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Is It Greek To You?

With just 3.4 defects per million units, the Six Sigma strategy may seem somewhat foreign. Welcome to the quality-assurance system the big boys use.
July 1, 1999
URL: http://www.entrepreneur.com/article/17998

Simon Dolan first heard of Six Sigma in a 1994 book recounting chairman John F. Welch's revitalization of General Electric. It sounded awesome--a quality measurement goal that allows just 3.4 defects per million units. (For comparison, 99 percent accuracy allows for 10,000 failures per million.)

At the time, that quality level seemed almost unimaginable at Dolan Industries Inc., a 41-person fastener manufacturing company founded by Dolan's father. But within a few years, after strenuous effort, the Clinton, Massachusetts, company began successfully meeting the rigorous requirements of the ISO 9000 quality standard, which is comparable to Six Sigma.

Six Sigma came up again more recently at Dolan Industries, this time at a meeting of suppliers for one of the company's large customers. All the suppliers were told they must embrace the Six Sigma goal to keep selling to the company. Suddenly, achieving Six Sigma was no longer a choice--if Dolan Industries wants to keep selling to one of its largest customers, that is. Says Dolan, "Inevitably, we're going to have to achieve Six Sigma."

More and more small companies will be chasing Six Sigma quality as large corporations increasingly endorse the goal as a requirement for doing business with them. In addition to GE, Allied-Signal and Motorola are among the other corporate leaders using Six Sigma as a quality objective.

Reported benefits include better-performing products and happier customers, which can turn into higher profits. At GE, Welch says the sky-high quality goal has helped raise overall profit margins by nearly 2 percent.

Not everyone feels Six Sigma is a panacea, especially for the small companies that will soon have to toe the line. But as Dolan says, "By and large, it's going to be a requirement in the coming years to have a Six Sigma mindset."


Mark Henricks is an Austin, Texas, writer who specializes in business topics and has written for Entrepreneur for nine years.

Six Sigma Starts Up

Statisticians use the Greek letter sigma to express standard deviation, which refers to the average difference between a given point in a set of data and the average of all other points. In a quality context, that might mean comparing measurements for manufactured screws. A quality process that meets a performance goal of one sigma will produce slightly more than two out of three screws that meet specifications. Reaching two sigma means more than 95 percent of all screws will pass muster. By the time you get to six sigma, only 3.4 defects would show up in a million screws.

The use of Six Sigma in quality management originated, or at least was popularized, at Motorola. About 15 years ago, Motorola was trying to get its thousands of cost-oriented, technically-savvy engineers more concerned about quality. The odd-sounding name was considered appropriate to these goals.

"Six Sigma was a good way to describe quality to engineers," according to James Morehouse, a quality consultant with A.T. Kearney Inc., a global management consulting company in Chicago. "It was a tool for changing a very entrenched, engineering-driven organization from focusing on cost to focusing on quality. That's what Six Sigma is really all about."

Let's Talk About Six

By boosting quality and achieving financial success, Motorola made itself a model for other companies. Six Sigma, however, is more than a way to measure manufacturing quality, says Mario Perez-Wilson, who helped develop the Six Sigma philosophy and techniques at Motorola and is now a principal consultant at Advanced Systems Consultants, a Scottsdale, Arizona, engineering and processes improvement consulting firm specializing in Six Sigma. It can be applied to a company's services as well, such as customer service, delivery performance--virtually any aspect of a business.

"Six Sigma views a business as a bunch of processes, which include administrative processes, service processes, transactional processes and manufacturing processes," Perez-Wilson says. "[Implementing it] makes everybody look at all the company's processes."

Although Six Sigma is a goal that doesn't specify precisely how companies should attempt to achieve it, there are a number of quality improvement tricks Six Sigma fans often employ. The first step in achieving Six Sigma is accurately understanding and optimizing all of a company's processes. Standard procedure is to break an operation, such as assembling a product or processing an invoice, down into small steps and use statistical analysis techniques to see how well each process performs. Without knowing the number and nature of defects you're currently producing, you won't be able to monitor progress toward goals.

Once you determine your defect rate, there are a number of tools you can use to edge closer to Six Sigma. One is poka-yoke, a Japanese term referring to the practice of designing products and manufacturing processes in order to reduce the opportunity for error and defects. For example, a company using poka-yoke in its order-entry operation may program computers so they won't accept erroneous postal codes in customer addresses. By reducing errors in this way, a company can improve on-time delivery of shipments and move closer to overall Six Sigma quality. (To search for past articles on poka-yoke, visit http://www.entrepreneurmag.com)

Robust design is another technique companies use to achieve Six Sigma. It calls for using simple, rather than complex, designs to reduce the opportunity for errors in assembly. Robust designers also engineer products and components to perform adequately in spite of extreme circumstances. For example, designers at General Electric found putting a rougher finish on a metal connector in one of its X-ray machines reduced leakage through an important seal. This helped improve reliability to get the company closer to Six Sigma and allowed it to offer a better warranty to its customers.This is similar to the experiences of other companies seeking Six Sigma: It's a big goal you try to achieve by taking many small steps.

Achieving The Goal

Mastering Six Sigma is a challenging undertaking. Fortunately, there are a number of books exploring the topic, and it's been added to the curriculum at some colleges. Small businesses that have been asked by important clients to provide Six Sigma quality may be able to get training in the techniques from those same clients, suggests Dolan. His own large customer is arranging for a crash-course seminar he can attend at his own expense, he says.

You can also get grounded in the subject by attending a one-day class put on by Advanced Systems Consultants that costs about $490, according to Perez-Wilson. More detailed training for a team of 20 employees may cost from $12,000 to $15,000. But payback can come in as little as six months, Perez-Wilson contends.

With its standard of near-absolute perfection, Six Sigma may sound more like a celestial vision than an earthly goal. That's not necessarily a negative thing if Six Sigma helps companies jerk themselves out of complacency, says Morehouse. "The beauty of Six Sigma," he says, "is to move us away from the toleration of failure to the idea that we're going to be as perfect as we can be."

At Dolan Industries, where the future is increasingly tied in to those of the large automotive firms, power-tool makers and telecommunications companies that are its customers, Six Sigma holds a much earthier promise: The company can either pursue Six Sigma or find other customers. "If you want to grow and be a player with the Fortune 500 companies," Dolan says, "you have to accept the Six Sigma mentality."

Next Step

The American Society for Quality publishes a number of books and informational materials on Six Sigma and other quality-assurance programs. Contact the organization at (800)?48-1946 or visit it online at http://www.asq.org

Contact Sources

A.T. Kearney,http://www.atkearney.com

Advanced Systems Consultants, (602) 423-0081, sixsigma@mpcps.com

Dolan Industries Inc.,http://www.dolanind.com