One could cite numerous examples of successful Six Sigma implementation in the last three decades of corporate history. A prominent example is that of General Electric under the leadership of Jack Welch. Welch employed Six Sigma principles for the rail car repairs and aircraft engine imports projects. A large share of this success could be attributed to the proper implementation of the different stages of Six Sigma, especially the Measure. Through its meticulous application, GE “reduced repair time, redesigned its leasing process, reduced border delays and defects and improved overall customer satisfaction. Quantitatively, General Electric saved over $1 billion in its first year of Six Sigma application and then $2 billion in the second year. The company’s operating margin rose to 16.7 percent while revenues and earnings increased by 11 and 13 percent respectively.” (Smith, et.al, 2002, p.45)
The next step in Sig Sigma is Analyze. Here, the attempt is to investigate the fundamental cause of the project’s problem. The other objective is to scrutinize the reasons why defects and deviations from the norm are occurring. Upon a detailed study of these problems, the project team can start to design plans for mitigation. Sub-stages within this step are the identification of value and non-value added actions and the ascertainment o key CTQ (Critical-to-Quality) elements. In many ways, this phase of Six Sigma application is critical for a project’s success, because a lack of understanding and rigorous analysis is what leads to most defects and variations. For example, the following are some of the common deficiencies identified at the end of analysis stage: “Lack of control over the materials and equipment used; Lack of training; Poor instrument calibration; inadequate environmental characteristics; Hasty design of parts and assemblies.” (Drake, et.al, 2008, p.29) These items were based on the analysis of a manufacturing process, but could be adapted to the service industry as well. It is thus a generic Project Management tool available to all managers.
A good example of how Analyze stage in Six Sigma could add value to the enterprise is found in the case of Scottsdale Healthcare. The facility in Arizona was correctly able to identify its weakness through the Six Sigma analytic tools. For example, it was found that
“its overcrowded emergency department because it took 3 8 percent of the patient’s total time within the department to find a bed and transfer the patient out of the waiting room. Before implementing quality efforts, multiple intermediary steps existed in the process which inevitably slowed down the time from start to finish and reduced the potential yield. As a result of the DMAIC and Lean Sigma efforts, the facility identified the root cause of the problem was not that of finding a bed, as originally thought, but rather reducing the number of steps involved in the transfer process. This solution produced incremental profits of $600,000 and reduced the cycle time for bed control by 10 percent. Moreover, the patient throughput in the emergency room increased by 0.1 patients/hour.” (Grant, 2006, p.22)
The fourth stage of Six Sigma is Improve, where “the research of the problem’s root cause is actually put into work by eliminating all the defects and reducing the degree of variation.” (Lipscomb & Lewis, 2004, p.30) Important activities during this stage are the designing of experiments, design of various possible solutions, measuring failure modes of those solutions, validating hypotheses, and finally modifying/adjusting those possible solutions. A key tool used during this stage is Failure Mode and Effects Analysis, which helps identify a failure, its mode and effect through the research analysis. A prominent example of the importance of the Improve stage of Six Sigma is to be found in the Bank of America story, whereby the company was able to increase its customer base while also increasing overall efficiency. The improvement was drastic in that by the end of it, the company dealt with approximately 200 customer interactions per second and improved customer satisfaction. Further, in the very first year of Six Sigma implementation, BOA was able to decrease its defects by 88 percent, as errors were significantly reduced in customer delivery channels. Issues taking more than 24 hrs to get resolved reduced by 56 percent. Within a few years of adopting Six Sigma, BOA’s customer satisfaction index rose by 25 percent, which is a significant rise. (Grant, 2006, p.22)