The advancement & effect of six sigma approach in a modern


Published on

Published in: Business, Technology
  • Be the first to comment

No Downloads
Total Views
On Slideshare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

The advancement & effect of six sigma approach in a modern

  1. 1. International Journal of Mechanical Engineering and Technology (IJMET), ISSN 0976 –6340(Print), ISSN 0976 – 6359(Online) Volume 4, Issue 3, May - June (2013) © IAEME32THE ADVANCEMENT & EFFECT OF SIX SIGMA APPROACH IN AMODERN INDUSTRY AND CURRENT BUSINESS ENTERPRISEPrabhat Kumar Sinha, Nikhlesh Noel Singh *Shepherd School of Engineering & Technology, Department of Mechanical Engineering &Applied Mechanics, Sam Higginbottom Institute of Agriculture Technology & Sciences,Allahabad, Uttar Pradesh UP 211007, India.ABSTRACTSix Sigma has been well applied in manufacturing Industries through improvingprocesses that use the DMAIC methodology. Some larger corporations have integrated SixSigma so well into the corporate culture that it can be considered the DNA of the company.A number of successful cases have been reported of six-sigma-based management activitiesdramatically enhancing a company’s strategic performance over study periods of severalyears. However there are number of case studies in the literature regarding Six Sigma, thereis a lack of empirical studies that adopt statistical approaches. This study proposes a researchmodel based on Six Sigma to test whether management activities improve corporatecompetitiveness. Empirical results showing that six sigma activities do indeed contribute toprocess management refreshment, quality improvement, and finally corporatecompetitiveness. In addition the possible changes and outcomes which occour by applyingthis concept of six sigma in various Industries. We hope that this study enables furtherrigorous studies investigating six sigma as a major strategic activity.Keywords: Six sigma management activities, corporate competitiveness, Projectmanagement; Lessons learned; Organizational culture; Quality; Business systemsimprovement.1. INTRODUCTIONIn the pursuit of higher operational effectiveness an organizational performance,scholars and practitioners are looking for new approaches to improve operationalINTERNATIONAL JOURNAL OF MECHANICAL ENGINEERINGAND TECHNOLOGY (IJMET)ISSN 0976 – 6340 (Print)ISSN 0976 – 6359 (Online)Volume 4, Issue 3, May - June (2013), pp. 32-46© IAEME: Impact Factor (2013): 5.7731 (Calculated by GISI)www.jifactor.comIJMET© I A E M E
  2. 2. International Journal of Mechanical Engineering and Technology (IJMET), ISSN 0976 –6340(Print), ISSN 0976 – 6359(Online) Volume 4, Issue 3, May - June (2013) © IAEME33performance, boost profitability, and enhance competitiveness. Six sigma management is aquality management method recently adopted by many leading companies. Six sigma is adata-driven method that focuses on the customer and leads a company to attain the bestquality level. A leading company is one with the ability to forecast uncertainties and maintaincompetitiveness in this fast changing environment.Six sigma is a very basic and systematic approach based on statistical data, whichprovides companies with a way to reduce these uncertainties. Companies are applying sixsigma for successful business operation and are carrying out properly set strategies faster andmore effectively than their competitors. In addition, six sigma is a method that gives priorityto preventive measures that remove the root cause of the defects rather than searching fordefects after they occur. In addition, it performs an important role in providing a commonlanguage for organizations that are trying to form a sustainable improvement culture. Sixsigma is also a systematic change management process that uses data to measure and analyzethe deviation of a certain process from its goals.Standardization of the measurement process can be achieved, and six sigma alsoprovides the knowledge and technology needed for change. Although companies that applysix sigma to achieve business innovation can improve their corporate competitivenessthrough quality improvement.Besides, as the studies considering the results of six sigma business activities thathave been introduced domestically and internationally were mostly focused on case studies, astrict statistical and empirical analysis is now required. Companies that are applying sixsigma business activities also need an objective measurement of the affects of the six sigmamanagement activities on their corporate competitiveness.However, in order to accomplish these goals it will be necessary to develop factorsthat can empirically verify six sigma management activities and create a systematic researchmodel of how those factors affect corporate competitiveness. Considering theserequirements, we propose the following research goals for this study:First, we propose proper factors (or constructs) that will make six sigma managementactivities statistically significant.Second, by setting a structural equation model among the appropriate factors, weempirically analyze the affects of six sigma management activities on corporatecompetitiveness.Third, based on the empirical analysis results, we establish the practical significanceof six sigma management activities. Due to the paucity of previous research in this area, itwas difficult to conduct research about six sigma. Therefore, in this study we haveintroduced some factors from the total quality management (TQM) performancemeasurement method in order to explore the basis for the factor formation of six sigmamanagement.2. TWO PERSPECTIVES OF SIX SIGMA PROCESSES2.1. Statistical viewpointSix sigma method has two major perspectives. The origin of six sigma comes fromstatistics and statisticians. Hahn et al. (1999), Hoerl and Snee (2002), and Montgomery(2001) discuss the six sigma method from a statistical, probabilistic, and quantitative point ofview. From the statistical point of view, the term six sigma is defined as having less than 3.4defects per million opportunities or a success rate of 99.9997% where sigma is a term used to
