# Six Sigma: Principles & Process

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Lesson Transcript
Instructor: Natalie Boyd

Natalie is a teacher and holds an MA in English Education and is in progress on her PhD in psychology.

How can companies boost profits by lowering mistakes made? In this lesson, we'll examine the Six Sigma program, including what it is, where it came from, the key principles of Six Sigma, and the DMAIC process used in Six Sigma programs.

## Six Sigma

Gina owns a popular jewelry company, but there's a problem. She's noticed that about one in every thousand necklaces that her company produces has a faulty clasp. Now, one in every thousand doesn't sound so bad, but every time a necklace is made with a faulty clasp, it costs her company money. That's not good! To save money, Gina would like to reduce the number of necklaces with faulty clasps being made in her factory. But how could she do that?

Gina might want to try Six Sigma, which is a performance-enhancing and problem-solving program for businesses. The name Six Sigma is actually a statistical term that represents fewer than 3.4 errors per million opportunities for errors. In Gina's case, that would mean an average of 3.4 out of every million necklaces would have faulty clasps. Compare that to her current rate, which is 1,000 out of every million. Six Sigma would be much better!

The Six Sigma program was developed at Motorola in the 1980s and became very popular after GM adopted it with great success in the 1990s. In both cases, as with Gina's company, the goal was to reduce mistakes made. To help Gina implement the Six Sigma program, let's look at its principles and process.

## Principles

Gina thinks that Six Sigma could be very good for her company. After all, if she can reduce the number of necklaces with faulty clasps from 1,000 per million to 3.4 per million, she'll be saving a lot of money! But she wonders what, exactly, the Six Sigma program entails. There are four major principles to Six Sigma that Gina will need to understand before she can implement the program. They are:

1. Company-wide commitment is the only way to ensure success - For Six Sigma to work, the entire company has to be committed to working on improvement. From Gina all the way down to the lowest man on the totem pole, the entire company should be involved in the process.
2. Improvement is a continuous process - If Gina thinks that she can just fiddle with a few things and then reach perfection, she's wrong. Instead, Six Sigma looks at improvement as continuing to work hard to improve. For example, even if Gina's company makes thousands of necklaces with no faulty clasps, they'll still want to find ways to improve, such as becoming more efficient or making even stronger-than-average clasps.
3. Business processes can be measured, analyzed, and improved - As we'll see in a moment, the Six Sigma program is about the research of problems and implementation of solutions. If the problem is random, there's nothing Gina can do. That is, if the faulty clasps aren't a result of anything other than random chance, then Gina can't improve the process. But the Six Sigma program believes that problems are not random and, therefore, can be improved.
4. Scientific study can provide a guide for how to improve processes - Linked in with the idea of measuring, analyzing, and improving processes is the idea of systematic study of processes within a business. That is, Six Sigma treats business problems like science projects. The idea is to systematically study all aspects of a process to figure out what's causing the problem, and then come up with a plan for how to improve.

## Process

Okay, Gina gets the four main principles of Six Sigma. But how, exactly, can she implement the program? The actual process of the Six Sigma program is often abbreviated to DMAIC, which stands for define, measure, analyze, improve, and control.

Define is about figuring out the problem and goals to be addressed. For example, Gina wants to reduce the number of necklaces with faulty clasps being produced by her company. In defining the problem, Gina is making sure that she knows exactly what she's looking for results-wise.

Measure involves getting a baseline performance measurement. That is, Gina needs to know where they are starting. In her case, she knows that about one in every thousand necklaces has a faulty clasp - that's her baseline measurement.

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