Nothing puts a chill into system devotees more than the idea that the scheme they rely on, whether it be Total Quality Management, lean or their FranklinCovey Planner, is not "the answer." That's been the case in some quarters for Six Sigma, the celebrated methodology developed at Motorola in 1986 and championed most famously by former General Electric CEO Jack Welch as a way to improve productivity and cut costs by identifying and eliminating defects in manufacturing processes and other business areas.
During the late 1990s, Six Sigma -- a quality improvement process based on producing fewer than 3.4 defects per million -- was credited for astounding results in improving quality and reducing costs. At General Electric alone, thousands of projects were estimated to have added $5 billion to the firm's net earnings over its first five years of implementation. To date, Motorola pegs the financial benefits of Six Sigma at more than $17 billion.
But is Six Sigma's reign as the answer to company productivity improvement coming to a close? Headlines such as "Why Six Sigma is on the Downslope" and "Six Sigma: So Yesterday" seem to support that impression. In a recent study, executive recruiting firm The Avery Point Group found that calls for managers with lean knowledge exceeded that for Six Sigma talent by almost 11%, reflecting what Tim Noble, the company's managing principal, called "an indication that they see lean as a better and more practical hedge against today's tough economic challenges."
Some observers say the seeds of Six Sigma's perceived shortcomings come not from problems with the methodology itself, but how it is applied and the high expectations it has engendered in the manufacturing world.
"To an extent, Six Sigma is kind of a religion," notes George Haley, a business professor at the University of New Haven and director of the Center for International Industry Competitiveness. "When it focuses on the manufacturing process, it is very good. If you want to improve efficiency, cut down on failure rate and errors, that is Six Sigma's strength."
But Six Sigma is often applied too late, Haley observes, so that products are designed in a way that invites problems on the production floor. Product design engineers have "360-degree access" to a product in the R&D lab, but workers on the line who have to attach components and perform other tasks don't have that same access and sometimes can't see what is going on. The problem may be exacerbated by robotics, he notes.
Haley also criticizes the application of Six Sigma to services such as health care. For example, a nurse may be given a specific amount of time to perform a patient service. But Haley notes that patients differ and that nurses may need to perform a different service than initially expected. "If the nurse doesn't have time to figure out what they need, patients can get a lot of wrong treatment," he warns. "Six Sigma should stay out of hospitals and stay out of any business where you have human-to-human interaction. Humans just aren't programmable; they aren't machines."
Lean Six Sigma at Xerox
Last year, Xerox Corp. executives went through a Six Sigma exercise they gladly would have avoided. The company used Six Sigma to help organize a far-reaching restructuring that cut approximately 3,000 jobs and trimmed $200 million in costs. Employing the methodology helped Xerox be "thoughtful" about how it made the cuts and prevent harm to its operations, says Doug Burgess, Xerox's senior vice president of corporate lean Six Sigma.
When Xerox began using Six Sigma in January 2003, the company focused on very functional projects with a high likelihood of success so that momentum would be built for using the process. Over time, the company moved into more ambitious cross-functional projects. Today, says Burgess, the company wants employees to recognize that "you can use lean Six Sigma on any process that is measurable, so you can apply it to customer satisfaction issues, cycle time, CAD generation issues."
Burgess admits that it may not be as easy to apply Six Sigma in sales and service groups as it is in manufacturing. He says these groups traditionally focus more on managing relationships than managing processes. But with training and strong management support for using these tools, he says, they can be employed throughout the corporation. For example, he cites a project done with Xerox Global Services, where the finance department had become bogged down processing contracts that were rarely the same. When the project commenced, Burgess recalls, they found 134 contracts that were backlogged, resulting in countless hours of overtime. "When they started that project, they were logging in almost six days for every contract they were reviewing. By applying the DMAIC (define, measure, analyze, improve, control) process, we reduced the six days to just over one and eliminated all the overtime. The billing process was improved significantly as well," he says.
Burgess is a firm believer that lean Six Sigma can be applied to everyday challenges, not just major projects. "It doesn't necessarily require big teams," he maintains. "It is the thought process and the disciplined approach to looking at a business problem."