Lean Six Siqma: October 2007

The Top Ten Six Sigma Myths
1. Six Sigma is a new concept
Six Sigma is Total Quality Management (TQM) with a focus on process, results, and return on investment as a result reduction in variation. It's not the tools or process of Six Sigma, it's how you implement it that counts. The tools have been around for a many years, they are statistical in nature and now aided by computer to make them more user friendly. Start by leveraging Business Process Management and your understanding of the core processes in your business. Then apply it with a clear focus to drive significant results in your company.

2. Culture change is difficult
Culture change is easy when you give employees what they need to do a better job and don't waste their time. Employees don’t come to work to do a bad job, we don’t always give them the processes, tools and training to do the job correctly. By working on the core business processes that are problematic, then the next, and the next, your ongoing success will convert the rest of the organization to Six Sigma.

3. Setting big goals may prevent the success of Six Sigma
While Six Sigma equates to 3.4 defects per million operations is a very lofty goal, moving up a sigma level or two can give some impressive results. Since many enterprises operate their core business processes at the 3 to 4 sigma level, an improvement of even one sigma level represents a huge step forward in reducing defects or errors, and in turn improving customer satisfaction and reducing costs. Through a better understanding of their core processes, businesses can make significant improvements rapidly. For example, if a businesses which has an order fulfillment process (a core process) operating at 3.0 sigma or 66,000 defects per million opportunities (DPMO) could improve performance to the 4.0 sigma level (6,210 DPMO), it would realize a gain of approximately 10X performance. Imagine if each error cost as little as $10.00 to fix, then the cost savings would be in the range of $600,000.00.

4. You have to train everyone
Many Six Sigma consulting organizations make their money by training the organization in volume. You don't want to measure the number of employees trained, you want what you expect training will do to provide significant improvements. Also, restricting participation helps build interest and desire among the rest of the work force.

5. It takes weeks to train team members
No one has time or money to spend on training. Using Just-in-Time training, you can train team members in a short time and throw them right into DMAIC process with a skilled facilitator. They will learn more from a timely introduction and real experience. Most employees can learn the Six Sigma tools, the people issues in this area are harder to learn and require real hands on experience.

6. You need Blackbelts & Greenbelts
Most successful companies hover around 3-3.5 sigma (1-6% defects,10000-60000 defects/million). I have found that you can get to 4 sigma (6200 defects/million) with common sense and some problem solving skills. That means you need a few capable greenbelts. Meanwhile you'll save a ton of money and add it to the bottom line.

You need motivated people who can help you successfully start making dramatic improvements in your business. You bring in a consultant who has a proven track record of making dramatic improvements to help you jumpstart the process. Once you start making progress, you'll discover the employees who are adept at employing Six Sigma tools and delivering results. These are your greenbelts and future blackbelts.

7. Teams can figure out what to work on
I have found that if leadership, assisted by an experienced professional or consultant, can't narrow the focus to the processes that causes most of the problems, your teams can't do it either. Projects are the responsibility of the leadership team and should be based upon fixing issues in the core processes that have an affect on your customers. Every Six Sigma project should deliver $250,000 in savings that fall straight to the bottom line. As a leader, you wouldn't let teams define their own work projects, so why would you delegate focusing the improvement effort?

8. Solving problems takes time
A facilitated team can identify the real root causes of key process problems in anywhere from 4-8 weeks, without dramatically taking away from their normal work. Properly focused by data collected and a clear understand of the process, the team can analyze process and make recommendations to improve the process.

9. Teams can implement their solutions
Robust solutions to process problems often cross organizational boundaries. Leadership needs to manage the implementation of identified improvements. It may take time and money to make all of the changes in people, process, and technology required to maximize your benefit. The implementation team may involve members of the root cause team, but don't get the two teams confused.

10. Six Sigma and BPM can’t work together
Once businesses get beyond the big myths surrounding Six Sigma, then they must start to apply the methodology. The strength of Six Sigma lies in its rigorous approach to data collection and analysis. Through this methodology it is can identify even the smallest opportunities for process improvement, maximizing an organization’s ability to institute necessary changes. It is not as strong, however, in its ability to monitor process improvements and ensure they are applied across the board.

One of the most powerful ways to improve business performance is combining business process management (BPM) strategies with Six Sigma strategies. BPM strategies emphasize process improvements and automation to drive performance, while Six Sigma uses statistical analysis to drive quality improvements. The two strategies are not mutually exclusive, however, and some savvy companies have discovered that combining BPM and Six Sigma can create dramatic results.

BPM fills this gap by providing tools to automate process improvements and connect those improvements across the entire organization. The strength of BPM lies in its ability to automate processes and workflow through modeling and examination of inputs, outputs and performance. It is not as strong, however, in its ability to analyze data associated with very difficult or multifaceted problems.

Both BPM and Six Sigma represent significant commitments on the part of a business or organization, and they take time to implement them thoroughly. Organizational change is often required, leading most companies to start with a single department or pilot project and expand their use over a multi-year period. It is well worth the time and effort, though, to generate the substantial business improvements that are typical with BPM and Six Sigma.

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Says NC Narayanan, founder, Six Sigma Alchemy, “Six sigma, and Lean Six Sigma
have been more well received in the Indian industry unlike ISO or CMM certifications.

The latter are more of marketing tools but Six Sigma actually adds to the bottomline.”
Changes in organisational processes are often limited if only compliance tools are used.

Mr Silverstein says investments in companies could vary between 0.1 and 0.2% of the
overall revenues. If companies were to invest in training a Six Sigma black belt, it would
cost them just Rs 4-5 lakh. The gains in efficiency are almost immediate, with returns
accruing to the company after just one quarter of implementation of Lean Six Sigma
processes.

Within nine months, companies often see returns of 4-5 times their initial investment, and
the net savings could be as much as 10-15 times the initial investment. Asian Paints
recorded savings of $4 million in a year after implementing one Six Sigma project, while
capacities in their Patancheru and Ankleshwar plants increased by 100% each, without
any capital investment while the capacity of a third plant in Kasna increased by 220%.

The returns from services are likely to be much higher, says Mr Silverstein.
Manufacturing and engineering processes are meant to drive down costs, but inherent
inefficiencies are much higher in processes in services, he feels. Also, feels Mr
Narayanan, “The defect is more easily identifiable in services than it would be in
manufacturing.” With this focus on bottomline, there is always a possibility that a lot of
companies will not invest in improving processes, as much as they would in chasing
growth.

Six Sigma practitioners concede that this could happen for a few companies, but it isn’t
the norm. Says Mr Silverstein, “In India, the airlines and telecommunication industries
are showing signs of poor service with the high growth that they’ve seen. The quality of
service will be the only differentiator in the near future.”

He feels there will be a tipping point India will encounter when the cost of labour and the
wage bill goes up and today’s small companies become large. That’s when Six Sigma
processes will gain more acceptance amongst the service companies.
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