Six Sigma: The Present and Future
I. Global Fever
This is the age of Six Sigma power. Achieving Six Sigma quality has become a veritable battle-cry in the global business community, as a growing number of companies in Europe, and even those in China, embrace it to minimize product defects or enhance management effectiveness.
Broadly, Six Sigma is a body of management tools designed to achieve quality or perfection by holding down defects, whether it is in production, management or organization. Specifically, the Six Sigma process has the goal of reducing defects to 3.4 cases per one million opportunities. An "opportunity" here refers to a produced good or service.
Quite remarkably, Chinese companies that once took a cavalier attitude towards product or management innovation are quickly catching up with Six Sigma concepts. And globally, Six Sigma tools have already become a dominant trend in the world of business. According to one recent survey, over 40% of the Fortune 500 companies operate on Six Sigma process.
The Six Sigma concept is also infiltrating the public sector and financial services industry. A US naval base in San Diego has taken to using the innovative process. So does the city administration in Fort Wayne, Indiana. For their part, financial service providers have also been willing to introduce Six Sigma. Among those using Six Sigma tools for more innovative management are Bank of America, Citibank, JP Morgan & Co. and American International Group Inc. Healthcare providers use it, such as Commonwealth Health Corporation, Virtual Health, and North Shore Long Island Jewish Health System. To them, Six Sigma is the way to achieve a near-perfection standard in medical procedures.
This global trend has changed the way Korean companies regard the Six Sigma process. Shortly after Samsung SDI Co., Ltd. and LG Electronics began accepting Six Sigma tools in 1996, other big companies like POSCO and KT Corporation have taken them. Today, it is fashionable for small and medium-sized companies to use Six Sigma ways to try emulating the stellar performances of their larger cousins. The public sector is also catching on to the new wave. The Ministry of Information and Communication, Korean Intellectual Property Office, Supreme Prosecutors' Office and Korea Railroad - just to name a few - have taken to using Six Sigma. The Korean government now encourages more agencies to use Six Sigma tools.
What explains this popular process that is taking the world by storm? It is due largely to the demonstrated success case of General Electric or GE. So dramatic has been the success of GE's Six Sigma process that it has drawn the attention of companies all over the world, fuelling a global fever for Six Sigma tools by other world-class companies.
II. Six Sigma Concepts
Six Sigma process started from Motorola's "zero-defect" manufacturing campaign back in the mid-1980s. Today, it is the most widely accepted management innovation process, moving through a variety of development stages or changes over the years, constantly improving along the way, not only reducing product defects but also enhancing management effectiveness and employee engagement. As more and newer innovative tools are added to the existing menu of Six Sigma process, new techniques and formulas have become increasingly powerful, thus collecting more enthusiasts. Six Sigma tools therefore have gone through the following stages of transformation and improvement over the years:
1. Stage one: Motorola's defect elimination campaign
Growing threats from formidable Japanese competitors challenged Motorola to come up with exceptional ideas to enhance its product quality. At that time, Motorola's products were lagging so far behind their Japanese rivals in quality that minimizing product defects had become an urgent matter. Motorola's initial focus was on finding out the root cause of product defects from its shop-floor operation. At that time, Six Sigma was only used in manufacturing activities and its major goal was set to minimizing defect rates.
2. Stage two: GE's campaign
But it was until GE adopted the process that Six Sigma went through a big change. In 1995, GE introduced the Six Sigma innovation process under leadership of its legendary chairman Jack Welch, after having pursued restructuring and the Change Acceleration Program. While Motorola in earlier cases used Six Sigma tools for improving its manufacturing process, GE was improvising it for innovating its management process. In this way, not only was the application of Six Sigma process drastically expanded, but the tools acquired more precision in the way of their methodology.
Application of Six Sigma's tools had turned more diverse. Under GE's application, Six Sigma process also developed the so-called DFSS (Design for Six Sigma), a method that brought Six Sigma tools to product development and design. Today, these tools have evolved into a comprehensive method to statistically find, measure and analyze defects throughout the management process across an organization.
After passing through a variety of transformations in the past decades, Six Sigma has also developed a process that stresses effective management and employee engagement, the two crucial criteria for evaluating innovation activities. This transformation has changed the perception of Six Sigma practitioners on: how its process could be used; who must participate in the innovation process; how changes should be pursued; and which business areas really need Six Sigma tools.
As a result, Six Sigma tools are applied to sales and R&D, as well as to the manufacturing process. Six Sigma practitioners have developed a certification system called the "Belt System" to foster in-house Six Sigma professionals. Sharing information and experience on Six Sigma success cases have helped employees to become more actively engaged in company management innovations.
