The foundation of any business is in its processes. Inefficient or broken systems can be unnecessarily costly and time-consuming for the business ultimately increasing the expenses and eating into profits. For this reason, it is vital for a business to analyze and improve its existing processes from time to time to optimize efficiency in the delivery of products or services and remain competitive. Analyzing business processes helps the business owners to identify where a process needs fixing, improvement, or even replacement.
The primary goal of business process improvement regardless of the methodology adopted is to reduce waste, increase productivity, and maximize profits. Process improvement can be done in small increments with a long-term focus on delivering high value. The business needs to put in place parameters for tracking and evaluating the outcome of the improvements against business objectives.
One of the widely adopted business process improvement techniques is the Six Sigma principles. To master the six sigma principles and apply them in real business processes, you need to be familiar with six sigma methodologies. Consider taking the Lean Six Sigma training which aims at building practical knowledge around six sigma principles and methodologies.
What Is Six Sigma?
Six sigma is a business process improvement approach aimed at eliminating errors and defects from processes to deliver high-value output that increases customer satisfaction. This technique uses statistical methods to identify and minimize variability in business processes to enhance quality through consistency. To minimize variability, any of the two six sigma approaches can be used depending on whether an existing system is being improved or a new one being created.
DMAIC acronym represents phases during the improvement of an existing process.
- Define - define the problem and the objectives
- Measure - measure the current performance of the process. Common measurement techniques are the Defects Per Million Opportunities (DPMO) and Process Sigma. The target of six sigma projects is to achieve 3.4 defects per million opportunities over time.
- Analyze - Analyzing the process to identify the root cause of variations and defects. Types of analysis done during this phase include root cause analysis (RCA) to identify defects causes, Failure mode effects analysis (FMEA) to identify process failures, and multi-vari charts to identify variations in processes.
- Improve - Improve performance by addressing root causes to produce fewer variations.
- Control - Control the improved process by addressing/preventing variations to eliminate defects and improve process performance.
DMADV is also a six sigma data-driven process improvement cycle for developing new processes in a way that no variations are experienced and defects not produced.
- Define - Defining the goal of the process including standards and metrics that align with customers’ important needs.
- Measure - Applying the defined standards and metrics to determine what the customer thinks is important in the new product which is what forms the CTQs (Critical to Quality).
- Analyze - Analyzing the CTQs to come up with functional specifications. During this stage, possible sources of defects are identified and a baseline for improvement created.
- Design - From the results of the previous processes, a design is arrived at that matches customer requirements. At this point, any further adjustments that might be required are made after which the design is developed into a prototype.
- Verify - Ascertaining that the new prototype meets customer requirements.
The Importance of Six Sigma Principles
At the core, six sigma is customer/product-focused. The six sigma principles are focused on meeting customer requirements by eliminating waste and variations in processes. Adopting the six sigma approach for business process improvement has the following benefits.
● Enhanced productivity
● High-quality production
● Increased customer satisfaction
● Reduced operation/production cost
● Efficient processes
● Boosted employee morale
The Six Sigma Principles
Successful adoption of the six sigma approach is based on 7 core principles which are:
1. Focus on the customer
The ultimate of the six sigma approach is to improve processes, productivity, and quality. Quality is defined from the perspective of the customer. This means that a process, product, or service that will meet customer requirements and deliver value while at the same time enabling the business to deliver this very value through efficient processes will have passed the quality test. It is important to note that customers can be external or internal. All other factors including cost and time should be considered in line with meeting customer needs.
2. Identify and understand how work is done (Value stream)
Process improvement cannot take place without an understanding of how processes are designed to work as well as the knowledge of how they are actually working. At this point, process mining comes into play. Process mining is the technique used to collect systems data to analyze, monitor, and improve processes. Through process mining what happened during a process and at what point can be identified. This is then visualized in the form of a process map for example a workflow chart, which is what reveals the cause of variations and defects. One common cause of variations in processes is the bottleneck. A bottleneck is an area within a process that underperforms and affects the performance of all other areas negatively.
3. Streamline the process flow
Streamlining is not only about proactively addressing the root cause of variations to improve process flow, it is also about monitoring processes and constantly looking for ways to optimize them. Streamlining processes should be done with cost, time, and scope factors. Part of managing process flow is distinguishing between tasks that add value and those that do not.
4. Reduce waste and work on value addition
This principle makes use of lean six sigma techniques of adding value to the day-to-day processes and minimizing waste to nil. This involves finding ways of reducing waste in overproduction, defects, unutilized talent, waste of rework, extra processing, inventory, transportation, and motion. Several approaches can be adopted to holistically address waste reduction. This may include making it visible, inculcating a culture of awareness and accountability for waste, measurement, and eventually reducing waste.
Value addition can be achieved through waste reduction, in other words, eliminating anything that does not add value to the process.
5. Eliminate defects by eliminating variations
Eliminating defects is a part of process flow improvement along with waste reduction. Once root causes of variations have been identified efforts are made to improve the process to eliminate variation. When variation is eliminated, defects are also eliminated. One way of eliminating variations is through standardizing processes to produce standard products and/or services. A perfectly efficient process eliminates defects to 3.4 defects per million opportunities (DPMO).
Six sigma is an organizational approach that involves multiple teams and stakeholders through business processes for the production of products or services. Thus, six sigma can be achieved successfully through team collaboration. It starts with equipping all the teams involved with training on six sigma techniques and tools. This way, six sigma becomes a culture and everyone is empowered to spot and work against variations and defects.
7. Systematic and scientific efforts
Six sigma approach gives businesses the ability to make decisions and adapt their processes based on insights extracted from data. Thus, deliverables, tasks, and activities should be measurable. Through thorough problem solving and simplified process improvement, all teams get the opportunity to be actively involved with changes in processes with the goal of eliminating variations.
Six sigma allows businesses to focus on producing products and services with the customer in mind. It also helps teams to focus on eliminating variations and reducing defects ultimately reducing operation expenses and maximizing profits. It should be noted that process improvement is a continuous effort.