What is Six Sigma

Consider this scenario. Suppose you are a wholesale vendor. You purchase mobile phones from some company and sell it to your customers. Let’s say for every 100 mobile phones sold to your customers you receive 10, 5, 0, 20 and 2 complaints. So average number of complaints you get from your customers is 7.4 for every 100 sales. But 7.4 complaints is not presenting the real situation. Sometimes you get 0 complaints and sometimes as high as 20. This leads you to uncertainty and you get dissatisfied. Because you can not commit to your customers the quality of the mobile phones received. Being dissatisfied you start looking for some other mobile company to purchase from. Thus the previous mobile company suffers a loss of business due to uncertainty caused by variation in defects. Six Sigma is a concept to reduce this uncertainty.

What is Sigma
In terms of mathematics, the word Sigma means variation from average or mean value. It’s also called standard deviation. In a way it measures dispersion1 around the mean value. When this definition is applied in business process, it measures the number of defects or failures occurring in a particular process when same process is measured 1 million times. The defects or errors occurring refer to Sigma level.

What is Six Sigma
So, naturally the question arises what is Six Sigma. Six Sigma is a concept and now it’s a management philosophy. Six Sigma refers to quality measurement in business process. According to one definition Six Sigma is defined as2: “A technical measure of number of unhappy customer experiences per million opportunities”. Or put in other words the number of defects produced per million repetitions.

Where Did Six Sigma Originate
Motorola was the first ever company in the world where the concept of Six Sigma originated in 1980s. Mikel Harry was the engineer responsible for this concept. After studying various processes at Motorola he noticed that too much variation in any process resulted in poor customer satisfaction. And hence the concept was born.
The first companies to adopt the concept of Six Sigma were HoneyWell and General Electric from which Six Sigma concept became popular.

Six Sigma Levels
Six Sigma levels refer to customer satisfaction levels. The efficiencies for different levels are: The efficiency is calculated as:
(1 million – Defects per million)*100/1 million

The highest performing companies come in categories of Six Sigma Level 5-6.

Lower performing companies come in Six Sigma Levels lower than 3. Such companies suffer impact on business and hence more problems due to high rate of customer dissatisfaction.

1. http://www.industryforum.co.uk/services/glossary/
2. George Eckes, the author of Six Sigma for Everyone
3. http://en.wikipedia.org/wiki/Six_Sigma

For those who want to learn more about Six Sigma for implementation, I have collected some books on Six Sigma, chosen from amazon. You can view the list for purchasing.