Six Sigma is based on the premise that an organization actually derives financial benefit from the exercise in question. I have been performing TQM, operational and performance improvement projects for over 15 years, and I have yet to see tangible direct bottom line expense reductions (i.e. staff reduction or asset disposition) related to a six sigma or related project. Management has never implemented cost reductions at the project level, only at the corporate or business unit level when faced with a poor economy, business cycle downturn, or incompetent management. Any impact of theoretical savings from Six Sigma is far outweighed by the cost of development, implementation and compliance of changed procedures.
It sounds like your company could benefit from the “softer” side of Six Sigma. That’s the benefit that I see in Six Sigma over TQM. It involves what GE calls “change acceleration” which is terribly important in politically charged environments — I don’t know yours, but it sounds that way.
A good book identifying many of the hurdles and solutions is called Leading Change by Kotter.
Please let me know if I can help in any way.
You’re right. People will fill the time available until you get rid of them….
C Northcote Parkinson
Work expands to fill the time available for its completion.
Economist 19 Nov 55
You or I are confident enough to work ourselves out of a job, but for someone who pushed a button for the last 15 years knows his job isn’t easily replaced when he hits the street in a layoff from a lean improvement..
People aren’t stupid! When you get rid of people when 6S or other lean improvements are made…..there goes any further improvements.
How many black belt projects have you done? Cost reduction isn’t the only driving factor in six sigma projects. When TQM was introduced to our management team x number of years ago we thought it was a waste of time. It was to slow and not comprehensive enough to react to real issues. It was forced on us by a group of weak minded idiots that did not work for a living. They thought they always knew the real story but did not, looks like nothing has changed. Those tools did not work then and they do not work now. I hope my company is competing with yours. Six Sigma does work in the hands of someone that knows what there doing and the biggest roadblocks that derail success are quality improvement experts such as yourself that never look outside of the vacuum they live in.
When a knife is used by a murderer, fire by an arsonist, a wheel by a drunken driver, electricity by a mafioso or religion by a fundamentalist, do you blame the knife, fire, wheel, electricity or religion as a Scam?
Anything is only as good as the use it is put to.
In all fairness, dl’s point is taken, that savings from Six Sigma can be so low as to not affect the bottom line in comparison to other cost cutting initiatives. A highly enlightened management is required to get the best of 6S.
First let me say, I am ashamed of the responses you have received to your post thusfar. They are not what I would expect from people who have been around the block.
You state that “Management has never implemented cost reductions at the project level, only at the corporate or business unit level when faced with a poor economy, business cycle downturn, or incompetent management.” Having said this, tell me where TQM derives its benefits (i.e., either cost savings or customer satisfaction). In other words, what is it that TQM accomplishes that Six Sigma does not?
Truth is, both TQM and Six Sigma are both intended to make good numbers go up and bad numbers go down. If this does not lead to more money and more happy customers, then your leadership is simply ignorant of what the good numbers and bad numbers are.
Six Sigma is not a theoretical concept. It is a set of tools, allbeit incomplete in its original form, intended to lead to logical and verified improvements to any business (in the broadest since of the term) process.
As far as the cost of Six Sigma goes, I agree. Too many idiots are charging way too much for helping companies with Six Sigma. However, the proper implementation of Six Sigma will lead to meaningful (more money or more happy customers) results for that business.
Finally, as far as compliance goes, this is a challenge for ALL approaches to business improvement. If companies cannot maintain control over their machines, material, methods, and people, then their is no hope of obtaining and keeping gains from any approach to process or business improvement.
Very nicely put.
As with any change management tool, they are only as effective as the teams trying to implement them. Senior management, the change management teams and the people involved in the areas of change all have to work together to ensure change is managed effectively and efficiently.
The tools for change are not at fault – it is that hand in which the tool is held that causes the problem!
Dear Dr. Scott,
When was the last time you personally ousted people from the payroll or generated increased sales, from a Six Sigma project which you projected had an ROI on it. Your response is a rather naive academic answer to a practical problem. Improvement is only improvement if it hits the top line or the bottom line. Six Sigma is a program which only squeezes incremental improvement out of efficient companies, and falls on deaf ears for poorly performing companies. Real improvement comes from the basics of managing a business effectively and efficiently in a competitive environment. Competition too survive is what drives change, not programs or management fads.
It is with the greatest respect that I can only somewhat
agree your position. The ability to run an organization in
an effective and efficient manner is a fundamental skill of
every good businessperson. Few would disagree with
this point. When a business lacks this skill it is generally
destined to failure (unless it owns the DOS operating
Recall the teachings of Mr. Sloan and those of
Rockefeller, Welch, and the other great industrial leaders.
