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What is Six Sigma?

November 25, 2014

Most manufacturers have heard of Lean and Six Sigma. Several have successfully leveraged these proven process improvement methodologies to raise productivity, increase the bottom line and improve quality and the customer experience. Unfortunately, many manufacturers and businesses in general have still not discovered the value of Lean Six Sigma. There are many reasons organizations do not use Lean Six Sigma. Some are valid. Many are misconceptions. Still others are pure fiction.

Lean focuses on value through the relentless elimination of waste and acceleration in the velocity of processes. Its origins can be traced to Henry Ford of Ford Motor Company and Taiichi Ohno of Toyota. Value is defined in terms of what is important to the customer. Value-add work is something your customer is willing to pay for. For example, does the task add a desired function or feature to the product or service? Or does the task enable a competitive advantage (faster delivery, fewer defects, lower price)? Non-value work, or waste, includes activities the customer is not willing to pay for.

There are eight commonly known forms of waste that can be remembered using the acronym DOWNTIME:




Non-Utilized Talent


Inventory (too much or too little)


Excess Processing

Increasing the velocity of processes is not about working faster, but speeding up the entire end-to-end process or lead time. Think of lead time as the time it takes once you order a book from Amazon to the time you receive the book.

Six Sigma is a well defined, customer focused management system that strives for the delivery of near-perfect products or services. Six Sigma's goals are to reduce defects and variation so that processes are more consistent and predictable. Originated by Motorola in the 1980s, Six Sigma translates into 99.9997 percent quality or yield. Dial tone of traditional landline phones, for example, was designed to be available 99.9997 percent of the time. Like Lean, Six Sigma places the customer first. It embraces data to make sound decisions. What has made Six Sigma so popular is the money it has saved companies. According to Praveen Gupta, "Companies have reported saving in the billions of dollars. No other methodology comes close to Six Sigma for savings."

What is "sigma"? The Greek letter Sigma (σ) is a statistical term that measures standard deviation or how far a given process deviates from perfection. The "six" comes from the goal of fitting six standard deviations between the mean and the nearest customer specification or target. To achieve Six Sigma quality (99.9997%), a process must produce no more than 3.4 defects per million opportunities. A "defect" is anything outside of customer specifications. An "opportunity" is defined as the total number of steps in a process where a defect can occur. The central idea behind Six Sigma is that if you can measure how many defects you have in a process, you can systematically figure out how to eliminate them and get as close to zero defects as possible. This means we need to be nearly flawless in executing our key processes

The best way to describe Sigma may be in terms of human behavior. When we start a new job, enter college, enroll in a training program, open up a new business or even try a new sport, humans generally are operating between 1.5 and 2.0 Sigma on a scale of 0 to 6. In other words, people begin by making errors about 30 to 50% of the time. We learn from our errors, and then improve our performance to an acceptable level. Type "A” personalities strive for 3+ Sigma performance or an error level 5% or less. They're asking questions, taking notes, and practicing their skills. Human behavior can be pushed to Sigma levels above 4 through simple checklists, mistake-proofing or poka-yoke techniques, visual management, and standardized work. Only through machine automation can we can achieve nearly error-free performance to the level of 6 Sigma.

Six Sigma follows a proven, closed-loop framework for tackling problems. It consists of five phases known as DMAIC: Define, Measure, Analyze, Improve, and Control. One of the key tenants that makes this framework work is the methodical discipline of identifying the most significant root causes of a problem before implementing solutions.

DMAIC methodology

Source - Apex Global

When we combine Lean and Six Sigma, we get something powerful -- a business improvement methodology that maximizes shareholder value by achieving the fastest rate of improvement in Cost, Quality and Customer Satisfaction. It focuses on reducing waste by streamlining operations and reducing defects (i.e., services not delivered on-time or within budget).

If you are keen to learn more about Six Sigma then check out the Six Sigma Green Belt Certification course details that will give your career the much-required boost.


About the Author

Trusted by Fortune 500 Companies and 10,000 Students from 40+ countries across the globe, it is one of the leading International Training providers for Finance Certifications like FRM®, CFA®, PRM®, Business Analytics, HR Analytics, Financial Modeling, and Operational Risk Modeling. EduPristine has conducted more than 500,000 man-hours of quality training in finance.

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