Six Sigma - The Beginnings and History

[Sam]

If one starts a business for the "primary" purpose of making money; they will fail (or go to jail for counterfeiting).
There are several things that have to be addressed to make money;Price,cost,efficiency,ROI,delivery,quality, wants/needs of the customer, customer satisfaction and ability to produce.
All of these topics and more are covered under the guise of a good quality system.
Making money is the by-product of making something that someone wants or needs. Of course we all know that we can make money by supplying inferior product at inflated rates, but for how long?

 

[AJPaton]

Originally posted by Jim Winings:
Ok, I'm confused ...

Kevin Mader said ...
I believe that an organization is not in the business to make money as a primary objective (unless it is a fund raising organization).

Then where does it get the moneys to expand technology?

Jim, you're arguing for Kevin, not against him. The money that the company makes must be put back into the R&D department.

So the objective was to continue supporting R&D, not just to make money.

IMHO a company is in business to supply a product its customers want in return for fair compensation.

If the customers don't want the product, the company folds.

If the company can't get fair compensation, they file for bankruptcy soon enough.

Just my $0.02 worth.

AJP


[This message has been edited by AJPaton (edited 31 July 2000).]

 

[jwmgmt]

Hello all,

I am currently reading Harry's book on 6 Sigma as part of research I am doing for my own book. I was not familiar with 6 Sigma prior to reading his book and now after getting into the subject and reading your posts as well as other articles, I see a "house divided" with regards to the merits of this "new" methodology. I myself find two, IMHO, major flaws in the philosophy of 6 Sigma.

1). The concept of Defects Per Million Opportunities (DPMO) can be manipulated by an unscrupulous individual to "pad" the numbers and improve the Sigma rating without actually improving any processes. Example: This year I report to my shareholders that we are implementing 6 Sigma for our main product line. I report that the product has 4 parts or processes that 6 Sigma can apply to, and that currently we are operating at the 3.30-3.25 Sigma range or 37,500 DPMO. I wait 12 months and then report to my shareholders that we are now at 3.85 Sigma or 9,375 DPMO and my stock shares rise in value. How did I accomplish this without improving quality? Simple. I divided each step into 4 steps, thereby increasing the number of "opportunities" for defect from 4 to 16. Now according to Harry's formula provided in his book, I have, indeed increased my Sigma without increasing my quality. This may not be applicable in the real world and I would hope it isn't but the point I'm trying to make is that the numbers can be "fudged" to promote a virtual increase in quality without an actual increase. Maybe an improvement on the 6 Sigma push would be to lock controls in place to prevent this from happening.

2). The basic tenet of 6 Sigma is "If you build it, they will come." In other words, if your company implements 6 Sigma and subsequently builds a superior product, external factors, (such as the economy, competition, changing customer desires, etc.) shouldn't affect the sales of your company's product. A perfect example of the flaw of this argument would be Apple computers in the 80's. It was a superior product, in both design and function, but the wave of public interest went in the PC direction. Look at the New Coke fiasco. All their taste tests showed it to be a superior product, yet the public didn't go for it. This definitely affected the bottom lines of both these companies. With 6 Sigma, the only variables that can be controlled are the ones that can be measured and the only variables that can be measured are internal to the organization. I'm not sure of a way around this one. External factors MUST be considered when implementing quality initiatives. What will it matter if you build the best product nobody wants?

These are some things that have gone through my mind as I research this material and read the opinions of others on the subject. I also have a problem with the 1.5 Sigma "shift". There seems to be something kind of fishy about a quality enhancement methodology requiring the removal of variances in production while not removing the variances from itself.

 

[Don Winton]

Jim Winings said:

These thoughts may have worked in the 40's, 50's 60's and even 70's, but, as technology grows in BIG leaps and bounds, it takes a lot of dollars, pounds, etc. to hire talent to stay on the cutting edge.

Mike1245 said:

Just one simple question - if a company's primary goal isn't to make money, then what is it?

Steven Truchon said:

I have never once in my brief stay here on planet earth heard anyone state an intention to start a business because they believed so highly in a means of managing quality or so that they might make "something" with zero defects.

I put these together so I could summarize my feelings on this. Everyone makes a valid point and I found the input interesting, but a small point should also be made (IMHO).

The primary purpose of an organization should be to STAY in business, not to make money. A company that stays in business provides much more than a company that merely makes money. However, if making money in the primary means of staying in business, so be it! And if some so-called quality initiative is the means to make money, thus staying in business, so be it. But, make no mistake, if a company's primary goal is to make money, rest assured they will not be a company long.

"We shall build good ships here; at a profit if we can, at a loss if we must, but always good ships."

That should be the goal of an organization. And you are right about Sarasohn. I have read that course over and over.

If one starts a business for the "primary" purpose of making money; they will fail (or go to jail for counterfeiting).

As you can tell from above, I agree.

Jwmgmt:

I agree with your post. Superior quality, thus a superior product, do not mean diddly if no one buys them. So I have issues with those quality 'programs' that do not examine all aspects of the business.

Just the ramblings of an Old Wizard Warrior.

