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COST AND MANAGEMENT ACCOUNTING REPORT

ON

Six Sigma

PRESENTED BYRohit Mundhara P - 21

Pratik Purav P 29

SUBMITTED TO

PROF. R.S.VERMA

MARCH 2009

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Historical overview

Six Sigma was originally developed as a set of practices designed to improve manufacturing

processes and eliminate defects, but its application was subsequently extended to other types of

business processes as well. In Six Sigma, a defect is defined as anything that could lead tocustomer dissatisfaction.

The particulars of the methodology were first formulated by Bill Smith at Motorola in 1986.[3]

Six Sigma was heavily inspired by six preceding decades of quality improvement methodologies

such as quality control, TQM, and Zero Defects, based on the work of pioneers such as

Shewhart, Deming, Juran, Ishikawa, Taguchi and others.

Like its predecessors, Six Sigma asserts that ±

Continuous efforts to achieve stable and predictable process results (i.e. reduce process

variation) are of vital importance to business success.

Manufacturing and business processes have characteristics that can be measured, analyzed,

improved and controlled.

Achieving sustained quality improvement requires commitment from the entire organization,

particularly from top-level management.

Features that set Six Sigma apart from previous quality improvement initiatives include ±

A clear focus on achieving measurable and quantifiable financial returns from any Six Sigma

project.

An increased emphasis on strong and passionate management leadership and support.[1]

A special infrastructure of "Champions," "Master Black Belts," "Black Belts," etc. to lead and

implement the Six Sigma approach.

A clear commitment to making decisions on the basis of verifiable data, rather than assumptions

and guesswork.

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The term "Six Sigma" is derived from a field of statistics known as process capability studies.

Originally, it referred to the ability of manufacturing processes to produce a very high

proportion of output within specification. Processes that operate with "six sigma quality" over

the short term are assumed to produce long-term defect levels below 3.4 defects per million

opportunities (DPMO). Six Sigma's implicit goal is to improve all processes to that level of

quality or better.

Six Sigma is a registered service mark and trademark of Motorola, Inc. Motorola has reported

over US$17 billion in savings from Six Sigma as of 2006.

Other early adopters of Six Sigma who achieved well-publicized success include Honeywell

(previously known as AlliedSignal) and General Electric, where the method was introduced by

Jack Welch. By the late 1990s, about two-thirds of the Fortune 500 organizations had begun SixSigma initiatives with the aim of reducing costs and improving quality.

In recent years, Six Sigma has sometimes been combined with lean manufacturing to yield a

methodology named Lean Six Sigma.] Origin and meaning of the term "six sigma process"

Graph of the normal distribution, which underlies the statistical assumptions of the Six Sigma

model. The Greek letter marks the distance on the horizontal axis between the mean, µ, and the

curve's inflection point. The greater this distance is, the greater is the spread of values

encountered. For the curve shown in red above, µ = 0 and = 1. The other curves illustrate

different values of µ and .

The following outlines the statistical background of the term Six Sigma. Sigma (the lower-case

Greek letter ) is used to represent the standard deviation (a measure of variation) of a

statistical population. The term "six sigma process" comes from the notion that if one has six

standard deviations between the process mean and the nearest specification limit, there will be

practically no items that fail to meet specifications.[5] This is based on the calculation method employed in process capability studies.

In a capability study, the number of standard deviations between the process mean and the

nearest specification limit is given in sigma units. As process standard deviation goes up, or the

mean of the process moves away from the center of the tolerance, fewer standard deviations will

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fit between the mean and the nearest specification limit, decreasing the sigma number and

increasing the likelihood of items outside specification.

Sigma levels

Taking the 1.5 sigma shift into account, short-term sigma levels correspond to the following

long-term DPMO values (one-sided):

One Sigma = 690,000 DPMO = 68.26% efficiency

Two Sigma = 308,000 DPMO = 95.24% efficiency

Three Sigma = 66,800 DPMO = 99.73% efficiency

Six Sigma = 3.4 DPMO = 99.9997% efficiency

Methods

Six Sigma has two key methods: DMAIC and DMADV , both inspired by Deming's Plan-Do-

Check-Act Cycle . DMAIC is used to improve an existing business process; DMADV is used to

create new product or process designs.

DMAIC

The basic method consists of the following five steps:

Define high-level project goals and the current process.

Measure key aspects of the current process and collect relevant data.

Analyze the data to verify cause-and-effect relationships. Determine what the relationships are,

and attempt to ensure that all factors have been considered.

