Question

Provide some examples of “defects per million” within the following industries (using six sigma):

Banking:

Healthcare:

Transportation:

Education:

Law Enforcement:

Answer 1

Banking:

How can leading financial services institutions like Bank of America and J.P. Morgan Chase be bragging about "six sigma", when this expression still has a manufacturing stigma? These two words had their call to fame in the 1990's when industrial companies started reporting the results from process improvement programs to their shareholders. Motorola (who owns the Six Sigma trademark for process improvement) followed by Allied Signal (now Honeywell), and then by Jack Welch in his charismatic leadership of the GE industrial conglomerate are among the most notable examples. Such fame stemmed from the accepted wisdom that making perfect widgets is better than producing defective ones, as customers prefer dependable and predictable manufactured goods rather than putting up with items of wildly variable quality.

While Six Sigma means virtually zero defects (fewer than 3.4 per million) and predictable quality, what really ended up propelling these methodologies within these industrial giants was an appetite for bottom line performance, competitive advantage and cultural change. It turns out that these process improvement methods simplify and speed up production while eliminating defects and their associated waste. Consequently, Six Sigma processes perform much faster and cheaper. Competitors have a tough time matching such amazing quality and productivity standards through conventional techniques. And finally, Six Sigma improvement activities open up new dimensions of teamwork and empowerment for managers and employees.

How did these quantum improvements percolate into the conservative world of financial services? For many individuals, seeing is believing. GE Capital Services, a division from one of the giants with annual revenues in the 60 billion dollar range, has readily embraced this corporate improvement gift. It was also that a few visionary leaders in large financial institutions saw the opportunity to transport Six Sigma methods into the services arena as a break out strategy.

After many decades of tweaking, patching, convoluting and reconciling their administrative flows, financial institutions were stuck with fragmented and largely deteriorated processes that typically entail up to 90% of wasteful steps. Their customer satisfaction across other service and manufacturing companies ranked in the bottom tier, barely above the level of the Internal Revenue Service. The dependability of older processes was visibly low, to the point that airline customers were more likely to get their baggage delivered without any hassle than financial services customers seeing their transactions processed timely and accurately. Over the years, financial institutions had managed to educate their customers to put up with unacceptable quality. Therefore, improving old processes has become a quintessential source of customer satisfaction, cost efficiency, and competitive advantage.

Several visionary CEOs at financial institutions sensed a strategic opportunity to boost bottom-line performance and customer loyalty by improving ailing processes. Among others, Ken Lewis at Bank of America, Bill Harrison at J.P. Morgan Chase, Phil Humann at SunTrust, and Ken Chenault at American Express have explicitly mentioned their Six Sigma and quality reengineering programs for customer impact, efficiency and growth in their respective annual letters to shareholders. In the aggregate, visible process transformations at these companies have already contributed billions of dollars in cost efficiencies and revenue growth. A key challenge in attaining such performance gains is championing a process improvement culture across the organization.

To be effective, major business transformations in financial services require an end-to-end customer perspective that cuts across functional lines. Indeed, a distinctive feature of Six Sigma improvements is employing diverse methods and tools that focus on maximizing customer value through collaborative solutions. By adopting a customer perspective, financial institutions completely redefine the performance improvement opportunity by shifting the attention from tactical cost cutting measures at individual departments into a cohesive quest at their group or corporate levels to address critical and strategic business priorities.

A holistic process perspective also helps illustrate how financial institutions find strategic performance value in Six Sigma. For example, a widely adopted tool known as DMAIC (define, measure, analyze, improve and control), hinges on a systemic improvement process. A technique known as "Voice of the Customer" helps in revealing critical needs and issues from various surveys and feedback sources. Savvy institutions also incorporate an equivalent "Voice of the Employee" feedback, as employee performance affects the customer experience. At a business sponsor level, these critical needs and issues are then framed as a strategic problem or opportunity. Sponsors specify a high-level process scope and improvement target, and empower a project team to design and implement the targeted business transformation.

This is where the statistical aspects of Six Sigma may help financial institutions to fully understand the problem and set a baseline for process improvement. Financial transaction or service environments may provide abundant performance indicators that are relevant to the customer, and statistical process control tools may pinpoint problem areas. In any case, DMAIC plows through the maze of financial processes by employing a variety of problem and value-added analysis tools that drill down into deeper issues and root causes. Specialized team facilitation by "black belt" experts and quality professionals is pivotal to this improvement process. By framing relevant issues and root causes, cross-functional teams can then come up with breakthrough transformations (such as straight-through processing paths) that greatly simplify and speed up the process. The resulting end-to-end process improvements eradicate the sources of errors, customer dissatisfaction, and operational overhead. Project management techniques ensure the successful implementation of the required changes across business, operations and technology areas. To achieve sustainable results, these improvements are linked to institutional performance tracking and control mechanisms that gauge the actual return on investment and customer impact.

