Considering Six Sigma Best Practices - dummies

Considering Six Sigma Best Practices

Successful Six Sigma efforts have several practices and characteristics in common. As you launch into your own Six Sigma journey, you can use these as landmarks to set your course and bearing. Even after you’ve been doing Six Sigma for a while, it’s a good idea to periodically compare what you do with what others have found to be most effective.

Set stretch goals

Six Sigma isn’t for the mildly ambitious manager or the person who wants to incrementally improve the output of a process. Instead, Six Sigma is for people who want to improve by leaps and bounds.

Six Sigma has repeatedly proven that it produces breakthrough improvement. But to achieve this, you have to combine the power of the Six Sigma method and tools with stretch goals, goals that almost seem too aggressive, too optimistic.

Specifically, a stretch goal represents a 70 percent improvement over current performance. For example, if your company’s profit margin is seven percent, you want to aim for 11.9 percent (a 70 percent increase). Or if a certain process or product is producing ten defects per 100 units, you want to reduce that number to three defects per 100 units (a 70 percent improvement).

Another common way to set the right stretch target is to benchmark yourself against your competition. A benchmark is the level of performance achieved by the best companies, organizations, functions, or processes in your industry. If someone else is doing it, you should be able to do it, too, right? Toyota, for example, is a company that is benchmarked for the time it takes them to introduce a brand-new vehicle design. Most companies take 36 to 48 months to bring a new vehicle to market; Toyota did it in about 24 for its hybrid car, the Prius, which also presented a technical challenge far beyond those of traditional gasoline-only cars.

Target tangible results

Typically, Six Sigma leads organizations to reduce their costs by as much as 20 to 30 percent of revenue. At the same time, these organizations increase their revenues by 10 percent or more.

To realize these returns, however, each Six Sigma project must be tied to a tangible financial measure of return — dollars saved, new revenue gained, specific costs avoided, and so on. These measured financial returns must be formally measured, tracked, and rolled up if you want to achieve the startling financial return that is a hallmark of Six Sigma. Without tying projects to tangible financial measures and tracking their financial impact, Six Sigma efforts naturally drift away from their financial potential.

In isolated cases, a Six Sigma project is not directly focused on cost reduction or revenue enhancement. Instead, it is targeted on a strategic objective of the organization. If you complete a project with an object of increasing brand awareness, for example, you’ll have difficulty quantifying how much that project improves the company’s bottom line. But if it enables the company’s key business strategies, the project is still worth the effort.

Determine outcomes

Every output or result is determined by a set of inputs. The natural outgrowth of this principle is that you actively go out and adjust and control the inputs in a way that enables you to reach your desired outcomes with certainty and consistency.

Think before you act

Too often, people jump into action and do something — anything — to solve a problem. They confuse action with effectiveness. Undoubtedly, this approach showcases activity, but it usually ends in a continuation of the problem or, at best, a suboptimal solution.

Six sigma’s DMAIC methodology forces you to shift the bulk of the activity of solving a problem into defining, measuring, and planning a solution. Each project starts with a detailed, in-depth definition of what the problem really is and what the objectives of the solution are. Next, extensive measurements are taken to verify the current performance of the process or system. This is followed by in-depth analysis of inputs, outputs, conditions, and causes-and-effects. Only after completion of all of these steps is an improvement solution attempted. The result of this upfront rigor is, almost always, an optimal solution that can be quickly and efficiently put in place. In the long-run, the front-loaded DMAIC approach solves the problem more quickly and with better, more consistent results than other approaches.

Put your faith in data

Without data, decisions are based on supposition, estimation, opinion, and sometimes wishful thinking. Data allows you to objectively identify and select the truly best ideas and solutions from among the many alternatives.

Making decisions based on data, however, is not easy. Data require you to suspend judgment and personal bias, to confront sometimes brutal and undesirable facts. You have to believe that, in the long-run, trusting data will consistently lead you to better and more rapid solutions.

Minimize variation

Most people think of excellence in terms of averages or single numbers — the average yield on a production line, the monthly cost to run a department, the rate of return on an investment. But the reality is that variation around these averages or single numbers — even when they are at acceptable levels — can often cause more damage than their level itself.

For example, having a high average number of orders is great. But if the day-to-day number of orders varies widely, it requires the company to have excess equipment and staff always on hand, just in case. When the number of orders varies to the low side, equipment and staff sit idle. The company would actually come out ahead if its average number of orders were lower but its day-to-day variation were smaller. That way equipment and staff needs would be steady and costs would be reduced.

Variation will always be present in the plans you design, the products you make, the transactions you conduct, the services you deliver. Even in the environment outside your control, events and circumstances change and vary in ways beyond your control.

Align projects with key goals

An important Six Sigma success factor is selecting projects that are aligned with the key goals and objectives of your organization. Six Sigma efforts that are successful and lasting are always made up of projects that are each specifically focused on moving an organization towards its stated objectives.

Celebrate success!

A Six Sigma initiative may start small with a single pilot project, or a deployment within a lone department. Others grow to include an entire global organization or accumulate staggering financial returns. Regardless, celebrate success.

Success is contagious. When the first, small victories are showcased and lauded — with recognition, rewards, praise, and publicity — people develop real interest. They build confidence and trust. They begin to believe in the power and potential of the method. Each successive victory becomes that much easier.

Involve the owner

Successful Six Sigma practitioners communicate with and involve the owner of the process or system they are working in. They solicit their input and provide feedback through all the stages of DMAIC. Then, when the time for change arrives, the owner jumps at the chance to implement the awaited improvements