WHAT IS SIX SIGMA?

Donald P. Lynch, Ph.D.

University of Michigan Center for Professional Development

Abstract: Six Sigma has burst onto the business world organization) who receives a product, service or
scene and has commanded the attention of industry information. An opportunity is defined as, every
leaders and Wall Street analysts alike, by posting occasion to do something “right” or “wrong.” Six Sigma
impressive success stories regarding improving the represents the commitment to our customers that ensures
bottom line of many different types of organizations. the results of each opportunity meet customer
While Six Sigma has become a common methodology, expectations.
engrained into many organizations that have
embraced it, several others still grapple with what Six Six Sigma the metric, comprises the ideas of Six Sigma as
Sigma actually is. This paper will focus on providing a goal, level of performance, statistical measurement,
an introduction and overview of Six Sigma to answer metric or benchmark. This view is most popular from a
the question, what is Six Sigma? quantitative point, because it provides a standard unit of
measure for calculating variation in our products and
Key words: Six Sigma, business process improvement, services. The metric is often even extended to represent a
continuous improvement very specific goal of 3.4 DPMO (defects per million
opportunities). The standard unit of measure can be used
I. INTRODUCTION to compare processes, business units and furthermore
organizations.
Six Sigma has become part of our everyday vocabulary as
its popularity has grown in today’s business environment. Six Sigma the methodology, comprises the ideas of Six
For those who work in an organization that has embraced Sigma as a methodology, systematic approach, set of
Six Sigma, the term is clear and the methodology is well statistical tools and a vehicle for customer focus,
understood. However, others are still trying to figure out breakthrough improvement and people involvement. This
exactly what Six Sigma is, and how it may be able to help viewpoint is really the “how” for the “why” – vision and
them reach their goals. “what” – metric. Six Sigma as a methodology is the step-
by-step approach to reduce variation, in everything we do
to improve customer satisfaction. This approach follows
A. What is Six Sigma? a methodology sometimes referred to as the Breakthrough
Strategy, and utilizes a set of tools to accomplish the
One of the reasons it has been so difficult for those not results in a project environment with dedicated personnel.
working in an organization that has embraced Six Sigma
to really understand it, is because Six Sigma means These three categories of Six Sigma can be summarized
multiple things. The term Six Sigma is used into a couple of phrases. Six Sigma is a business process
interchangeably to reflect a vision, philosophy, that allows companies to drastically improve their bottom
commitment, goal, level of performance, statistical line, by designing and monitoring everyday business
measurement, metric, benchmark, methodology, activities in ways that minimize waste and resources,
systematic approach, set of statistical tools, and a vehicle while making fewer mistakes in everything they do,
for customer focus, breakthrough improvement and eliminating lapses in quality at the earliest possible
people involvement. These different definitions can be occurrence. It provides specific methods to re-create the
summarized in three main categories; Six Sigma the process, so that defects and errors never arise in the first
philosophy, Six Sigma the metric and Six Sigma the place. Six Sigma represents extraordinary sense - not
methodology. ordinary or common sense. [1]

Six Sigma the philosophy, comprises the ideas of Six Six Sigma distinguishes itself as a business improvement
Sigma as a vision, philosophy and commitment. Used in methodology from prior quality improvement
this fashion, Six Sigma is a direction for everyone to methodologies, in that it supports the improvement in
follow and reflects of way of doing business. A customer quality and customer satisfaction only as a means to an
is defined as anyone (internal or external to the end – to improve the bottom line of the organization. It
accomplishes this by defining the goals of the business,
and defining performance metrics that tie to the business active in Six Sigma. Continued steady growth in
goals. Six Sigma then uses performance metrics based manufacturing organizations is anticipated. An even
projects that will yield clear business results, by applying more rapid expansion into transactional applications is
advanced quality and statistical tools to achieve believed to stem from the fact that historically there has
breakthrough financial performance. These results are been little emphasis on measuring these types of
attained using dedicated, focused, qualified personnel processes, leaving an even greater potential for savings.
working in a project environment.