Account opening processes provide a classical example of how banking, securities, and insurance institutions have employed Six Sigma tools for visible performance improvements. As customers open accounts in order to transact in diverse financial products, they are especially sensitive to the time involved in the process, to any repetitive information requests or inaccuracies affecting their individual data. The account opening challenges increase as financial institutions seek to cross sell additional products from diverse business lines. For example, a retail customer relationship may span a combination of mortgage, credit card, brokerage, insurance, or investment management products. Traditionally, the people, processes, and technology involved across such wide product spectrum represent a disparate array that results in wasteful hand-offs, inconsistencies, and delays. In such context, opening an account may take several days, cost a few hundred dollars, and score low in customer satisfaction. By combining and rearranging multiple steps, institutions may streamline account opening through a standardized and flexible front-end solution that feeds relevant data to the underlying product processing capabilities. Total time could reduce to hours rather than days and cost get slashed to a fraction. Consequently, customer business is secured and their transactions start flowing earlier. This results in both tangible expense reduction and revenue growth.

Beyond the direct benefits attained through these process improvements, institutions find the Six Sigma toolkit to be a valuable management tool that fosters teamwork and customer-focused behavior. As financial institutions care about customer relationships, these tools bring unique capabilities to identify the variables that are most relevant to world-class performance in order to drive the appropriate process transformations. Despite its manufacturing and statistical roots, the Six Sigma methodology epitomizes a powerful approach for innovation and cross-functional collaboration in financial services. Customers and shareholders have welcomed the results.

Healthcare:

In December 1999, the Institute of Medicine (IOM) released a report that made health care providers and consumers alike sit up and take notice. The study by the IOM estimates 98,000 people die every year in the United States from medical mistakes made by healthcare professionals. In addition to the troubling death toll, the study suggests the nation’s price tag for these errors could be as high as $29 billion a year, and lists medical mistakes as the fifth leading cause of death in the country…behind heart disease, cancer, stroke and lung disease.

Further evidence of the need to address medical errors may be drawn from a benchmark study conducted by Harvard University for the state of New York. This study, extrapolated to the national population, suggested that 1.3 million people are injured each year in hospitals, and of that number, 180,000 will die from the injuries. Providing additional cause for alarm, the report also suggested that most of those injuries were actually preventable.

Another study in 1997 used trained observers to monitor care in an urban teaching hospital and documented discussions between physicians and nurses in clinical conferences for patients. The observers identified one serious adverse event in approximately 18 percent of the patients (ranging from temporary disability to death).

The statistics collectively speak for themselves. Clearly, though one may quibble over percentage points, the bottom line is that decisive action needs to be taken – sooner, rather than later.

Six Sigma’s Potential for Error Reduction

“Sigma” is a statistical measurement reflecting how well a product or process is performing. Higher sigma values indicate better performance, while lower values indicate a greater number of defects per unit. At Six Sigma – a rigorous and exacting approach to quality – defects are limited to just 3.4 per million opportunities. Organizations take aim at this lofty target by carefully applying Six Sigma methodology to every aspect of a particular product or process. This approach allows the redirection of time, energy and resources toward activities that bring real value to customers instead of forestalling and fixing defects in order to perform at a minimally acceptable level.

While Six Sigma has been steadily revolutionizing a diverse range of corporations, the approach is relatively new to the healthcare industry. Given the ominous and widely reported backdrop of medical mistakes, however, it’s evident that the healthcare setting provides distinct and vital opportunities for the application of this methodology to reduce errors at the clinical process or project level. Mounting evidence of success in other industries suggests definite patient/caregiver rewards to be reaped by deploying Six Sigma strategies and techniques within hospitals and health systems. If error reduction is warranted within industries such as plastics or electronics, it should be considered even more crucial to the delivery of healthcare. The exigency here is dictated by the fact that this particular line of work deals with nothing less than the precarious balance between life and death.

Charting a Course Toward Improved Patient Care

Once Six Sigma is introduced and begins to take hold within the realm of patient care, initial efforts will likely focus on existing processes that appear to be dysfunctional or more often prone to error. The Six Sigma approach to this type of process is referred to as DMAIC: Define, Measure, Analyze, Improve, Control. This may sound somewhat like previously tried operational improvement processes, and it also sounds like the nursing process itself which requires caretakers to assess, plan, implement and evaluate. Despite superficial similarities, Six Sigma is unlike any initiative formerly introduced to improve the quality of healthcare delivery.

