Rational Expectations from Six Sigma

In our experience, the first three to four years of a Six Sigma initiative yield savings of approximately 3% of revenue. After about four years, we have eliminated nearly all of the obvious and easy to accomplish projects. Then, we expect the savings to drop by roughly half. These estimates are based on experience, so they are empirical but not scientific.

Once we have picked the easiest of all possible projects, we then can look to other techniques to perform value engineering in both design and manufacturing. We can use the hybrid form Lean Six Sigma or we can go straight to lean manufacturing. We favor Lean Six Sigma because the Six Sigma approach provides a nicely organized algorithm for proceeding through the project, people already understand the bottom line approach, and we have a wealth of statistical tools we can add to what is normally used on lean projects.

If we use the ASQ Six Sigma Black Belt body of knowledge as a starting point, we can provide a structure survey of what we need to know in order to proceed to value \ engineering through Six Sigma. We have been part of successful Six Sigma programs;

hence, we can verify many of the thoughts from the body of knowledge based on real occurrences.

Enterprise-Wide Deployment

One of the “secrets” of successful Six Sigma lies with enterprise-wide deployment.

If we do not have the support of management, we will fail. We observed a successful Six Sigma program falter when management took off on a tangent by trying to implement a lean initiative based on weak data and unproven theories. We have nothing against the lean approach; however, we think the most successful method lies with merging both methodologies into the hybrid version called Lean Six Sigma.

The idea of continuous improvement has been around at least since the 1920s with the advent of work by Joseph Juran. By the 1930s, we were seeing publications from Walter Shewhart and W. Edwards Deming. After the war, the Japanese rebuilt their industrial base, in many cases, with consultative assistance from these individuals and homegrown concepts from Ishikawa (see Figure 8.3), Taguchi, and Ohno, among others. In the United States, we saw work from the Crosby brothers and others. In the 1980s, after the failure of some Total Quality Management (TQM) approaches, we saw the advent of Six Sigma: project-based, bottom line–focused, with a strong toolbox.

In some ways, we might consider Six Sigma to be the result of what we learned from TQM.

From the very start, Six Sigma projects were required to focus on the monetary value to be yielded by the changes wrought by the project. We did not have to guess at value—we had to calculate that value in some agreed upon currency. No longer were we trying to improve quality everywhere; we were endeavoring to improve quality where it had the most impact on the enterprise.

Management may choose to set goals for specific departments (closer to TQM) or they may allow Six Sigma to sprout as a kind of grass roots movement within the enterprise. Often, the initial financial effect occurs from the procurement (purchasing) department, since they have the ability to leverage suppliers for lower prices. This approach is fine so long as the department does not cut corners on the engineering

Cause−and−Effect Diagram

Surface Flaws Measurements

Environment

Materials

Methods

Personnel

Machines Microscopes

Inspectors

Alloys Suppliers

Supervisors Operators

Condensation Moisture

Brake Engager

Angle

Speed Bits

Sockets

Figure 8.3 The Ishikawa diagram can help us plan as well as solve problems.

change process. Production or manufacturing may have some obvious bottom-line affecting improvements, often in the area of process improvements (the removal of a subprocess from the procedure rather than simply increasing throughput of individual processes). The design group may use Design for Six Sigma (DFSS) or more traditional value engineering techniques to remove costly subprocesses by designing them out (e.g., selective soldering uses expensive robots). The marketing department may be able to streamline processes and improve other processes that involve both customer and supplier.

As we noted, as the Six Sigma initiative matures, we may evolve into Lean Six Sigma, which melds the concept of waste reduction with that of quality improvement.

A good way to proceed into Lean Six Sigma is the traditional kaizen approach of hundreds or thousands of small improvements—the continuous movement towards improvement then becomes a part of the corporate culture.

Service enterprises can use Six Sigma and Lean Six Sigma to improve processes.

Obviously, we still want oversight from a mature committee to ensure that we are receiving a financial return on our efforts. For example, a department store may choose to use designed experiments to determine the effects of location, product placement, employee placement (cash registers), and other factors on the sale of products. The service department at an auto dealership might use Lean Six Sigma to reduce customer wait times and to standardize work (not just standardize the bill!).

