The six sigma black belt handbook

Part One:

The Six Sigma Management System

This first part of The Six Sigma Black Belt Handbook focuses on the

extension of Six Sigma into a management system that encompasses all

levels of an organization. Motorola University consultants have found

that while implementing Six Sigma through individual projects has produced significant results in many organizations, sustainable, breakthrough

improvements are realized by those organizations whose leadership has

embraced Six Sigma and incorporated it into their vision, strategies, and

business objectives - in short, adopted Six Sigma as the system for managing their organizations. The Six Sigma Management System enables a

leadership team to align on their strategic objectives, establish their critical operational measures, and determine their organizational performance

drivers and then use those to implement, drive, monitor, and sustain their

Six Sigma effort.

The four chapters in this part of the book will:

z Introduce the Six Sigma Management System, and distinguish it from

the Six Sigma metric and Six Sigma methodology

z Explain the background (Chapter 1), principles, and

elements of the Six Sigma Management System (Chapter 2)

z Describe the Six Sigma leadership modes (Chapter 3)

z Provide insights into Six Sigma leadership (Chapter 4)

z Illustrate key tools used to implement the Six Sigma Management

System

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The Six Sigma Management System

Management System

ySix Sigma drives strategy execution

yLeadership sponsorship and review

yMetrics driven governance process

yEngagement across the organization

Chapter

Introduction to Six Sigma

Six Sigma has been labeled as a metric, a methodology, and now, a management system. While Green Belts, Black Belts, Master Black Belts,

Champions and Sponsors have all had training on Six Sigma as a metric

and as a methodology, few have had exposure to Six Sigma as an overall

management system. Reviewing the metric and the methodology will

help create a context for beginning to understand Six Sigma as a management system.

Figure 1-1 Six Sigma as a Metric, Methodology, Management System

Six Sigma as a Metric

Sigma is the measurement used to assess process performance and the

results of improvement efforts - a way to measure quality. Businesses use

sigma to measure quality because it is a standard that reflects the degree

of control over any process to meet the standard of performance established for that process.

Management System Management System

Methodology Methodology

Metric Metric

Management System Management System

Methodology Methodology

Metric Metric

•

Metric

yMeasure process variation

Methodology

yConsistent use of DMAIC model

yTeam based problem solving

yMeasurement-based process

analysis, improvement, and control

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Source: The Six Sigma Black Belt Handbook

Sigma is a universal scale. It is a scale like a yardstick measuring inches,

a balance measuring ounces, or a thermometer measuring temperature.

Universal scales like temperature, weight, and length allow us to compare

very dissimilar objects. The sigma scale allows us to compare very different business processes in terms of the capability of the process to stay

within the quality limits established for that process.

The Sigma scale measures Defects Per Million Opportunities (DPMO).

Six Sigma equates to 3.4 defects per million opportunities. The Sigma

metric allows dissimilar processes to be compared in terms of the number

of defects generated by the process in one million opportunities.

Figure 1-2 Sigma Scale

A process that operates at 4.6 Sigma is operating at 99.9% quality level.

That means:

z 4000 wrong medical prescriptions each year

z More than 3000 newborns being dropped by doctors/nurses each year

z 2 long or short landings at American airports each day

z 400 lost letters per hour

A process that operates at the 6 Sigma level is operating at 99.9997%

quality level. At 6 Sigma, these same processes would produce:

4 Chapter One

Sigma

DPMO

(Defects Per

Million

Opportunities)