The approach goes above and beyond other initiatives by removing guesswork and half-hearted implementation. At each step of the review process, the methodology forces participants to rigorously test assumptions and to document those tests. The methodology itself encourages the reduction of variability not only in the process immediately under investigation, but also in the overall approach to the investigation and improvement of processes throughout the organization.

Six Sigma healthcare projects currently underway in a few locations have already begun to reduce the number of defects in specific areas, including the nurse charting process and patient throughput in radiology. But there are many other patient care processes that seem to be begging for immediate attention and initiation of a Six Sigma review. It’s conceivable and reasonable to expect that the error rates cited in the IOM report could be reduced by process implementation in the following areas:

• Medication administration
• Site-marking for surgical or other procedures
• Assignment of patient caregivers
• Case management
• Patient falls
• Patient restraints
• Emergency department triage

Six Sigma alone may not be heralded as the savior of healthcare delivery in this country, but its judicious application along clinical lines, combined with the best treatment, technology and expertise available, will certainly improve care for the patient and diminish uncertainty for caregivers. Time will bear witness to the efficacy and extent of the transformation.

Transportation:

A Customer Service Rave

The following story didn't happen in a post office. This customer service rave happened in a UPS Store - its a simple story, but the impression it left on me will last a long time.

Burlington Northern Santa Fe, World Class Maintenance

Burlington Northern Santa Fe, one of the largest Railroads in the United States, has developed a system called World Class Maintenance (WCM) which includes several methodologies including Six Sigma and Lean Process.

Case Study: Improving the Flow of Cargo and Documents in a Shipping Company – Part 1 of 2

In this case study, a team wants to be sure their customer-focused business is satisfying its clients. This week, Part 1 focuses on reducing the wait times associated with transferring cargo and documents.

Case Study: Improving the Flow of Cargo and Documents in a Shipping Company – Part 2 of 2

In this case study, a team wants to be sure their customer-focused business is satisfying its clients. Part 2 looks at making more improvements using just-in-time (JIT) principles.

DMAIC Case Study: Accuracy of System-generated Service Routes

In this case study, a leading environmental services company used DMAIC to improve the accuracy of system-generated transportation routes for efficiently reaching its geographically dispersed customers.

Norfolk Southern Six Sigma

The company has also implemented the "Thoroughbred Operation Plan" (TOP), which optimizes the way they operate their rail network by improving on-time performance, reducing car handling, shortening routes, accelerating train speeds, and boosting asset utilization.

Penske, Beyond Six Sigma for Indy 500

Just to put into perspective how much Indy means to Penske, Six Sigma quality is a process that produces a maximum of 3.4 defects per million opportunities. But that is not good enough for race day - Penske expects perfection.

Piggybacking Air Filters to Save Shipping Costs

A recent Six Sigma project by Cummins Inc., a manufacturer of truck engines and related component technologies, found a way to save space, energy and money by rearranging the way the Columbus, Ind., USA-based firm shipped its products from the factory.

Six Sigma at CSX Corporation

For the past two years, we've had a team working literally "At the Customer, For the Customer" with CSX Transportation at their offices in Jacksonville, Florida.

Six Sigma at Union Pacific

Union Pacific (UP) has been using the Six Sigma methodology for a number of years to increase customer satisfaction, reduce failures, and conserve energy.

Transportation and Logistics Industry

These are Fortune 1000 and Global 500 companies in the Transportation and Logistics industry that are practicing Six Sigma.

Education:

Six Sigma education has become the most recent topic for discussion nowadays. Six Sigma education is aimed at imparting knowledge to the students about all respects of Six Sigma. Six Sigma education, based on the Six Sigma process improvement methodology, is meant for creating excellence in the field of academics.

Six Sigma has proved itself a strong tool in the corporate sector. With the boost in the development in the countries, the various universities have also realized the importance and thereby the implementation of the Six Sigma methodology in their academic program.

Six Sigma is the statistical approach to resolve the problems, which hinder the growth or the progress of any process. Hence, it is termed as a process melioration program. It lowers the number of possibility of defects to less than 3.4 defects per million opportunities, which thereby opens wide gates of success for any process. Six Sigma operates on an efficiency rate of 99.9997% and also aims at improving the quality level of the product, manufactured by the company. Sigma is the 18th letter in the Greek alphabet and Six Sigma signifies the six standard statistical deviations in mean, which limits the number of errors to less than 3.4 DPMO.

As mentioned, Six Sigma aims at improving the quality of the product. This is done, keeping in mind the needs and the demands of the consumers. When Six Sigma methodologies are applied in the fields of education and academics, the needs and the demands of the students are kept in mind, while designing the Six Sigma strategy.

