UV0868

SIX SIGMA: A BASIC OVERVIEW

In the nearly 30 years since it was first introduced, Six Sigma1 has evolved to mean
different things in different circumstances and in different organizations, so that now it is
difficult to identify a single, universally accepted definition. That said, however, Six Sigma
always has been and remains a rigorous, data-based approach to improving the performance of
an organization.

Motorola, Inc., developed Six Sigma in the early 1980s, but it was over the ensuing
years—as other Fortune 500 companies, like General Electric under Jack Welch, adopted Six
Sigma and reported on its significant benefits in a variety of settings—that the Six Sigma
approach to performance improvement really caught on.

The purpose of this note is to provide a basic overview of Six Sigma by explaining its
underlying principles and most commonly utilized methods while providing a brief review of its
history. Finally, the note will provide a brief summary of a Six Sigma case study illustrating the
practical application of Six Sigma.

What Exactly Is Six Sigma?

As Six Sigma has gained in popularity, its definition has become more and more diluted,
so that today it appears as if virtually any quality-improvement process can be called Six Sigma,
and few seem the wiser for it.

For practical purposes, however, Six Sigma can be defined as a specific methodology to
develop and implement quality improvements in an organization’s critical processes by
rigorously measuring and identifying variations from customer specifications in those processes
and adjusting them or creating entirely new processes to keep variations at an acceptable level.

1
Six Sigma is a registered trademark of Motorola, Inc.

This technical note was prepared by Alan Zimmerman, Research Assistant, under the supervision of Robert D.
Landel, the Henry E. McWane Professor of Business Administration. It was written as a basis for class discussion
rather than to illustrate effective or ineffective handling of an administrative situation. Copyright  2007 by the
University of Virginia Darden School Foundation, Charlottesville, VA. All rights reserved. To order copies, send an
e-mail to [email protected]. No part of this publication may be reproduced, stored in a retrieval
system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying,
recording, or otherwise—without the permission of the Darden School Foundation.

This document is authorized for use only in PROF. SAJI GOPINATH's Lean Six Sigma- Section B (EOM-02) at IIM Kozhikode - EPGP Kozhikode Campus from Dec 2024 to Jun 2025.
 -2- UV0868

In answer to the question of what makes Six Sigma unique, General Electric says:

Six Sigma, of course, did not invent the concept of quality improvement. Rather,
Six Sigma’s innovation was to focus on the variation in defects as a metric for
defining quality and to provide an objective and mathematical basis for defining
the critical processes that require improvement.

Often, our inside-out view of the business is based on average or mean-based

measures of our recent past. Customers don’t judge us on averages; they feel the
variance in each transaction, in each product we ship. Six Sigma focuses first on
reducing process variation and then on improving the process capability.

Customers value consistent, predictable business processes that deliver world-

class levels of quality. This is what Six Sigma strives to produce.2

Specifically, Six Sigma seeks to focus an organization on

 defining customer/user requirements,

 aligning processes to meet those requirements,
 using metrics to minimize variations in processes,
 rapidly and permanently improving processes.

The name Six Sigma is derived from the Greek letter sigma (denoted by lowercase s),
which is a statistics term used to define standard deviation or variability from a mean. Because a
better-quality process or set of processes is less likely to produce a defect in any given product or
operation, the higher the quality, the higher the sigma—in other words, the fewer variations from
customer specifications.

Six Sigma is a level of quality producing a frequency of defects per million operations
(DPMO) that is six standard deviations from a given mean (typically defined as the average of
the upper and lower limits of customer specifications for a given product or operation) based on
a normalized distribution.3 An operation in this context is defined as any activity that is critical to
an organization’s mission, such as manufacturing a component, processing a form, or
understanding a customer’s complaint.

2
General Electric, What Is Six Sigma? The Roadmap to Customer Impact.
3
The creators of Six Sigma at Motorola thought 6s was the best possible performance. Because DPMO at each
sigma is calculated exponentially, 7s is generally not considered to be a statistically meaningful number. That said,
however, there are arguably processes that exceed Six Sigma.