II. DISCUSSION B. The Six Sigma Methodology

A. History and Business Case As previously stated, the sigma level corresponds to the
level of performance within a process, and Six Sigma as a
In 1979, Six Sigma was initiated at Motorola in response metric corresponds to 3.4 DPMO or a yield of
to declining performance, due to quality issues. Motorola 99.99966%. With regards to process performance in Six
changed the current paradigm regarding quality and Sigma, this is considered almost perfect. Listed below in
profitability. Motorola proved that the highest quality Table I am a summary of various sigma levels with their
producer could also be the lost cost producer, by corresponding DPMO and yield.
developing a system centering on eliminating defects
rather than detecting them. By 1993, most of Motorola's Table I. Sigma Level Table
facilities were operating at levels near Six Sigma. During
the same period Motorola’s sales productivity had Sigma Level DPMO Yield
increased from $68.9K to $110.1K per employee and
1 691,462 30.9%
USA savings from operations improvements increased to
2 308,537 69.1%
more than $2.2 billion. [1]
3 66,807 93.32%
Former General Electric CEO, Jack Welch is probably the 4 6,210 99.379%
most famous backer of Six Sigma. Lawrence Bossidy, 5 233 99.9767%
Allied Signal, originally introduced GE to Six Sigma. In 6 3.4 99.99966%
1995, Jack Welch mandated that each GE operation work
towards achieving Six Sigma. He described Six Sigma as A basic premise of Six Sigma is that a yield of 99% or 3.8
…“the most important initiative GE has ever undertaken.” Sigma is no longer an acceptable level of process
GE’s margin increased from 10% in the decades prior to performance. When the cost of operating a manufacturing
1995, to 13.6% in 1995 and 16.7% in 1998. In 1997, Six or transactional process at 3.8 Sigma is calculated, the
Sigma delivered $300 million to GE’s operating income. numbers are often astronomical. The idea behind Six Sigma
[1] is a constant never ending journey toward perfection in our
processes, by application of the Six Sigma methodology.
Based on the financial performance of Motorola, General
Electric and many other subsequent organizations a Historically, most companies operate between 2 and 4
typical payback model has been developed for each Sigma level. At this level, they are applying the basic
dedicated Six Sigma project leader (termed Black Belt). quality tools and may even have formal quality systems, but
Each Six Sigma Black Belt is presumed to be capable of fail to see the breakthrough improvement they desire.
delivering $250,000 hard dollar cost savings per project, Companies are typically stuck at this level, due to a number
and execute 4 projects per year, contributing $1 Million of issues including; past success has bred arrogance,
each year to the bottom line. dependence on inspection and rework, reliance on trial and
error methods of problem solving, emphasis on fire fighting,
Since its inception, numerous companies have joined the minimal focus on quality measurements, and because of
Six Sigma ranks including companies such as Texas functional silos that inhibit collaboration.
Instruments, Bombardier, Nokia, Ford, Visteon, Kodak,
Toshiba, Dupont, Dow Chemical, Johson Controls, Lear, In order to breakthrough this performance level and achieve
etc. Historically, the bulk of companies involved in Six the type of performance they desire, these companies,
Sigma have been manufacturing oriented. However, most trapped between 2 and 4 Sigma, need to change their culture
recently there has been a surge of organizations from the to one that values a high level of process knowledge. They
service / transactional sectors. Financial companies such need to be open to challenge the status quo, and have
as American Express, Citicorp, Merrill Lynch and First of conviction in the opportunity to improve with belief in the
America now have formal Six Sigma efforts. Additional Six Sigma methodology. It is necessary to have driven
transactional-based companies, e.g. Hyatt, Starwood personnel, and to dedicate them to the business of process
Vacation Properties, Home Depot, Sears, are currently improvement, providing them with the new skills, tools and
information to make a difference. Lastly, they need to The key to understanding the relationship between the
reinforce new behaviors for managers that support and process inputs and outputs is the analysis of data. Data
reward the new culture. This transformation is one of provides a common language in order to make better
moving from dealing with processes as an art form, in a decisions. It allows communication to occur in an objective
firefighting mode, with chaos and waste, to one that is manner and provides the facts to continue problem
science / knowledge based, in a preventive / problem solving resolution, including justifying the extension of the solution.
mode, with good decision making based on facts and data. In short, data builds knowledge. There are seven levels of
This transformation is often called the operational analysis of data, as indicated in Table II, and Six Sigma
excellence leap. encourages continual advancement in the levels of analysis.