Factors that Led to the Application of Six Sigma in Education: The following problems played the major role behind the involvement of Six Sigma methodology in education:

• Tuition fee of many institutes were rising because of which it became difficult for many students to study in their desired institutes.
• The cycle time required fulfilling the various formalities of the institution related to the registration and admission process was quite long.
• The value of the education was decreasing.
• The students demanded a better quality in academics to excel in their fields.
• The performance of the students with respect to their grades kept on going down.

Concept Behind Six Sigma in Education: The future of any company depends on its employees and their performance, keeping in mind the needs and the demands of the customers. When Six Sigma methodologies are implemented in the education sector, the teacher becomes the employee and the customers are the parents who pay the fee for their wards. Parents, who are paying the fee for their ward, expect a quality education to be bestowed to their wards, in return. By improving the teaching techniques and methodology, a teacher can help in increasing the performance level of the students and thus, can achieve the customer satisfaction.

Benefits of Six Sigma in Education:

• The factors delaying the admission process, registration process, information technology process, grants administration process, certification process, sequestration and purchase orders and the repairs and maintenance process, are identifiable and hence, they can be precluded with a statistical approach to the existing problem. This, in turn, reduces the cycle time of the process, lowers the cost involved in these processes and lowers the chances of defects.
• Tuition fee and the other fee involved decreases.
• The value of the education improves with improvement in quality.
• The positive changes made in the teaching methodology provide a positive result with respect to the good performance of the students.
• Apparently, the performance level of the students increases.
• A better ambience for innovation and creativity is observed.
• The reputation of the institute improves.
• With the Six Sigma methodology being involved in any teaching institute, parents can expect a quality education for their wards. As a matter of fact, there is a better level of customer satisfaction.
• With the reduction in the tuition fee, charged by any institute, more people would be able to admit their wards in the institutes and this would result into increase in literacy rate of the country increases.

By decreasing the number of defects to less than 3.4 defects per million opportunities, Six Sigma provides a boon to the quality education, being imparted in the institutes. Six Sigma has proved itself a very effective process, which can be used in any process, and the desired results can be achieved. By using the right techniques and methods while imparting education, the desired goals can be achieved in comparatively lesser time.

Law Enforcement:

At the heart of every laboratory quality assurance program should be standards, procedures and a fact based methodology used to develop processes and measure quality. Six Sigma is one such methodology.

The name Six Sigma is taken from the approach’s statistical roots. If a product or process achieves a Six Sigma level of consistency, then it is experiencing only 3.4 defects per million opportunities (DPMO). In other words, Six Sigma products and processes are 99.99966%. Six Sigma has been in existence for over thirty years. It has been implemented in numerous laboratories including Los Alamos National Laboratory, Quest Diagnostics, Abbott Laboratories and UNLV Biotechnology Center Forensic DNA Profiling Training Service Laboratory to name a few.

In Six Sigma, the laboratory uses a proven, five-phased approach known by the acronym “DMAIC” to gain improvements in process and product quality specifically to:

• Define the problem area in objective terms
• Measure the performance of products and processes
• Analyze the problems to identify root causes
• Improve the results by redesigning processes and reducing variation
• Control the processes to ensure the improvements are permanent

Why is the implementation of Six Sigma, or any quality assurance tool important to the success of the forensic laboratory? Every quality assurance tool is essential in insuring the reliability of the results of the examinations performed by the laboratory.   The reliability of the results of a forensic examination that protects a person’s liberty is second only to the reliability of the examination results that affect a person’s health.   Therefore, every effort should be made to ensure the reliability of the results of examinations that influence a precious thing. Six Sigma provides that tool.

Consider this. Philosophically the function of forensic science is to extract the truth beyond a reasonable doubt. However, there is a school of thought that insinuates that forensic laboratories are incapable of obtaining this level of confidence. Per Michael Saks States in his 2001 Arizona State Law Journal article “As it is practiced today forensic science does not extract the truth reliably. Forensic science expert evidence that is erroneous (that is, honest mistakes) and fraudulent (deliberate misrepresentation) has been found to be one of the major causes, and perhaps the leading cause, of erroneous convictions of innocent persons” (1)

The following headlines refer to errors in crime laboratories throughout the United States.   These stories appear to support Mr. Saks’ assertions.

• Detroit (2008)- The Detroit police crime lab was shut down by the city’s new mayor and police chief after an a preliminary audit indicated about a 10% rate of inaccuracies related to ballistics evidence testing involving firearms.
• Baltimore (2008)– In August, 2008 the city Police Department’s crime lab director is dismissed after it was determined that crime analysts have been contaminating evidence with their own DNA
• Seattle (2004)- A report in the Seattle Post-Intelligencer found that forensic scientists at the Washington State Patrol laboratory had contaminated tests or made other mistakes while handling DNA evidence in at least 23 cases involving major crimes over a three-year period, including eight instances in which analysts contaminated samples with their own DNA.