If you aren’t familiar with the term, Six Sigma, it is a set of business management practices originally developed by Motorola in 1986. It achieved widespread notoriety after Jack Welch implemented it throughout General Electric during his tenure as CEO. Six Sigma is designed to improve the quality of products or processes by identifying and eliminating defects in products or processes. A Six Sigma process is one in which 99.99966% of the defects or errors are removed from business processes. The thinking is if you can produce near-perfect products or have near-perfect interactions with your customers, your sales and profits will correspondingly increase.
What are some of the major principles of a Six Sigma that you can apply in your business?
- Base your management decisions on long-term goals, not short-term goals, even at the expense of short-term profits. This is easier said than done, especially if you are a public company. This is hard to stick to but thousands of companies have proven that it works. It pushes you to have a strategic plan that you adhere to, sometimes at the expense of short-term profits.
- Create continuous process flow so that problems are surfaced. When you look at each of your business processes and break them down into components it is easier to find and fix problems. For example, take a process such as inventory receiving and break it down into each of its components starting with the original purchase order through the inventory put away process. Examine each step of the process and identify parts of the process that breakdown on occasion, and change the processes to make them more bulletproof.
- Use “pull systems” to avoid overproduction. If you manufacture products, minimize work in process and inventory, creating a “just-in-time” environment. How much inventory do you have sitting around in your warehouses or on the plant floor tying up cash and gathering dust? You also eliminate inventory that becomes obsolete and needs to be disposed of, thereby hurting profits.
- Work to level out the workload and production instead of a stop/start approach. This can be difficult for any business with last-minute customer demands, but what about the other processes in your business? Keep in mind that stop or wait time is waste.
- Build a culture that stops to fix problems to get quality right the first time. In many companies there is such pressure to produce products quickly, or make deliveries quickly, that quality takes a backseat. Train your associates to understand that they are empowered to stop what they are doing when there is a problem and fix it before proceeding.
- Standardized tasks are the foundation for continuous improvement and employee empowerment. Use Standard Operating Procedures (SOP’s) throughout your business and standardize them to best practices. Standard procedures help employees know it is expected to ensure consistency.
- Grow leaders who thoroughly understand the work, live the philosophy, and teach it to others. Train, recognize, and promote those who buy into the system and adhere to it 100% of the time. Also look for people who can teach it to others.
- Respect your extended network of partners and suppliers by challenging them and helping them improve. Set targets, goals, and objectives for your suppliers. What is the net effect if they improve their products, which ultimately improves your customer’s satisfaction?
- Get personally involved in the processes so you thoroughly understand each situation. Get out of your office and get on the shop floor or the loading dock so that you personally understand the problems your associates are facing firsthand. It also does wonders for morale when your associates see that you are getting personally involved.
- Make decisions slowly, thoroughly consider all options, and implement decisions quickly. Do your homework, be detailed and focused, then get it done quickly. Do not allow the implementation of a great idea to lose momentum due to a slow pace of getting it done. Wherever you see a potential for value, go after it and save money fast.
- Become a learning organization through relentless reflection and continuous improvement. Constantly be looking at your business for ways to improve both processes and people. Break your business down into individual processes, or have someone do it for you, then drive out waste with passion to find extra value.
If you’re having problems with quality which is hurting your bottom line and leading to unhappy customers you ought to consider at least learning more about Six Sigma even if you don’t fully implement it in your business. What do you have the lose except for customer complaints?
Copyright 2012 by Jim Sobeck. All rights reserved. This information may be reproduced as long as full credit is given to the author.