60 Quality Progress/May 1998

N AGGRESSIVE CAMPAIGN TO BOOST

profitability, increase market share, andimprove customer satisfaction has beenlaunched by a select group of leadersin American industry.

Known as “six sigma,”1 the strategy providescompanies with a series of interventions and statis-tical tools that can lead to breakthrough profitabili-ty and quantum gains in quality, whether a compa-ny’s products are durable goods or services.

Taken from a letter in the Greek alphabet, theterm “sigma” is used in statistics as a measure ofvariation. The six sigma strategy measures thedegree to which any business process deviatesfrom its goal. The average product, regardless ofhow simple or complex, has a quality performancevalue of four sigma, for example. This is wheremost American companies cluster.

The best products, however, are valued at sixsigma, a level of excellence in performance that istruly world class.

Six sigma 101The philosophy of six sigma recognizes that

there is a direct correlation between thenumber of product defects, wastedoperating costs, and the level of cus-tomer satisfaction. The six sigma sta-tistic measures the capability of theprocess to perform defect-free work.For example, if the wall-to-wall carpetin a 1,500-square-foot home werecleaned to the three-sigma level, aboutfour square feet of carpet (the carpetarea under a typical recliner chair)would still be soiled. If that same car-pet were cleaned to the six-sigmalevel, only an area the size of a pinheadwould still be soiled.

With six sigma, the common mea-surement index is defects per unit andcan include anything from a compo-nent, piece of material, or line of code,to an administrative form, time frame,or distance. The sigma value indicateshow often defects are likely to occur.The higher the sigma value, the lesslikely a process will produce defects.

Consequently, as sigma increases, product reliabil-ity improves, the need for testing and inspectiondiminishes, work in progress declines, costs godown, cycle time goes down, and customer satis-faction goes up.

Figure 1 displays the short-term understandingof six sigma for a single critical-to-quality (CTQ)characteristic; in other words, when the process iscentered. Figure 2 illustrates the long-term per-spective after the influence of process factors,which tend to process centering. From these fig-ures, one can readily see that the short-term defini-tion will produce 0.002 parts per million (ppm)defective. However, the long-term perspectivereveals a defect rate of 3.4 ppm.

(This degradation in the short-term performanceof the process is largely due to the adverse effect oflong-term influences such as tool wear, materialchange, and machine setup, just to mention a few.It is these types of factors that tend to upset processcentering over many cycles of manufacturing. Infact, research has shown that a typical process islikely to deviate from its natural centering condi-tion by approximately 1.5 standard deviations at

Six Sigma: A Breakthrough Strategyfor Profitability

Makingstridesalong the roadto defect-freework

by Mikel J. Harry

A

Figure 1. Graphical Definition of Short–TermPerformance for a Single Characteristic

Process Width

Design Width

LSL T USL

LSL

.001 ppm ≤ LSL .001 ppm ≥ USL

T USL

-6�st +6�st

-3�st +3�st

Scale

Scale

Scale

�

(Source: The Vision of Six Sigma: A Roadmap for Breakthrough, Fifth Edition)

Quality Progress/May 1998 61

any given moment in time. With this principle in hand, one canmake a rational estimate of the long-term process capabilitywith knowledge of only the short-term performance. For exam-ple, if the capability of a CTQ characteristic is ±6.0� in theshort term, the long-term capability may be approximated as6.0� – 1.5� = 4.5�, or 3.4 ppm in terms of a defect rate.)

It should be pointed out that the “sigma capability” of aprocess may be estimated via an array of analytical means. Ofcourse, the specific means selected depends upon factors suchas the type of data one is presented with, production volume,time duration over which the data were collected, and a host ofother factors. However, one factor common to all statisticallybased approaches is the idea of “opportunities for defects,”which is the sum of all CTQs. The principal aim is to statistical-ly reduce quality problems to a metric called defects per oppor-tunity (DPO). In turn, the DPO is scaled to DPMO, or defectsper million opportunities. From here, the DPMO metric can betransformed into an equivalent Z value, also known as sigmacapability.

For a better understanding of this idea, Table 1 presents vari-ous levels of sigma capability and the implications of each

level. Of course, this table would be applicable to any product,process, transaction, or service.

Naturally, defects are not limited to the manufacturingprocess. Defects also occur in engineering design, in the time ittakes to process a patent, and in bank transactions. All process-es—from airline baggage handling to assembling an aircraft

engine—can deviate and cost companies additional time, labor,and material. Through the sigma scale of measure, one can cre-ate breakthrough charts from which to study competing levelsof capability (see Figure 3). From such charts, one can isolatebest-in-class performance for further study.

