Qualityworld
Yet again, UK industry seems to be sitting on the fence when it comes to adopting practices that make a difference to performance. Andrew Cave, managing director of specialist training organisation Smallpeice Enterprises, explains why six sigma is not only a tool for US multi-nationals, but a vital approach for industry on this side of the Atlantic
Few doubt the effort exerted by UK manufacturing to raise its productivity and business performance; the result has been a much more dynamic industry The level of specialist training in a variety of performance improving tools and techniques reflects this, with performance enhancing change programmes becoming widespread over the last ten years.
Yet, despite well-documented improvements during this period, the last government white paper on competitiveness shows that UK industry is still failing to match the performance of major overseas competition, in terms of productivity, efficiency and quality. Productivity is 20-40 per cent behind the US and the other leading European nations and the gap with France and Germany is not closing.
The shortcomings of British industry, such as the lack of capital investment in modern plants and machinery, are not new, but other, equally important issues need to be addressed. In practice, many companies hit a glass ceiling in terms of performance, with continuous improvement efforts failing to deliver beyond a certain level. To reach world-class performance levels, businesses must find better ways to direct their efforts; one such approach is six sigma. Already becoming widespread in the US, the strongest economy in the world, six sigma was originally developed to improve key areas such as high scrap rates and costly waste, under-utilised capacity and slow cycle times due to high process variation.
Origins and impact
Six sigma was pioneered by Motorola in the 1980s as an approach to improving productivity and quality, and reducing costs in the face of overwhelming competition from Japan. The company recognised that technology was now so complex that it was rendering old ideas about acceptable quality levels obsolete, so it developed a quality philosophy based on a goal for process quality of six sigma, consequently changing its internal perception of 'acceptable' quality from parts per hundred to parts per million, or even billion.
To understand the dramatic nature of this change, it is crucial not to underestimate the gulf in performance between this world-class level and typical levels of performance, which range between two and four sigma. At three sigma, the defect rate is up to 66,810 per million (6.681 per cent) and the total cost of poor quality is generally 40 per cent of sales revenue; at six sigma (3.4pppm defective), the total cost of quality declines to roughly 10 per cent of sales revenue.
It was not long before many other major US businesses recognised the potential of six sigma: the rest is history. In 1999, GE had saved over $2 billion using the sigma methodology The bottom line is that US corporations moving toward six sigma performance levels have saved billions of dollars and are now in the process of saving billions more.
Figure 1. The sigma values are translated into defects per million opportunities but, in doing so, an adjustment is made to account for the effects of ongoing variation, 'shifted process'.
Breaking the barriers
The success of six sigma within UK operations, such as GDA (which is admittedly co-owned by GE and Marconi), Black & Decker and Raytheon Marine, has proved the methodology to be a valid approach for UK industry Smallpeice Enterprises has already seen a wide range of UK businesses join up to its training programme. According to Philip Catherwood, business development manager, Source Wales (part of the Welsh Development Agency) and previous black belt at Sony (UK), UK industry cannot afford to ignore or dismiss any best practice ideas: six sigma has the potential to be the biggest source of competitive advantage around.
'Within UK industry there are still massive savings to be had in the cost of poor quality and the potential return to be gained from six sigma is huge for any business. While I am not saying that UK companies will generate anywhere near the billions achieved by GE, proportionally, there is no reason why the same degree of savings cannot be achieved', states Catherwood.
However, it is also important to realise that before there is any chance of widespread adoption in the UK, there are some significant hurdles to overcome, not least the general complacency of many businesses, which are either unaware of six sigma or will dismiss it as another US fad.
As Bill King, an independent consultant and six sigma enthusiast, observes: 'Unfortunately there are many companies, still in the mode of three-ish sigma, set in their ways, complacent in the knowledge that they are as good as their local competition. They carry the view that zero-defects is neither realistic nor achievable and they are unaware that six sigma world-class companies have similar manufacturing processes which are a hundred times better.'
Far too many senior executives and managers are consumed by everyday pressures, and as a result tend to minimise and marginalise their inputs into plans for the future. Chief executives need to recognise the benefits of six sigma and provide the necessary leadership and support to establish it in their organisations.
Give me deeper understanding
Even managers who are aware of the approach, often assume that it is SPC with a new name - statistical theory is only a small part of six sigma and it is much more than a technical quality tool to control the product defects. Six sigma is the basis for a best-in-class philosophy that demands long-term, business strategy The fundamental objective is to establish a measurement-based strategy to focus on systematic process improvement and variation reduction, through the application of powerful statistical tools. Waste and cost are driven out as quality improves, while customer satisfaction is increased through continuous improvement in quality and delivery performance.
Process sigma |
DPMO |
6 |
3.4 |
5 |
233 |
4 |
6,210 |
3 |
66,807 |
2.3 |
308,537 |
Process capability |
Defects per million opportunities |
To ensure its effective adoption, key features include the use of a team-based, project environment to introduce change, with the overall programme and individual project teams guided by designated 'experts': black and green belts - who are trained in six sigma tools, creative thinking, and project management. There are also 'champions', to whom black belts report, whose role is to ensure that projects are progressing. These people are the core of a successful implementation of six sigma.
