6 sigma in the service sector

This paper seeks to review a case of service sector that use 6 sigma and comment on the application and results of their efforts and comment on how this application varies from the general concepts of 6 sigma and comment of whether its a true 6 sigma or modification of old quality management techniques.  For this paper we will use Honeywell International (previously know as Allied Signal).

What is Six Sigma?

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Six Sigma is a methodology to manage process variations that cause defects and to systematically work towards managing variation to eliminate those defects (Motorola University, n.d.) which we are unacceptable deviations from the mean or target.  Its objective is to deliver high performance, reliability, and value to the end customer.  Bill Smith at Motorola in 1986 pioneered the process (Motorola University, n.d.), which was originally defined (Motorola University, n.d.)  as a metric for measuring defects and improving quality, and a methodology to reduce defect levels below 3.4 Defects Per (one) Million Opportunities (DPMO), or put another way, a methodology of controlling a process to the point of ± six sigma (standard deviations) from a centerline.. (Wikepedia, 2006)  (Paraphrasing made).  Observing definition of sigma indicates it origin from improving quality concepts.

Motorola (n.d.) claims that Six Sigma is its registered service mark and trademark which had produced over US$17 billion in savings to date.  Aside from Motorola, Honeywell International (previously know as Allied Signal) and General Electric companies which also adopted six sigma methodologies early-on and continue to practice it today, are Honeywell International (previously know as Allied Signal) and General Electric (introduced by Jack Welch).  These companies have reported to have saved literally billions of dollars too like Motorola and which they attributed to the aggressive implementation and daily practice of six sigma methodologies.  (Wikepedia, 2006)  (Paraphrasing made).

How Honeywell International applied the Six Sigma?

Honey International   through its chairman Larry Bossidy explained how it applied Six Sigma as compared with the concept of Total Quality Management.  On March 7, 2000 Bossidy was part of the Symposium at the Center on Japanese Economy and Business, to explore the relationship between Six Sigma and Leadership and to see what it takes for successful institutionalization of this effort.  In said event,   Bossidy (2000) said: “Quality does not necessarily mean what it meant ten years ago.  A decade ago, conversations of that nature dealt with the quality of the product that one bought.  For approximately five to seven years, the quality of the product consumers have purchased has been good.  As you know, there has been intense global competition and there has been a metamorphosis in manufacturing capability, at least in the United States.  Consequently, product quality has ceased to be a problem.  Today, quality is referred to in terms of first-pass yields or, in other words, the efficiency with which a product comes down the line.  The question is no longer whether the product shipped to a customer will be good but, rather, what is the cost of attaining first-pass yields at 85-90 percent without inspection?  There are four essential questions to ask in order to understand Six Sigma; what is Six Sigma?  why is it important?, how is it deployed?, and who are the key players that make it work?”

Bossidy (2000) answered the above questions saying: “Six Sigma is a customer satisfaction focused continuous improvement process that aims to reduce defects.  Six Sigma means 3.4 defects per million products manufactured, and it provides tools designed to both identify and correct these defects.  Six Sigma is not a product.  It applies to various processes that exist in every business and it has implications for product design.  I think Six Sigma is recognized as a key way to grow.  In other words, the better the product, the better the costs, and the better the opportunity to sell a product.”

In explaining the methodology, Bossidy (2000) said “It is essential to talk about growth and productivity together.  They are not separate entities.  Six Sigma must be applied to growth processes as well as the factory floor.  In my company, we promulgated the initiative across the company to adopt Six Sigma.  To some extent, we began in the factory, but then quickly went to every function in the business and asked them to apply it to their various processes.  It had a terrific yield, well beyond the products of the manufacturer.”  In so describing Six Sigma, Bossidy was very clear in emphasizing the stages by first starting with the factory, then to the function.  One would observe that the stages really had come from the traditional quality improvement in the factor until Honeywell International observed the practice would be better applied in processes.  Hence he said, “Six Sigma is often described as a DMAIC process; define, measure, analyze, improve, and control.  Each on of the tools used is a way to identify defects, whether it is a process map, a capability analysis, or a multi – variant analysis.  Six Sigma teaches how to apply these tools to the process, identify the defects, and correct them.  It is not complicated math.  Rather, Six Sigma is basic, advanced statistics with an engineering quotient built in to help one understand how to use these tools effectively.”

Honeywell International through Bossidy (2000) had the chance of evaluating the effectivity of Six Sigma where explained that Six Sigma operates project by project.  He noted that the results are measured by the effects one project adds to another.  He thus said that it is important to pick the correct projects and to ask the people at the highest level of management to participate in the selection of the projects that one should also choose projects that, once corrected, will have the greatest impact on the business, whether they are manufacturing, building, or design processes.  He added that it is important to train the people correctly and to attain expertise in Sigma, he recommended training hand-chosen personnel to become black belts.

In describing the details  Bossidy (2000) said, “A black belt’s training consists of sixteen weeks; one week in the factory, one week in school, three weeks in the factory with a project, one more week of school, then back to the factory for four weeks.  This process continues on a rotational basis for four months.  Essentially, a trainee is taught specific Six Sigma tools in order to learn how to analyze defects.  A master black belt is not only a person who has completed his/her training, but has also taught other black belts.  A green belt might well be an administrative person who does not need to know all of the dynamics of a black belt, but nonetheless can take the Six Sigma methodology and apply it to functions such as marketing.”  The effectiveness of any program may be convincingly established by proof of savings.  Did Honeywell benefited in adapting Six Sigma?  Bossidy admitted: “I think Six Sigma and the use of black belts saved my company approximately $1 billion in costs.  I know it has improved our ability to provide our customers a product we can feel good about.”

What other benefits happened to Honeywell International?  Bossidy (2000) narrated the results saying “We take great pride in our black belts and use them for advertising.  We also take the black belts and move them to our customer base, to see if we can be helpful to our customers, which is another way to distinguish ourselves from another supplier.  I promote Six Sigma continuously and it is important to keep it visible.  Every unit has a Six Sigma master.  The general manager of the SBU is accountable for Six Sigma results and we review those projects several times each year.  Six Sigma leadership at Allied Signal (now Honeywell International) decides how many black belts ought to be on each S BU.  Usually, we try to keep black belts for two years and then try to accelerate their careers through the company so there is a reward for doing it.”

Another unique part of the methodology, Bossidy (2000) noted the choice made by management for people to become black belts rather than taking volunteers since Honeywell want the best people possible.  In so influencing the direction of the processes, Bossidy (2000) said that in the company management set the stage where it is a distinguished feature to be black belt.  He made it clear that when can accelerate their career growth, then it feeds upon itself and can become something to feel really good about.  He warned that if  the CEO is not interested in Six Sigma, does not speak about it all the time, is not one of the messengers of what it is all about, then it wanes because everyone has another ideas as to what should be priority on the list of things to do.  On the other hand, if one perseveres, puts the right structure in place, completes the proper training, and then follows-up in terms of how it is working, it becomes a very significant breakthrough and produces excellent results. (Bossidy, 2000)  (Paraphrasing made)

Conclusion:

Honeywell International through Bossidy himself has made it very that Six Sigma is not a product but refers to the process.  Since he distinguished the Six Sigma from quality improvement in the past on the basis of the results of these for Sigma including the claim for the successful Six Sigma, it is submitted that is must be considered as modification for the   old quality management techniques.  Improving the quality has always been objective of companies.  Moreover, the fact they there is qualify improvement also in Six Sigma, it is submitted that there were just a modification of old qualify management technique and not the creating of completely new practice and theory.

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