Black beltsSince organizations are built around people and their know

ledge, not just philosophies or programs, the success of the sixsigma “breakthrough strategy”2 depends on people who areproperly trained. Deploying special forces known as “blackbelts” throughout the company to work full time on projects todrive out defects is integral to success. Training black belts pro-vides the necessary knowledge and technical ground for compa-nies to achieve their targets.

Black belts perform the following tasks:• Mentor: Cultivate a network of six sigma individuals at the

local organization or site.• Teach: Provide formal training of local personnel in new

strategies and tools.• Coach: Provide one-on-one support to local personnel.• Transfer: Pass on new strategies and tools in the form of

training, workshops, case studies, and local symposia.• Identify: Highlight or discover business opportunities

through partnerships with other organizations.• Influence: Sell the organization on the use of six sigma

strategies and tools.The average black belt project will save a

company $175,000. Black belts, with 100% oftheir time allocated to black belt projects, canexecute five or six projects during a 12-monthperiod, adding approximately $1 million toannual profits. When the ratio of black belts toemployees is at its ideal (one black belt for every100 employees), companies can achieve a 6%cost reduction each year. Approximately onemaster black belt is needed for every 100 blackbelts.

Figure 2. Graphical Definition of Long–Term Six SigmaPerformance for a Single Characteristic (Distribution Shifted 1.5�)

Process Width

Design Width

LSL T USL

LSL

0 ppm ≤ LSL 3.4 ppm ≥ USL

T USL

-7.5�st +4.5�st

+1.5�

-3�st +3�st

Scale

Scale

Scale

�

Sigma Parts per million Cost of poor quality6 sigma 3.4 defects per million <10% of sales (World class)5 sigma 233 defects per million 10-15% of sales4 sigma 6,210 defects per million 15-20% of sales (Industry average)3 sigma 66,807 defects per million 20-30% of sales2 sigma 308,537 defects per million 30-40% of sales (Noncompetitive)1 sigma 690,000 defects per million

Table 1. Practical Impact of Process Capability

Even companies adverse to management fads are

embracing six sigma, believing that six sigma is a

method of substance that will increase market share,

decrease costs, and grow profit margins.

(Source: The Vision of Six Sigma: A Roadmap for Breakthrough, Fifth Edition)

62 Quality Progress/May 1998

How the breakthrough strategy worksThe six sigma breakthrough strategy involves a series of

steps that are specifically designed to lead a six sigma black beltthrough the gauntlet of process improvement. Most important,the breakthrough strategy takes the key manufacturing, engi-neering, and transactional processes of entire corporationsthrough the four breakthrough phases. Each breakthrough phaseestablishes the course and pace in the race for total customersatisfaction. Figure 4 displays the breakthrough strategy and the

activities necessary to fulfill the intents of eachphase.

Phase 1. Measurement. In this phase, theblack belt selects one or more CTQ character-istics, maps the respective process, makes thenecessary measurements, records the result,and estimates the short- and long-term processcapability.

Phase 2. Analysis. This phase allows theblack belt to benchmark key product perfor-mance metrics. Following this, a gap analysisis often undertaken to identify the commonfactors of successful performance; in otherwords, what factors explain best-in-class per-formance. In some cases, it’s necessary toredesign the product and/or process.

Phase 3. Improvement. This phase guidesthe black belt to specific product characteristicsthat must be improved to achieve the perfor-mance and financial goals. Once this is done,the characteristics are diagnosed to reveal themajor sources of variation. Next, the keyprocess variables are identified by way of sta-tistically designed experiments. For eachprocess variable that proves to be leverage innature, performance specifications (tolerances)are established.

Phase 4. Control. This phase is designed tohelp the black belt document and monitor thenew process conditions via statistical processcontrol methods. After a settling-in period, theprocess capability is reassessed to ensure thegains are being maintained. Depending uponthe outcomes of such a follow-on analysis, itmay be necessary to revisit one or more of thepreceding phases.

When these four steps—measurement,analysis, improvement, and control—are com-pleted for all key processes within a business,breakthrough improvement occurs in econom-ics and customer satisfaction.

The history of six sigmaIn 1981, Bob Galvin, then chairman of

Motorola, challenged his company to achieve atenfold improvement in performance over afive-year period. While Motorola executiveswere looking for ways to cut waste, an engi-neer by the name of Bill Smith was studyingthe correlation between a product’s field lifeand how often that product had been repairedduring the manufacturing process. In 1985,

Smith presented a paper concluding that if a product werefound defective and corrected during the production process,other defects were bound to be missed and found later by thecustomer during the early use of the product. On the other hand,if the product was assembled error free, the product rarely failedduring early use by the consumer. Additionally, Motorola wasfinding that best-in-class manufacturers were making productsthat required no repair or rework during the manufacturingprocess.