66810

6210

233

3.4

0.02

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Introduction to Six Sigma

z 13 wrong drug prescriptions per year

z 10 newborns dropped by doctors/nurses each year

z 2 long or short landings at U.S. airports each year

z 1 lost letter per hour

Mikel J. Harry, one of the developers of Six Sigma at Motorola, has estimated that the average company in the Western world is at a 4 Sigma

level, while 6 Sigma is not uncommon in Japan.1 Dave Harrold, in

Control Engineering 2 cites benchmark sigma levels broken down by

industry and type of process:

z IRS phone-in tax advise - 2.2

z Restaurant bills, doctors prescription writing, and payroll processing - 2.9

z Average company - 3.0

z Airline baggage handling - 3.2

z Best in class companies - 5.7

z U.S. Navy aircraft accidents - 5.7

z Watch off by 2 seconds in 31 years - 6

z Airline industry fatality rate - 6.2

Clearly, the value of sigma is its universal application as a measuring stick

for organizational and process quality. With sigma as the scale, measures

of as-is process quality and standards for should-be process targets for

quality improvement can be set and understood for any business process.

Six Sigma as a Methodology

The Six Sigma methodology builds on the Six Sigma metric. Six Sigma

practitioners measure and assess process performance using DPMO and

sigma. They apply the rigorous DMAIC (Define, Measure, Analyze,

Improve, Control) methodology to analyze processes in order to root out

sources of unacceptable variation, and develop alternatives to eliminate or

reduce errors and variation. Once improvements are implemented, controls are put in place to ensure sustained results. Using this DMAIC

methodology has netted many organizations significant improvements in

product and service quality and profitability over the last several years.

The Six Sigma methodology is not limited to DMAIC. Other problemIntroduction to Six Sigma 5

1 Harry, Mikel. "Six Sigma: The Breakthrough Management Strategy Revolutionizing the World's

Top Corporations." New York, N.Y. Random House Publishers, 2000.

2 Harrold, Dave, "Designing for Six Sigma Capability", Control Engineering, January 1, 1999

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Introduction to Six Sigma

solving techniques and methodologies are often used within the DMAIC

framework to expand the tool set available to Six Sigma project teams.

These include:

z Theory of Inventive Problem Solving (TRIZ)

z Lean

z Ford 8Ds (Disciplines)

z 5 Whys

z Is/Is Not Cause Analysis

Utilizing the sigma metric and marrying this variety of approaches with

the DMAIC methodology, the Six Sigma methodology becomes a powerful problem-solving and continuous improvement methodology.

Clearly, the use of a consistent set of metrics can greatly aid an organization in understanding and controlling their key processes. So too, the various problem-solving methodologies significantly enhance an organization's ability to drive meaningful improvements and achieve solutions

focused on root cause. Unfortunately, the experience of Motorola

University consultants has demonstrated that good metrics and disciplined

methodology are not sufficient for organizations that desire breakthrough

improvements and results that are sustainable over time.

In fact, conversations with organizational leaders who report dissatisfaction with the results of their Six Sigma efforts have shown their Six Sigma

teams have sufficient knowledge and skill related to good use of metrics

and methodology. However, all too often, these teams have been applying the methodology to low level problems, and have been working with

process metrics that don't link to the overall strategy of the organization.

It is this recurring theme that has driven Motorola University to develop

the concept of Six Sigma as a management system, first introduced in the

book "The New Six Sigma".

Six Sigma as a Management System

Six Sigma as a best practice is more than a set of metric-based problem

solving and process improvement tools. At the highest level, Six Sigma

6 Chapter One

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Introduction to Six Sigma

has been developed into a practical management system for continuous

business improvement that focuses management and the organization on

four key areas:

z understanding and managing customer requirements

z aligning key processes to achieve those requirements

z utilizing rigorous data analysis to understand and minimize variation

in key processes

z driving rapid and sustainable improvement to the business processes.

As such, the Six Sigma Management System encompasses both the Six

Sigma metric and the Six Sigma methodology. It is when Six Sigma is

implemented as a management system that organizations see the greatest

impact.

These organizations are among those that have demonstrated that breakthrough improvements occur when senior leadership adopts Six Sigma as

a management system paradigm.

z In 1999, ITT Industries implemented Value-Based Six Sigma

(VBSS), the company's "overarching strategy for continuous

improvement" (source: ITT Industries website). In the 2003 letter

to the shareholders, the then-Chairman, President, and CEO, Louis J.

