Disaster Recovery Plan for Health Sector

A Prospective and Retrospective Study of Six Sigma

Former Student

ABC University

Background

According to Tjahjono et al. (2015), Six Sigma was incepted by Motorola in the 1980s after discovering that the poor quality of the company’s products cost much capital in production. Approximately, the cost of production was about 15%-20% of the company’s sales revenues. Its production process had low capacity and a significant percentage of its products matched neither the market standards nor the customers’ requirements. As a result, Motorola incurred huge losses in scrapping, field word, rework, and return or recall of the products that it had already shipped to customers (Sujova, Simanova, & Marcinekova, 2016).

The company became aware that improving production process so that only a few or none of its products had defects could significantly reduce the costs associated with poor quality. In fact, Pande et al. (2008) explained that such an approach would directly boost the company’s productivity. The desire to upgrade Motorola’s production prompted its engineer to propose the idea of using the Six Sigma strategy to achieve a quality standard below 3.4 DPMO (Defects Per Million Opportunities). Since the quality standard of that time was 35,000 DPMO, Motorola set a high target.

Six Sigma brought much success to Motorola, Therefore, it was adopted by many Fortune 500 companies during the 1990s. The company’s performance also improved. Some of the large organizations that topped the list of the first adopters of Six Sigma were 3M, AlliedSignal (the current Honeywell), and GE, with the latter using it in various new practices. Later on, GE stated that it had made Six Sigma part of its business strategy and culture. GE’s use of Six Sigma brought much success, which encouraged several small and medium-sized businesses to adopt it. With nearly four decades since its inception, Six Sigma’s purposes have outgrown defect-rate measure to become a crucial, robust improvement method with a set of unique beneficial practices that suit nearly all the operations of a company (Sujova, Simanova, & Marcinekova, 2016).

Description of Problem

Six Sigma was first incepted by Motorola, and has been used by many organizations from that time. While there is anecdotal evidence to support the overall effectiveness of Six Sigma, academic research on it appears to be in its early phases. This paper’s research problem focuses on the link between Six Sigma and management, with much emphasis laid on how it is used in quality management. In providing a solution to this problem, the research will first review the current study on Six Sigma, after which it will conduct a critical analysis of Six Sigma based on management literature.

Research Objectives

The primary objective of this research is to incorporate the concept of Six Sigma in companies with a different (lower) system of managing quality to determine the change in their process performance. Since this paper primarily uses the findings of the past studies on this topic, it will also strive to bridge the gaps in the existing literature on Six Sigma. Lastly, it will demonstrate how the target companies can use Six Sigma to ensure improvement of their production process and sustainable quality.

Methodology

Given the qualitative nature of this research, it will use a set of methods that conform to its nature. In collecting data, this research will use literature review, conduct an analysis of the current quality management strategy used in the target companies, and application proceeding of the concept of Six Sigma in the target enterprises. In the case of the latter, the research will use the findings from the questionnaire survey to select the enterprises in which the concept of Six Sigma should be applied. Primarily, it will focus on the industries where companies do not use the Six Sigma Methodology (SSM) and achieve low return on equity.

In analyzing the current quality management strategy used in the target companies, the research will use the questionnaire method to ask the managers about the overall quality management in the company. The questions will be grouped in three categories – standard characteristics (such as the number of employees, orientation of company operations, branch, location, ownership, and company’s type of production); financial results (including turnovers and indicators of return on equity); and internal operations, including quality control, processes, and production. For the literature review method, the research will discuss Six Sigma in tune with findings of past studies.

The Sample

Primarily, this research will focus on the industries where companies do not use the Six Sigma Methodology (SSM) and achieve low return on equity. A sample of 63 companies will be reviewed to establish how they can use Six Sigma to improve their overall management operations. A questionnaire method will be used to obtain relevant data on the company’s quality control strategies.

Limitations

Primarily, the use of Six Sigma is intended to improve the company’s overall quality, but it is also worth noting that the approach is associated with several limitations. For example, quality culture, a project scope and selection, and measuring and defining metrics are some of the drawbacks that could affect the success rates of Six Sigma. Additionally, social and technical supports also affect the successful implementation of Six Sigma (Zugelder, 2012; Mehrjerdi, 2011).

Findings

The results of the questionnaire survey will show the rate at which the selected companies use Six Sigma structured in line with product types, industrial branches, and company sizes. A cross-tabulation depicting the relative and absolute frequency of how individual groups utilize the Six Sigma method will be used to tabulate the findings. The groups will be divided into the application of the strategy used in process management in various industrial branches, production type, and the system used in the implemented quality management in line with the ISO standards.

The findings will also demonstrate both the expected and measured frequencies to verify the hypothesis that using Six Sigma increases the amount of ROE (return on equity). The relationship between these parameters will be demonstrated in the following tables:

Empirical ROE Frequencies

Expected ROE Frequencies

The findings will also present both the expected and measured frequencies to verify the hypothesis that using Six Sigma boosts the system of implemented quality management in tune with the ISO standards. The relationship between these parameters will be demonstrated in the following tables:

Empirical ROE Frequencies

Expected ROE Frequencies

Conclusion and Recommendation

The results of the questionnaire survey will confirm the positive impacts of using the Six Sigma methodology in driving the quality control and management as discussed by other researchers. In particular, it will demonstrate that the companies that use this management tool do not only attain higher performance in the business operations, but also boost their overall corporate performance. With the much emphasis laid on attaining its objectives, the research will also present the statistical data that support the fact that depending on the use of the Six Sigma methodology improves the company’s quality management operations. Additionally, the study will outline the flexibility of this management tool by demonstrating how it compliments other quality management strategies such as the ISO standards. Just as the research proposal revealed, Six Sigma utilization is associated with some limitations such as quality culture, a project scope and selection, and measuring and defining metrics. For that reason, this research recommends that any company that plans to incorporate the use of Six Sigma should establish strategies for mitigating the mentioned drawbacks. Additionally, the research holds that the companies that do not use Six Sigma should focus on incorporating it with their management operations to improve their overall performance. Despite its limitations, this management tool is associated with several benefits that address nearly all areas of the company’s activities.

References

Mehrjerdi, Y. Z. (2011). Six-Sigma: methodology, tools and its future. Assembly Automation, 79-88.

Pande, P., Neumann, P., & Cavanagh, R. (2008). Zavádíme Metodu Six Sigma ( 1st ed.). Brn: TwinsCom.

Sujova, A., Simanova, L., & Marcinekova, K. (2016). Sustainable Process Performance by Application of Six Sigma Concepts: The Research Study of Two Industrial Cases. Sustainability, 1-21.

Tjahjono, B., Ball, P., Vitanov, V., Scorzafave, C., Nogueira, J., Calleja, J., & Minguet, M. (2015). Six Sigma: a literature review. Bedford: Cranfield University.

Zugelder, T. J. (2012). Lean Six Sigma Literature: A Review and Agenda for Future Research. Ohio : The Ohio State University.