Figure 3. Standard Six Sigma Benchmarking Chart

Domestic Airline Fatality Rate(0.43 PPM)

IRS - Tax Advice(phone in)

140,000 PPM

Restaurant Bills

Purchased MaterialLot Reject Rate

1,000,000

100,000

10,000

1,000

100

10

1

2 3 4 5 6 7

Best-in-Class

Average Company

Doctor Prescription Writing

Payroll Processing

Order Writeup

Journal Vouchers

Wire Transfers

Airline Baggage Handling

Figure 4. The Six Sigma Breakthrough Strategy

1 Select CTQ Characteristics2 Define Performance Standards3 Validate Measurement Systems4 Establish Product Capability5 Define Performance Objectives6 Identify Variation Sources7 Screen Potential Causes8 Discover Variable Relationship9 Establish Operating Tolerances10 Validate Measurement System11 Determine Process Capability12 Implement Process Controls

ControlAudit and Review

Improve

Control

Improve

Analyze

Measure

Breakthrough Cookbook

Management LeadersProduct Benchmarking

Management & Technical LeadersProcess Baseline Analysis

Application Projects

Analyze

Measure

A FB C D E G

(Source: The Vision of Six Sigma: A Roadmap for Breakthrough, Fourth Edition)

(Source: The Vision of Six Sigma: Supplier Breakthrough, First Edition)

Quality Progress/May 1998 63

Although Motorola executives agreedwith Smith’s supposition, the challengebecame how to take the theory of sixsigma and create practical ways toachieve six sigma in each of Motorola’soperations.

In 1988, Motorola won the MalcolmBaldrige National Quality Award, whichset the standard for other companies toemulate.

As other companies studied its success,Motorola realized its strategy to attain sixsigma could be further extended. Thusbegan the arduous and painstaking task ofcreating a deeper strategy with specifictactics and tools to achieve total customersatisfaction.

Long convinced of the validity ofSmith’s work and the inherent value oftrying to achieve six sigma, I had takenon the challenge of creating the break-through strategy to achieve six sigmathrough uniform statistical measurements.

Based on my paper “The Strategic Vision for Accelerating Six Sigma withinMotorola,” Galvin requested that I leave Motorola’s Government ElectronicsGroup in Phoenix, AZ, and start the Six Sigma Research Institute in Schaumburg,IL. With the financial support and participation of IBM, Texas InstrumentsDefense Group, Digital Electronics, Asea Brown Boveri, and Kodak, the SixSigma Research Institute began developing six sigma implementation strategy,deployment guidelines, and advanced application tools.

After leaving Motorola’s Six Sigma Institute, Six Sigma Academy PresidentRichard Schroeder and I joined forces at Asea Brown Boveri Ltd. Together weworked to further refine the implementation and deployment of the six sigmabreakthrough strategy by focusing the strategy on Asea Brown Boveri’s net prof-its as a way to ultimately improve product quality, performance, productivity, andcosts. The breakthrough strategy resulted in a 68% reduction in defect levels anda 30% reduction in product costs, which led to an $898 million savings/costreduction each year for two years.

The culmination of this 10-year journey to improve and clarify the six sigmabreakthrough strategy resulted in the creation of the Six Sigma Academy and theacademy’s Navigator system, a state-of-the-art software program that guides com-panies and their black belts through training, project selection, and implementa-tion of the breakthrough strategy.

Six sigma success stories As American industry searches for new ways to buoy profitability, companies

such AlliedSignal, General Electric, Sony, Texas Instruments, Bombardier, CraneCo., Lockheed Martin, and Polaroid are beginning to directly tie quality to theirbottom line. Even companies adverse to management fads are embracing sixsigma, believing that it is a method of substance that will increase market share,decrease costs, and grow profit margins.

Larry Bossidy, CEO of AlliedSignal, enhanced the company’s brand equity byimplementing the six sigma breakthrough strategy. The company has alreadytrained 6,000 employees in six sigma and the breakthrough strategy, and will trainan additional 2,000 before the end of 1998, with the goal of increasing productivi-ty 6% each year in its manufacturing sectors. Since Bossidy implemented the pro-gram in 1994, the cumulative impact of six sigma has been a savings in excess of$1.2 billion in direct costs, according to Timothy Jubach, vice president of corpo-rate operational excellence at AlliedSignal.

