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Six Sigma News Makers
IMPROVE YOUR SIX DRIVE
January, 2002
Published in Works Management
Six Sigma has worked wonders for the big boys like Motorola, GE and Ford. Can it work for you too, asks Annie Gregory?
Ford did it and saved $52 million in one year. Motorola reckons it has saved $14 billion since launching it in 1986. And Honeywell gives it credit for an extra $2.2 billion in the corporate piggy-bank. 'It' is Six Sigma, the latest approach to improving business performance.
Those who have done it are evangelical in their enthusiasm. Those who are holding back, however, agonize about the potential demands of a statistics-based methodology that threatens to absorb massive amounts of training effort and resource.
So who is right? First of all, let's look at what's involved. Simply put, it is an improvement process aimed at understanding and therefore reducing variations within products and processes, yielding a defect level of less than 3.4 per million parts. Most companies who have already worked hard on improving their operations sit at around three sigma - around 67,000 defects per million. Six sigma acts as a kind of benchmark for a world-class performance. Progress towards this goal is made through its five-stage DMAIC process: Define and Measure, Analyze, Improve and Control.
Six Sigma works through the championship of rigorously trained Black Belts who, after an average four months in the classroom, emerge to use their new-found problem-solving techniques in critical workplace projects. They are supported by Green and Yellow Belts who have also taken the implant but to a less august level. In the USA, where Six Sigma is now the 'do-or-die' methodology, Black Belts are dedicated to Six Sigma projects for two years and companies aim to have two to three per cent of the workforce certified to this level.
Such a level of effort will strike fear into the hard-pressed UK SME. For that reason alone, many observers ask whether it brings anything more to the party than is already provided by established - and less painful - techniques like Lean Manufacturing and 5S. Yasar Jarrar, research fellow at Cranfield's Centre for Business Performance believes its virtues are threefold: rigour, focus and quantifiable benefits made through a methodology with a specific set of tools and skills. "This overcomes many deployment issues organizations faced with other approaches that had sound conceptual methodologies, but fell short of a clear 'how to'," he explains. He is adamant that Six Sigma is not all about statistics - it is just one of many tools within it. "The Six Sigma methodology is a mentality and framework for maximizing the benefits of using these tools [in] aiming for defect-free process operation."
Sal Puaar of Celerant Consulting, involved with Six Sigma since 1989, believes companies should embrace the valuable techniques within different methodologies rather than trying to decide which single one is best. "When we do Six Sigma at companies, we also use tools from TPM [total productive maintenance] and 5S. " Even so, he believes that Six Sigma boldly goes where Lean can't. "Lean doesn't go into design and marketplace and customers sufficiently. Many who have resisted Six Sigma are eventually forced to take it on board for those reasons."
In UK industry, the issue of available resources is not likely to go away. Many companies would like hands-on experience before making a wholesale commitment. This causes dissent among the experts. While agreeing that it is theoretically possible to pilot, Jarrar points out that it has been most powerful when deployed as an organizational way of life. Optimizing a single process might have adverse effects elsewhere, he says: "Processes do not exist nor operate in isolation, and thus they should not be improved and optimized in isolation."
Puaar, however, believes in being flexible to allow more companies to make progress. "The supposed optimum of two to three per cent of Black Belt employees only exists because some consultant came up with it. You can't do it if you are an SME." He says it is possible to train more people part-time rather than fewer full-time. At Ericsson, Celerant trained about 500 people, most of them on a part-time basis. "You can't get the same results part-time as you would full-time, but I would rather have someone doing it that way than not at all."
He points out that having too many projects reduces people's effectiveness, so SME managers need to focus on specific projects and postpone others. "It can be a tough decision but you need to work out the business case for each, agreed with the finance guy. The board has to decide what the priorities and key issues are. For the first ones, you want quick wins but you also want high visibility."
It means that the person responsible for a machine's efficiency must work out what a 20 per cent improvement in its OEE (overall equipment effectiveness) means in cash terms. Though such translations are the bedrock of Six Sigma techniques, Puaar believes that industry has tended not to ask people to do them. Once under way, however, this approach achieves widespread popularity. "HR likes it because it develops the people you want to stay. Finance likes it to because it makes business sense."
He, too, maintains that Six Sigma's emphasis on data is not as arduous as it sounds. "It is about the minimum amount of data you need to make a judgement in which you have 99 per cent confidence. The statistical tools tell you if your judgement is random or statistically valid. Fact-based decision making is one of the first things Black Belts learn."
Celerant guarantees that Six Sigma will pay back at least 100 per cent in its first year and expects to achieve at least 3:1. "If Six Sigma isn't giving a good return in a year, either you've chosen the wrong consultant or you are applying it in the wrong way," says Puaar.
There is concrete evidence that Six Sigma is not only for the big boys. Although part of a much larger group, Porvair Technology has a total of only 75 staff in its Wrexham plant, turning over around £6m. This did not deter the company, which makes filters from sintered porous plastics and metals for specialist medical and industrial applications, from applying the methodology to its own business. It did mean, however, that this SME had to tread a measured path in tying the process very closely to its business needs and limited resources.
It started two years ago, when manufacturing director Nigel Bright chose an open programme run by Six Sigma Qualtec (SSQ). Bright explains that although he had used 5S with considerable success, it didn't address all of its problems. Porvair CEO Ben Stocks was the first to suggest this new approach. It had the potential advantage of becoming culturally embedded rather than dependent upon one-man initiatives.
Porvair's plant is highly complex, making a huge variety of products in medium to high volume batches to strict customer specification. "It was a fit for us in that it was highly analytical," explains Bright. "We had huge experience in our field. But we would lurch into problems, all the troops would charge the cannons like good 'uns and we'd lurch out again. I felt that moving us into something with a set procedure would be good for us, even though I hadn't appreciated the full extent of the statistical involvement."
Two people went through the Black Belt training, Bright himself plus a promising member of the development department. Although Bright knew he wouldn't be able to work on it full time, he felt it was important to be able to steer people knowledgeably. Four people were trained as Green Belts. One project is now fully underway and two are currently being implemented.
Porvair's bottom line says it all. On the first project - a vital but previously troubled plastic moulding process - the standard cost has reduced by 25 per cent. It can now also run with every known variant of raw material right first time. Consequently, waste rates have been cut by over 60 per cent. Project two has cut standard production time on one customer's filters from 40 seconds to eight seconds a piece, allowing Porvair to meet demands for price reductions on a previously negative margin account. The third - a metal moulding project - is only just starting but is on track for reducing standard time down from 1.3 minutes to under 60 seconds. Overall, Porvair is heading for a 3:1 payback in the two years since it started.
Bright emphasizes that the benefits don't stop there. "We have been quietly pleased with the number of blue-chip companies happier coming to us now. Six Sigma is helping to open doors for us. The whole programme is a response to commercial pressure to secure and grow our own markets.
"Now we pursue data through the methodology until we know we're working on the right thing and exactly where the solution lies. We may be focusing on a smaller part of the problem rather than trying to do the whole thing. So, when we move to implementation, we are making small changes that are highly influential instead of putting in a big change that may not work. It is changing attitudes across the board, he says.
He firmly believes that SMEs can't take a 'big bang' approach: "You run the high risk of taking your eye off the ball while you are going after the next major contract. All the time, your wise words on the soapbox are getting watered down and you will lose credibility. People need to understand what you are doing but there is no point in campaigning it. They just need to look out for the results - and thankfully our initial critics are now saying that it seems to be working. You can only convert on the basis of success."
© Annie Gregory 2002.
Reproduced by permission of the Editor of Works Management
www.worksmanagement.co.uk
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