Guiliano, wrote, "VBSS gives us the tools and discipline we need to

make fact-based decisions, to solve problems and to find solutions in

a systematic and measurable way. Now in its fourth year, the VBSS

strategy is already making a huge difference to our customers. The

thrust of our VBSS projects has shifted from simple initial shortterm projects that drive out costs and waste, to more comprehensive

projects that focus on making improvements that mean the most to

our customers. VBSS is generating many new ways of growing our

business and increasing our capacity, as well as saving millions of

dollars. It is a key contributor to our robust cash flow performance.

As our VBSS project leaders grow in numbers and in expertise -

more than 10 percent of our 39,000 employees are now certified as

Champions, Black Belts or Green Belts - they are increasingly

focused on projects that are changing the way we do business in

profound and enduring ways. Through the combined efforts of the

Champions, Black Belts, Green Belts, and the teams they lead, we

Introduction to Six Sigma 7

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Introduction to Six Sigma

are seeing real progress in the quality of the products and services

we are providing to customers. We are shortening cycle times,

reducing lead times, and eliminating excess inventories; we are

meeting or exceeding on-time delivery commitments, and dramatically reducing defect rates. Our customers have noticed these

improvements, and we see this reflected in enhanced customer loyalty and market share position. More than that, our employees gain

satisfaction from working on these teams."

z General Electric started its quality focus in the 1980s with WorkOut. Today, Six Sigma is providing the way "to meet our customers'

needs and relentlessly look for new ways to exceed their expectations. Work-Out® in the 1980s defined how we behave. Today, Six

Sigma is the way we work. Six Sigma is a vision we strive toward

and a philosophy that is part of our business culture. It has changed

the DNA of GE and has set the stage for making our customers feel

Six Sigma." (source: General Electric website)

z Raytheon has used Six Sigma to cut billions of dollars in costs,

improve cash flow and profits by millions, improve supplier and

customer relationships,and build internal knowledge networks.

"Raytheon Six Sigma™ is the philosophy of Raytheon management,

embedded within the fabric of our business organizations as the

vehicle for increasing productivity, growing the business, and building a new culture. Raytheon Six Sigma is the continuous process

improvement effort designed to reduce costs." (source: Raytheon

website)

z Honeywell views its Six Sigma initiative (called Six Sigma Plus) as

the way to maintain its position with its customers as a premier

company. "At Honeywell, Six Sigma refers to our overall strategy

to improve growth and productivity as well as a measurement of

quality. As a strategy, Six Sigma is a way for us to achieve performance breakthroughs." (source: Honeywell website)

z Valley Baptist Medical Center (Harlingen, TX) has incorporated Six

Sigma Quality as one of its Seven Strategic Initiatives. The hospital

has been recognized with a number of national awards, including the

"Top Performer" in the country for the overall quality of physician

care in the emergency room. (Award presented by independent

marketing research firm Professional Research Consultants.) James

G. Springfield, President and CEO of Valley Baptist Health System,

says they have made Six Sigma the company's system for

operations. (source: Valley Baptist Health System website).

8 Chapter One

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Introduction to Six Sigma

These and other organizations have discovered that successful practice of

Six Sigma requires the adoption of a management system to strategically

guide their Six Sigma programs. The next chapter will explore the principles behind the Six Sigma Management System, as developed by

Motorola University consultants to guide their clients to build strategic

management systems and achieve breakthrough results.

Introduction to Six Sigma 9

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Introduction to Six Sigma

Chapter

Foundations of the Six Sigma

Management System

The Six Sigma Management System is robust, and designed to guide any

organization's performance improvement initiatives at all levels. This

management system:

z is built on the business process model of organization structure

z uses a data-driven management approach based on an unique operational measurement system

z is centered on a model of a high-performing, ethical leadership team

z applies a team-based model as its fundamental work unit.