After organizations make the operational excellence leap, Table II. Seven Levels of Data Analysis
they will hit another wall at 5 Sigma. This is an indication
that their processes are operating as effectively and Level Description of Analysis
efficiently as possible, without major re-design and re- 1 Experience and Intuition
configuration. This is often called the Design for Six Sigma 2 Collect Data but only Look at the Number
(DFSS) wall. Since the majority of defects are designed into 3 Graphical Data Analysis
processes, most processes will not be able to obtain 6 Sigma 4 Descriptive Statistics on Census Data
with re-design. However, at this point there has been such 5 Descriptive Statistics on Sample Data
considerable savings due to improvements, it is not difficult 6 Inferential Statistics on Sample Data
to justify the expenditure required to invest in re-design. 7 Math Modeling and Development of Predictions
As previously stated, Six Sigma allows for organization
transformation by developing the culture that supports C. What Makes Six Sigma Different
continuous improvement based on financial gains.
Acquiring highly trained and superior skilled project leaders, Six Sigma methodology as a business improvement strategy
called Six Sigma Black Belts, to lead process improvement is different from prior quality improvement strategies, due to
projects, achieve this transformation. One by one, these a number of reasons. While many other improvement
projects improve process potential, improve customer strategies stressing leadership commitment, competence and
satisfaction and eliminate waste, providing a means to the involvement, provided a methodology, were team based and
end of improved financial performance of the organization. focused on proactive, data driven problem solving, they
The Black Belts are trained in Six Sigma methodology and missed some key points. Six Sigma speaks the language of
statistical thinking, and are given the tools to operate in their executives, money. Six Sigma projects improve process
roll dedicated to process improvement. Black Belts are the performance and customer satisfaction only as a means to an
backbone of Six Sigma, leading teams comprised of end, financial performance. Six Sigma also differs in that it
personnel from functional responsibilities to improve the operates in a project type environment, with the highest
process. Six Sigma Black Belts are supported by a number potential employees dedicated to improving process
of other positions including Master Black Belts, Green performance. Lastly, no other predecessor to Six Sigma has
Belts, Champions and Executives. placed the level of emphasis on the commitment to
continuous training realizing that the key to success is
When executing Six Sigma projects, the Black Belts analyze through education and knowledge.
the process to a deeper level than has been done previously.
Traditional focus on process monitoring has been on the
process output (also called Y, the dependent variable, effect, D. Cost of Quality
or symptom). Many current measurement and monitoring
systems have concentrated on inspecting and managing the Traditionally, emphasis to improve quality has been placed
process output, leading to a reactionary mode of operation on inspection. The issue associated with inspection, is that it
and poor results. Black Belts focus on the inputs to the is not typically 100% effective, and it is a non-value added
process (also called X's, independent variable, cause, activity that increases cost. At a typical manual inspection
problem). By focusing on the process inputs, and effectiveness of 80%, it would take 8 consecutive inspectors
understanding the relationship to the output, the Black Belt looking for the same defect, to inspect in Six Sigma level of
can often obtain the results desired from the output by quality. Obviously, this is not an effective method for
controlling the input variables. This is the key to the Black obtaining the process quality level desired. The Six Sigma
Belt's success, and is the objective of the statistical tools that approach is to improve quality, by eliminating the possibility
are used. By controlling the independent variables, of the defect ever occurring, rather than to inspect for it. In
breakthrough type improvements can be realized with the addition to being more effective and reducing cost this
dependent variables. approach is a break form the traditional cost of quality
model paradigm. The traditional cost of quality model
 includes a point of diminishing economic returns from Sigma, includes tangible quality costs of rejects, scrap,
investments targeted at improving quality. See Figure 1 for concessions, inspection, rework and disposition. This
the traditional cost of quality model. With this model the opportunity can also include some intangible costs such as
highest quality producer is not necessarily the lowest cost more setups, expediting costs, lost sales, lost customer
producer. loyalty, quality audits, improvement program costs, excess
inventory, long cycle times, engineering change orders and
Figure 1. Traditional Cost of Quality Model other abstract or difficult to measure items. Each time a
process defect must be detected, repaired and placed back
Defect Rate
into the process there is an opportunity from the wasted
Cost of Control time, money, resources and floor space. As previously
Failures

