"Six 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

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.

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