The Pros and Cons of Six Sigma

ANALYSIS BY: Eric Britten, President, Britten & Associates, LLC, Anchorage, AK.

PUBLISHED: Jun 02 2010 .

AUDIENCE: Operations professionals, ERP professionals, Six Sigma professionals, Enterprise decision makers .

Introduction

It's difficult to have an objective discussion about about something unless we can definitively state what that "something" is. So, let's understand what Six Sigma is.

Motorola, the company who pioneered Six Sigma in 1981, says that Six Sigma is three things: a metric, a methodology and a management system. At different times in varying contexts, Six Sigma is all three. As a metric, Six Sigma is a measure of defects per million opportunities, a statistical measure that focuses on nearly error-free results. As a business improvement methodology, Motorola says it focuses an organization on understanding and managing customer requirements, aligning key business processes to meet those requirements, using hard data to analyze and minimize errors in those processes, and driving rapid and sustainable improvement to those processes. Finally, as a management system, Motorola says it is a high performance system for executing business strategy that enables organizations to align their strategy, mobilize to attack high impact projects, accelerate improved results and sustain those improvements.

With this three-in-one concept in mind, let’s now take a look at the pros and cons of Six Sigma.

Analysis

Pros

Research shows that firms who successfully implement Six Sigma typically deliver better return on investment, return on sales, employment growth, stock growth and value growth. General Electric executives report that their company realized approximately $8 billion in savings through its Six Sigma program from 1999 to 2002. I participated in a series of linked Six Sigma projects in 2007-2008 that netted $15 million in savings over 18 months.
Thomas Pyzdek, Author of The Six Sigma Handbook, says, “Estimated savings per project varies from organization to organization. Reported results average about US$150,000 to US$243,000. My experience is that the average Six Sigma Black Belt project will produce a net benefit of around $200,000 in mature programs, but I have seen a single project in a new Six Sigma program net as much as $2.5 million.”

Michael Marx, research manager for iSixSigma, tells us "About 53 percent of Fortune 500 companies are currently using Six Sigma, which has resulted in an estimated $427 billion of savings over the past 20 years. Utilization rises to 82 percent when you look at just the Fortune 100."

In addition to the financial benefits, Six Sigma implementation can also improve an organization’s ability to deliver value to their customers, create competitive advantage, improve job satisfaction, increase teamwork and communications, improve strategic alignment, improve systems performance and simplify process and workflow.
If implementing a Six Sigma environment in an organization can deliver so many benefits, why then isn’t every company doing it?

Cons
The reasons why every company doesn’t implement a Six Sigma program are varied. Yet, when we think about it, all the reasons can be reduced to three primary factors. First, Six Sigma implementation requires many organizations to completely change the way the company does business, and, in the judgment of leadership, that may just not always be in the best interests of the company or their customers. Second, it’s just plain hard work. Even if a company does decide to embark upon the Six Sigma path, it’s not an easy process, and some companies may only achieve limited or unsustainable gains. I’ll point out the third factor shortly.

Dr. Jiju Antony of Glasgow Caledonian University writes, “When Six Sigma was introduced to many organisations , the initial reactions varied from a lot of enthusiasm to an absolute skepticism. The latter mood reflected incomments such as:
•It is another quality improvement initiative or flavour of the month
•There is nothing really new in Six Sigma compared to other quality initiatives such as TQM we have witnessed in the past.
•This too shall pass like others
•This won’t work in our business
•It is nothing more than a hype
•It is not for us as Six Sigma requires complicated statistical methods”

Those types of opinions and perceptions usually are self-fulfilling prophesies. If a Six Sigma implementation is going to be successful, it has to be embraced by everyone at all levels of the organization. And it is within this context that the primary difficulties of implementation lie.

Forrest W. Breyfogle III, American Society for Quality Crosby Medal 2004 recipient, and David Silverstein, managing partner at Breakthrough Management Group, list what they see as the primary Six Sigma pitfalls:

•Not building an effective Six Sigma implementation strategy
•Trying to implement a one-size-fits all metric within Six Sigma (Organizations should choose the best metric for each project situation.)
•Trying to "go it alone," using their own training material when implementing Six Sigma
•Having weak, uncommitted leadership
•Failing to recognize the need for a supporting infrastructure
•Not committing Black Belts 100 percent of the time
•Pursuing poorly defined projects that are too broad in scope

I mentioned earlier that there was one more reason that an organization might not decide to embark on a Six Sigma implementation. Frequently, when thinking about Six Sigma, organizations either know or quickly realize that they already have many Six Sigma programs, practices and systems already in place. Their company has adopted these various elements as parts of their company management and operating system over time and they simply don’t call them Six Sigma.

Conclusion

If an organization is considering a Six Sigma implementation, their time will be well spent learning about the discipline, analyzing the expected benefits versus the costs, and thinking long and hard about how well the system will fit within their organization.

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