  3. 3. International Journal of Mechanical Engineering and Technology (IJMET), ISSN 0976 –6340(Print), ISSN 0976 – 6359(Online) Volume 4, Issue 3, May - June (2013) © IAEME34represent the variation about the process average (Antony and Banuelas, 2002). If anorganization is operating at three sigma level for quality control, this is interpreted asachieving a success rate of 93% or 66,800 defects per million opportunities. Therefore,the six sigma method is a very rigorous quality control concept where manyorganizations still performs at three sigma level (McClusky, 2000).2.2Business viewpointIn the business world, six sigma is defined as a ‘business strategy used toimprove business profitability, to improve the effectiveness and efficiency of alloperations to meet or exceed customer’s needs and expectations (Antony and Banuelas,2001). The six sigma approach was first applied in manufacturing operations and rapidlyexpanded to different functional areas such as marketing, engineering, purchasing,servicing, and administrative support, once organizations realized the benefits.Particularly, the widespread applications of six sigma were possible due to the fact thatorganizations were able to articulate the benefits of six sigma presented in financialreturns by linking process improvement with cost savings.3. UNDERSTANDING SIX SIGMA3.1. Six sigma strategies, tools, techniques, and principlesSix sigma is a systematic, data-driven approach using the define, measure,analysis, improve, and control (DMAIC) process and utilizing design for six sigmamethod (DFSS) (GE 2004). The fundamental principle of six sigma is to ‘take anorganization to an improved level of sigma capability through the rigorous application ofstatistical tools and techniques’ (Antony et al., 2003). It generally applies to problemscommon to production.3.2. Six sigma strategies, tools, techniques, and principles applied to achieveBusinessAnbari (2002) pointed out that six sigma is more comprehensive than prior qualityinitiatives such as Total Quality Management (TQM) and Continuous QualityImprovement (CQI). The six sigma method includes measured and reported financialresults, uses additional, more advanced data analysis tools, focuses on customer concerns,and uses project management tools and methodology.He summarized the six sigma management method as follows:Six Sigma= TQM+CStronger Customer Focus+Additional Data Analysis Tools+Financial ResultsCProject Management3.3. DMAIC processDMAIC is a closed-loop process that eliminates unproductive steps, often focuses on newmeasurements, and applies technology for continuous improvement.
  4. 4. International Journal of Mechanical Engineering and Technology (IJMET), ISSN 0976 –6340(Print), ISSN 0976 – 6359(Online) Volume 4, Issue 3, May - June (2013) © IAEME35Fig.1 DMAIC Phase3.4. DFSS methodologyDFSS is a systematic methodology utilizing tools, training and measurements toenable the organization to design products and processes that meet customer expectations andcan be produced at Six Sigma quality levels (Mader, 2002). The goal of DFSS is to achieveminimum defect rates, six sigma level, and maximize positive impact during the developmentstage of the products. It is used to develop new products or services with a six sigma criteria,capability, and performance (Tennant, 2002). It utilizes variety of quality oriented tools andtechniques to meet customer requirements and has shown an increase in life cycle profits. AsTreichler et al. (2002) noted the essence of DFSS is ‘predicting design quality up front anddriving quality measurement and predictability improvement during the early design phases.’Essentially, the DFSS process is focused on new or innovative designs that yield a higherlevel of performance. De Feo and Bar-El (2002) summarize seven elements of DFSS asfollows.1. Drives the customer-oriented design process with six sigma capability2. Predicts design quality at the outset3. Matches top–down requirements flow down with capability flow up4. Integrates cross-functional design involvement5. Drives quality measurement and predictability improvement in early design phases6. Uses process capabilities in making final decisions7. Monitors process variances to verify that customer requirements are metDFSS has been used and proven successful at Dow Chemical (Buss and Ivey, 2001), W.R.Grace, (Rajagopalan et al., 2004), Delphi Automotive (Treichler et al., 2002), NCRCorporation (McClusky, 2000), General Electric (Weiner, 2004), and other process orientedindustries.MeasureAnalyzeImproveControlDefine
  5. 5. International Journal of Mechanical Engineering and Technology (IJMET), ISSN 0976 –6340(Print), ISSN 0976 – 6359(Online) Volume 4, Issue 3, May - June (2013) © IAEME36DESIGN FOR SIX SIGMAInitiate andPlan theProjectCaptureCustomerNeedsDevelopdesignConceptsDevelopdetaileddesignImplementfull scaleprocesses.Define Measure Analyze Design VerifyDELIVERABLESTeamCharterChiefTechnologyOfficerHigh LevelDesignDetailedDesignPilotProductTOOLSManagement Leadership Failure Mode and Effect Analysis (FMEA)Project Management Business Process SimulationCustomer Research Quality Function DeploymentDesign Scorecards Rapid Product PrototypingBenchmarking ETC
