we should set the target” “How much we can Improve” ” How much improvement we Need”. 
There are no standard set of rules for setting improvement goals. However, below are few guidelines.

  1. As a minimum, the goal shall be set in such a way that the difference between the current performance and the goal is statistically significant.
  2. The goal must be in line with the business expectations and the improvement shall be a breakthrough one instead of incremental one. a 5% improvement is incremental but 50% improvement is Breakthrough
  3. The goal shall take you towards the benchmark for the same process performance. Ideally the benchmark need to be considered is the industry best practice.
  4. The goal need to cover the gap between the entitlement and the current performance by atleast 70%. Entitlement is the performance which is expected for the investments already made or the best capability of the process internally.
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Key Components of a Project Charter I – Problem Statement

Problem statement

For having a Clear and Very good Project Charter, the following Components are very important. A clear understanding of the problem will help not only to build the business case to be presented, but also quickly arrive at solutions. A Problem well understood by all the stakeholders is half resolved.

The Key components of a charter are

· A Clear and un ambiguous Problem Statement.

· A Clearly defined and reachable goal to resolve or in the direction to resolve the problem

· A Business Case, stating the benefits which can be achieved by resolving the problem.

Let us first discuss the Problem Statement. It is a Known proverb that if understand the problem clearly, you are half way to the solution. A Good problem Statement shall address the following.


· What is the process that is involved?

· What is wrong?

· What is the gap / opportunity?


· Where do we see the problem / gap?

· What is the period for which we looking at?

· When do we see the problem / gap?

How big?

· How big is the problem /gap/opportunity?

· What are the limits it is impacting and by how much

· How will we measure it?

Impact? (Importance)

· What is the impact of the problem /opportunity?

· What are the benefits of the action /consequences of inaction?

Problem Statement – Example

For the period from Jan 2013 to Jun 2013 (When), the Average Fuel Consumption (What) of all the Luxury service buses is at 4.3 KMPl against a target of 6 KMPL (size). This has resulted in a loss of 700000 INR (Impact).

Key Considerations / Potential Pitfalls

· Is the problem based on facts or assumptions?

· Is data available or can be collected to verify and analyze the problem?

Potential Pitfalls

· Is a solution included or implied in the statement?

· Would customers be happy if they knew we were working on this?

· Does the problem statement prejudge a root cause?

· Is the problem statement too narrowly or broadly defined?

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What is Design of Experiments (DOE)

Design of Experiments (DOE) is a structured approach for varying process and/or product factors (x’s) and quantifying their effects on process outputs (y’s), so that those outputs can be controlled to optimal levels.
DOE deals with identification of critical factors and their response variables, and the magnitude of the response for each level of the critical factors. DoE is also used to understand the interaction between the various critical factors to ensure right mix of the critical factors to get the best amount of response.
DoE is used to understand the transfer function and mathematical model for the optimization of the response variable.
A DC motor manufacturer might wish to understand the effects of two process variables, wire tension and trickle resin volume, on motor life. In this case, a simple two factor (wire tension and trickle resin volume), two level (low and high values established for each of the two factors) experiment would be a good starting point. Randomizing the order of trials in an experiment can help prevent false conclusions when other significant variables, not known to the experimenter, affect the results. There are a number of statistical tools available for planning and analyzing designed experiments.

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Six Sigma Project Charter – Main elements

A Six Sigma Project Charter is essentially a planning document. The document also serves as an agreement between the project team and the management for the project. This is the essential record through which the management accepts and supports the project. This document is essentially an agreement between the Management and the project team on what is expected from both the sides. This is used to

  • Keep the project team aligned with the organizational Goals.
  • Clarifies what is expected out of the team
  • Keeps the team focussed on the objective
  • the project teams role is in fact increased from the champion after the charter is agreed.
A charter is prepared, once you have defined the problem, to communicate and confirm agreement between the problem-solving team and management.
There can be many other forms to use for a project charter. The most important information needed for management to approve the project must be captured here.
Here are the essential elements of the Project Charter
  • Project Name
  • Project Goal
  • Problem Statement
  • Business Case
  • Milestones
  • Support Needed
  • Estimated Cost
  • Signatures/Approvals.
These will define the complete description of the project in the language fo Management.
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Key Components of a Project Charter

image  In the earlier sections I have covered the list of key components and the problem statement in the following articles. I will continue this discussion on the Project Charter so that the problem is well understood at all levels and support wherever needed in clearly identified. A good start is half done. Same way in a Six sigma Project, A good project charter becomes heart of the project and to achieve the goals.
Once you have defined the problem clearly the other sections of the charter need to be completed.  Follow these sections in the order so that the logical flow is available. However, this is not mandatory. The details are below.
Project Goal or Goal Statement: The Goal statement is linked to resolution of the problem. Important consideration here is to set a goal which is achievable in a period of about 120 to 160 days. The goal is agreed by the team and team champion as achievable. This really helps in setting the scope of the project.
Business Case & Estimated cost: This section is for the Management to understand the Return on Investment. This shall be as realistic as possible since this is commitment to the Management on the benefits of the project. The business case shall be linked to resolving the problem and the benefit shall be in line with reducing the losses as outlined in the problem statement and achieving the goal in the goal statement.
Support Needed: This will help the management to understand allocation of resources and support. This shall outline the likely support needed from outside the project team.
Milestones: Clearly define the timelines for the phase of the project. This will help to see if the project is in the right direction and correct course by both management and the project team.
Signatures/Approvals : This is just a commitment for the project both from management and the project team.
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Introduction to Six Sigma

Introduction to Six Sigma is necessary as Six Sigma is seen only as a continuous improvement method. However Six sigma has many faces. It is originally developed as a Quality management program in Motorola in the 1980s; Adopted with a zeal by GE in mid 90s; Being used effectively all over the world now. The goal of six sigma is to achieve continual improvement. The term Six Sigma is used in many contexts with an aim of Continual Improvement. Some of them are listed below.
Six Sigma is used as a Management Philosophy focused on business process improvements to:

  • Eliminate waste, rework, and mistakes
  • Increase customer satisfaction
  • Increase profitability and competitiveness
  • Statistical measure to objectively evaluate processes.

Six Sigma is used as a business strategy by concentration on Quality and defect reduction resulting in increase profitability and competitiveness. Fewer defects will lead to increased reliability and brand popularity.
Six Sigma is used as a metric to define the Quality of the output and ability of production process to produce defect free output.  
Six Sigma Is a Method for Continual Improvement. This is the most popular use of this word. A six sigma project has a defined method of an improvement project. These are DMAIC and DFSS.
Six Sigma is a Benchmark or a Goal to achieve the highest standard of productivity. A Six Sigma Quality is equal to less than 3.4 defects per million opportunities. This is the Vision for most of the organizations to make sure they deliver high quality to the customers.
Six Sigma is a Statistical Measurement to define the process Capability based on Standard deviation. For any normal distribution, the process capability is equal to six Standard Deviations.
Six Sigma is used in many other contexts which are most relevant and make sure customer satisfaction.
An organization can easily tell the customer about its quality by using the term six sigma.

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