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July 2000
Volume 7 • Number 3

Contents

Six Sigma Beyond Manufacturing–
A Concept for Robust Management

Six-sigma quality describes a production process of highly robust quality; one that has very low variability compared with the tolerance limits specified for the product being made. Achieving six-sigma quality ensures both dependable quality and production efficiency. It is applicable not only to the production of goods and services, but to support processes as well. In this paper, six sigma is discussed as a metaphor for excellence and managerial thought, rather than a purely statistical concept. It is argued that six-sigma quality thinking is a means for robust management; one that is able to confront the challenges of a highly competitive and variable environment. This argument suggests the necessity of a systems view of an organization beyond its individual departments or processes, and a true appreciation of inherent variability in the system.


Key words: data quality, quality management, value creation

by Mustafa R. Yilmaz, Northeastern University and Sangit Chatterjee, Northeastern University

INTRODUCTION

An overarching objective for the top management of a modern-day business is the maximization of shareholder value as measured, for example, by the company’s stock price. In today’s global and highly competitive economy, stock price is strongly influenced by short-term financial performance. Although an acquisition or merger can sometimes produce a punctuated positive impact on shareholder value, long-term success of a company requires the creation of value in its core businesses in a sustained way. It is widely accepted that, in a manufacturing or product-oriented company, long-term performance ultimately depends on the quality and efficiency of production processes in delivering products that customers value. Thus, initiatives to improve quality and efficiency are usually focused on the product-related processes that are thought to have the highest impact on the bottom line.

In the 1980s, the vernacular of quality management was augmented by the addition of “six-sigma quality,” originating in the highly successful quality improvement efforts at Motorola. The new term was used to describe a manufacturing process of highly robust quality; one that has very low variability compared with the tolerance limits specified for the product being manufactured. Development of this capability would ensure both dependable quality and efficiency of the manufacturing processes. With a real example at Motorola, this idea has motivated other companies to undertake similar efforts.

The objective of this paper is to discuss six sigma as a concept that is applicable not only to goods and services, but also to the business processes that support production activities. Here, six sigma is used as a metaphor for excellence and managerial thought rather than a purely statistical concept. Even without technical details, six-sigma thinking can be a useful guide for robust management; one that is able to confront the challenges of a highly competitive and variable environment. These challenges include virtually instantaneous and worldwide availability information to customers, ever-increasing efficiency of economic markets, competition approaching theoretical levels, and the resulting downward pressure on prices and profit margins.