  6. 6. International Journal of Mechanical Engineering and Technology (IJMET), ISSN 0976 –6340(Print), ISSN 0976 – 6359(Online) Volume 4, Issue 3, May - June (2013) © IAEME374. REPORTED BENEFITS OF IMPLEMENTING SIX SIGMA4.1. Manufacturing sectorMotorola was the first organization to use the term six sigma in the 1980s as part ofits quality performance measurement and improvement program. Six sigma has since beensuccessfully applied in other manufacturing organizations such as General Electric, Boeing,DuPont, Toshiba, Seagate, Allied Signal, Kodak, Honeywell, Texas Instruments, Sony, etc.The reported benefits and savings are composed and presented from investigating variousliteratures in six sigma (Weiner, 2004; de Feo and Bar-El, 2002; Antony and Banuelas, 2002;Buss and Ivey, 2001; McClusky, 2000).4.2. Financial sectorIn recent years, finance and credit department are pressured to reduce cashcollection cycle time and variation in collection performance to remain competitive. Typicalsix sigma projects in financial institutions include improving accuracy of allocation of cashto reduce bank charges, automatic payments, improving accuracy of reporting, reducingdocumentary credits defects, reducing check collection defects, and reducing variation incollector performance. Bank of America (BOA) is one of the pioneers in adopting andimplementing six sigma concepts to streamline operations, attract and retain customers, andcreate competitiveness over credit unions. It has hundreds of six sigma projects in areas ofcross-selling, deposits, and problem resolution. BOA reported a 10.4% increase in customersatisfaction and 24% decrease in customer problems after implementing six sigma (Roberts,2004). American Express applied six sigma principles to improve external vendor processes,and eliminate non-received renewal credit cards. The result showed an improved sigma levelof 0.3 in each case (Bolt et al., 2000). Other financial institutions including, GE CapitalCorp., JP Morgan Chase, and SunTrust Banks are using six sigma to focus on and improvecustomer requirements and satisfaction (Roberts, 2004).4.3. Healthcare sectorSix sigma principles and the healthcare sector are very well matched because of thehealthcare nature of zero tolerance for mistakes and potential for reducing medical errors.Some of the successfully implemented six sigma projects include improving timely andaccurate claims reimbursement (Lazarus and Butler, 2001), streamlining the process ofhealthcare delivery (Ettinger, 2001), and reducing the inventory of surgical equipment andrelated costs (Revere and Black, 2003). The radiology film library at the University of TexasMD Anderson Cancer Center also adopted six sigma and improved service activities greatly(Benedetto, 2003).Also in the same institution’s outpatient CT exam lab, patient preparation timeswere reduced from 45 min to less than 5 min in many cases and there was a 45% increase inexaminations with no additional machines or shifts (Elsberry, 2000).4.4. Engineering and construction sectorIn 2002, Bechtel Corporation, one of the largest engineering and constructioncompanies in the world, reported savings of $200 million with an investment of $30 millionin its six sigma program to identify and prevent rework and defects in everything from designto construction to on-time delivery of employee payroll (Eckhouse 2004). For example, sixsigma was implemented to streamline the process of neutralizing chemical agents, and in a
  7. 7. International Journal of Mechanical Engineering and Technology (IJMET), ISSN 0976 –6340(Print), ISSN 0976 – 6359(Online) Volume 4, Issue 3, May - June (2013) © IAEME38national telecommunications project to help optimize the management of cost and schedules(Moreton, 2003).4.5. Research and development sectorThe objectives of implementing six sigma in R&D organizations are to reduce cost,increase speed to market, and improve R&D processes. To measure the effectiveness of sixsigma, organizations need to focus on data driven reviews, improved project success rate, andintegration of R&D into regular work processes. One survey noted that as of 2003 only 37%of the respondents had formally implemented six sigma principles in their R&D organization(Johnson and Swisher, 2003). Rajagopalan et al. (2004) reported that the development andmanufacturing of the new prototype at W.R. Grace (Refining Industry) was cut to 8–9months from 11–12 months by implementing the DFSS process. Fig. 2 shows the conceptualbenefits and improvement of implementing six sigma in R&D projects.5. KEY FACTORS FOR IMPLEMENTING A SUCCESSFUL SIX SIGMAPROGRAMAntony and Banuelas (2002) and Banuelas Coronado and Antony (2002) presentedthe key ingredients for the effective introduction and implementation of six sigma in UKmanufacturing and services organizations as the following.1. Management commitment and involvement.2. Understanding of six sigma methodology, tools, and techniques.3. Linking six sigma to business strategy.4. Linking six sigma to customers.5. Project selection, reviews and tracking.6. Organizational infrastructure.7. Cultural change.8. Project management skills.9. Liking six sigma to suppliers.10. Training.11. Linking six sigma to human resources (Wyper and Harrison, 2000). Johnson and Swisher(2003) provided useful implementation tips for successful six sigma applications as:A. Sustained and visible management commitment.B. Continuing Education and training of managers and participants.C. Setting clear expectations and selecting project leaders carefully for leadership skills.D. Picking and selecting strategically important projects.Starbird (2002) argued that six sigma process is part of a management system to achievebusiness excellence in organizations and presented keys to six sigma success as:(1).Start process management: identify core processes, customer needs, and measures.(2).Drive performance through reporting: Leaders must maintain and report opportunity lists,status of active projects/resources, and results from finished projects.(3).Integrate championing of active projects: Select and charter projects and require updatesduring existing staff meetings.