3. Future course
Six Sigma tools will evolve further over time. Blending with tools and ideas developed by practitioners earlier and elsewhere, Six Sigma process is expected to be upgraded in the years ahead. For example, GE applied the concept of "lean production," a system first used by Toyota Motor Corporation to improve worker productivity, to its Six Sigma process, thereby reinventing the existing Six Sigma process. GE not only successfully reduced the product defect ratio but also accelerated its work process with the new evolved innovative tools.
Companies using Six Sigma tools encourage their employees to hone skills in using them and participate in Six Sigma activities more actively. Certainly, companies seek to motivate their employees to pursue innovation at all levels of the work process. To make this happen, all CEOs should be encouraged to become Six Sigma professionals.
As Six Sigma process becomes increasingly important for management, more companies will embrace it. Financial service providers are likely to be at the forefront of this growing movement because they have already seen how beneficial this innovative management tool can be. Healthcare professionals to whom perfection is crucial will also embrace it because any professional missteps could result in unforeseen fatalities or enormous financial risk.
The Six Sigma process is moving into areas like business planning and product development. It will help overcome the limitations of existing innovation tools that lack linkage with organization-wide business strategies.
III. Recommendations
In view of its evolutionary course over the years, in the short run, the importance of Six Sigma appears unlikely to be overshadowed by another innovative movements. For a more successful promotion of this process, we need to think of Six Sigma as a conceptual framework for greater change and innovation, not just a simple product innovation process. A simple innovative tool can change anytime, but a conceptual framework lasts longer.
It is also important for CEOs to understand the Six Sigma process as an instrument for firm-wide innovative activity, not just a way for improving production. In other words, Six Sigma process should by no means be narrowly regarded as the interest of production managers focused on raising their product quality. Six Sigma tools are the processes that go beyond such a simple purpose to touch all aspects of management areas, ranging from marketing to sales, R&D to product development, to business planning itself.
Finally, companies using Six Sigma tools should not mindlessly emulate success cases of their rivals, but use creativity to tailor their needs to specific goals. Ultimately, the goal of the Six Sigma process is to create a culture of innovation. Corporate executives therefore should acquire the routine of engaging in all forms of Six Sigma activities along with their employees.
No company should rush to use the Six Sigma process without meticulous preparation. Plenty of study and discussion should come before using the Six Sigma process as a means of reducing the risk of error and misjudgment.
The writer is a senior researcher at the Six Sigma Department, Samsung Economic Research Institute.
More < Six Sigma: The Present and Future > , < Six Sigma mind map >
This is the age of Six Sigma power. Achieving Six Sigma quality has become a veritable battle-cry in the global business community, as a growing number of companies in Europe, and even those in China, embrace it to minimize product defects or enhance management effectiveness.
Broadly, Six Sigma is a body of management tools designed to achieve quality or perfection by holding down defects, whether it is in production, management or organization. Specifically, the Six Sigma process has the goal of reducing defects to 3.4 cases per one million opportunities. An "opportunity" here refers to a produced good or service.
Quite remarkably, Chinese companies that once took a cavalier attitude towards product or management innovation are quickly catching up with Six Sigma concepts. And globally, Six Sigma tools have already become a dominant trend in the world of business. According to one recent survey, over 40% of the Fortune 500 companies operate on Six Sigma process.
The Six Sigma concept is also infiltrating the public sector and financial services industry. A US naval base in San Diego has taken to using the innovative process. So does the city administration in Fort Wayne, Indiana. For their part, financial service providers have also been willing to introduce Six Sigma. Among those using Six Sigma tools for more innovative management are Bank of America, Citibank, JP Morgan & Co. and American International Group Inc. Healthcare providers use it, such as Commonwealth Health Corporation, Virtual Health, and North Shore Long Island Jewish Health System. To them, Six Sigma is the way to achieve a near-perfection standard in medical procedures.
This global trend has changed the way Korean companies regard the Six Sigma process. Shortly after Samsung SDI Co., Ltd. and LG Electronics began accepting Six Sigma tools in 1996, other big companies like POSCO and KT Corporation have taken them. Today, it is fashionable for small and medium-sized companies to use Six Sigma ways to try emulating the stellar performances of their larger cousins. The public sector is also catching on to the new wave. The Ministry of Information and Communication, Korean Intellectual Property Office, Supreme Prosecutors' Office and Korea Railroad - just to name a few - have taken to using Six Sigma. The Korean government now encourages more agencies to use Six Sigma tools.
What explains this popular process that is taking the world by storm? It is due largely to the demonstrated success case of General Electric or GE. So dramatic has been the success of GE's Six Sigma process that it has drawn the attention of companies all over the world, fuelling a global fever for Six Sigma tools by other world-class companies.