This document is authorized for use only in PROF. SAJI GOPINATH's Lean Six Sigma- Section B (EOM-02) at IIM Kozhikode - EPGP Kozhikode Campus from Dec 2024 to Jun 2025.
 -3- UV0868

Mathematically, 6s translates into 3.4 DPMO, as shown in Table 1:4

Table 1. DPMO calculations.

Sigma DPMO Percentage of Successful Operations

1 691,462 30.9%
2 308,538 69.1%
3 66,807 93.3%
4 6,210 99.4%
5 233 99.98%
6 3.4 99.99966%

What constitutes an acceptable level of quality for a business? Obviously, that depends
on numerous factors, but any business operating at less than 3s (93.3% of its operations are
successful) is generally considered unsustainable. A quality level of 4s (99.4% of its operations
are successful) might be quite an acceptable, even superior, performance for a fast-food
restaurant, while that same level might be inadequate for a commercial airline.

Implementation of Six Sigma

The principal methodologies used to implement Six Sigma are the DMAIC and DMADV
models—acronyms, respectively, for Define, Measure, Analyze, Improve, and Control, and
Define, Measure, Analyze, Design, and Verify.5 Each of these components is roughly defined as
follows:

 Define: Understand customers’ needs and develop both minimum and ideal specifications
to meet those needs. Methods can include traditional means to solicit customer feedback,
such as surveys or personal visits, as well as brainstorming and historical data.
 Measure: List and describe all processes critical to manufacturing goods or providing
services consistent with specifications. Develop or use available statistical data, such as

4
A 3.4 DPMO reflects long-term process capability. At short-term process capability, a 6s level of quality
would actually produce only .002 DPMO, based on a normalized distribution. Owing to the nature of processes,
however, shifts and drifts naturally occur in the mean of the distribution of a component value over time because of
such factors as changes in personnel and suppliers, movements of machinery, wear and tear on machinery, etc. As a
result, the long-term performance for a single process has been calculated as likely to deviate from its natural center
by approximately 1.5s at any given point in time.
5
Typically, DMAIC is used to improve existing processes, while DMADV is used to create new processes.
Other processes, beyond the scope of this note, have been developed for Six Sigma methodologies, including
DMADOV (Define, Measure, Analyze, Design, Optimize, Verify), DMEDI (Design, Measure, Explore, Develop,
Implement), IDOV (Identify, Design, Optimize, Validate), and I2DOV (Invent, Innovate, Develop, Optimize,
Validate).

This document is authorized for use only in PROF. SAJI GOPINATH's Lean Six Sigma- Section B (EOM-02) at IIM Kozhikode - EPGP Kozhikode Campus from Dec 2024 to Jun 2025.
 -4- UV0868

historical information, yield reports, analysis reports, or production data, to define the
baseline level of performance and determine potential problem areas.
 Analyze: Comprehend the reasons behind defects by narrowing the potential list of
problems to a manageable number and specifically determining the causes of variation in
products or services, determining the limitations of the processes to ensure that they are
capable of achieving the desired objective, and identifying ways to narrow the gap
between baseline and desired performance.
 Improve (Design): Develop specific solutions to problems, plan and conduct experiments
implementing those solutions, and measure the results, modifying the solutions, as
appropriate, as the experiments proceed.
 Control (Verify): Establish that the new system is stable, within acceptable variation
limits, and predicable. Institutionalize the new system through revised procedures,
policies, and other management systems, and develop and implement ongoing
measurements to monitor and gauge performance on an ongoing basis.

Six Sigma requires buy-in and properly trained individuals at all levels, beginning at the
very top. In the absence of senior executive support, implementers of Six Sigma projects will
lack the necessary clout and credibility to succeed. Trained implementers of Six Sigma projects
are as follows:6

 Black Belt: Six Sigma experts highly skilled in the application of rigorous statistical tools
and methodologies to drive business-process improvement, Black Belts who have
significant experience and achieve positive results can reach the status of a Master Black
Belt. Black Belts are able to tackle most complex projects and train other Black Belts and
Green Belts, and can be in-house or consultants brought in from outside an organization.
 Champion: Charged with the day-to-day responsibility for improving the business
process, Champions are responsible for ensuring that the project team has the required
resources.
 Green Belt: Trained in the methodology and tools needed to work effectively on a
project, Green Belts typically work under the direction of Black Belts at the workplace
level to ensure the implementation of process changes but may handle less complex
projects on their own.
 Yellow Belt: Trained in Six Sigma techniques, perhaps as part of company-wide training,
these employees are not expected to actively engage in quality-improvement activities.