  8. 8. International Journal of Mechanical Engineering and Technology (IJMET), ISSN 0976 –6340(Print), ISSN 0976 – 6359(Online) Volume 4, Issue 3, May - June (2013) © IAEME39Based on various literature reviews and discussions with six sigma leaders inorganizations that adopted the six sigma method, the authors identified four key elements ofsuccessful six sigma applications.Six Sigma, process management, and innovationThe development and introduction of any innovation initiative (such as Six Sigmaas a process management program) can be viewed as a mechanism for organizationaladaptations since they are used or reinforced by organizations in response to environmentalchanges (Brown and Eisenhardt, 1997). Despite the differences among process managementprograms (such as TQM, Baldrige Award, Six Sigma) in terms of scope, methodology andtheir approach all of them have a common mission: improving organizational processes(Hammer and Champy, 1993; Ittner and Larcker, 1997; Harry and Schroeder, 2000). Becauseof the focus of process management programs in variance reduction (efficiency) efforts forimproving the operations and continuous improvement of activities in a firm, over-emphasison these programs affects the balance between exploitation and exploration (Benner andTushman, 2003). In other words, too much focus on process management will have negativeeffects on innovation, which may negatively affect the long-term performance of the firm(Garvin, 1991; Hill, 1993). To find the impact of process management on firm performancein both short term and long-term, we need to take a closer look on the effect of processmanagement on innovation.6. PROCESS MANAGEMENT AND INNOVATIONProcess management influences innovation of the firm in several ways. First, itattempts to balance the allocation of resources to activities across the firm (Christensen andBower, 1996; Klassen and Menor, 2007). Second, process management deals withminimizing sources of variability in internal and external activities (Pannirselvam et al.,1999; Silver, 2004). This may result in focusing on specific types of innovations that areconsistent with reducing variability in the processes (Henderson and Clark, 1990). That is thecase with Six Sigma programs where it is aimed at innovation in design and developmentprocesses (Harry and Schroeder, 2000). To understand the effect of Six Sigma on innovationwe need to be familiar with different types of innovations. Researchers have looked atinnovation from different perspectives. Innovations could affect the technological base of thefirm, the subsystems/routines/procedures, and the markets/customers the firm is serving.Abernathy and Clark (1985) classify technological innovation into two dimensions:(1) The degree to which they are close to current technological path and(2) Their degree of closeness to existing markets/customers.While incremental changes are built upon the current technological capabilities ofthe firm, by fundamentally changing the current technological base firms can exhibit radicalchange (Green et al.,1995). Technological innovations affect the systems and processeswithin a firm (Tushman and Murmann, 1998). They may affect the subsystems, routines orprocesses without affecting the integration and interconnectedness among processes androutines, which results in modular innovation. On the other hand, they may bringarchitectural innovation, change the way subsystems, routines, and procedures are linked,and totally restructure the configuration and interconnectedness among procedures and
  9. 9. International Journal of Mechanical Engineering and Technology (IJMET), ISSN 0976 –6340(Print), ISSN 0976 – 6359(Online) Volume 4, Issue 3, May - June (2013) © IAEME40routines of the firm. Technological innovations can also affect the market/ customers the firmis serving. They may address the needs of the existing customers/markets or thenew/emerging customers and/or markets (Christensen and Bower, 1996). Whileimprovement in current technological base are suitable for addressing the needs of existingcustomers/market, products and/or services designed for new customers/markets needdifferent type of technological capabilities, technologies that are fundamentally differentfrom the current technological trajectory of the firm (Christensen, 1998).Since Six Sigma programs translate the voice of customers into independent processimprovement projects, they enhance the technological innovation of the firm. Accordingly, itis proposed that P: Six Sigma programs significantly improve technological innovation of afirm. The key decision regarding Six Sigma programs is to determine their impact on(1) The technological base of the firm (incremental vs. radical),(2) The processes, procedures, and routines within the firm (modular vs. architectural), and(3) New customers/markets or existing customer/markets (sustaining vs. disruptivetechnologies).6.1. The effect of Six Sigma on innovation and firm performanceSix Sigma programs attempt to improve the processes with the firm with the focuson reducing variability in organizational processes and routines (Linderman et al., 2003;Schroeder et al., 2008). A popular framework for Six Sigma is DMAIC which