II. Six Sigma Concepts
Six Sigma process started from Motorola's "zero-defect" manufacturing campaign back in the mid-1980s. Today, it is the most widely accepted management innovation process, moving through a variety of development stages or changes over the years, constantly improving along the way, not only reducing product defects but also enhancing management effectiveness and employee engagement. As more and newer innovative tools are added to the existing menu of Six Sigma process, new techniques and formulas have become increasingly powerful, thus collecting more enthusiasts. Six Sigma tools therefore have gone through the following stages of transformation and improvement over the years:
1. Stage one: Motorola's defect elimination campaign
Growing threats from formidable Japanese competitors challenged Motorola to come up with exceptional ideas to enhance its product quality. At that time, Motorola's products were lagging so far behind their Japanese rivals in quality that minimizing product defects had become an urgent matter. Motorola's initial focus was on finding out the root cause of product defects from its shop-floor operation. At that time, Six Sigma was only used in manufacturing activities and its major goal was set to minimizing defect rates.
2. Stage two: GE's campaign
But it was until GE adopted the process that Six Sigma went through a big change. In 1995, GE introduced the Six Sigma innovation process under leadership of its legendary chairman Jack Welch, after having pursued restructuring and the Change Acceleration Program. While Motorola in earlier cases used Six Sigma tools for improving its manufacturing process, GE was improvising it for innovating its management process. In this way, not only was the application of Six Sigma process drastically expanded, but the tools acquired more precision in the way of their methodology.
Application of Six Sigma's tools had turned more diverse. Under GE's application, Six Sigma process also developed the so-called DFSS (Design for Six Sigma), a method that brought Six Sigma tools to product development and design. Today, these tools have evolved into a comprehensive method to statistically find, measure and analyze defects throughout the management process across an organization.
After passing through a variety of transformations in the past decades, Six Sigma has also developed a process that stresses effective management and employee engagement, the two crucial criteria for evaluating innovation activities. This transformation has changed the perception of Six Sigma practitioners on: how its process could be used; who must participate in the innovation process; how changes should be pursued; and which business areas really need Six Sigma tools.
As a result, Six Sigma tools are applied to sales and R&D, as well as to the manufacturing process. Six Sigma practitioners have developed a certification system called the "Belt System" to foster in-house Six Sigma professionals. Sharing information and experience on Six Sigma success cases have helped employees to become more actively engaged in company management innovations.
3. Future course
Six Sigma tools will evolve further over time. Blending with tools and ideas developed by practitioners earlier and elsewhere, Six Sigma process is expected to be upgraded in the years ahead. For example, GE applied the concept of "lean production," a system first used by Toyota Motor Corporation to improve worker productivity, to its Six Sigma process, thereby reinventing the existing Six Sigma process. GE not only successfully reduced the product defect ratio but also accelerated its work process with the new evolved innovative tools.
Companies using Six Sigma tools encourage their employees to hone skills in using them and participate in Six Sigma activities more actively. Certainly, companies seek to motivate their employees to pursue innovation at all levels of the work process. To make this happen, all CEOs should be encouraged to become Six Sigma professionals.
As Six Sigma process becomes increasingly important for management, more companies will embrace it. Financial service providers are likely to be at the forefront of this growing movement because they have already seen how beneficial this innovative management tool can be. Healthcare professionals to whom perfection is crucial will also embrace it because any professional missteps could result in unforeseen fatalities or enormous financial risk.
The Six Sigma process is moving into areas like business planning and product development. It will help overcome the limitations of existing innovation tools that lack linkage with organization-wide business strategies.
III. Recommendations
In view of its evolutionary course over the years, in the short run, the importance of Six Sigma appears unlikely to be overshadowed by another innovative movements. For a more successful promotion of this process, we need to think of Six Sigma as a conceptual framework for greater change and innovation, not just a simple product innovation process. A simple innovative tool can change anytime, but a conceptual framework lasts longer.
It is also important for CEOs to understand the Six Sigma process as an instrument for firm-wide innovative activity, not just a way for improving production. In other words, Six Sigma process should by no means be narrowly regarded as the interest of production managers focused on raising their product quality. Six Sigma tools are the processes that go beyond such a simple purpose to touch all aspects of management areas, ranging from marketing to sales, R&D to product development, to business planning itself.
Finally, companies using Six Sigma tools should not mindlessly emulate success cases of their rivals, but use creativity to tailor their needs to specific goals. Ultimately, the goal of the Six Sigma process is to create a culture of innovation. Corporate executives therefore should acquire the routine of engaging in all forms of Six Sigma activities along with their employees.
No company should rush to use the Six Sigma process without meticulous preparation. Plenty of study and discussion should come before using the Six Sigma process as a means of reducing the risk of error and misjudgment.
The writer is a senior researcher at the Six Sigma Department, Samsung Economic Research Institute.
More < Six Sigma: The Present and Future > , < Six Sigma mind map >
posted by Joa at
Thursday, September 15, 2005