General Electric’s (GE) Jack Welch, a self-proclaimed cynic when it comes toquality programs, describes six sigma as “the most important initiative GE has

The Six Sigma Academy

Since its establishment in 1994, theSix Sigma Academy has been the mar-ket leader in six sigma training andimplementation. Located in Scottsdale,AZ, the academy is the developer of six-sigma-based Leadership, Champion,Master Black Belt, Black Belt, GreenBelt, and Breakthrough Strategy1 trainingprograms to dr ive new product andprocess capabilities through a completesix sigma training curriculum.

The academy accelerates the transfor-mation of corporations to best-in-classstature by providing the knowledge andinfrastructure necessary to implement,deploy, sustain, and benefit from a time-proven system of application tools anddeployment methods.

The academy has refined six basicsteps to improve a company's value:

1. Process improvements2. Product improvements3. Investor relations4. Design methodology5. Supplier improvement6. Training and recruiting

Reference1. The terms Breakthrough Strategy,

Champion, Master Black Belt, Black Belt, andGreen Belt are federally registered trademarksof Sigma Consultants, L.L.C., d/b/a Six SigmaAcademy.

“We bring good things to life”A six sigma case study

At a General Electric shareholders’ meeting in 1997, CEO Jack Welchextolled the successes of six sigma:

“We had a billing system at GE Lighting that worked just fine from our per-spective. The problem was it didn’t mesh very well electronically with the pur-chasing system at Wal-Mart—one of our biggest customers. Our system didn’twork for them and was causing disputes, delayed payments, and was wastingWal-Mart’s time. A black-belt team using six sigma methodology, informationtechnology, and $30,000 in investment tackled the problem from Wal-Mart’s per-spective, and in four months reduced defects in the system by 98 percent. Theresult for Wal-Mart was higher productivity and competitiveness and fewer dis-putes and delays—real dollar savings. The result for GE was a return manytimes that of our investment.

– from Jack Welch Speaks, by Janet Lowe, New York, NY: John Wiley & Sons,1998.

64 Quality Progress/May 1998

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ever undertaken.” In 1995, Welch mandated that each GE oper-ation—from credit card services to aircraft engine plants toNBC-TV—work toward achieving six sigma. GE averagedthree sigma when it introduced the program. Within 22 months,the company improved to 3.5 sigma (22,700 defects per mil-lion), and earnings grew significantly—13% in 1996 and 14%in 1997. Welch expects GE to reach six sigma by the year 2000,improving its operations by more than 90% per year.3 Althoughspending on six sigma training and projects will reach $450million in 1998, profits will increase to $1.2 billion and earn-ings per share will increase by 25 cents.

Jennifer Pokrzywinski, an analyst with Morgan Stanley, DeanWitter, Discover & Co., writes “Six sigma companies typicallyachieve faster working capital turns; lower capital spending ascapacity is freed up; more productive R&D spending; faster newproduct development; and greater customer satisfaction.”4

Pokrzywinski estimates that by the year 2000, GE’s gross annualbenefit from six sigma could be $6.6 billion, or 5.5% of sales.

Bombardier Chairman Laurent Beaudoin, another executiveadverse to fads, adopted six sigma in April 1997. The companyfirst implemented the program in its aerospace group, followedby the train manufacturing group, the Sea-Doo and Ski-Doogroups, the capital group, and the services group. By the end of1998, there will be more than 100 full-time six-sigma-certifiedemployees dedicated to aerospace quality—makingBombardier the highest-proile Canadian company to adopt sixsigma.5

Scorecard applicationsAs companies around the world adopt the six sigma break-

through strategy, many employees are even applying it to theirpersonal lives. One Polaroid executive responsible for oversee-ing the implementation of the breakthrough strategy claimsthere is a direct correlation between the sigma capability of hisgolf game and his handicap. He boasts that the application ofsix sigma measurements has trimmed at least 35 strokes off hisgame.

References1. Six sigma is a federally registered trademark of Motorola. 2. The terms Breakthrough Strategy, Champion, Master Black

Belt, Black Belt, and Green Belt are federally registered trademarksof Sigma Consultants, L.L.C., d/b/a Six Sigma Academy.

3. The Globe and Mail Report on Business Magazines, “The SixSigma Ensigns,” October 1997, p. 62.

4. Morgan Stanley, Dean Witter, Discover & Co., company update,June 6, 1996.

5. “The Six Sigma Ensigns,” p. 64.

Mikel J. Harry is the founder and CEO of the Six Sigma Academyin Scottsdale, AZ. He has a doctorate from Arizona State Universityin Tempe.