Six Sigma – The NY Times Version has been a long-time favorite of business journalists, business consultants, and executives looking for a rational, proven process for cutting costs.
How it Works:
Six Sigma is a statistical quality control method that combines statistics and some engineering to reduce error rates in processes. The sigma part of Six Sigma comes from the symbol for a standard deviation from the mean. The higher the number, the less often the process produces defects or errors. In a six sigma process there are only 3 or 4 defects per 1,000,000 opportunities.
The engineering part of Six Sigma begins with analysis and ends with a research-based quality improvement to the process in question. You begin to implement Six Sigma by gathering baseline measures – there are 450 defective products for every 10,000 that come off the assembly line, for example. Employees can use that number and information about what is defective to design improvements to the process.
Where it Came From:
Developed over 40 years ago by employees of Motorola, it is now used to improve quality and reduce waste in companies around the world. Some early big Six Sigma users include Allied Signal, Motorola, and General Electric. Now it is used in many thousands of organizations.
In the 1980s and 1990s General Electric executive John Welch spent eight years and $1 Billion to convert all divisions of GE into a Six Sigma company. The effort must have paid off because operating profit margin rose from 14.4% to 16.6%.
“Six Sigma translates fuzzy customer requirements into technically measurable responses.