Once entrepreneurs secure the funding necessary for a business startup, they must take their idea from concept to reality. The faster they can generate revenue the better.
If the business concept is new to the world, there may be some flexibility in setting the product's price. However, in a global economy pressure will mount to lower the price without unfavorably impacting the product's quality or delivery. In fact, more and more customers expect and even demand perfect quality, which can be a challenge, especially for a startup.
For a manufacturing startup to be successful, there are a multitude of tasks that need to be completed at the right time and in the right way. Opportunities for errors are high, and they increase as the entrepreneur hires more employees and adds multiple shifts. Is it possible to keep the entrepreneurial energy and excitement around a new business concept that resulted in funding? Six Sigma, when properly applied, helps all types of organizations do just that.
What Is Six Sigma?
Every manufacturing business, large or small, faces competitive pressures to lower costs and reduce "variability," or defects. Six Sigma is a production philosophy that uses data, processes, and tools to nearly eliminate defects and bring performance close to perfection.
Specifically, achieving Six Sigma means that no more than 3.4 defects occur per one million "opportunities" to create an acceptable output. The name itself is the statistical measure that describes that defect rate. So, Six Sigma refers to six standard deviations between the mean of a process and the specification for whatever output is being measured. Specifications are determined by customers.
In practice, the process relies on the "DMAIC" framework:
- Define. Identify, define, and pinpoint where variability might be occurring.
- Measure. Outline and develop various data metrics, including value-added and non-value-added steps in the work process. Customers do not mind paying for processes that truly add value.
- Analyze. Use data and other tools to determine variation and to analyze its causes.
- Improve. Mistake-proof the work processes with the help of tools and technology.
- Control. Monitor and control the new process to ensure the organization does not backslide to creating variability again.
Highest Quality at the Lowest Cost
Six Sigma drives an organization toward the goal of finding the lowest cost for the level of quality needed, with quality being defined by the customer. A business needs to be a "lean enterprise," which the APICS The Association of Operations Management2005 Dictionary explains this way:
The objectives of the lean enterprise are to correctly specify value to the ultimate customer and to analyze and focus the value stream so that it does everything from product development and production to sales and service in a way that actions that do not create value are removed and actions that do create value proceed in a continuous flow as pulled by the customer.
Determining value-added processes relies on understanding the customer and what the customer is willing to pay for. However, while actions can be taken to "lean" an organization, if a work process is not stable, the performance of that process will vary. Such variances will unfavorably impact quality, cost, cycle time, and delivery.
Getting Started with Six Sigma
To implement Six Sigma effectively in an entrepreneurial company, every associate should complete Six Sigma Overview Training, which is designed to establish Six Sigma as a part of the organization's culture. In addition, an associate should be selected and trained as a Six Sigma Black Belt. A Black Belt coaches project teams and is proficient in using extensive analytical tools, including customized software, to yield marked organizational improvements.
Collaboration is critical to the Six Sigma process and will help initiate employee input and buy-in. A project team comprised of relevant process owners (customers, administrative associates, and suppliers, for example) should be identified and directed to focus on a problem area. The team members must be allowed to let the Six Sigma project guidelines point them to the area where focus is needed.
Tips for Success
The long-term philosophy of Six Sigma is to eliminate all non-value-adding activities within the manufacturing process. This journey is one of continuous improvement and must be focused so that its implementation does not overwhelm the organization. Here are key points for entrepreneurs to keep in mind as they implement Six Sigma efforts:
- Build the case for change. Involve all levels of the organization and leverage the strengths of your organization and culture.
- Start slowly. Ensure employees are recognized and rewarded for bringing challenges in the process to the forefront. Do not let Six Sigma become so big that it keeps team members from speaking up honestly when it is not working.
- Seek out the right team. Select individuals to serve as Black Belts who not only have the appropriate technical expertise but also have the amount of respect needed to work with employees at all levels.
- Create the right foundation. Check the organizational culture to ensure it's not solely based on safety, data, and a "plan, do, check, act" low-cost, no-cost problem solving approach. This type of culture lacks the right foundation for Six Sigma to be successful.
- Select the right projects. Identify carefully which projects require this level of analysis and take time to define the necessary level of return.
- Involve the team. Use "gate" reviews that involve all team members. This approach helps to create ownership and maintain employee focus during various stages of the process.
- Communicate and visibly celebrate successes. Communicate openly and encourage associates to communicate openly, too. Successes, even minor ones, should be visibly celebrated.
- Train strategically. Conduct extensive training first with those directly involved in implementing the Six Sigma process and then expand to train all associates in the basics of Six Sigma.
You, your investors, your associates, and your customers are looking for predictability in your manufacturing business's performance, so it follows that causes of variability must be understood, reduced, and eliminated. With such a highly competitive global business environment, implementing Six Sigma through stakeholder collaboration and involvement is critical to positioning your organization to thrive in the future.
© 2007 Donald G. Waggener. All rights reserved.
Donald G. Waggener Founder and President Building Blocks for Success, Inc.