Leadership

For Six Sigma or Lean Six Sigma to be successful, we need top-level management involvement (see Figure 8.4). We know this approach is real because we have seen an enterprise “jump tracks” by ignoring Six Sigma and moving toward a particular version of lean manufacturing as they chased the will o’ the wisp of cost savings. When they chose to do this change, the saving from Six Sigma evaporated. The drawback was that this particular lean implementation did not use rigorous costing and, hence, the savings were nebulous at best.

Executive leadership drives middle management, which in turn, drives low-level management and rank-and-file employees. The trick to making this approach work is educate the employees at all levels about the benefits of improving company margin and how it affects the stability of the enterprise. Furthermore, we may need to issue reassurances about downsizing—having surplus capacity is a very good place to be in if we are aggressively pursuing markets.

The executive leadership may take on the additional and specific responsibility of being a project champion. The purpose of a champion is to remove organizational roadblocks so that the project can continue to move forward. The champion can have tremendous influence on the success of the project. Furthermore, the champion must have sufficient organization leverage to effect hurdle removal.

What can affect the ability of a Six Sigma or lean team to progress? Sometimes an organization will evolve a set way of performing certain processes, so much so that nobody sees the inefficiencies in the process anymore. An example of this situation occurs when we see a configuration management document that requires twenty or

more signatures to proceed; in this case, we are seeing confusion between need-to-know and need-to-approve. Other hurdles may be cultural and also remain undetected, lurking in assumptions and prejudicial beliefs. Elsewhere in this book we briefly discuss an assumption surfacing technique (SAST), but any team activity that brings assumptions and prejudices to light is usable to improve the climate for change.

We may discover other roadblocks in the form of inadequate resources. We have seen CEOs indicate that Six Sigma is self-supporting; therefore, no money is needed to initiate the program. This belief makes no sense! Yes, Six Sigma returns cash to the corporation, and often, quickly; however, seed money is usually needed to train the employees in the methods of Six Sigma. The same applies to lean and Lean Six Sigma also.

We must maintain configuration management for the duration of all projects, lean or Six Sigma. Configuration management is the overarching concept by which we maintain a level of change control. In some situations, we may find we must reverse a change and proper documentation will help us to get there. In general, a company should already have a configuration management system in place for routine changes. Nonroutine changes are potentially riskier and the need for management can be significant. Software development should always use a software configuration Figure 8.4 A typical (and overrated) Six Sigma belt hierarchy.

management tool (e.g., subversion) to maintain revision control and the ability to backtrack. Hardware changes, drawing changes, and documentation changes can also fall under the configuration management system. Enterprise-level tools are available to support configuration management; however, for smaller companies, we can use a database or even a paper system so long as we use it rigorously.

We see words like “transformation” and “organizational change” bandied about in management magazines and general audience management tomes. Do we really want “transformation” as such? The word “transformation” means to “mold or figure”

across but it contains overtones of revolutionary change. We favor the more gentle approach of traditional kaizen, where thousands of small changes apply. Moreover, traditional kaizen is the golden path to cultural change in the corporation. Instead of advertising pabulum about revolutionary change, we make change revolutionary. We change the effect by affecting our manner of change. Do we really desire to “drive”

employees with a macabre metaphor of bestial brutality?

A Six Sigma project must be managed as a project and must be accepted by an oversight committee. We can apply the same mentality to kaizen events (a term we deprecate) so that they proceed promptly and with minimum wasted effort. The general goal is to ascertain the projects with the greatest impact, which is not always easy to do, particularly when our costing ventures into the region of intangibility. In some cases, we may accelerate a process but be unable to positively identify the financial benefits. In those cases, we should look for projects that provide obvious cost benefits and only go to the more nebulous projects if and when it makes sense.

Perhaps one of the most overplayed parts of the Six Sigma approach is the use of the terms

• Green belt

• Black belt

• Master black belt

• Process owner

How can a process owner be a “process owner” when they do not normally own the paraphernalia of production? While the belt designations were intended to demarcate levels of training, they sometimes ended up representing yet another hierarchy, producing resentment and rancor at the “lower” levels of the hierarchy. We need to clarify what “belts” really mean in the sense of levels of training at the outset of our Six Sigma initiative. We have seen green belt projects return more immediate and larger monies than anything seen with a black belt project.