Improve or optimize the process based upon data analysis using techniques like Design of

experiments.

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Control to ensure that any deviations from target are corrected before they result in defects. Set

up pilot runs to establish process capability, move on to production, set up control mechanisms

and continuously monitor the process.

DMADV

The basic method consists of the following five steps:

Define design goals that are consistent with customer demands and the enterprise strategy.

Measure and identify CTQs (characteristics that are Critical To Quality), product capabilities,

production process capability, and risks.

Analyze to develop and design alternatives, create a high-level design and evaluate design

capability to select the best design.

Design details, optimize the design, and plan for design verification. This phase may require

simulations.

Verify the design, set up pilot runs, implement the production process and hand it over to the

process owners.

DMADV is also known as DFSS, an abbreviation of "Design For Six Sigma"

Implementation roles

One of the key innovations of Six Sigma is the professionalizing of quality management

functions. Prior to Six Sigma, quality management in practice was largely relegated to the

production floor and to statisticians in a separate quality department. Six Sigma borrows martial

arts ranking terminology to define a hierarchy (and career path) that cuts across all business

functions and a promotion path straight into the executive suite.

Six Sigma identifies several key roles for its successful implementation.

Executive Leadership includes the CEO and other members of top management. They are

responsible for setting up a vision for Six Sigma implementation. They also empower the other

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role holders with the freedom and resources to explore new ideas for breakthrough

improvements.

Champions are responsible for Six Sigma implementation across the organization in an

integrated manner. The Executive Leadership draws them from upper management. Championsalso act as mentors to Black Belts.

Master Black Belts, identified by champions, act as in-house coaches on Six Sigma. They devote

100% of their time to Six Sigma. They assist champions and guide Black Belts and Green Belts.

Apart from statistical tasks, their time is spent on ensuring consistent application of Six Sigma

across various functions and departments.

Black Belts operate under Master Black Belts to apply Six Sigma methodology to specific

projects. They devote 100% of their time to Six Sigma. They primarily focus on Six Sigma project

execution, whereas Champions and Master Black Belts focus on identifying projects/functions

for Six Sigma.

Green Belts are the employees who take up Six Sigma implementation along with their other job

responsibilities. They operate under the guidance of Black Belts.

Quality management tools and methodologies used in Six Sigma

Six Sigma makes use of a great number of established quality management methods that are also

used outside of Six Sigma. The following table shows an overview of the main methods used.

5 Whys

Analysis of variance

ANOVA Gauge R&R

Axiomatic design

Business Process Mapping

Catapult exercise on variability

Cause & effects diagram (also known as

Failure mode and effects analysis

General linear model

Histograms

Homoscedasticity

Pareto chart

Pick chart

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ishbone or Ishikawa diagram)

Chi-square test of independence and fits

Control chart

Correlation

Cost-benefit analysis

CT Q tree

Quantitative marketing research through use

of Enterprise Feedback Management (EFM)

systems

Design of experiments

Process capability

Regression analysis

Root cause analysis

Run charts

SIPOC analysis (Suppliers, Inputs, Process,

Outputs, Customers)

Stratification

Taguchi methods

Thought process map

TRIZ

The term ³Six Sigma´ has two definitions. Firstly, it has a statistical definition. Sigma (the

lower-case Greek letter ) is used to represent the standard deviation (a measure of variation) of

a statistical population. The term ³Six Sigma´ comes from the notion that if one has six standard

deviations between the mean of a process and the nearest specification limit, there will be

practically no items that fail to meet the specification. Secondly, the term refers to a toolkit of

quality tools that are applied within a structured, five-stage improvement methodology known as

DMAIC (standing for Define - Measure - Analyze - Improve - Control), designed to drive process

improvement towards a Six Sigma level of capability.

The Stage

It is widely recognized that survival in today¶s globalised market requires continuousimprovement and innovation of products and services, as well as core and support processes.

This includes the reduction of costs associated with variation and waste within the processes.

The Six Sigma toolkit enables an organization to continuously reduce variation and waste using

a project-by-project approach, yielding ³quick, measurable improvement in operating costs´.

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Six Sigma projects are selected by the executive team on the basis of various criteria, including

the following: alignment with corporate goals, estimated cost savings, available resources to

undertake the project, and expected duration.