 

[ahuffman]

I have been studying this site and it makes me want to throw up. When we will learn that no system is the cure all. It seems to be assumed by most of the participants here that as long as you make the best quality part imaginable, you are assured to be in business. I am in automotive and I can't tell you quality is nothing. Price is everything. Now the customers will throw you out for quality, but they will throw you out faster for price. It does not matter how good your quality is, if a competitor comes in with a better price, you are out. It may not be fair, but that is the way it is. So you have to find a happy medium between quality and cost. Mercedes found this out years ago when they could charge whatever they wanted because they "hand made" much of their cars. Then came Infiniti, and Lexus, quality cars made in production mode and guess what, now you can buy a Mercedes for 30k. Until we quit sitting around thinking up new concepts and work on things that truly affect the bottom line, we will continue to grab on to each new and improved concept that comes down the pike.

 

[skyc]

dear ahuffman,

I'm not sure if it's etiquette - I apologise in advance if not - however, you might consider reading and replying to my post on deja-misc-industry-quality "is quality progressing" to further your argument. thanks

Personally i have started to participate in these forums because it's obvious a lot of knowledgeable and experienced people are evident. There is a need for application of quality techniques and you'll see people talking about these in most posts ; much of what is discussed leads to cost reduction in the form of waste removal.

So, I'm not convinced of your line of argument that is implying that to be taken seriously or contribute one needs to concentrate on the bottom-line. Are you saying quality techniques are not doing this? You cite an example of the price and quality of cars and indicate that the former is more important to the customer. I'd disagree, consumers don't see it this way, they chose on both equally and believe they're getting it but are often duped. In business, with suppliers and customers we are so fascinated by the bottom-line that it has become the only model because it's simple. But it comes with preconceived ideas - e.g. quality suffers because it's so temptingly linked to cost reduction and not to differentiation.


Definitions of quality based on function and consistency often lead to missing the point that quality is also about uniqueness and desire. Cost reduction is needed but it's a pretty normal target. The marketeers, the designers, the engineers, the artists have to create something of beauty, something of experience that consumers want and society needs so they are willing to pay extra to get. And although competition brings prices down as the product matures there are other considerations to make than the bottom-line.

Doing a good job goes in-hand with producing desireability ; and this is why quality professionals create something new or something extra special and don't focus narrowly on an accountant's balance sheet that doesn't consider the business potential, implications on reputation and what deming I believe called the unknowable costs.

you think?
regards - skyc

[This message has been edited by skyc (edited 11 August 2000).]

 

[johno]

On the quality vs cost debate it's perhaps more useful to consider quality as the 'great enabler', the foundation, as without it low cost is a moot point for most, and without it a good design is usually not realized. In a volume environment quality enables the pursuit of lower cost and the consistency also enables better designs to be utilized at lower cost. Note that volume can be either high product volume, or low product volume and high volume of parts and operations. Among engineers this seems to be the 'how many angels can dance on the head of a pin' discussion :^).

 

[jwmgmt]

ahuffman,

Your argument is justifiable if you change the word "price" to "value". I for one have read Harry's book on Six Sigma and found flaws in it and also after reading Philip Crosby's "Quality Without Tears", see a lot of information being copied by Harry to add support to his theory. You are correct in saying that quality alone is not what the customer cares about, but value is. I say again, you can build the best designed product in the world but if nobody wants it, what good is it?

Something else that should be noted here is that Six Sigma reduces cost. If production remains constant or increases then with reduced costs, profit increases. Profit, not REVENUE. Again, this does not add value to the product, which is what the customer cares about but it does make the stockholders feel warm and fuzzy.

 

[Marc]

Originally posted by ahuffman:

When we will learn that no system is the cure all.

I don't think many here are in any way saying any 1 system is 'the' system. I guess I read these and other posts as discussions of different systems one or more of which may be utilized by any company. Typically no company embraces 6 sigma alone, for example. Companies mix things up. One client I had was into 6 sigma, was completing a 5-S program, was implementing QS9000 and was undergoing an significant internal managem,ent restructuring.

Different threads and topics here in the Cove forums typically are focused, however.

I am in automotive and I can't tell you quality is nothing. Price is everything.

I bet Ford will have less consideration of the price it pays for tires with respect to the 'quality' of the product. I hear this arguement often and I always say the same: GM wants a light switch and 2 companies make the switch. Company A sells for 25 cents and company B for 39 cents. Company A's switch has a MTBF of 1000 hours and company B's of 10000. Use predictions are 8000 hours. Considering MTBF to be part of the quality of the product, which one would you, as a GM buyer, purchase? If you want to argue that MTBF is a design consideration, I will point out that the design aspect is surely part of your overall quality system - not just manufacturing.

I've seen a lot of companies go for that 25 cent switch and pay dearly later. Maybe the recent Firestone 'event' was a matter of specifying or buying cheaper materials. We may never *really* know.

Whether one admits it or not, decision making in buying is never based only upon price. The quality of the product you are purchasing is considered in one way or another.

 

[Carlos_Elizondo]

Hi everyone!!!

My name is Carlos Elizondo, Im a 22 years old student from Tampico, Tamaulipas, México.

Im almost to finish my Career, Chemical and Systems Engineering. My thesis theme is: "Development of a guide for the implementation of Six Sigma"
Any suggestions about the methodology for gathering information???
Where can I find more info???

Thank you!