CXO

Project management 101: Understanding Six Sigma and its business value

Learn the basics about the project management concept Six Sigma, which drastically reduces defects, waste, and time while lowering costs and enhancing customer satisfaction.

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Image: iStock/ileezhun

Six Sigma is a project management term that often surfaces within the business world when it comes to excellence and quality, but what does it mean, and how does it benefit businesses and stakeholders? Here's an overview.

SEE: Quick glossary: Project management (Tech Pro Research)

What is Six Sigma?

Six Sigma is essentially a data-driven approach that's aimed at creating process and product excellence by drastically reducing defects, waste, and time while lowering costs and enhancing customer satisfaction. The term Six Sigma means that 99.99966% of all output is expected to be defect free.

The term Six Sigma was first coined in 1986 by a Motorola engineer named Bill Smith. Six Sigma was registered as a Motorola trademark on December 28, 1993.

Motorola in 2005 combined lean project management with the traditional Six Sigma approach, creating opportunities to address redundancy issues and cut costs. Since implementing Six Sigma, Motorola was able to achieve $16 billion in savings.

Since then many other organizations have adopted Six Sigma, including Honeywell and General Electric. GE's former CEO Jack Welch is quoted as saying that Six Sigma is "a quality program that, when all is said and done, improves your customer's experience, lowers your costs, and builds better leaders."

How Six Sigma helps create operational excellence

These are some of the ways Six Sigma helps companies create operational excellence.

  • In conjunction with business strategy, Six Sigma helps companies quickly zoom in on problem areas that require improvement.
  • Six Sigma can greatly expedite processes.
  • Six Sigma creates opportunities to get a product to market faster.
  • Six Sigma creates opportunities to increase productivity and output.
  • Six Sigma reduces operating costs through improved efficiencies.
  • Six Sigma increases customer satisfaction by delivering higher quality.
  • Six Sigma increases employee job satisfaction and retention by reducing rework.

Six Sigma methodologies

There are the Six Sigma methodologies: DMAIC and DMADV or DFSS.

DMAIC is used for existing processes, and maximizes and stabilizes business processes and designs.

  • Define: Identifies problems or objectives that need attention
  • Measure: Provides a measure of the problem or process
  • Analyze: Identifies the root causes of any deficiencies and opportunities
  • Improve: Finds solutions to address problems
  • Control: Implements and maintains improvements for sustainability

DMADV is used for new processes, products, or services.

  • Define: Identifies problems or goals that need attention
  • Measure: Provides a measure of customers' needs
  • Analyze: Identifies the process that meets customers' expectations
  • Design: Develops a process to meet customers' needs
  • Verify: Confirms the ability to meet customers' requirements

DFSS (Design For Six Sigma) is used for developing or redesigning a net new product or service and involves these steps:

  • Define: Determines what the customers does and doesn't need
  • Identify: Identifies specifics about the customer and the project
  • Design: Develops processes to meet customers' expectations
  • Optimize: Identifies abilities to deliver and maximize design elements
  • Verify: Testing and validation of any deliverables

Six Sigma's five belt levels

There are different levels of Six Sigma project professionals who are key to the attainment of operational excellence. These Six Sigma professionals are categorized into "belts," or levels based on their capabilities, roles, and contributions.

  1. Master Black Belts tend to be more at the program level and provide coaching for Black Belts and Green Belts. They are also responsible for determining strategy and developing KPIs.
  2. Six Sigma Black Belts are charged with leading projects that solve high-level problems and also provide coaching to team members.
  3. Green Belts help collect information/data and provide any necessary analysis. They also provide leadership for Green Belt project teams.
  4. Yellow Belts are typically project members who assist with process improvements and provide project support.
  5. White Belts provide team level problem-solving support, but they aren't directly part of the Six Sigma project team.

Edge out the competition by adopting Six Sigma

It's increasingly difficult for businesses to be competitive because of global factors like regulatory and legal hurdles and elevated customer expectations; however, companies are still under pressure to demonstrate operational excellence.

Businesses that endeavor to adopt Six Sigma can develop a big advantage over their competitors by staying in front of issues. Remember: Improvements in business are an ongoing effort and don't happen overnight.

Also see

About Moira Alexander

Moira Alexander is the author of "LEAD or LAG: Linking Strategic Project Management & Thought Leadership" and Founder & President of Lead-Her-Ship Group. She's also a project management and IT freelance columnist for various publications, and a contr...

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