Expert Opinion

As an approach, Six Sigma was originally pioneered by Motorola in the United States. The

process started in 1981, when the company¶s CEO Bob Galvin reportedly asked his corporate

managers to achieve ³a tenfold improvement in performance over a five-year period´. By 1984,

it was clear that better analytical methods and product design were required to achieve

continued process improvement. The focus was then shifted to design quality, and a number of

advanced quality tools were employed, which came together to form the holistic improvement

strategy subsequently known as Six Sigma.

Juju Antony and Ricardo Bunuel¶s summaries the major achievements of the pioneering

organizations of Six Sigma as follows:

Motorola (1987-1994)

reduced in-process defect levels by a factor of 200

reduced manufacturing costs by $1.4 billion

increased stockholders share value four-fold.

Allied Signal (1992-1996)

reduced new product introduction time by 16 per cent

reduced manufacturing costs by more than$1 billion.

General Electric (1995-1998)

company-wide savings of more than $1 billion.

Six Sigma has both a technical and generic meaning. As reported in Kwan and Ambary, it can be

viewed through two ³lenses´. First, it originates from the field of statistics, and has a specific

and technical definition in terms of statistical and quality control theory. Second, it can be seen

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as a holistic business strategy, aiming to increase business profitability by improving the

effectiveness and efficiency of all operations so that they meet or exceed customers¶ needs and

expectations.

Viewed through the technical lens, the term Six Sigma derives from a target level of processcapability. This means a desired and ideal end-state resulting from the application of the various

tools and methods that are part of the Six Sigma toolkit. Given a sample of numerical values

resulting from process measurement, it is possible to calculate the mean (average) value

denoting its central tendency, and the standard deviation, denoting its degree of variability or

dispersion. Sigma ( ) is the Greek letter for s, and is used in statistical theory to represent

standard deviation.

Traditional quality control theory (based on the early pioneering work of Walter Shewhart) and standard statistical normal distribution theory have traditionally held that an acceptably low

level of non-conforming product may be attained by having the upper or lower specification limit

(USL or LSL) for the manufacture of that product or component correspond to a 3 distance

from the mean or target value of that process. This provides an acceptable level of 2,700 defects

per million opportunities (DPMO), or 0.27 per cent of all production. However, according to

Motorola¶s process observations, it is common for process means to drift over time and in either

direction by up to 1.5 .

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Considering this drift, it is further argued that traditional 3 control may in fact result in an

unacceptable 66,810 DPMO, or 6.8 per cent of production. In Six Sigma thinking, the process

is²ideally²improved to the extent that specification limits lie 6 from the mean. The process is

thereby capable of achieving 3.4 DPMO, or 0.00034 per cent of production, after allowing for

the process drift. The technical achievement of Six Sigma capability can be seen in Figure 1

(page 3). Viewed through the generic improvement strategy lens, Six Sigma refers to the

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strategic process of training and developing employees with the thinking and techniques

necessary to achieve this level of performance.

This is achieved through the systematic application of a collection of long-established

managerial and statistical tools, within a cycle of improvement known as DMAIC (standing for Define-Measure-Analyze-Improve-Control). One of the ways that Six Sigma is distinguished

from previous quality control approaches is its adoption of a martial arts-style belt grading

system, which determines the practitioner¶s grade of knowledge and experience in the

application of DMAIC and the tools. These move through yellow, green, black and, finally,

master black belt. To progress up the rankings, a practitioner needs to demonstrate more project

experience and greater monetary savings. D. P. Madder provides a detailed discussion and table

of the body of knowledge and skill sets that accompany each level. [9] For

ideal¶

implementation, a ratio of approximately one black belt to every 100 employees is recommended.

Under these conditions, it is estimated that the approach is capable of achieving a 6% cost

reduction per year.

Frank Ambary argues that Six Sigma is more comprehensive than previous initiatives, such as

Total Quality Management (TQM) and continuous improvement, as it has more explicitly

measured and reported financial results, additional and more advanced data analysis tools,

greater use of project management tools, and a stronger customer focus.

The tools commonly used within Six Sigma include brainstorming, cause-effect (fishbone)

diagrams, process mapping, check sheets, Pareto charts, scatter plots, run charts, affinity

diagrams, prioritization matrix, and statistical control charts. These are combined with more

general management planning or improvement tools such as Project Management, Failure Mode

and Effect Analysis (FMEA), Quality Function Deployment (QFD), and statistical Design of

Experiments, including Taguchi Methods. These are summarized in Figure 2, below. While none

of the tools, strategies or methods used within Six Sigma are inherently new, the power of theapproach lies in their systematic and logically structured application to problem solving via the

DMAIC improvement cycle.

