Zhen He and Thong Ngee Goh
1College of Management and Economics Tianjin University, Tianjin, China
2Industrial and Systems Engineering Department, National University of Singapore, Kent Ridge, Singapore
More than a quarter of a century after its inception, Six Sigma can be considered amature framework for performance improvement – as for maturity assessment at theorganizational level. Traditionally, the Six Sigma framework is understood tobe motivated by the need to improve manufacturing processes and has gained its popularityafter successes at large corporations; however, after years of propagation and practice, SixSigma has been subject to a wide variety of interpretations in industry. A transnationalcomparative study among Netherland, UK and USA conducted by Iwaardenet al.Shows that although a body of knowledge has been developed which centers aroundstandardized methodologies, the approach to Six Sigma varies among organizations. Someuse it as a general quality philosophy, while others use it as a statistical tool only. Thevariation in understanding and implementation results in differences of Six Sigma benefitsas well as the sustainability of Six Sigma programs. It would be useful at this juncture totake stock of the overall journey that has been taken in the name of Six Sigma, with anexamination of what it might take to make Six Sigma continue to be effective and relevantin the coming years.
2. Evolution of Six Sigma for Quality
There are many published papers on how Six Sigma has been developed. Some also present thoughts on thefuture directions of Six Sigma. It is always a challenge to forecast the future of any management methodology,especially one that has been understood in many ways and has been subject to variousinterpretations. Six Sigma was first motivated by the need to improve quality to meetcustomer demands, so when it comes to speculating the direction of development of SixSigma, one tends to consider the future direction for Quality. Almost twenty years ago, in1996, the American Society for Quality (ASQ) gathered a number of quality expertsworldwide for a “Future of Quality” study, selecting major factors that would affect thefuture and speculating the impact such factors might bring to the world and hence thedirection for future quality practitioners. Thereafter the exercise was conducted on atriennial basis, each time pointing to key factors that might affect Quality, such asglobalization, social responsibility, rapid social reform, ageing population, innovation, andso on. Such exercises do have their place for the quality professionals, but the factorsidentified tend to be “macro” in nature, and their significance in societal development farexceed their direct impact on the quality profession perse.
Six Sigma originated from Motorola in 1986 arising from the need to improve productquality and face competitions, with customer satisfaction and business competitiveness asthe objective. With Six Sigma implementation, the company won the Malcolm BaldrigeNational Quality Award in 1988. Thereafter the company’s sales volume, profits and shareprices increased. With the success of Six Sigma at companies such as Allied Signal, WallStreet started to hear about Six Sigma. In the mid 1990s, Jack Welch at General Electric(GE) provided the best example of leadership and corporate-wide initiatives for Six Sigma.
Gradually Six Sigma is not just about statistical tools, though statistical thinking is itsbackbone; it is not just about quality improvement, but implemented with a view to corecompetitiveness of a corporation. Further details are described by Harry and Schroederand Hahn et al.
Following the remarkable success of implementation of Six Sigma at General Electric,Six Sigma was noticed, accepted and implemented by many other corporations. Today, theapplications of Six Sigma have gone beyond Motorola and GE to the world, from the Westto the East, from Fortune 500 multinationals to common organizations, from manufacturingto service industries such as banking and healthcare. Six Sigma has been recognized notjust a way to improve quality but as a management concept and systematic approach tocontinuous improvement, strengthening leadership, enhancing customer satisfaction,increasing profits and business competitiveness. Six Sigma’s DMAIC has gained popularitythough it may not be very effective for ill-structured problems.
3. Ingredients of Six Sigma Successes
From the historical development of Six Sigma, it can be seen that while Six Sigmaconcepts originated from Statistics, and as a management framework for continuousimprovement it has gone far beyond its statistical contents. Many previous authors have
discussed the key elements of Six Sigma, but obvious similarities can be seen between what Six Sigma entails and thequality gurus of the past have advocated. For example, Shewhart and Deming’sPlan-Do-Check/Study-Action (P-D-C/S-A) cycle as well as Juran’s ten steps for qualityimprovement are mirrored in Six Sigma DMAIC implementation – especially the latter,which is worth being recalled here: 1, Buildawareness of the need and opportunity for improvement; 2, Set goals for improvement; 3,Organize to reach the goals; 4, Provide training; 5, Carry out projects to solve problems; 6,Report progress; 7, Give recognition; 8, Communicate results; 9, Keep score ofimprovements achieved; 10, Maintain momentum by making annual improvement part ofthe regular systems and processes of the company.
