Sigma will be the biggest, the most personally rewarding, and
in the end, the most profitable undertaking in our history."
Jack Welch, former Chairman and CEO, GE
Six Sigma is a rigorous, focused and highly effective
approach to achieving improved business performance. The
goal is virtually error-free products and services. The Six Sigma
methodology requires companies to measure and analyse their business
processes. Six Sigma attacks the root causes of business problems
using a structured and strongly data-driven methodology.
Put simply, Six Sigma identifies your biggest
business problems and assigns your best people to solve them, using
a proven roadmap and a powerful set of statistical and other tools.
It is a project-based approach, where the choice of projects, the
choice of people to lead the projects, and the training of those
people in the tools and techniques are all vitally important.
Sigma is the Greek letter used to describe the variation in a process
(the standard deviation, in statistical parlance). The sigma level
of a process indicates the performance of the process in meeting
the customer's requirements. A so-called six sigma
process is one which produces on average 3.4 defects, or errors,
per million opportunities. Most Australian companies are
typically at the 2 to 3 sigma level - plenty of room for improvement.
It is estimated that the cost of poor quality for a 3 sigma company
is around 25% of sales.
Typical targets in Six Sigma projects are reduced defects, reduced
cycle times, lower inventory levels, shorter design time, increased
throughput, improved yield, reduced waste, increased sales, increased
capacity, reduced rework, less downtime, decreased warranty costs,
lower cost of poor quality, increased productivity.
Six Sigma is a mature business improvement program in the United
States, where an estimated 50% of the Fortune
500 companies are successfully implementing it to achieve dramatic
cost savings and enhanced bottom line performance.
The Australian Experience
Six Sigma is still in its infancy in Australia.
Apart from some outposts of US conglomerates, such as Ford, GE,
Ingram Micro, Cummins, Kodak, Lincoln Electric, Honeywell and Motorola,
uptake by Australian companies has been slow, although many Australian
organisations are actively considering a Six Sigma initiative. The
Six Sigma pioneers among Australian companies have been BHP Billiton,
Comalco, Telstra, Suncorp Metway, and WMC.
There is a whole terminology which has grown up around Six Sigma
in the US, such as Champions, Black Belts, Master Black Belts, and
Green Belts. Likewise, the standard deployment models for Six Sigma
are based on accepted behaviour in American companies. American
culture, within organisations and generally, is different to Australian
culture. Thus Six Sigma needs to be modified to
match the Australian way of doing things. At Sinclair Associates,
we work closely with our clients designing the type of deployment
most suitable to their culture and values through senior executive
workshops and one-on-one interviews with key personnel. With
Six Sigma, one size certainly does not fit all.
In addition, to match the needs of the Australian marketplace,
we are developing ways of delivering the Six Sigma methodology to
small and medium size enterprises (SMEs), which do not have
the available resources of the larger companies. This is truly pioneering
work, as even in the USA, Six Sigma deployment has been essentially
confined to the larger organisations.