encompassesDesign, Measure, Analyze, Improve, and Control phases (Hammer, 2002; Linderman et al.,2003, 2006; Knowles et al., 2005). This structured methodology helps Six Sigma programs toidentify the root causes of the problem, look for solution, and improve the process. It shouldbe noted that in the search for improvement in organizational routines and procedures, SixSigma efforts are primarily focused on improving efficiency within an existing technologicalbase of the firm (Benner and Tushman, 2003). Because of the focus of process improvementprograms on continuous and incremental change, they are best suited for improving theexisting technological trajectory of the firm. In the pursuit of reducing variability andincreasing efficiency, Six Sigma programs ensure that the new technological innovation (inprocesses or systems) are very close to the current technological base of the firm.Accordingly, P1: Six Sigma programs positively affect incremental innovation of the firm.Six Sigma programs improve organizational procedures and routines. Six Sigma assumes thatthe current organizational processes are sound but they need minor (incremental)improvement to be efficient (Hammer, 2002). Six Sigma does not change the integrity andinterconnectedness of organizational processes; rather, in improves them. Therefore, P2: SixSigma programs positively affect modular innovation in the firm. According to Douglas andErwin (2000) Six Sigma is a concept that concentrates on the customer rather than theproduct. The primary target for Six Sigma improvement efforts are the existing customers.Information and data from the existing customers are collected and analyzed, and Six Sigmaprojects are defined to improve the processes in order to meet customer requirements.Organizations strive to reduce or eliminate the number of customer complaints received withthe perceptions that fewer complaints equate to increased customer satisfaction. This willresult in introducing new products and/or services which is targeted to the existingcustomers. Therefore, P3: Six Sigma programs positively improve innovation for the existingcustomers. Knowledge about customers’ perceptions and attitudes regarding an organization,and its products and/or services will greatly enhance its opportunity to make better business
  10. 10. International Journal of Mechanical Engineering and Technology (IJMET), ISSN 0976 –6340(Print), ISSN 0976 – 6359(Online) Volume 4, Issue 3, May - June (2013) © IAEME41decisions. Harry (1998) states that Six Sigma’s philosophy recognizes that there is a directcorrelation between the number of defects, wasted operating costs, and the level of customersatisfaction. The focus of Six Sigma has been to address the needs of the exiting customers(Linderman et al., 2003; Evans and Lindsay, 2005). Customer requirement are translated intoquantifiable goals. Kwak and Anbari (2012) argue that effective implementation of SixSigma projects requires strong customer focus. In fact, within the DMAIC process (Design,Measure, Analyze, Improve, and Control) understanding the requirements and expectationsof customers needs to be addressed. Pande et al. (2000) recommend that organizations firstlook at the problem from the customer side when dealing with a problem. It is believed that acustomer- oriented firm will focus on integrating the input from customers into its Six Sigmaprojects, where it will tackle projects that have the highest impact on customer satisfaction(Johnson, 2005). All of the above confirms the focus of Six Sigma on addressing the voice ofthe existing customers. Accordingly, P4: Six Sigma programs improve customer satisfactionfor the existing customers. As indicated earlier Six Sigma projects focus on reducingvariability of the organizational processes and routines. Organizations use Six Sigmainitiatives to deal with a specific problem. In that regards, they tailor their processimprovement efforts to address a specific problem raised by existing customers. In theirpursuit for process improvement, organizations improve their existing products/services tomeet or exceed customers’ expectation. Such incremental improvements could have twobenefits for the firm; first, it improves customer satisfaction for their existing customers, andsecond, it could attract new customers due to the changes they have made to the products.Accordingly, at the early stage of Six Sigma implementation, firms have the opportunity toenhance their customer base through either focusing on their existing customers oraddressing the needs of new customers. The challenge for the firms at their early stage of SixSigma initiative is to whether continue their efforts on improving their existingproducts/services (focusing on existing customers) or restructure their existing processes(aiming at new customers). Therefore, it is expected that at the early stage of Six Sigmaproject organizations develop the capabilities to develop new products or services; theseproducts could be either within the existing technological trajectory of the firm (incrementalinnovation) or follow an entirely new technological trajectory (radical innovation). In fact,due to the way they translate and integrate