FAQs - Six Sigma

Lean is seen as providing the tools for waste elimination and cycle time reduction, whilst deeper Six Sigma analysis focuses further on understanding and removing the root causes of variation and reducing process defects by a considerable amount.

Overall savings will depend on the size of the deployment e.g. how many Six Sigma projects you can run and the size of your resource in terms of trained Black Belts and Green Belts. The level of maturity of your Six Sigma people will also have a bearing, for example newly trained people will typically start with ‘learner projects’ through which they can apply the tools and methodology on less complex and pressured process problems which may deliver lower levels of benefits than can be achieved by experienced belts.

Typical benefits delivered by mature belts would be as follows:

• Black Belts (full time) – £100k to £150k per project with the potential to run around four projects concurrently
• Green Belts (part time) – around £75k per project usually run sequentially

So in order to estimate benefits you will need to consider the following:

• The number and type of projects you can run
• The number of belts you can sustain on the programme
• The experience of the belts
• The ‘transferability’ of benefits from project throughout the organization

Finally, as with all improvement approaches ‘where you are starting from’ will influence your potential i.e. What is your process baseline performance? How much ‘low hanging fruit’ is there? What levels of performance are you targeting?

There are many examples of Six Sigma benefits across a range of sectors and industries. Motorola and GE are the most famous Six Sigma companies and their accounts will demonstrate significant benefits over the last 10 years. A summary of some companies is shown below:

• Allied Signal – Cost Savings Exceeding $800m annually
• General Electric - $2bn savings annually
• Network Rail - £27m in 2005
• Visteon - $100,000 per project
• EEV - £700,000 on £100m turnover in 2000
• Marconi Optical Components - £250,000 savings on £30m turnover in 2001
• General Domestic Appliances - £7.8m in 2000

The investment in effort in Six Sigma is high:

• Black Belts - full time
• Green Belts - 30% to 40%

Training will cost £10,000s subject to the size of the organization, but the return is far greater. GE invested $400m in Six Sigma in 1998 and got a return of over £1200m. Similarly, GDA (Hotpoint et al) invested £1m in one year and returned £3m.

Normally, in the first year, organizations will more than break even, as it starts its first projects. The second and subsequent years see increased returns.

Burge Hughes Walsh will train and support in year one, support in year and train ‘trainers’ (Black Belts) so that the company is self-sustaining.

A study in 1985 by Bill Smith, a Motorola engineer, found that:

• Delivered defects are directly proportional to the total number of defects found during manufacturing.
• Average cycle time per unit is directly proportional to the total number of defects per unit.
• Latent defects are directly proportional to the total number of defects found during manufacturing. 

This led Motorola to announce Six Sigma in 1987

Six Sigma works due to the following:

• It is driven by top level management.
• It is aligned to strategic business objectives.
• Six Sigma has universal application across the business.
• Projects are selected based on key business issues and will not be chosen if there is no tangible impact on the business.
• Six Sigma pays for itself; returns are far greater than investment.
• Benefits are visible and traceable; it focus is on profitability.

Per 1000 employees a typical organization would require:

• Master Black Belts 1
• Black Belts 4 – 10
• Green Belts 30 – 300
• Champions All Directors & Senior Managers

In addition, there will be involvement by other employees as team members (typically 4-8 per project, 1-4 projects per Black Belt per year).