Six Sigma, though built upon what is largely known to the quality profession, ensuresits remarkable effectiveness essentially on three counts: first, a relentless top-down approach; secondly, emphasis on project selection and attention to a project’sstrategic value to organizational goals and thirdly, the prevalence of statistical thinking inall improvement projects, in conjunction with a more structured and systematic approach.It must be understood that while the Six Sigma framework might initially appear novel,there is nothing in its implementation that could be construed to be against the teachingand admonition of quality gurus such as Deming, Juranand so on. Detractors of Six Sigma might focus onanalytical aspects such as the “1.5 sigma shift”, but never on the concept of variationreduction and decision making based on analysis of factual data.
4. Future Evolution of Six Sigma
Perhaps the term Six Sigma will be replaced by some other names one day, but theconcept of continuous improvement in management initiatives will never become out ofdate. The future of Six Sigma depends mainly on two fronts: one, whether Six Sigma canbring about continuous benefits for an organization; two, whether Six Sigma itself iscapable of absorbing and integrating other management thinking and tools to further itsprowess.
From a high-level perspective, the key words determining the evolution of Six Sigmaare: strategy, integration and innovation.
While Six Sigma is a methodology for systematic and rigorous solution of problems,experience in its implementation points to the fact that its results often proved to beshort-term and non-sustainable. As literature study shown by Brady and Allen, topmanagement commitment is the first and most important factor for Six Sigma success.
High profile, high-level leadership recognition is needed of the fundamental objective ofSix Sigma, namely establishing a long-term sustainable management model that in turnbecomes a core source of competitiveness ingrained in the organizational culture. Theorganization in turn would realize, through Six Sigma, management innovation, technicalinnovation, human resource development, corporate culture formation and so on. Only byimplementing Six Sigma at the strategic level could organizational buildup and continuousimprovement be assured.
Implementing Six Sigma at business strategic level requires top management have theirstrategic goals and develop a plan to achieve these goals through Six Sigma. A goodexample is Tiayuan Iron and Steel Corporation (TISCO), the largest stainless steelmanufacturer in China as well as in the world. Its strategic goal is to build the world’s mostcompetitive stainless steel producer. Before implementing Six Sigma at TISCO, the topmanagement realized that TISCO had two major obstacles through benchmarking: lowproduct quality and low management capability. TISCO decided to overcome theseobstacles through Six Sigma and deployed it at strategic level in 2005. It developed a 5-yearplan every five years and annual plan for Six Sigma implementation. Through Six SigmaTISCO achieved great successes in terms of quality improvement, management teamdevelopment and sustainable development and won China Quality Award. Now Six Sigmabecomes corporate culture of TISCO.
As commented above, the integration of Six Sigma with other management modelsand methods has been the focus of research on Six Sigma and practical implementation,which will continue to be the trend. There are three essential dimensions in the integrationof Six Sigma management, as shown in Figure 1 below.
Figure 1. Three dimensions in the integration of Six Sigma.
At the strategic level, to help an organization realize its strategic goals, projectselection in Six Sigma must take the organization’s objectives fully into account and secureopportunities for improvement through such strategy and analysis of key process indicators(KPI); such opportunities will then constitute the direction of the Six Sigma project.
SWOT analysis, business strategy map, balanced scorecard etc. can be useful tools foridentifying opportunities for improvement from strategic point of view.
Though there exists body of knowledge (BOK) of Six Sigma, it’s rather difficult to limit the scope of Six Sigma tools. In fact, at themethodology level, Six Sigma toolkits should be open in nature, so that Six Sigma can beintegrated with many management theory and methods such as lean production, qualitymanagement systems, performance excellence model, supply chain management, theory ofconstraints and so on. An increasing number of corporations are now implementing whatis labeled as Lean Six Sigma; however, the concept and practice of “lean” should alreadyhave been taken into account in a serious Six Sigma organization.