customer requirements, Six Sigma projectsprovide firms with a foundation to either incrementally develop their existing processes orradically change their entire processes. In that regards, as firms devote their resources andattention to improving their existing processes and routines with focus on their existingcustomers, they may ignore radical innovation. In other words, while at the early stage of SixSigma firms may be motivated to restructure their processes and routines to achieve radialinnovation, too much emphasis on Six Sigma projects shifts the direction of the firms toincrementally improve their current technological trajectory. Therefore, P5: Six Sigmaprograms have a bi-polar effect on radical innovation of the firm. The customer orientation ofthe firm (existing vs. emerging customers) moderates the effect of Six Sigma on radicalinnovation. Consistent with the previous proposition, Six Sigma projects (at their early stageof implementation) provide firms with the foundation to address the needs of both existingcustomers and the new customers (i.e. the opportunity to address process improvement andinnovation). However, as organizations focus too much on Six Sigma projects, theysystematically focus on the needs of their existing customer base. Therefore, one couldexpect that too much emphasis on Six Sigma projects may paralyze organizations to developnew products/services for their new customers. Accordingly, P6: Six Sigma programs have a
  11. 11. International Journal of Mechanical Engineering and Technology (IJMET), ISSN 0976 –6340(Print), ISSN 0976 – 6359(Online) Volume 4, Issue 3, May - June (2013) © IAEME42bi-polar effect on innovation for new customers. Focus on existing customers moderates theeffect of Six Sigma on innovation for new customers. The relationship among Six Sigma,innovation and firm performance has been presented in Fig. 1. Six Sigma projects have apositive effect on incremental innovation of the firm (P1). Customer satisfaction for existingcustomers is increased as organizations invest more on their Six Sigma projects (P4). As theresult of improvement in customer satisfaction along with incremental innovation firmperformance will be enhanced.7. SIX SIGMA AND FIRM PERFORMANCEThe degree to which Six Sigma programs are effective can be contingent upon thestability of the customer base or the environment. When organizations are serving a specificcustomer base and the customer base is expected to remain stable over time, Six Sigmaprograms can maintain a strong focus on translating the voice of customers into improvementprojects. This is due to the fact that within stable customer base, customer requirements areexpected to remain stable over time. The same pattern could be envisioned within stablemarkets/environments. In such an environment, the rate of innovation and change ispredictable, and patterns of innovation and change can be easily projected. More specifically,the focus of innovation and change is on improving organizational processes (efficiency)rather than improving new products (innovation). Petroleum industry could be a goodexample of a stable customer base. While the price of oil fluctuates dramatically over time,the gas stations provide standard and specific products. To improve organizationaleffectiveness in such an environment firms need to focus on improving their operationaleffectiveness to reduce the operational cost, resulting in reducing variability in theirprocesses and procedures. In contrast, in consumer electronics new products and services areoffered so frequently that requires restructuring, redesigning and reevaluating organizationalprocesses and routines by organizations. Accordingly, it is proposed that P7: To the extentthat the customer base is stable, Six Sigma programs positively affect firm performance. Inother words, customer base moderates the effect of Six Sigma programs on firmperformance. It has been shown that contextual variables such as industry structure andcompetition affect the implementation of process management programs (Das et al., 2000;Lai and Cheng, 2003; Zhao et al., 2004). While within evolving markets the rate ofinnovation and change is dramatic stable markets exhibit little change in industry structureand intensity of the competition. Constantly evolving markets require constant change indeveloping new products and services, where firms are forced to introduce new products andservice to remain competitive. The locus of innovation in dynamic markets is product/serviceinnovation. This inclination toward competitiveness requires exploration and learning ratherthan exploitation and control. In contrast, stable markets/environments are characterized byestablished products/services, where little attention is given to developing new productsand/or services. In such environments, organizations need to focus on process improvementand efficiency rather than innovation since the sources of competitive advantage is processimprovement. Therefore, it is proposed that P8: To the extent that the environment is stable,Six Sigma programs positively affect firm performance. In other words, the environmentmoderates the effect of Six Sigma programs on firm performance.