Cost
stated and depicted in Figure 3, Six Sigma refers to this as
the hidden factory. Six Sigma is about identifying,
Point of Diminishing
Economic Returns quantifying and eliminating the hidden factory in operational
From Investments and transactional processes.
To Improve Quality
Figure 3. The Six Sigma Hidden Factory

OK Final Test
Inputs Operation Inspect
Yield
NOT
Rework OK
Quality improvement Hidden Factory
Scrap
Six Sigma offers a break in the traditional paradigm,
where at higher quality levels there is not necessarily a
point of diminishing economic returns from investments
targeted at improving quality, see Figure 2 below. [1] This is E. Six Sigma Metrics
because the quality improvements are not based on
inspection and detection of the defects, but on eliminating In addition to the Sigma Level and DPMO metrics
the possibility of the defect ever occurring in the first place. previously mentioned, Six Sigma has also introduced new
metrics that are extensions from traditional process metrics.
Figure 2. Six Sigma Cost of Quality Model These additional new metrics are Rolled Throughput Yield
(Yrt) and Defect per Unit (DPU). In order to explain Six
Sigma metrics one must first grasp an understanding of
opportunities. An opportunity is characterized as every
Failures

Defect Rate
Cost

chance for a defect to occur. Typically, an opportunity is

Cost of Control
defined by each process step. However, they can also by
defined by each failure mode, transaction, transition,
movement or entry. Each process and product may have
many opportunities for defects. [2]
3σ
Defect per Unit (DPU) is the total number of defects that
4σ occurs in a particular process divided by the number of units
5σ
processed. It is important to realize that, based on the
6σ
number of opportunities; there may be more than one defect
per unit. The traditional approach to analyze defects is to
consider only the first defect detected on a unit. Since the
Quality improvement Six Sigma notion of defects is based on the Poisson
distribution, each defect that occurs must be noted and
This Six Sigma view demonstrates that the highest quality accounted for. Since Defect per Unit (DPU) compares
producer can, in effect, be the lowest cost producer. More processes for performance, it is a method for driving
simply stated it costs less to do things right the first time. organization-wide improvement focus through the analysis
of defects and attacking the processes with the highest DPU.
Six Sigma capitalizes on the new cost of quality model to
identify, bring out into the open and address some of the lost Rolled Throughput Yield is a derivative of throughput yield
opportunity from less than ideal process performance. This and first time throughput. The difference is that Rolled
opportunity, sometimes called the hidden factory in Six Throughput Yield is a cumulative indicator of first time
throughput. Many organizations only focus on yield at the Executives and Senior Leadership within a Six Sigma
end of the process, which may cause them to loose sight of structure will drive the implementation of Six Sigma
the rework that occurs within the process. Rolled publicly through their actions and words, and will set
Throughput Yield calculates the first time throughput at meaningful goals and objectives for the corporation with
each process step, and then multiplies them together to get respect to Six Sigma performance. These goals should be
an overall indication of the process capability. Rolled aligned with corporate strategic objectives and cascaded
Throughput Yield can also be calculated directly from the throughout the various functional organizations across the
DPU (Yrt=e-DPU) based on the Poisson distribution company. It is critical that the Executives tie their
assumption. Rolled Throughput Yield then becomes the organizational performance reviews and merit system
probability of a unit passing through the process defect free. directly to Six Sigma performance. Often there is an
This is a departure form the traditional yield metrics that executive charged with the responsibility for the
views yield as a ratio of good product over total product implementation / deployment of Six Sigma. This is usually
processed. Rolled Throughput Yield drives organization a Vice President position in an organization independent to
wide improvement focus through as a productivity measure. any of the functional areas. Some companies have included
Six Sigma in the quality area. However, this may send
Defects per Million Opportunities or DPMO are the number mixed messages regarding Six Sigma as a business
of defects that occur in a give process multiplied by one improvement process and not just another quality
million then divided by the total number of opportunities. improvement program. The Executive position is often
The total number of opportunities is equal to the number of termed Executive Champion or Director of Six Sigma.
opportunities for a defect multiplied by the total number of
units. This metric is a derivative of the traditional parts per The role of Six Sigma Corporate Deployment Director is a
million (PPM) metric, however it is calculated at each full time position charged with all aspects associated with