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The DMAIC cycle provides a structured approach in which each of these tools and techniques is

used at an appropriate point in the improvement cycle. Antony, Escamilla, and Canine provide a

detailed table showing how each method, tool or technique fits within the stages of DMAIC. The

stages of DMAIC are explained on page 4.

Define

The define phase involves setting project goals and boundaries that are in line with the

organization¶s high-level goals and strategies. This phase results in a¡

project charter¶, which is

a business case for the project, outlining its impact and expectations in terms of financial savings, the quality issues that are critical to the customer, and an overview map of the process

that will be the subject of the improvement activity.

Measure

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The purpose of the measure phase is to develop a factual understanding of the process in

question, in terms of its existing conditions and problems. The goal is to produce a baseline

capability level, and to collect process data that can be used to pinpoint the sources of problems

that will be investigated in the analyze phase.

Analyze

The aim of the analyze phase is to determine the root cause(s) of the identified problem. Typical

tools employed might include cause effect diagrams, scatter plots and regression analysis, time

series plots, and/or designed experiments.

Improve

In the improve phase, the focus is upon developing, implementing, and evaluating solutions tothe problem. An assessment of the new baseline capability will reveal the extent of the

improvement, which can be expressed in sigma terms if necessary, remembering that the ultimate

aim is to work toward Six Sigma control or better.

Control

The control phase is intended to ensure that the problem stays fixed. Traditional quality control

tools such as control charts are used to provide fact-based control over the improved process.

Critical Success Factors for Six Sigma

In 2001, the Industrial Research Institute¶s Process Effectiveness Network hosted a panel

discussion involving panelists with a total of approximately 200 years¶ Research and

Development (R&D) experience. The objective of the panel was to discuss the role of Six Sigma

in R&D.

The panelists identified the most important factors for success with Six Sigma as being:

The people at the top of the organization must provide commitment and leadership.

Project selection and management processes must involve rigorous project administration,

commitment management, control of costs, schedules, changes, and production, as well as

quality assurance and configuration management.

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The customer¶s value proposition must be understood very early in the process.

Metrics must be available and used to improve and track performance.

A common language for improvement must be learned and used.

Adequate funding for improvement efforts must be made available and maintained.

A research study into the implementation of Lean Six Sigma in six companies revealed the

following factors as contributing to successful implementation:

The business strategy was fused with a continuous improvement strategy.

Leadership was committed and involved in the deployment and implementation processes.

Consultants used were proficient and experienced.

A defined organizational model linked the continuous improvement efforts with the performance

measurement system and senior leadership.

Personnel selection criteria were defined and standardized.

Survey and Research Data

Lean Manufacturing Leads the Way

The publication Industry Week, in conjunction with the Manufacturing Performance Institute,

conducts an annual census of US manufacturers, to which more than 600 manufacturers

routinely respond. Figure 3, below, provides a summary of data from the 2003, 2005, 2006, and

2007 surveys, in relation to the use of a range of standard improvement methods and

approaches. The data shows that lean manufacturing currently leads the way by a clear margin,

while all other methodologies enjoyed a marked upswing from 2006 to 2007. Six Sigma use has

progressed to beyond 20% in 2007.

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CEOs Aware of Six Sigma

In 2004, an American Society for Quality (ASQ) survey of 600 CEOs in the manufacturing (180),

service (220), healthcare (100) and education (100) sectors, reported by Wailer, revealed the

pattern of awareness and use of certain quality techniques and practices as summarized in Figure 4, below. Six Sigma scored just under 50% in terms of awareness, and 15% in terms of

use.

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US Top Executives Aware of Six Sigma

In 2005, ASQ undertook a survey that confirmed that approximately 40 per cent of top executives

in the United

States were

aware of Six

Sigma.

Figure 5, next

column,

indicates the

general

awareness of

various tools

resulting from this

study.

Six Sigma Least Used Tool

In 2008, New Zealand¶s Centre for Organizational Excellence Research (COER) undertook a

global study of the use of improvement tools. Survey responses were received from more than 20

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countries with the majority of the 450 responses being from the following countries: New

Zealand, United Kingdom, India, Germany, Canada, Taiwan, Australia. Hungary, Mauritius,

and Saudi Arabia. The study found that only 18% of responding organizations use Six Sigma and

that it was, in comparison to 19 other improvement tools, the least used. Figure 6, below, provides a summary of the various improvement techniques used throughout the world.