  12. 12. International Journal of Mechanical Engineering and Technology (IJMET), ISSN 0976 –6340(Print), ISSN 0976 – 6359(Online) Volume 4, Issue 3, May - June (2013) © IAEME43Fig. 2 The effect of Six Sigma projects on firm performance8. Limitations and future researchThe paper addressed the effect of Six Sigma approach in an Industry and BusinessEnterprise using theories from process management and innovation. It is believed thatempirical research is needed to further validate the propositions. It is recommended that thetype of industry (service, manufacturing), the environment (stable, dynamic) and thecustomer base (stable, evolving) be taken into account. In addition, the size of theorganization should be considered as a control variable in future research. One of thechallenges in conducting research in Six Sigma is to clearly distinguish between Six Sigmaprojects and other process improvement initiatives. Organizations may refer to their processimprovement programs as Six Sigma programs, where in reality they may not be true SixSigma projects. Therefore, attention should be devoted to carefully select organizations thatimplement Six Sigma programs. Another possible avenue for research is to determine theeffect of other quality initiatives on the success of Six Sigma projects. The implementation ofquality management programs (such as lean or the Baldrige model) provides organizationswith the ability to more systematically focus on organizational processes so that they caneffectively implement total quality philosophy. Therefore, it would be interesting to see ifthere is any difference in terms of performance between organizations which haveimplemented other quality programs with those which only focused on Six Sigma. Theirfocus on the viewpoint of customers, they systematically translate critical-to-qualitycharacteristics into improvement projects. While it has been argued that Six Sigma programsenable firms to become more ambidextrous through their dual focus on efficiency(exploitation) and innovation (exploration) review of the literature on process managementreveals that they may impede the ability of the firm for radical innovation, forcing the firm topursue the current technological trajectory. In addition, as firms heavily capitalize on theirSix Sigma programs, their ability in indentifying, monitoring, and understanding the needs oftheir future customers may be paralyzed. To get the best out of Six Sigma programs,organizations need to carefully address the needs of their current customers while monitoringCustomerSatisfaction forexisting CustomersFirmPerformanceSix SigmaIncrementalInnovation
  13. 13. International Journal of Mechanical Engineering and Technology (IJMET), ISSN 0976 –6340(Print), ISSN 0976 – 6359(Online) Volume 4, Issue 3, May - June (2013) © IAEME44the formation of new markets and/or customers. In its current form, Six Sigma programs donot guarantee a sustainable competitive advantage for the firms due to their focus on existingprocesses, products, and customers. This is due to the fact that they have not been developedto address radical improvement in organizational processes and routines. There is no doubtthat organizations can benefit from Six Sigma programs; however, such benefits are notsustainable until Six Sigma programs develop mechanisms to address product innovation,pattern of change in customer base, and environmental uncertainty while improvingorganizational processes.9. CONCLUSIONSix Sigma is now according to many business development and quality improvementexperts, the most popular management methodology in history. Six Sigma is certainly a verybig industry in its own right, and is now an enormous brand in the world of corporatedevelopment. Six Sigma began in 1986 as a statistically-based method to reduce variation inelectronic manufacturing processes in Motorola Inc in the USA. Today, twenty-somethingyears on, Six Sigma is used as an all-encompassing business performance methodology, allover the world, in organizations as diverse as local government departments, prisons,hospitals, the armed forces, banks, and multi-nationals corporations. While Six Sigmaimplementation continues apace in many of the worlds largest corporations, manyorganizations and suppliers in the consulting and training communities have also seized onthe Six Sigma concept, to package and provide all sorts of Six Sigma branded trainingproducts and consultancy and services. Six Sigma has also spawned many and variousbusiness books on the subject. Six Sigma, it might seem, is taking over the world. OmarRabee’a Mahdi AL –Mfraji, Mahmoud Khalid Almsafir (Sustainable Competitive AdvantageUsing Six Sigma Methodology) (2012).Interestingly while Six Sigma has become a very widely used generic term, the nameSix Sigma is actually a registered trademark of Motorola Inc., in the USA, who firstpioneered Six Sigma methods in the 1980s. The original and technically correct spellingseems to be Six Sigma, rather than 6 Sigma. Although in recent years Motorola and GE haveeach since developed their own Six Sigma logos using the number six and the Greek sigmacharacterߪ. Six Sigma is now a global brand and something of a revolution.REFERENCES(1). Hahn et al. (1999), Hoerl and Snee, (2002) and Montgomery (2001). Six Sigma Methodand Its Applications in Project Management, Proceedings of the Project ManagementInstitute Annual Seminars and Symposium [CD], San Antonio, Texas.Management Institute, Newtown Square, PA. Antony and Banuelas 2002, Mc Clusky 2000.A strategy for survival. Manufacturing Engineer 80 (3), 119–121.(2).Antony, J., Banuelas, R., 2001. Key ingredients for the effective implementation of sixsigma program. Measuring Business Excellence 6 (4), 20–27.(3).Anbari (2002), J.L. Mader, (2002). Lean Sigma. Manufacturing Engineer 82 (4), 40–42.Tennant (2002), 2009. Critical success factors for the successful implementation of six sigmaprojects in organizations. The TQM Magazine 14 (2), 92–99.