process step and cumulated as in the case of Rolled the deployment of Six Sigma. The Corporate Deployment
Throughput Yield. DPMO is also different from PPM in Director typically reports directly to the Executive Director
that it is based on the number of opportunities. Calculating and is responsible for developing the balanced scorecard on
the DPMO at each step and cumulating the results it the Six Sigma process. Six Sigma process metrics will
provides a method for capturing the true total process guide the administration of the Six Sigma program from a
capability. Calculating the DPMO based on the number of corporate level. Different companies have different degrees
opportunities provides a method for comparing dissimilar of autonomy and empowerment between the corporate Six
processes and taking complexity into consideration when Sigma Deployment Director and local deployment.
determining process capability. [2] However, some level of administration must occur at the
corporate level. Some organizations have local Deployment
The Sigma Level is the ultimate Six Sigma process Directors at a functional level.
capability measurement, and is calculated directly from
DPMO through the normal distribution or can be located in Typically, the Deployment Champion is a functional
a conversion chart. The Sigma Level can be determined as position within the functional areas of the organization. This
an overall group or organization capability measurement and position is ultimately responsible for the success of Six
allows for benchmarking within and across companies. Sigma within their organization. They regularly monitor
Most available literature regarding process performance is and report their organizational balanced scorecard metrics to
based on the Sigma Level scale. the corporate level. They are responsible for holding the
leaders in their organization accountable for the Six Sigma
The objective of Six Sigma is to track the trends in these performance, as well as for developing the reward and
metrics in order to establish a project baseline and ultimately recognition systems within their organizations. Companies
to document the performance after project completion. This differ as to whether the Deployment Champions are full time
difference in metric performance is used to substantiate the or part time in Six Sigma.
claims of improvements related to the project.
The Project Champion is a local project coordinator
position. The Project Champions are responsible for
F. Roles and Responsibilities selecting Black Belts, identifying projects, scoping projects,
assigning Black Belts and monitoring the Black Belt's
Leadership and support for the Six Sigma structure must project process. Typically, the Project Champion will
flow from the top down involving Executives, Senior coordinate a tollgate project review process to ensure that
Leadership, Deployment Directors, Deployment projects are progressing. During this process, the Project
Champions, Project Champions, Master Black Belts, Black Champions are responsible for holding the Black Belt
Belts, Green Belts and Team Members. accountable, eliminating barriers, providing resources and
coaching the Black Belts. Typically there is one Champion
for every three Black Belts. This position is normally part
time with respect to Six Sigma. Team members are the participants on the project team.
They work in conjunction with the Black Belt, stepping
Master Black Belts are trainers, facilitators and coaches in through the Six Sigma project process. Team members are
the Six Sigma process. They are full time on Six Sigma. specific to the project area and are part time in Six Sigma.
Master Black Belts have a unique blend of strong
quantitative, teaching, consulting and leadership skills. III. CONCLUSIONS
They are experts in the tools and in statistical methods.
Some organizations differentiate between deployment Six Sigma is a business process that allows companies to
Master Black Belts and project Master Black Belts. drastically improve their bottom line by designing and
Deployment responsibilities include organizing, developing monitoring everyday business activities in ways that
and instructing training, working on deployment issues, minimize waste and resources while making fewer mistakes
monitoring the deployment balanced scorecard, sharing best in everything they do, eliminating lapses in quality at the
practices, championing deployment related mega projects earliest possible occurrence. The benefits of Six Sigma are
and helping in the development of other Master Black Belts. well documented and are demanding the attention of
Project responsibilities include helping the champion to business leaders and Wall Street analysts alike. It is a
identify and scope Black Belt projects, assisting in project method that will change an organization's corporate culture
reviews, sharing best practices, certifying Black Belts and to one of continuous business process improvement, through
championing local mega projects. A Master Black Belt scientific measures leading to improved customer
should spend 10% of their time in training brining back new satisfaction, reduced waste and ultimately improved
skills and methods to the organization. Typically there is financial performance.
one Master Black Belt for every ten Black Belts.

