Six Sigma

Six Sigma, developed by Motorola but made famous by General Electric, adds to the approaches of TQM. The Malcolm Baldrige award represents the United States' symbol of highest achievement for business excellence. It grew out of a focus on TQM but today seeks to broaden its coverage. ISO 9000 is an international standard for quality performance, deployed by many companies. The Web site for the Malcolm Baldrige award [9] compares these approaches:

Although all three are quality measurement systems, the Baldrige Criteria for Performance Excellence, ISO 9001:2000 Registration, and Six Sigma each offer a different emphasis in helping organizations improve performance and increase customer satisfaction.

Six Sigma

• concentrates on measuring product quality and improving process engineering.

• drives process improvement and cost savings. ISO 9001:2000 Registration

• is a product/service conformity model for guaranteeing equity in the marketplace.

• concentrates on fixing quality system defects and product/service nonconformities.

Baldrige Criteria for Performance Excellence

• focus on performance excellence for the entire organization in an overall management framework.

• identify and track all-important organizational results: customer, product/ service, financial, human resource, and organizational effectiveness.

The popular literature may lead you to believe that TQM was a management fad that failed to deliver on its promise and had outrun its applicability by the end of the century. A recent Six Sigma book asserts that it solves all of the problems that TQM experiences ([10], pp. 43-9). I consider TQM still to be quite successful, when applied appropriately, and Six Sigma to be part of the ongoing process of improving TQM.

The Baldrige criteria go beyond the Six Sigma literature in a number of areas, as noted above. At the February 1999 award ceremony in Washington D.C., the president of the United States noted that previous winners of the Malcolm Baldrige National Quality Award from 1988 to 1997 posted an impressive 460% return on investment, as compared to a 175% increase for the S&P 500 over the same period. Kevin Hendricks and Vinod Singhal [11] published results in April 1999 demonstrating that performance measures for TQM award-winning firms outstripping comparison control firms by two to one. For example, the TQM firms compared to non-TQM firms posted a 91% (versus 43%) increase in operating income, a 69% (versus 32%) increase in sales, and a 79% (versus 37%) increase in total assets. Although this performance dipped in 2002 due to the dominance by high-technology firms, it has risen again in 2004.

Six Sigma takes its name from a long-term goal of seeking to reduce defects, such that process output conforms with customer requirements within ±six sigma of mean process output, leading to a defect rate of less than 3.4 per million opportunities (the approach allows the mean output to float ±1.5 sigma). Sigma is the statistical measure of the process standard deviation. Six Sigma considers variation as the evil to focus on.

Six Sigma builds on Deming's plan^do^check^act (PDCA) cycle, defining the improved cycle as define^measure^analyze^improve^control (DMAIC). Six Sigma uses understanding of variation and statistical tools very heavily, key points we will focus on with CCPM. However, TOC takes the approach of using statistical knowledge to develop and deploy simple solutions, while Six Sigma tends toward rigorous application of the statistical tools. All of the Six Sigma approaches can complement applying CCPM, if you avoid the danger of suboptimizing on a single process versus focusing on exploiting the system constraint.

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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