6
These definitions are drawn from Motorola University, with the exception of Yellow Belt, which is drawn
from isixsigma.com, a Web site devoted to Six Sigma.

This document is authorized for use only in PROF. SAJI GOPINATH's Lean Six Sigma- Section B (EOM-02) at IIM Kozhikode - EPGP Kozhikode Campus from Dec 2024 to Jun 2025.
 -5- UV0868

History and Evolution of Six Sigma

Six Sigma was developed at Motorola in the mid-1980s. Two Motorola engineers, Mike
Harry and Bill Smith, are generally acknowledged as its creators, although Six Sigma is actually
based on several techniques of quality management that had been known and practiced for
decades. It was officially introduced as a long-term quality program at Motorola in January 1987.
In 1988, Motorola was among the first recipients of the Malcolm Baldrige National Quality
Award.

Over the next several years, Harry sought to leverage Six Sigma throughout Motorola, as
well as formalize training in its implementation, so that knowledge could migrate from quality
engineers throughout the organization. After a discussion about Six Sigma training with a friend
who studied martial arts, Harry hit upon the “belt” nomenclature for designating levels of
expertise.

As originally conceived, Six Sigma was a metric for improving the quality of
manufactured components; in fact, its mathematically based nomenclature represents one of its
more significant innovations, namely, the use of a more rigorous standard in which defects are
measured per million rather than per hundreds or thousands of opportunities. Following its initial
successful implementation, Motorola extended Six Sigma to other critical business processes,
where it eventually evolved into an improvement methodology.

In 1993, Harry moved to Allied Signal, which also adopted Six Sigma. Within six
months, the company reported significant improvements in costs and savings. Allied Signal’s
CEO, Lawrence Bossidy, had once worked under Jack Welch at General Electric, and Welch,
impressed with Allied Signal’s improvements, invited Bossidy to speak at GE’s Corporate
Executive Council meeting in 1995. GE then conducted a cost-benefit analysis on Six Sigma
implementation. It showed that the company was running at a quality level of 3s to 4s and that
Six Sigma could reduce costs by between $7 billion and $10 billion.

In 1996, Welch introduced Six Sigma at GE. A significant step in Six Sigma’s evolution
at GE was Welch’s strong backing and commitment, which included basing executive
compensation and advancement, in large part, on the adoption of Six Sigma.

Since then, dozens of companies have implemented Six Sigma, including Bank of
America, Caterpillar, and Merrill Lynch. According to the American Society for Quality, 82 of
the country’s 100 largest corporations have used it.7 Formal training of Six Sigma specialists,
which began at Motorola in the early 1990s, had, within the decade, spawned a cottage industry
of training, certification, software tools, and consultancy, not to mention a publishing
phenomenon.7
As of 2006, Motorola claimed to have reaped approximately $17 billion in savings from
Six Sigma projects.8 But Six Sigma has its detractors as well.
7
An Amazon.com search for Six Sigma, for example, yields 3,860 results.
8
About Motorola University, www.motorola.com/content/0,3071-5801,00.html.

This document is authorized for use only in PROF. SAJI GOPINATH's Lean Six Sigma- Section B (EOM-02) at IIM Kozhikode - EPGP Kozhikode Campus from Dec 2024 to Jun 2025.
 -6- UV0868

For example, in 2005, the magazine Fast Company reported on Six Sigma: “No one
disputes the worthiness of Six Sigma’s intentions, much less the statistics. But a quick survey of
a handful of industries, using product-quality ratings from J. D. Power and Associates, led [us] to
believe that while [Jack] Welch may be right that you can’t afford not to understand Six Sigma,
you can’t necessarily afford to use it either.”9

The article went on to note that even as Xerox touted its Six Sigma credentials, it ranked
lower in quality than Canon, Toshiba, and Hewlett-Packard. The article also cited Larson Boats,
which had two Six Sigma Black Belts on staff but ranked last among the 11 companies that built
express cruisers.