Six Sigma's Business Process Management Model

Six Sigma as a management system incorporates the business process

management (BPM) model. The Six Sigma Management System treats the

business process as its fundamental organizational building block. The

business process is the operational unit that is measured, managed, and

continuously improved through the Six Sigma Management System.

The BPM model is best understood when contrasted with the classic functional model of management. In this classic model, the building block of

an organizational unit is the functional department. Before 1990, most

American companies operated their businesses in functional silos and

basically ignored the ideas of business process management. In the minds

of functional management, process design involved writing policy and

procedure manuals for functional departments to follow.

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Source: The Six Sigma Black Belt Handbook

Motorola invented and pioneered Six Sigma in the late 1980s. In the

1990s, leading businesses, including Motorola, turned to process reengineering to compete in markets that were exploding with improvement in

the variety and quality of customer choices. Markets had changed from

supplier-driven, push-controlled to customer demand-controlled dynamics. As these leading companies experimented and developed their understanding of process management and redesign, their leaders' vision

evolved from a focus on managing specialized functional divisions of

labor to the focus on managing business processes. BPM became their

fundamental operating model. Through years of effort and work with

BPM, they invented continuous process improvement as an operational

strategy that combined the strengths of the Six Sigma improvement

methodology and the BPM model.

Motorola and a few other global technology giants led a dramatic change

in the fundamentals of how goal-driven organizations are designed and

operated. They fought against a 150-year practice of designing organizations exclusively with the hallowed building blocks of the discrete functional departments - accounting, manufacturing, marketing and sales, etc.

Instead, these leaders chose the "business process" as their organizational

building block. Through trial and success, these companies have demonstrated the supremacy of the business process as the fundamental building

block and the management unit to measure and control in high performance companies.

The process was a more natural unit to manage in the manufacturing companies that led the revolution than in the service businesses and government agencies that have since adopted the continuous process improvement strategy. Motorola, GE, Raytheon, and others began their process

improvement efforts in their manufacturing operations with a goal of

improving the quality and reducing the cost of their products. In manufacturing, these companies all achieved a very impressive, breakthrough

level of success that proved the viability of BPM and continuous process

improvement using Six Sigma methods. Billions of dollars were saved

and customers were delighted with the quality and value of the products

they received. AlliedSignal's Raymond C. Stark, Vice President of Six

Sigma & Productivity, attributed Six Sigma practices with saving the

company $1.5 billion between 1994 and 1998. 1

12 Chapter Two

1 Harrold, Dave, "Designing for Six Sigma Capability", Control Engineering, January 1, 1999

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Foundations of the Six Sigma Management System

But, at Motorola and GE, the application of BPM and Six Sigma continuous process improvement was not limited to the manufacturing arena.

GE launched a corporate wide quality improvement strategy in 1995 when

Jack Welch, Chairman and CEO, committed GE's empire to reach Six

Sigma quality by the year 2000. Welch was quoted in 1997 that he expected his managers to be "committed zealots" of Six Sigma. The following

year the company credited Six Sigma with adding $300 million to 1997

operating income. 2

In that time period, Motorola's leadership worldwide embarked on the

redesign, in fact, the redefinition of the total set of core business processes that had to be managed and improved to compete and survive in the

changing global marketplace.

Motorola's core business process redesign experience enhanced and

extended the definition of a process from a "manufacturing process" to a

true "business process". In the broadest sense, a process is a structure for

action to achieve predetermined goals. The classic definition, from

Thomas Davenport, in Process Innovation, 3 states that a process is:

The key elements in this definition include structured and measured activities done in a specific ordering. A process must be bounded by a beginning and an end with clearly identified inputs and outputs. Those elements of the definition of a process remain fundamental to all process

improvement work, especially Six Sigma. However, from the Motorola

experience, a "business process" has come to have even richer meaning

and greater utility as a conceptual tool for process management and continuous process improvement.

