The competitive business environment has created a high degree of complexity, which caused a paradigm shift in quality and customer satisfaction. As a result, many companies, like Allied Signals, Motorola and GE, tapped into a quality tool of some sort to help them stay ahead of the curve in meeting both internal and external customers’ expectations. The tools range from total quality management (TQM) and continuous quality improvement (CQI), to the evolutionary tool known as six sigma.
In scanning and assessing the business environment in which a company operated, most companies realized that they would not be able to achieve competitive superiority if they did not become quality conscious. So, the need to adopt a “tool” and chart their business strategy in that direction became paramount for their core competence, and such deployment ever since has become exponentially more compelling as the business environment gets more sophisticated.
Basically, a tool to help better the company’s position in the market environment was seen as a prerequisite to having a competitive advantage. In addition, it helps command a lasting and sustaining growth, which in the long run helps any companies win a unique image in the industry environment.
The six sigma concept
As companies’ operations became more complex and the environment grew more competitive in the mid 1980s, quality and customer satisfaction became the criteria for judging whether an organization was efficient in delivering what it set out to deliver. The ability to deal with the non-homogeneous customer became paramount to sustainable growth and competitive advantage.
Many techniques, like total quality management (TQM) and continuous quality improvement (CQI) were the basic requirements for gaining a unique image and a competitive advantage. What was not central to these techniques, however, was the ability to measure quality issues and the root cause of product defects faced by the organization at the process stage. For the most part, quality issues such as defects did not come to light until the product was out or at the end of production, thus leading to exorbitant costs.
These techniques’ lack of quantitative measurement and a database approach caused organizations to be ill advised with respect to product defects. Although the techniques TQM and CQI enabled companies to measure their operations with some degree of awareness as to where the system had failed, they could not generate explicit data so that one could pinpoint at the early stage where in the processes the failure had occurred.
The inherent limitations in these techniques prompted companies, like Motorola, to design a new technique known as “six sigma” in the form of a technical document to help minimize the defects that they were experiencing in their core competence. The emergence of this concept completely shifted Motorola’s view and approach to process evaluation.
Six sigma is a technique that shows how far away from the mean or average a process measurement deviates. Each time the deviation is minimized or eliminated, it is translated as “opportunity” and the reverse is known as a “defect”. The evolution of the six sigma phenomenon and the ability that it gave organizations in identifying quality challenges has provided both tangible and intangible benefits. Some define the tangible benefit as the ability to reduce the number of defects from their processes. The intangible benefits have often been referred to as business initiatives that could create competitive superiority, like GE’s accomplishments.
Conceptual approach
Conceptually speaking, the way to improve the process with six sigma is by applying the following four elements: define, identify, analyze, and continuous evaluation:
- The process needs to be defined, and the requirements for that process must be spelled out.
- The factors to be measured need to be identified as the process is implemented because they must be entrenched into the concept if maximum quality results are to be achieved.
- Careful analysis of the process must be put forth with sound process pathways to address the process defaults in order to attain the degree of quality or the minimum defects in the process.
- The activities to be analyzed must be identified explicitly with the end in mind; and nurtured to prevent the process from going back to the old status quo.
These elements are critical in building a sustainable quality standard with the six-sigma quality concept.
“For six sigma to work well, implementation must be with the impetus of the top management.”
Quantitative approach
The quantitative factor is to build the parameters in the methodology in order to quantify the process for a sound quality infrastructure. This factor is more concerned with the scientific approach of six sigma. At this juncture, several steps may be required to achieve the positive financial outcomes as achieved by many companies that adopt the six-sigma approach.
The data gathered are used to identify the patterns in defects. Once this process is completed, anything that can be measured gets measured in order to determine the level of defects by identifying where the defects fall under the bell-shape curve to compute the sigma level.
The scientific aspect has made the six-sigma concept a successful tool for organizations whose core competencies are products which require a measurable yardstick to determine defect level. Customers, and companies, view it as a technique that should be embedded in the day-to-day operation.
Formulation of the six sigma strategy
As the program begins to roll out, two important factors must be in the fore:
Top management must be willing to change when the technique suggests that such a change is required and the importance of it in the business structure must be underscored in order to deal effectively with employees’ resistance. The organization leaders must be willing to be flexible in their change. Management must be able to manage flexibly from being coercive to coaching as demand arises.
Every key employee in the organization must be a participant in the process through various means, i.e. educational training and application. Those who complete the training should be encouraged not to shelf the concept, but put it to work on a project in their daily operation with three key elements in mind: the external customer, the internal customer, and the process. There are many positive results when its approach is set as such with a pyramidal commitment. The more flexible styles that management exhibit, the more the organization can deal with the quality issues through this technique and improve the delivery of its core competence.
Competitive advantage
The significant competitive advantage that can be obtained from implementing six sigma is by way of the three basic resources: customer, process, and employee. The strengths, weaknesses, and the opportunities of these resources, as stimulated by the six sigma concept in some way or another, tend to enrich organization culture and view on quality and improve its position and strength in the market in which it operates. It also enables the organization to create strength discovery, weaknesses acknowledgement and advantages on opportunities.
Blending the six sigma concept into the organization’s culture could result in unique acknowledgement of some of the tangible factors that could give the organization competitive edge and superiority. It will also enable the organization to be cognizant of some of the intangible factors that are intrinsic, thus creating unique value to the organization that is irreplaceable by others.
Six sigma alone as a concept does not guarantee success; rather, it is the way firms adopt it and channel it into the organizational culture that helps achieve successful results.
This is a shortened version of “Effective management commitment enhances six sigma success” which originally appeared in Handbook of Business Strategy, Volume 5 Number 1 2004 pp. 195-200.
The author was Charles Thevnin, Chief Financial Officer for Doctors Medical Center – San Pablo/Pinole Campus (Tenet Health System).
This article may be found at:
http://www.managementfirst.com/quality/articles/sigma_success.php
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