A controversial but widely discussed 2006 study by consultant Charles Holland (who
espouses a management philosophy that competes with Six Sigma) found that of 58 large
companies that had announced the adoption of Six Sigma, the stock prices of 91% trailed the
S&P 500.10

The primary objections to Six Sigma are that even as it cuts costs and increases profits, it
stifles innovation and can wear down employee morale. Robert Nardelli’s tenure as CEO at
Home Depot presents an excellent example. Writing about Home Depot in June 2007,
BusinessWeek claimed:

Six Sigma was used to streamline the check-out process and strategically place
vacuum cleaner displays. But by-products of the program irritated many at the
retailer’s stores, who thought its constant data measurement and paperwork
sapped time given to customers. The bottom line on Nardelli’s tenure:
Profitability soared, but worker morale dropped and so did consumer sentiment.
Home Depot dropped from first to worst among major retailers on the American
Customer Satisfaction Index in 2005. 11

9
Martin Kihn, “Six Sigma Stigma,” Fast Company, September 2005.
10
Betsy Morris, “New Rule: Look Out, Not In,” Fortune, July 11, 2006. Holland’s methodology, not to mention
his conflict of interest, has been strongly critiqued.
11
Hindo, “Six Sigma: So Yesterday?”

This document is authorized for use only in PROF. SAJI GOPINATH's Lean Six Sigma- Section B (EOM-02) at IIM Kozhikode - EPGP Kozhikode Campus from Dec 2024 to Jun 2025.
 -7- UV0868

Six Sigma Case Study

Motorola and 3M: Improving the Global Shipment of Semiconductor Products12

Background

In 2004, as the price of semiconductors began to fall, Motorola searched for ways to
reduce excess costs in its global supply chain as a means to boost margins. In addition, Motorola
sought to reduce the possibility of damage to its semiconductor wafers, which had grown
progressively thinner and more fragile during transport. The process Motorola eventually
adopted would have to be implemented globally among seven fabrication and two assembly/test
facilities, as well as among several subcontractors, all spanning a variety of languages and
cultures.

Existing packing methods relied on corrugated containers with polyurethane-foam fillers.

Wafers were packed vertically. The method was expensive because air-freight charges are based
on dimension, not weight, and disposal of the packing materials raised environmental issues that
varied from country to country.

Motorola believed a new packing system could address all of these issues and requested
proposals from several vendors.

Motorola opted to work with 3M Industrial Services and Solutions Division to develop
and implement a new system. The firms decided to apply Six Sigma methodology to the project
because both used Six Sigma in manufacturing operations and therefore were familiar with it.

Define

In the define phase, 3M focused on creating a project charter to establish the objectives,
financial justifications, and scope of the project and then translating Motorola’s objectives into
3M service requirements.

The project’s ongoing goals were defined as follows:

 Improving the reliability of wafer transportation

 Eliminating damage
 Reducing freight expense
 Reducing the cost of packing materials
 Increasing productivity
 Improving customer satisfaction

12
This case study is drawn from 3M Business Development, “Six Sigma–Based Methodology—A
Motorola/3M Case Study,” Future Fab International, www.future-fab.com/documents.asp?d_ID=2308#.

This document is authorized for use only in PROF. SAJI GOPINATH's Lean Six Sigma- Section B (EOM-02) at IIM Kozhikode - EPGP Kozhikode Campus from Dec 2024 to Jun 2025.
 -8- UV0868

Measure

Motorola’s current processes were documented and critical input and output variables
were determined. The teams analyzed the input variables through a cause-and-effect matrix to
determine key factors that could affect objectives. The cleanliness of each of the packing
system’s parts, for example, was a key factor in reducing wafer damage during packing and
transport.

Analyze

Analysis included reducing the number of output variables, assessing high-risk inputs,
and identifying means of eliminating them.

