"Any statistician will tell you that a defect rate of 3.4 defects per million is actually at a Four Sigma level of quality. And, statistically, Six Sigma quality would actually imply a defect rate of just two defects per billion. So, why do we still insist on calling a 3.4 ppm defect rate a Six Sigma quality level?" For one, answers Charles J Loew, an allowance of plus-minus 1.5 Sigma is always made to account for uncertainties in measuring defects. And two, he grins: "Because it's more sexy."Six Sigma's just got a whole lot sexier. Last fortnight, Loew, managing consultant and leading faculty of Motorola University, undertook a whirlwind tour of the country along with Eicher Consultancy Services -- the duo are "exploring the potential for a long term partnership with each other" -- spreading the word about the powerful quality management system.
Today, Loew is conducting a closed-door session for Eicher consultants, preaching the Six Sigma gospel. The parables come early. Even before the session starts,he makes the 14 managers in the room list their expectations from the workshop. Says Charles, "It tells me whether I will satisfy the client or not. It gives me," he pauses, pointedly: "an idea about where the customers mind is, and where I am going."
Loew's commitment to customer satisfaction is no coincidence. Six Sigma was not just spawned at leading global telecommunications giant, Motorola Inc, in 1981; it is synonymous with Motorola's fundamental corporate objective: "total customer satisfaction."
Essentially, a Six Sigma quality initiative focusses on bringing about a culture that is built around offering total customer satisfaction -- to both internal and external customers -- through two major planks. One, by reducing defects -- any variation of a required characteristic of the product or service from the target value -- in each process or operation by 10 times every two to three years.
Two, by bringing in design for manufacturability, that is, using design engineering for building a morerobust design. Loew's favourite example harks back to the 1970s, when he worked for a calculator-manufacturer. Back then, each calculator had 256 parts -- so even if each part was operating at Six Sigma quality levels, the overall product quality would always be much lower than Six Sigma. Says Loew, "Today, this companys calculator has just four parts. Sometimes to reach Six Sigma, you just change the design."
Balancing the two, an organisation then strives toward a Six Sigma quality level that generates fewer than 3.4 defects per million operations in a manufacturing or service process. A defect, under Six Sigma, is defined simply: anything that dissatisfies the internal or external customer. The starting point of any Six Sigma culture, therefore, is to recognise the customer and to understand exactly what the customer wants.
Each employee then strives to reduce the total defects per unit (TDU), where a unit is whatever unit of activity a company wants to measure consistently across the company, from asales order to a ball-bearing. In Citibank, where Motorola is helping implement Six Sigma, a customer at a teller is a unit, for example.
Under Six Sigma, therefore, its constant measurement which drives in a culture of customer focus. In fact, at Motorola Inc, "Metrics" is an acronym for "Measure Everything That Results In Customer Satisfaction". Each employee maintains his or her own chart of total defects per unit (TDU), on which is mapped the blue line which shows a projected 10-times improvement, versus a red line -- which shows the current level of defect improvement. The six steps to Six Sigma:
* Identify the work you do -- your product;
* Identify who your work is for -- your customer;
* Identify what you need to do your work, and from whom -- that is, your supplier;
* Map the process;
* Mistake-proof the process and eliminate delays;
* Establish quality and cycle time measurement and improvement goals.
Not surprisingly, its a culture movement that is driven best top-down -- John Reed,who heads Citibank, not only maintains his own TDU chart but shares his performance with all Citibank employees regularly, just to ensure that the commitment to Six Sigma does not waver. Or consider Jack Welch, chairman and chief executive of General Electric Co.
Welch launched Six Sigma in GE in late 1995, with 200 projects, which grew to 6,000 projects by 1997. Last year, Six Sigma is believed to have delivered $320 million in productivity gains and profits to GE--more than twice of the original goal of $150 million. This year, GE is aiming at about $750 million in net benefits from Six Sigma. Interestingly, currently, GE is running at a Sigma level of three to four.
Here's the scary part: even some of the best Indian companies, according to Loew, are operating at just Three to Four Sigma quality levels. "Which is why most of their MNC competitors have a minimum 10 per cent cost advantage over Indian companies," reckons Loew.
Interestingly, according to Loew, if at one end of the scale Six Sigma canbe implemented has a catalyst for culture change, at the other end, it is a neat tool which dovetails into a companys existing quality initiative -- from Total Quality Management, to Total Waste Management or even Total Employee Involvement.
Says Loew, "It gives you competitive advantage, gets your products and services faster to the marketplace, drives out non-value activities and drives out costs associated with non-value activities." He adds: "Six Sigma has shown that the highest quality producer is the lowest cost producer."
Be warned though: in the long term, as a Six Sigma company learns to run its processes leaner and meaner, the biggest issue it faces is dealing with the excess manpower resources that are released. There is another issue: given its obsession with metrics and mapping processes, does Six Sigma work as well in creative organisations as it does in manufacturing or service processes?
Loew promptly invokes the example of leading American TV channel, NBC, which is a part of GE -- andis implementing Six Sigma. "In creative environments, the concentration will be more on cycle time reduction. For example, at NBC they can worry about how can we get a new play ready faster if currently it takes us four to six months?" Now, that's sexy logic indeed.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.