In contrast to Six Sigma quality, the Three Sigma quality standard of 99.73 per cent translates to 2,700 parts per million (PPM) failures, even if we assume zero drift. For processes with a series of steps, the overall yield is the product of the yields of the different steps. For example, if we had a simple two-step process where step one had a yield of 80 per cent and step two had a yield of 90 per cent, then the overall yield would be 0.8 x 0.9 = 0.72 = 72 per cent. Note that the overall yield from processes involving a series of steps is always less than the yield of the step with the lowest yield. If Three Sigma quality levels (99.97 per cent yield) are obtained from every step in a ten-step process, then the quality level at the end of the process will contain 26,674 defects per million! Considering that the complexity of modern processes is usually far greater than ten steps, it is easy to see that Six Sigma quality isn’t optional; it’s required if the organization is to remain viable. The requirement of extremely high quality is not limited to multiple-stage manufacturing processes. Consider what Three Sigma quality would mean if applied to other processes:
- Virtually no modern computer would function.
- 4,050 invoices would be sent out incorrectly each month by a modest-sized telecommunications company.
- 18,900 US savings bonds would be lost every month.
- 54,000 checks would be lost each night by a single large bank.
- 540,000 erroneous call details would be recorded each day from a regional telecommunications company.
- 10,800,000 healthcare claims would be mishandled each year.
- 270,000,000 (270 million) erroneous credit card transactions would be recorded each year in the United States.
With numbers like these, it’s easy to see that the modern world demands extremely high levels of error free performance. Six Sigma arose in response to this realisation. Box 7.1 discusses the Six Sigma journey undertaken by Motorola.
Box 7.1 Six Sigma at Motorola
Motorola, the originator of Six Sigma, had to adopt it for reasons of pure survival. It was being consistently beaten in the competitive marketplace by foreign firms that were able to produce higher quality products at a lower cost. A Japanese firm that took over a Motorola factory that manufactured Quasar television sets in the United States in the 1970s immediately set about making drastic changes in the way the factory operated. The factory was soon producing TV sets with 1/20th the number of defects they had produced under Motorola management. They did this using the same workforce, technology and designs, making it clear that the problem was Motorola’s management. Eventually, even Motorola’s own executives were forced to admit that the company’s quality policy needed a complete overhaul.
In the mid-1980s, the top management under the leadership of the CEO, Bob Galvin, decided to take quality seriously. He started the company on the quality path known as Six Sigma and became a global icon due to his efforts. The Motorola management focused on quality leadership in a number of ways including top-level meetings to review quality programmes with results passed on through the organization. All levels of the company were involved. Non-executive employees contributed directly through Motorola’s Participative Management Programme (PMP). PMP teams, composed of employees who work in the same area were assigned to achieve a specific aim. These teams meet often to assess progress toward meeting quality goals, to identify new initiatives and to work on problems. Savings that stem from team recommendations are shared to reward high- quality work.
Today, Motorola is known worldwide as a quality leader and a profit leader. The secret of their success became public knowledge after Motorola won the Malcolm Baldrige National Quality Award in 1988.
Source: Poornima M. Charantimath (2017), Total Quality Management, Pearson; 3rd edition.