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Six sigma quality: experiential learning.

Article Excerpt
Six sigma, a management philosophy developed at Motorola by Bill Smith in 1985 (Chadwick, 2004), consists of the rigorous application of statistical tools to improve profits, reduce costs, and improve speed. As Harry and Schroeder (2000) said, "Six Sigma is about making money." The track record of major firms that first employed six sigma is impressive. General Electric in 1999 reported in its Annual Report that six sigma had increased after-tax earning by $2 billion. Larry Bossidy (CEO at Allied Signal) brought the firm back from near bankruptcy by employing six sigma. Others such as Polaroid, Asea Brown Bovari (ABB), and Ford Motor Company have reported similar results. In a careful review of annual reports, Waxer, (ND) found that savings attributed to six sigma between 1986 and 2000 ranged from 1.2% to 4.5% of annual revenue for a number of Fortune 500 firms. Bolten (2003) reported that Idaho National Engineering and Environmental Laboratory achieved six sigma savings of over $40 million in 18 months. These results reflect the differences between six sigma and total quality management (TQM) that was introduced in the United States in 1980 by W. Edwards Deming. TQM, despite considerable emphasis in firms across the industrial world, has frequently not lived up to its expectations (Repenning and Sterman, 2001).

Six sigma is a sequential process that begins by asking hard questions regarding level of defects, time required to perform operations, and customer expectations. The answers provide the "working area of operations" for six sigma projects. It is important to understand that six sigma projects are seldom, if ever, incremental ("kaizen") quality improvement that is so characteristic of TQM. Six sigma projects are all about robust change--changes that lead to 50% or more improvement in quality and speed.

Measurement and Process of Six Sigma

A classic, standard measurement in six sigma is defects per million operations (DPMO). DPMO is calculated by multiplying an error rate by one million and dividing by the number of ways an error can occur. For example, if we find that historically 10% of all students get an "F" in a particular course and if the ways they get an "F" are poor test scores, inadequate preparation, or excessive absenteeism, then...

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