The problem does not seem to be one of grasping the
need for efficiency and effectively, but rather one how of
best to achieve it (in an effective and efficient manner).
How can we be efficient and effective when it comes to
improving the effectiveness and efficiency of something?
Certainly this is a strange paradoxical loop. Seems to me
that this is what Six Sigma is all about (from a
But who am I? This often-humbled-fat-bald-headed-guy
(OHFBHG) has spent his career in engineering, not
business management. But having been around Six
Sigma for many years, the OHFBHG has seen so many
business executives struggle with the question: What
should be done next? It absolutely amazes me how few
people are willing to provide an answer and silently bear
the consequences. If their action proves even mildly
successful, in terms of economic success, the lessons
learned are highly modeled and exemplified, but then
again, so are their failures (even the mild ones).
The bottom line to this discussion is simple. They have
carried the burden of leadership and the responsibility of
economic consequence. They have spent many nights
pacing the floor. I often wonder how many on this
website have born such heavy weights, other than
through academic exercise and intellectual projection.
Until a person has carried significant P&L responsibility,
all is just rhetoric. Even this OHFBHG can admit that.
Would you not agree?
Hard & Soft Dollar, Balance Sheet & Income Statement
Do you have any idea what the above terms, and the concepts they refer to, mean?
Having worked close to 100 projects, and coached a few hundred more, it is easy to see why you would draw your conclusions – you don’t know what you are doing!
One of the fundamental tenents of Six Sigma is that it is Process focused, not people focused. I strongly advocate that no one should be displaced as a result of Six Sigma projects, rather, they should either be moved to productive (cash generating) work, or transferred to the OPEX (CI, etc) dept’s to help with further projects.
Soft dollar savings, you are correct, require further action from management to be realized. However, hard dollar savings, such as reduction of BOM reqmts, reduction in scrap, reduction in inventories, rework costs, returns cost, etc. are abundant, and directly affect the Income Statement or Balance sheet (the latter is a 1 time hit, however)
Work a well scoped, well defined & chartered project with hard dollar savings (eg a REAL project) and you will see differently.
First, I am not sure if you knew the man or know of his works. But, I can say both is true with me. Not only did Dr. Deming and I know each other, but I studied under him for three years. Not to stop your reading here, but I find it disrespectful that you adopt the name you did for your post. My search finds that this is the first time you have used this name, and perhaps should be the last time. Unless, it is truly your name.
Now, to your questions with my answers in bold:
“When was the last time you personally ousted people from the payroll or generated increased sales, from a Six Sigma project which you projected had an ROI on it.”
In 2002 I had to advise one of my SVPs that the only way to realize gains from a one of our Six Sigma projects (given the constraints that she placed on us) was to release employees. So she released them! I did not personally fire these folks, yet it was done at my word and regret. I felt we could have leveraged the process improvements made to keep the employees on. Last I heard, 18 additional employees had to be hired in early 2003 to meet the demand created from the increased quality which accompanied the efficiencies we achieved. I guess I should have gone with my gut in 2002.
“Your response is a rather naive academic answer to a practical problem. Improvement is only improvement if it hits the top line or the bottom line.”
I am not at all clear on where you derive your perception of my naivete, but I feel you are mistaken. I have been doing what is now called Six Sigma, TQM, ISO, 5S, TPM, Workout, etc. before you (or most others here) ever heard of these terms. However, I do agree that improvement is only improvement if it makes more money or more happy customers (close to what you say). Just some advice, try not to call names or make baseless insults. It only shows you own ignorance.
Six Sigma is a program which only squeezes incremental improvement out of efficient companies, and falls on deaf ears for poorly performing companies.
The smallest process improvement in a key metric I have EVER seen achieved using Six Sigma is 6%. That was with a Fortune 100 company. If you call 6% incremental, ok. But I will take such increments every six months any damn day! As far as Six Sigma falling on “deaf ears in poorly performing companies”, a former privately-held client of mine in California had eight employees and close to $200,000 in revenue when we met. Now they are a Fortune 500 company you likely do business with whether you know it or not. By the way, do you know of a better approach to process improvement than Six Sigma?
Real improvement comes from the basics of managing a business effectively and efficiently in a competitive environment. Competition too survive is what drives change, not programs or management fads.
Finally, you are right (at least mostly right)! Again, what I ask you is, what helps companies be more efficient and effective than Six Sigma? I do expect you to answer that question. I do question why you feel only in a “competitive environment” though. Perhaps you managed a US automotive company in the ’70s. You must believe that improvement should not be sought unless the competition makes you do it first.
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