The most fundamental characteristic of a "business process" is not the

individual structured measured activity or its inputs and outputs. It is the

synchronization and coordination of structured, measured activities that

tie them into business processes. That synchronization and coordination

is typically accomplished through managing the flow of information

through the "business process".

Foundations of the Six Sigma Management System 13

2 Bylinsky, Gene, "How to Bring Out Products Faster", Fortune, November 23, 1998

3 Davenport, Thomas H., "Process Innovation, Reengineering Work Through Information

Technology", Harvard Business School Press, 1993

"A structured, measured set of activities designed to produce

a specified output for a particular customer or market. … A

process is a specific ordering of work activities across time

and place, with a beginning, an end, and clearly identified

inputs and outputs."

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Foundations of the Six Sigma Management System

This enhanced understanding of the "business process" allows organizations today to manage and improve core business processes and business

service processes. A "service process" is seen as coordinated set of collaborative, transactional activities that deliver value to customers.

A "core business process" is typically strategic to the survival of an organization and is:

z large, complex, and long-running. A single instance of a process

such as "order fulfillment" or "design and develop new product"

may run for months, or even years.

z multi-dimensional, with end-to-end flows involving materials, information, and even internal and external business commitments.

z widely distributed across traditional organizational boundaries both

within and even between organizations.

When Motorola, GE, and other leaders began their efforts to redesign and

redefine their businesses in terms of processes, their businesses were

made up of processes in an organic or unmanaged state. These same

organic process conditions continue to be encountered by every organization that is beginning the Six Sigma journey into process management and

continuous process improvement.

Organic processes in their unmanaged state share many characteristics

which make them difficult to deal with, at least initially.

z Cross-functional organic processes exist inside all large organizations, even those that are functionally managed. These processes are

implicit, accepted, and mostly unmeasured, having evolved within

the history of the organization.

z Organic processes are functional, producing some successful output

units, but are uncontrolled and unreliable in terms of the quality and

productivity they generate.

z Organic processes fiercely resist efforts at managed change, due to

the threatening nature of moving from a trusted order to an unknown

new order.

z Organic processes are difficult to see inside any organization that has

not consciously designed or explicitly documented their processes.

14 Chapter Two

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Foundations of the Six Sigma Management System

z Organic processes interact with other processes. They divide and

combine with one another as their undefined boundaries change.

z Organic processes evolve through:

- unplanned changes and series of small adjustments in their

internal activities, and

- the acquisition or loss of process participants and their capabilities.

z Organic processes are often partially automated. For the sake of

speed and reliability, routine or mundane activities are performed by

computers wherever possible. Automated components of organic

processes are normally the result of the one-to-one conversion of

original manual activities into automated activities.

z In organic processes, people perform the tasks that are too unstructured to delegate to a computer or that require personal interaction

with customers.

z Quality and productivity are often dependent on the intelligence,

judgment, and efforts of individuals.

z People interpret formal and informal information flowing though the

process, make judgments, and act to solve perceived internal or customer related problems.

z People modify processes to adapt to varying requirements. This

makes processes dynamic and adaptive to demands from customers

and unstable with variable output quality and quantity.

Through Six Sigma process improvement methodologies, organic

processes are restructured, made explicit and visible, and ultimately, are

brought under control. Motorola's people and leadership went through

great struggles to accomplish this. Every Motorolan felt the stress of this

enormous Six Sigma process redesign challenge, as safe traditional roles

in organic processes were peeled away to build the new order of core

process management. Today, as part of the Six Sigma Management

System, leaders who are in charge of segments of Motorola's business

operations are given the title of "Process Owner" and tasked with the continued maintenance and improvement of the processes they own.

The Six Sigma Management System has adopted BPM as the model for

creating and deploying processes as fundamental organizational business

units. Today, organizations that practice Six Sigma management treat

their processes with great care and combine continuous process improvement with planned life-cycle process management. Managed processes

Foundations of the Six Sigma Management System 15

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Foundations of the Six Sigma Management System

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