There is an established framework (roadmap) for each team, which ensures that improvement activities are structured and that the link between customer quality requirements, parts and processes is maintained. While variations in the framework exist, all are based on a stepped process with certain key phases:
- define problem
- measurement
- analysis
- improve
- control
- transfer (or payback)
Crucially, the approach is equally applicable to batch, process and transactional operations and is truly a cross-company mechanism. It can be applied to any aspect or transaction within the business - from design to sales order processing, distribution and service - which the customer may perceive as affecting quality. Using the common measurement index of 'defects per unit,' where a unit can be virtually anything (including a line of code or an administrative form), companies have started to utilise the approach to reduce defects in non-manufacturing operations.
Where is the difference?
Overcoming senior management disillusionment with previous quality initiatives, such as TQM and ISO 9000, combined with the initiative overload suffered by many companies, will take its time. While its potential benefits may counterbalance scepticism somewhat, it is also necessary to highlight the differences between six sigma and other quality improvement programmes. Undertaking a six sigma programme will not undermine existing initiatives but will enhance the results of those programmes, by offering something more, especially in terms of structure and focus.
'There is at present an obsession in UK manufacturing with "lean",' Catherwood explains, 'and while this does offer big opportunities, it has limitations. One of the major advantages of six sigma is that it focuses directly on attacking the cost of poor quality, either by eliminating variation or optimising processes. Lean does not provide the key statistical base, which make the benefits of reduced variation and process optimisation possible.'
Six sigma has the advantage of a standard methodology for improvement projects, which is repeatable for different projects. The training and project management of black and green belts establishes a structure and sets a level of expertise. The structure helps to ensure that the work is focused and that all changes are based on fact, not internal politics. King says: 'The roadmap to six sigma, the stepped process, is much the same in concept as Dr Edward Deming's PDCA cycle. Unfortunately when it comes to other improvement activities, some managers tend to measure and assess situations by assuming or deciding because they know best, rather than examining in adequate detail what other options are available.'
Training and support
The other major hurdle to UK industry acceptance of six sigma is training and support. Six sigma has not had the same endorsement through the UK supply chain as in the US, so organisations adopting it must be pro-active in their approach. Naturally training and the cost of implementation have been significant issues.
Until recently UK manufacturers wanting expert advice and tuition have been restricted to sending people to the USA, or adopting courses imported from the US, however, aside from the high cost, there will inevitably be cultural differences, since US consultants may not have a deep understanding of UK industry
UK training organisations are tackling this issue, by developing cost-effective six sigma programmes, specific to UK requirements, offering intensive modular training plans, geared towards black and senior green belt certification, with at least one major in-company project. Moreover, they are geared to attacking the factors that have typically caused programme failures in the US: weak leadership, slack goal setting, poor project management, inadequate resources and training.
Six sigma is not for the faint hearted. To quote Dennis Sester, of Motorola: 'Six sigma is not a product you can buy it is a commitment.' Nevertheless, six sigma may help UK industry make a quantum leap in terms of performance. UK manufacturers need to make the business decision to commit to world-class standards.
black and green belts
Six sigma is a business decision which must be aligned to a company's strategic goals. Six sigma must also have top management support and needs to be structured for success. But, while a full implementation may take two to three years, significant results can be expected within six months.
In the UK, six sigma practitioners are called black belts and senior green belts. Both are trained to be self sufficient in carrying out improvement projects. A six sigma black belt is a full-time improvement worker, (with minimum of 20 days training), trained in statistics and statistical tools, and in their application within improvement projects. Training is not purely statistical, as in some US courses, and includes other key skills such as project management, quick technical problem solving, statistical process control, software, design of experiments, Taguchi techniques, mistake proofing, quality function deployment (QFD), creativity, and leadership.
A senior green belt is a part time improvement worker, who spends at least 40 per cent of his/her time on improvement projects. The 16-day training programme for a senior green belt is similar to that of the black belt, but with less emphasis on leadership, QFD and advanced statistical tools. Senior green belts can work alone in SMEs or can support black belts in larger organisations.
In training programmes, it is vital that regular project reviews take place to forge strong links between theory and practice and develop confidence in applying tools. It is vital that support is available to emerging practitioners to help them through the difficult periods which they will encounter.
Dr Andrew Cave is MD of Smallpeice Enterprises and project leader for the Smallpeice six sigma and demand flow ~'E technology programmes. He has held senior management positions in large UK-based international engineering PLCs, and has a background in general management, research and education. For the past five years, he has been a supporter of the Engineering in Education Scheme, serving as panel chairman for the West Midlands. He is a mentor for the engineering CPD scheme and vice-president of the Birmingham and Wolverhampton branch of the Royal Aeronautical Society.
Andrew Cave can be contacted at Smallpeice Enterprises Ltd. (www.smallpeice.com) 27 Newbold Terrace East, Leamington Spa. Warwickshire CV32 4E5, Tel: 01926 336423 Fax: 01926 450679. e-mail: andrewc@smallpeice.co.uk
© Qualityworld January 2001