The Black Belt is the backbone of the Six Sigma process. IV. REFERENCES
They are typically full time on Six Sigma however; some
organizations are experimenting with part time Black Belts. [1] Harry, Mikel and Schoeder, Richard, 2000, “Six
They are experts in Six Sigma strategy and lead project Sigma,” Doubleday Publishing a division of Random
teams. Black Belts should be selected by Executives, House, Inc., New York, NY.
Champions and Master Black Belts from a pool of the
company's highest potential employees. A Black Belt [2] Breyfogle, Forrest W. III, 1999, "Implementing Six
should be a visible advocate of the application of statistical Sigma," John Wiley & Sons Inc., New York, NY.
methods and be an established leader within the
organization. Attributes for a successful Black Belt include; Donald P. Lynch, Ph.D. received his BS in Mechanical
process / product knowledge, basic statistical knowledge, Engineering from Michigan Technological University,
good communication skills, self starter / motivated, open- MBA from Eastern Michigan University and Ph.D. in
minded, eager to learn new ideas, desire to drive change, Mechanical (Industrial) Engineering from Colorado State
team player, respected by others and a track record of University. His professional career includes positions in
obtaining results. Typically, Black Belts comprise 1-2% of engineering, quality, design and management at Ford
a company’s total population. Motor Company, Diamond Electric Mfg. Corporation and
Visteon Corporation, and SKF Corporation. He is an
Black Belts typically attend a rigorous four-week in four ASQ Certified Six Sigma Black Belt, Quality Manager,
month training process which follows a plan-training-apply- Quality Engineer, Reliability Engineer, Quality Auditor
review strategy. In addition to learning the methodology and Quality Improvement Associate in addition to being
and tools of Six Sigma, they are also working through their an IQF and Visteon Certified Master Black Belt. He also
first project. Some organizations include a training project works for The University of Michigan’s Center for
and evaluation. For a Black Belt to become certified they professional development and servers as adjunct
typically have to complete the training, successfully professor at Cleary University.
complete two projects and pass a certification examination.

Green Belts are often team members with training in Six

Sigma methodology. They can be future Black Belts and
are often the process leaders within the project organization.
Green Belts understand Six Sigma methodology and are
beginning users of the statistical tools. They assist the Black
Belt on the project and are almost always part time on Six
Sigma. Typically, there is at least one Green Belt per project
team.