The Six Sigma Hysteria

From my 30 Years of experience in dealing with hundreds of Transformation Efforts.

One also needs to change their mindset about partially adopting Lean as the solution. I’ve found this is harder for companies to do when they’ve also jumped on the Six Sigma bandwagon. When Jack Welch mandated Six Sigma as the improvement vehicle for GE, he closed off other ideas for continuous improvement and paved the way for thousands of copycat companies to spend millions of dollars on Six Sigma initiatives requiring highly paid consultants. Wanting to capitalize on this trend, consulting firms sold Six Sigma as the be-all and end-all of business improvement tools rather than being true to what Six Sigma is meant to address. Many company leaders excitedly bought into the opportunity to introduce something new.

Even though Six Sigma was being seen as the replacement for Lean, my high-level contacts at GE were still secretly implementing Lean manufacturing methodologies, fearfully hiding their “treasonous” efforts from senior leadership. Eventually, the business world became confused over the difference between Lean and Six Sigma. To appease both camps, the term Lean Sigma was born, further unsettling the marketplace; yet, opening a new path for more consultants to sell their wares.

It’s important to understand that Lean is not Six Sigma. Six Sigma is a statistical problem solving process that fits under the Lean umbrella. It should not compete with it.

The majority of companies that have relied on the Six Sigma approach have failed to increase shareholder value. More than a decade ago, Charles Holland of Qualpro did a study finding that 98% of the 58 companies that had announced Six Sigma programs trailed the S&P 500. Even Jack Welch has conceded that Six Sigma shouldn’t be used in every corner of the organization. We are all aware that GE has fallen from the graces of the elite companies, evidenced by poor performance and their dismissal from the Dow Jones Industrial Index.

Let’s look at the reasons why Six Sigma hasn’t been the cure-all it was purported to be.

1. It’s the Wrong Tool for the Job. Six Sigma and Lean are both attempts to make improvement and solve problems. Six Sigma is a set of statistical problem-solving tools that follow a model of Define, Measure, Analyze, Improve, and Control. Lean follows the Deming cycle: The Plan, Do, Check, Act model. On the surface, using Six Sigma to improve quality and reduce variation seems reasonable. The issue has become an over-reliance on Six Sigma to solve problems that other approaches would be better at addressing. The adage applies that when the only tool in your toolbox is a hammer, all of your problems look like nails.

While Six Sigma has its place in the continuous improvement spectrum, I have seen it applied to inappropriate situations. When we worked on our benchmark kaizen at GE’s Money division, we applied Lean to their process and reduced their lead time from 63 days to one day. The process time to accomplish the amount of work necessary to complete one order was just one hour. The Six Sigma engineers had been trying to reduce the process time from one hour without any consideration for the 63-day lead time inherent in the process. This was a misuse of the tool and, quite frankly, the wrong one for this task. We used traditional value stream mapping and other Lean approaches to reduce the lead time which resulted in $216 million of additional revenue in the first year alone. This breakthrough was noticed by Senior GE leadership, including CEO, Jeff Immelt, and gave rise to the popularity of Lean methodologies within General Electric.

For one of our clients, there was a specific application where Six Sigma would have made sense. Their foundry process had over 25 variables that needed to be set correctly in order to assure a quality part. So, a Six Sigma tool called Design of Experiments (DOE) was the right tool of choice. However, the VP of Corporate Quality wanted to institute Six Sigma across the entire company, which would have negatively impacted initiatives that were better suited to Lean.

The bottom line is that 90% of the problems most businesses face can be solved with Lean because it offers a broader range of tools to address various situations. Companies should not ever try to merge Lean and Six Sigma together as this derails Lean efforts. Use Six Sigma strategically for specific problems. Do not try to create a culture around a tool such as Six Sigma, as many companies have attempted. So, when your Quality Assurance lead decides to introduce Six Sigma to optimize everything in the plant, be aware that this is likely not the best use of resources and that Lean is more efficient and effective.

2. It Takes Longer. Six Sigma demands a more significant time investment because:

·     It requires upfront training.?

·     It tends to look at comprehensive solutions to address all situations which adds lead time before the improvement process can even begin. 

·     Each project requires significant, time consuming data collection and analysis.?

·      Six Sigma improvements cannot commence until proper certification is achieved. Becoming certified at the various levels (Master Black Belt, Black Belt, Green Belt, etc.) consists of weeks of training, plus it’s expensive. On the other hand, improvements can start immediately with Lean.

·      Six Sigma projects average several months while the typical Lean kaizen initiative achieves results in a matter of days. The continuous improvement nature of Lean has an inherent sense of urgency. Also, the spirit of the kaizen process looks for a 70–75% solution instead of trying to address every nuance. “Don’t let perfect get in the way of better” is what Lean practitioners need to keep in mind.

3. Six Sigma has a Goal of 3.4 Defects Per Million. One of my Japanese sensei’s lectured me that Six Sigma is ‘No Good!!” He said that we should have a mindset of zero defects, not 3.4 parts per million! If airlines targeted a 3.4 parts per million quality rating regarding safe flights, there would be an airline crash somewhere in the world every 3 days. Clearly, there are specific industries, such as aviation, where defects are unacceptable. Yet, all companies that aim to be world class should strive for this. You may be thinking, “But, achieving zero defects would be cost-prohibitive.” Studies show that the Cost of Poor Quality (COPQ) ranges anywhere from 15–25% of a firm’s revenues. The cost of rework, delays, scrapped product, inspection warranty, liability, lost business,  etc. make it difficult to argue that zero defects should not be the goal. Look to Lean for the total elimination of defects.

One of the key Lean principles is that you should always assure quality of the part or service before passing it on to the next process. However, Six Sigma relies on a statistical process called SPC (Statistical Process Control). SPC violates this principle. Let’s say you wanted to take measurements of the inner diameter of a bore. With SPC, you may check one out of every fifteen parts. My Japanese sensei, Mr. Iwata, told us: “If you are going to check one, check them all. Would you want an airline to check one out of fifteen airplanes?” He couldn’t understand why 14 out of 15 parts were not checked, and if the 15th part passed inspection, the other 14 parts would be passed to the next process without having quality assured. 

When I was with a Japanese engineer at Hino Motors in Hino City, Japan, I foolishly asked him where he stored his defects and scrap. He stated, “DeLuzio-san, we do not make defects in this cell!” Because every machine in this particular cell had Poka Yoke and Jidoka devices, engineered quality was built into the process. Poka Yoke devices are commonly known as mistake-proof devices. Jidoka devices automatically detect a defect and do not allow the process to continue until the problem is corrected, making it nearly impossible to repeat a defect.

4. It’s Not Inclusive. I asked a Six Sigma leader how he engaged his workforce in the improvement process, and he said, “Employees are instructed to fill out a check sheet to record quality measurements.” Nowhere were employees asked to contribute their ideas as to how to improve the quality of the product or process. Since a company cannot afford to put all of their employees through Six Sigma training, very few can engage in the process beyond basic data collection.

Lean, on the other hand, allows employees to contribute their ideas immediately in the continuous improvement process. Employees at all levels can play a significant role in making and implementing their recommendations. In fact, your best consultants are the employees who are executing the work on a day-to-day basis. Even though they are intimately familiar with the work, many times they are not asked to contribute their ideas.