  14. 14. International Journal of Mechanical Engineering and Technology (IJMET), ISSN 0976 –6340(Print), ISSN 0976 – 6359(Online) Volume 4, Issue 3, May - June (2013) © IAEME45(4). Treichler et al 2002, Buss and Ivey 2001. Adapting manufacturing-based six sigmamethodology to the service environment of a radiology film library. Journal of HealthcareManagement 48 (4), 263–280.(5).Rajagopalan et al 2004, Treichleretet al 2002. Service Quality Six Sigma Case Studies,ASQ’s 54th Annual Quality Congress Proceedings 2010 pp. 225–231.(6). Mc. Clusky, 2000. Dow Chemical Design for Six Sigma Rail Delivery Project,Proceedings of the 2000 Winter Simulation Conference 2001 pp. 1248–1251.(7).Weiner, 2004; de Feo and Bar-El, 2002. What’s different about Six Sigma.Manufacturing Engineer 81 (8), 186–189.(8).Antony and Banuelas 2002; Buss and Ivey 2001; Mc Clusky 2000, Leadership forQuality: An Executive Handbook, the Free Press, New York, NY.(9).Roberts 2004, (2004) "Lean Six Sigma – getting better all the time", International Journalof Lean Six Sigma, Vol. 1 Iss: 1, pp.9 – 29(10) Bolt et al 2000, Roberts 2004 “Lean Six Sigma, creativity, and innovation”,International Journal of Lean Six Sigma, Volume: 1 Issue: 1(11).Lazarus and Bulter 2001., “How constraints management enhances lean and six sigma”,SupplyChain Management Review, Vol.10 No.1, pp.42-7.(12).Ettinger (2001). Reducing exposed copper on annular rings in a PCB factory throughimplementation of a Six Sigma project. Total Qual. Manage., 20(8): 863-876.(13).Ettinger (2001). Six Sigma: A goal-theoretic perspective. Revere and Black 2003, 21(2):193-203.(14).Benedetto (2003), Elsberry (2000) and Eckohouse (2004). DMAIC failure modes, ASQSix Sigma Forum Mag., 4(3): 30-34.(15).Moreton (2003); Johnson and Swisher, (2003). Exploring the six sigma phenomenonusing multiple case study evidence. Int. J. Oper. Prod. Manage. 28(3): 279-303.(16).Rajgopalan et al 2004; Antony and Banvelas (2002) and Banuelas Coronado & Antony(2002) Wyper and Harisson (2000). Six Sigma: concepts, tools, and applications. Ind.Manage. Data Syst., 105(4): 491-505.Starbird (2002); Brown and Eisenhardt(1997)Measuring Effectiveness of Food Quality Management in the Bakery Sector. Total Qual.Manage., 17(6): 691-708.(17).Hamner and Champy (1993); Itner and Larcker (1997); Harry and Shroeder, (2000).Business excellence: Six Sigma as a management system: A DMAIC approach to improvingSix Sigma management processes. Annual Quality Congress Proceedings, Milwaukee, pp.47-55.(18).Benny and Tushman(2003); Garvin and Hill (1991),Christensen and Bower (1996);Klassen and Mennor (2007); Pannirselvan et al (1999); Silver (2004)METHODOLOGYAND THEORY Developing a Six Sigma maintenance model. J. Qual. Mainten. Eng., 14(3):262-271.(19).USOCDD Henderson and Clark (1990), Harry and Shroeder (2000); Abernathy andClark (1985). Cooperatives Pathways to Economics Green et al (1995); Tushman andMurenamn (1998), Christenen and Bower (1996); Christenen (1998); Linderman et al (2003);Schroeder et al (2008). Widening the Six Sigma concept: An approach to improveorganizational leaning. Total Qual. Manage., 13(6): 233-252.(20). Hammer(2002); Linderman et al 2003; Knowler et al (2005); Benner andTushman,(2003); Hammer (2002); Douglas ans Erwin (2000); Harry (1998) The evolvingtheory of quality management: the role of Six Sigma. 26(3): 630-650.
  15. 15. International Journal of Mechanical Engineering and Technology (IJMET), ISSN 0976 –6340(Print), ISSN 0976 – 6359(Online) Volume 4, Issue 3, May - June (2013) © IAEME46(21). Linderman et al (2003); Evans and Lindsay (2005); Kwak and Anbari (2012); Johnson(2005); Dasetal (2000); Lai and Cheng (2003); Zhao et al (2004). Design for six sigma: 15lessons learned. Deployment of six sigma methodology in human resource function: a casestudy. Total Quality Management and Business Excellence 11 (4 and 5), S720–S727.(22). Omar Rabee’s Mahdi AL –Mfrajia, Mahmoud Khalid Sustainable CompetitiveAdvantage (2012).(23) U. D. Gulhane, C.A.Nalawade, K.P.Sohani and V.S.Shirodkar, “Six SigmaImplementation Model for File Manufacturing Industry”, International Journal of MechanicalEngineering & Technology (IJMET), Volume 3, Issue 2, 2012, pp. 59 - 66, ISSN Print: 0976– 6340, ISSN Online: 0976 – 6359.(24) A.R.Prathipa and Dr.S.Balasubramanian, “Six Sigma and its Component ofContinuous Improvement”, International Journal of Production Technology and Management(IJPTM), Volume 1, Issue 1, 2010, pp. 1 - 12, ISSN Print: 0976- 6383, ISSN Online: 0976 –6391.(25) Dr Z Mallick, Mr Shahzad Ahmad and Lalit Singh Bisht, “Barriers and Enablers inImplementation of Lean Six Sigma in Indian Manufacturing Industries”, InternationalJournal of Advanced Research in Management (IJARM), Volume 3, Issue 1, 2012,pp. 11 - 19, ISSN Print: 0976 – 6324, ISSN Online: 0976 – 6332.