As for the process level, even though the DMAIC approach is rigorous and effective,the deployment of it improves only existing processes, whereas impacts are found in termsof quality, costs and cycle times in the design of a product or a service. More companiesnow start with DFSS which is likely to be the focus of Six Sigma research from now on.
As a system for enterprise innovation and continuous improvement in an enterprise,
Six Sigma has two distinct characteristics: first is in the management model, where Six
Sigma makes good use of the integration of planning and execution, via the leadership andparticipation of top management to promote areas such as process optimization,continuous improvement, knowledge management, supply chain management; second isthe operating methodology itself, which gathers management thinking, methods and toolstogether in an effective manner to offer an operable technical roadmap, resulting inintegration and innovation as progress is made. Now Six Sigma methods are widely usedfor developing new products and services that reach new and broad market; that is, forinnovation. The future of Six Sigma depends on that if ourunderstanding of Six Sigma can go beyond its old metric meanings. As Montgomery andWoodallpointed out, this metric is nonessential aspect of the Six Sigma processimprovement and product design frameworks and is now doing more harm than good.
5. Pervasive Six Sigma Implementation
A significant opportunity for the spread and prevalence of Six Sigma that has beenlargely overlooked is its propagation through small and medium enterprises. To-date almostall Six Sigma success stories are based on applications in large corporations, sometimesgiving the impression that Six Sigma is only for large organizations. One can understand how larger organizations tend to betrend setters and models of success, but Six Sigma has reached a stage where its efficacy isno longer in doubt, and there is no element in this methodology that suggests that it shouldbe the monopoly of large companies and multinationals.
One important consideration in the realization of the top-down approach is the muchflatter organizational structure found in smaller organizations, which actually facilitatechanges in thoughts and practices. Thus, for example, Six Sigma can be swiftly put in placewithout the formality of arranging for initiatives from the Human Resource or QualityDepartment. In fact once the direction is set, needed specific resources such as manpower,raw materials, machine time for Six Sigma projects can be marshalled without thesluggishness of any in-company bureaucracy; indeed if the outcomes are good, formalchange, adoption or standardization would not encounter as much “not made here”resistance as that tends to be seen in large, multi-location organizations. Thus it is time thatsmaller companies capitalized on their organizational nimbleness to leverage on what SixSigma could offer.
From another point of view, owing to short production runs and short-term logisticneeds, many small and medium enterprises tend to be operating with sub-optimal practicesand processes. This actually presents interesting opportunities for effective Six Sigmaapplications. What is important is the stress on statistical thinking in problem solving;intractable situations frequently encountered by small and medium enterprises are preciselywhere the traditional deterministic approach should give way to statistical thinking.
Again, the change in mind set is certainly less challenging in a smaller organization thanwhat could be encountered in a multi-division, multi-cultural or multi-continentalorganization with its myriad of business leaders and power centers.
6. Concluding Remarks
The thrust of the discussion in this paper is how Six Sigma could continue to berecognized and used in the future, both from a high-level view and from the practice level.
To-date Six Sigma has a good track record, is still embraced by many organizations, andtends to be thought of by those seeking improvements. Though no longer considered amanagement fad, Six Sigma could fade away like some previous management approaches itif its existence continues to be confined to its “classic” form, to large corporations and tomanufacturing. In short, the deliberations here have been inspired by the vitality of SixSigma so far, against the backdrop of its impressive success in the past.
It bears repetition that even as a mature methodology, Six Sigma still has an untappedpotential for which the beneficiaries include smaller organizations, traditionally not knownto be fertile grounds for Six Sigma. Further inroads into service industries are an inevitablephenomenon. Aspects of development of the Six Sigma management methodology itselfhave also been elaborated in this paper. Thus there is much to be expected in terms of whatSix Sigma could do for business excellence in the years to come, achieved throughpervasiveness and inclusiveness, not merely the mechanics of DMAIC, as the prominentfeature.