Developed by Motorola in the early 1980s as a way to remove defects from the system, Six Sigma has become a popular and effective management and production strategy adopted by businesses to satisfy their customers and subsequently increase revenue. Though Motorola has received credit for putting Six Sigma into practice, companies have been using statistical analysis to identify trends, returns and defects since the 1950s. Under the guidance of specially trained experts, projects follow a defined sequence of steps in order to reach quantifiable targets and replicate successful results.
The strategy relies on statistical methods to ascertain whether the product meets customer satisfaction, basing decisions on hard data instead of theories. “Six Sigma tries to measure the output of products or services to determine the kinds of defects they have and see how it varies from what is expected or the norm, ” said Jane Marshall, Principal of BPS Consulting and instructor at the University of California, San Diego Extension.
Over the last 10 years, many companies have combined the principles of Six Sigma with those of Lean manufacturing, creating a hybrid strategy. Six Sigma has grown beyond its manufacturing roots to banks, government agencies and insurance companies. “It has spread from manufacturing to all organizations that want to focus better on what their end customer needs, and create an efficient use of resources whether they’re for profit or not. Everybody right now needs to contain costs and do things with less,” said Marshall.
Companies like McGraw-Hill, Kodak and GE have used the principles of Six Sigma to improve customer satisfaction, while improving their bottom line.
The McGraw-Hill Companies are global leaders in the publishing, financial services and media markets. Businessmen rely on subsidiaries Standard & Poor’s for research and rating information, and J.D. Power and Associates for marketing information on the automotive, insurance or financial sectors.
However, the company does more than publish books on Six Sigma; they implement it in their company processes as well. In fact, the President of their Aerospace & Defense division, Tom Henricks, is a Six Sigma Black Belt. With reach into so many sectors, it is essential to adopt streamlining strategies that improve costs while keeping the customers happy.
Eastman Kodak Company
Kodak began producing easy-to-use cameras over a century ago. Though the product line now includes cameras, film and imaging software for commercial and scientific industries, the underlying goal of these products is to make the tools of photography available to the masses for the lowest price possible. With manufacturing facilities all over the world, consistency is essential to produce a high-quality product, regardless of where the product was made. The company follows strict Six Sigma Black Belt standards to manufacture the high-quality film that bears the Kodak name and logo on the package. These stringent standards allow the company to create the premium film bases that consumers have come to expect.
GE, a leader in infrastructure, finance and media, is one of the most famous cases of Six Sigma success. Former GE Chairman Jack Welch adopted Six Sigma principles in 1996, with the goal of defect-free products by 2000. He encouraged Six Sigma participation company-wide by connecting training and results with bonuses and promotions. The approach was effective at all levels of the company. As a result, GE was able to improve customer and employee satisfaction and streamline the production process to save the company money and eliminate defects.
Although many companies have dabbled with the Six Sigma strategy, success is contingent upon the commitment to the process. Since Lean Six Sigma focuses on constant improvement, the participation of employees at all levels is essential to the project’s success. “The thing that has eroded the effectiveness of companies really embracing and incorporating this into their culture, is the omnipresent constant of change,” said Marshall. “Customers change, markets change, executives change and with that change erodes the culture of a consistent and efficient organization. Sometimes that effort starts, but then it regresses back into the normal pattern that the company or organization had before.”
Employees at McGraw-Hill, Kodak and GE have committed to the Lean Six Sigma principles that have allowed the companies to improve customer satisfaction while saving money. “It does take effort and the companies that stick with it will find that when the market goes up, and the economy goes up and down, they have the wherewithal, the flexibility and the margin to be able to swing with the economic changes,” said Marshall.