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Measure and Evaluate Six Sigma

Key measures used to drive Six Sigma projects include the following: Process Capability, Cost of

Poor Quality (COPQ), Defects per unit (DPU), Defects per million opportunities (DPMO),

Throughput Yield (RTY), and Rolled Throughput Yield (RTY). These terms are explained below:

Process Capability Index (Cp / Cap)

The capability index Cp is a ratio between the specification limits and natural variation of the

process. It is an estimated ratio because the natural tolerance is usually calculated from an

estimate of standard deviation (s). Cp = (USL - LSL)/6 , where USL and LSL are the upper and

lower specification limits, and = an estimate of process standard deviation. The capability

index Cap additionally takes into account where the process average ( ) is located relative to the

specifications. Cap = the minimum value resulting from the two formulae (USL- )/3 and ( -

LSL)/3 .

Cost of (Poor) Quality

This is the total cost of quality-related activities as a percentage of total sales. This measure

provides a quantitative value of the actual cost of running quality systems. Among other things,

quality-related activities should include the following: cost of quality-related training,

prevention and inspection processes (costs associated with conformance), operating qualitycontrol, warranty/guarantee-related costs, scrap and rework, and rectifying poor quality

products (costs associated with non-conformance).

Measures for Defects per Unit and Throughput Yield

If defects = D and units produced = U, then defects per unit (DPU) = D/U.

Throughput yield (YTP) = e-DPU (where e = 2.718).

If opportunities for a defect = O, then defects per unit opportunities (DPO) = DPU/O.

Defects per million opportunities = DPO x 106.

If a process consists of m stages, and throughput yield is calculated for every stage, then rolled

throughput yield (YRT) = YTP1 xYTP2 x YTP3 x...x Type.

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EXAMPLES THAT HAVE CREATED A HISTORY USING 6SIGMA TECHNI QUES ARE

AS FOLLOWS.

CIGNA Corp. (United States) Six Sigma paves the way to quality excellence

In 2002, CIGNA Corp. in the United States, a provider of employee healthcare and related

insurance benefits with more than 28,000 employees, launched a holistic, grassroots Six Sigma

initiative in an attempt to achieve a range of advantages over its competitors. CIGNA began by

hiring a 25-year veteran of Motorola. As of 2007, Cigna had 165 black belts and more than 250

green belts in the organization, with a few thousand yellow belts working on its improvement

teams. The results have been pervasive and substantial across a variety of projects. One example

is from a healthcare intensive case management (ICM) programmed, which was attempting to

reduce re-admission rates for problems such as substance abuse. CIGNA staff identified

potential causes for a gap between the perceived and actual performance for readmission, and

implemented a number of improvements. A full-year study was designed using 286 patients

enrolled in the ICM program compared with 517 patients with similar problems in a control

group. The benefits of the Six Sigma group included: a 53% decrease in re-admissions

savings of approximately US$ 3,000 per patient, and a 49% decrease in total in-patient case

costs a 14.9% improvement in the rate of patients taking medications as prescribed.

As a result, CIGNA was presented with the North East Quality Council 2007 award for quality

excellence.

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Reliance Industries Ltd (India) Six Sigma contributes to a $4-million benefit for a polyester

manufacturer

In its manufacturing processes, Reliance Industries Limited, an India-based Global 500

producer of polyester, generated a large quantity of non-biodegradable polyester waste. To

eliminate this waste from the environment, the company recycled it²together with waste bought

from other companies²into value-added products at its Polyester Fiberfill operation. Thecompany began a Six Sigma initiative in 2001, which aimed to reduce variation and improve

business process performance, profits, customer loyalty, as well as the impact on the

environment. A cross-functional team determined the project¶s effect on performance; the

company sought the opinions of stakeholders and then involved them in the process. Main cost

drivers and root causes were identified, and various analyses and tools applied. In addition,

action plans aligned with stakeholders were developed and implemented. Each implementation

step was reviewed for completeness, and adjustments made as necessary to attain the required

performance measurements. The project produced significant benefits for the company,

including: 10% reduction in the cost of raw materials; 15% increase in the use of recycled

waste; 20% reduction in the cost of chemicals; 11% reduction in production costs; noticeable

increase in productivity, process capability, and plant yield; 70% reduction in market

complaints; 3% increase in product quality; 50% increase in product export. In addition, the

project contributed US$4 million pa in financial benefits, as well as intangible benefits that

included increased awareness of stakeholder needs, increased employee morale, and a positive

effect on society. The team won the Gold Award at the 2006 International Team Excellence

Award Competition.