Improve

After testing a variety of Motorola wafers in multiple packing configurations, 3M

performed a side-by-side comparison of its proposed solution with Motorola’s existing system.
Motorola collected extensive data from several fabrication and assembly sites.

The horizontal-wafer shippers ultimately developed by 3M for Motorola allowed wafers

to be stacked on one another, with air cushioning protecting the shippers. Four horizontal
shippers, each containing 25 wafers, can be placed in each air cushion, which holds them firmly
in place. In addition, the shipping components are reusable or, if not reusable, recyclable, making
them environmentally friendly.

The system minimizes wafer damage and significantly reduces freight costs.

Control

After understanding each facility’s specific requirements and identifying and removing
variables, project leaders assigned by 3M and Motorola rolled out the new transport system for
use across Motorola’s operations, and 3M trained Motorola employees at each site.

This document is authorized for use only in PROF. SAJI GOPINATH's Lean Six Sigma- Section B (EOM-02) at IIM Kozhikode - EPGP Kozhikode Campus from Dec 2024 to Jun 2025.
 -9- UV0868

Web Sites for Further Reading

i Six Sigma is a comprehensive Six Sigma Web site (www.isixsigma.com).

See the Motorola University Web site (http://www.motorola.com/motorolauniversity.jsp) for Six
Sigma at Motorola.
“General Electric—The Roadmap to Customer Impact” describes the company-wide approach to
Six Sigma at one of the world’s better-known followers of the methodology. The article can be
found at http://www.ge.com/sixsigma/SixSigma.pdf.
The American Society for Quality Six Sigma Forum contains excellent downloadable articles
(www.asq.org/sixsigma).

This document is authorized for use only in PROF. SAJI GOPINATH's Lean Six Sigma- Section B (EOM-02) at IIM Kozhikode - EPGP Kozhikode Campus from Dec 2024 to Jun 2025.
 -10- UV0868

Bibliography

3M Business Development. “Six Sigma–Based Methodology—A Motorola/3M Case Study.”

Future Fab International 16 (February 3, 2004), http://www.future-
fab.com/documents.asp?d_ID=2308#.

Gale, Sarah. “Building Frameworks for Six Sigma Success—Case Studies—Quality

Management Philosophy.” Workforce (May 2003),
http://findarticles.com/p/articles/mi_m0FXS/is_5_82/ai_101531687. See also
www.workforce.com.

General Electric. “The Roadmap to Customer Impact,”

http://www.ge.com/sixsigma/SixSigma.pdf.

Hindo, Brian. “Six Sigma: So Yesterday?” BusinessWeek (June 11, 2007).

Kihn, Martin. “Six Sigma Stigma.” Fast Company (September 2005).

Morris, Betsy. “New Rule: Look Out, Not In.” Fortune (July 11, 2006).

Motorola University. “Six Sigma in Action,” http://www.motorola.com/motorolauniversity.jsp.

Process Quality Associates, Inc. “The Evolution of Six Sigma,”

http://www.pqa.net/ProdServices/sixsigma/W06002009.html.

Process Quality Associates, Inc. “What Is Six Sigma,”

http://www.pqa.net/ProdServices/sixsigma/W06001001.html#WhatisSixSigma.

Pyzdek, Thomas. “Motorola’s Six Sigma Program.” Quality Digest (December 1997),
http://www.qualitydigest.com/dec97/html/motsix.html.

Simon, Kerry. “DMAIC versus DMADV.” i Six Sigma,

http://www.isixsigma.com/library/content/c001211a.asp.

“Six Sigma.” Wikipedia, http://en.wikipedia.org/wiki/Six_Sigma.

“six sigma.” businessballs.com, http://businessballs.com/sixsigma.htm.

“Six Sigma—What Is Six Sigma?” i Six Sigma,

http://www.isixsigma.com/sixsigma/six_sigma.asp.

This document is authorized for use only in PROF. SAJI GOPINATH's Lean Six Sigma- Section B (EOM-02) at IIM Kozhikode - EPGP Kozhikode Campus from Dec 2024 to Jun 2025.