Swot Analysis to Six Sigma

In 1981 Motorola launched an initiative calling for a 5-year, 10X improvement in quality. In 1987 Motorola initiated its “Six Sigma Quality” initiative, with the goal of no more than 3.4 defective parts per million (ppm) across the company. A 4-year 100X quality improvement goal was set. In 1988, Motorola won the Malcolm Baldrige National Quality Award. Motorola then shared its “Six Sigma” approach with other companies. In 1989, Motorola Chairman, Bob Galvin asked Mikel Harry to head the Six Sigma Research Institute, an organization that received funding from a number of Fortune 500 companies .

In 1993 Mikel Harry left Motorola and went to Asea Brown Boveria Ltd. (ABB). Here, the strategy changed from “Quality First” to “Business First.” AlliedSignal implemented Six Sigma in 1994 and claimed savings of $1.2 billion by 1998. Bossidy, CEO of AlliedSignal, convinced General Electric’s Jack Welch to try Six Sigma. The huge savings due to using Six Sigma were claimed in the GE Annual Report, Letter to Our Shareholders, February 12, 1999.

With successes like these and strong business leaders like Jack Welsh and Bossidy, the demand for Six Sigma has exploded. Many Fortune 500 companies have begun Six Sigma initiatives and others have asked if Six Sigma is right for them. Numerous consulting firms have jumped on the bandwagon, including ASQ, and numerous articles and books have appeared on the subject. Many product and service advertisements are now mentioning Six Sigma.

The term Six Sigma defines an optimum measurement of quality: 3.4 defects per million events. The Greek letter SIGMA is a mathematical term that simply represents a measure of variation, the distribution or spread around the mean or average of any process or procedure in manufacturing, engineering, services or transactions. The sigma value, or standard deviation, indicates how well any process is performing.

The higher the value, the fewer defects per million opportunities. One of Motorola’s most significant contributions was to change the discussion of quality from one where quality levels were measured in percentages (parts per hundred) to a discussion of parts per million or even parts per billion. Motorola correctly pointed out that modern technology was so complex that old ideas about acceptable quality levels were no longer acceptable. One puzzling aspect of the “official” Six Sigma literature is that it states that a process operating at Six Sigma levels will produce 3.4 parts-per-million nonconformances.

However, if a normal distribution table is consulted (very few go out to six sigma), one finds that the expected nonconformances are 0.002 parts per million (two parts per billion). The difference occurs because Motorola presumes that the process mean can drift 1.5 sigma in either direction. The area of a normal distribution beyond 4.5 sigma from the mean is indeed 3.4 parts per million. Because control charts will easily detect any process shift of this magnitude in a single sample, the 3.4 parts per million represents a very conservative upper bound on the nonconformance rate.

Notes 1: the quality evolution of motorola1979 “our quality sucks”1981 Motorola university, quality goal 10x reduction in 5 years 1985 Initiate corporate quality metrix1987 Six Sigma program: 10x reduction in 2 years1989 Received Malcolm Baldridge Award1992 10x reduction in cycle time: customer satisfaction metrix 1996 order fulfillment quality1997 Five Nines with an eyes on the customer

Notes 2: six sigma history1987 Motorola adopts six sigma1991 Allied Signal adopts six sigma (Larry Bossidy)1995 GE adopts six sigma (Jack Welch)1997 Six sigma adopted in GE capital (service industry)