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Canada Post (Canada) Six Sigma helps a mail company achieve its delivery rate targets and

stay profitable

In 2003, the Canada Post Corporation (CPC) started a Lean Six Sigma initiative, which had the

stated goal of ³the right product in the right place at the right time, all of the time´. [25] Lean

and Six Sigma tools were used to reduce waste and improve material flows, which has freed up

more than 3 million sq. ft. of floor space that can be rented out to third parties. Specially trained

Lean Six Sigma leaders, certified to green and black belt-level, coordinate many of the projects.

They use lean material-flow and Six Sigma statistical tools to identify the greatest opportunities

for improvement and implement changes. By changing the flow of material and creating

preliminary sorting hubs, the corporation required much less space, and the mail flow was kept

constant, which reduced the work-in-progress inventory. Employees were given greater authority

to react appropriately to blockages. Better incoming mail quality created less handling and

rework. Standardizations was encouraged along with the use of best practices across thecompany. Lean/Six Sigma facilitated a 96.8% on-time delivery rate for letter mail against a

stated target of 96%, and has so far resulted in ten consecutive years of profitability for the

corporation.

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Dairy Crest (United Kingdom) Six Sigma delivers productivity improvements

Dairy Crest¶s Spreads Business Unit at Crudgington, Shropshire, in the UK, produces retail

dairy spreads, packet and specialty butters, including a top UK grocery brand. In 2002, the

company implemented Six Sigma to focus and direct efforts related to ³specific and complex

quality issues´. [26] A team of six were initially trained: two front-line managers as black beltsto lead process improvement teams, and four shop-floor operators as yellow belts to act as

improvement team members. Two projects were set up: project 1 investigated the use of metered

water and made savings of around 120,000L per year; project 2 investigated and eliminated

overfilling in the production of a product and saved around 5,000L per year. Eliminating the

overproduction is currently saving the company around £85,000 each year. These savings have

more than offset implementation and training costs. Following this success, the project teams

were set a number of new projects to tackle productivity and quality issues. At the time of

writing, the Six Sigma teams were examining the process capabilities in terms of pack size

variation to determine whether changes needed to be made to the plant¶s machinery or to the

pack¶s production tolerances. Dairy Crest views the Six Sigma process as delivering solutions to

certain problems that would not have been tackled under the previous TQM approach, and as

the vehicle to deliver major productivity improvements at the plant in the years ahead.

Hawaii Technologies (China) Six Sigma implementation wins Hawaii top national prize

To meet its goal of becoming the ³Toyota of the telecom industry´, Hawaii Technologies, a

global telecom services provider located in Shenzhen in the southern portion of the Guangdong

Province neighbouring Hong Kong, invested heavily in quality tools and technology. [27] The

company implemented an end-to-end integrated product development process, based its

management systems on ISO 9000, and applied TL 9000 (Telecom quality management system)

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processes and standards across all of its product lines in design, development, manufacturing,

sales, installation and service, and placed a strong focus on measurements, tools and methods to

enforce strict quality control of production processes. The ASQ certified quality engineer (CQE)

programmed was adopted in 2005, the company began Six Sigma quality initiatives in its

manufacturing centre in 2002, and migrated them into R&D product lines. In 2004, the company

won the Shenzhen Mayor¶s Cup Quality Award and the 3 million RMB ($387,000 US) prize was

among the highest quality awards in China.

Six Sigma is a term that refers to both a specific measure of process capability, and a

breakthrough strategy for achieving substantial cost reduction and performance improvement. It

has been reported to be highly successful within many organizations.

Pioneered within Motorola in the 1980s, Six Sigma consists of a collection of long-established

quality and management tools, integrated within an improvement cycle known as DMAIC

(Define-Measure-Analyze-Improve-Control). It has more recently been integrated, to good effect,

with other successful strategies such as Lean and Theory of Constraints.

It is estimated that Six Sigma is currently being used by 18% of organizations. Success stories

have come from all sectors (e.g. service, government, military and healthcare). Full

implementation requires employees to be trained to appropriate levels and awarded belts

commensurate to their knowledge and project experience. This can be a costly process.

However, the cost reductions resulting from improvement projects are generally thought to more

than compensate for this initial financial outlay.

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