A leadership initiative to improve the big Y's that determine an organisation's success. Six Sigma Business Improvement elements include scorecards, Team Charters, improvement teams and integrated business reviews.
Balanced Scorecard
A one page tool for translating an organisation's strategy into operating terms. It has four columns: Vision, Current Initiatives, Business Processes and Business Results.
Business Process Improvement (also known as BPI)
Business Process Improvement (BPI) is a systematic approach to helping any organisation optimise its underlying processes to achieve more efficient results. BPI attempts to reduce variation and/or wastage in processes, so that the desired outcome can be achieved with better utilisation of resources. BPI works by:
- Defining the organisation's strategic goals and purposes (who are we, what do we do and why do we do it?)
- Determining the organisation's customers (whom do we serve?)
- Aligning the business processes to realise the organisation's goals (how do we do it better?)
- The goal of BPI is a radical change in the performance of an organisation, rather than a series of incremental changes.
BPI: Key Considerations
Processes need to align to Business Goals. An organisation's strategic goals should provide the key direction for any Business Process Improvement exercise. This alignment can be brought about by integrating programs like Balanced Scorecard to the BPI initiative. E.g. when deploying Six Sigma, identification of projects can be done on the basis of how they fit into the Balanced Scorecard agenda of the organisation.
Competitive advantage
Competitive advantage is a position a firm occupies against its competitors.In other words, it is a condition which enables a company to operate in a more efficient or otherwise higher-quality manner than the companies it competes with, and which results in benefits accruing to that company.
The two forms of competitive advantage are cost advantage and differentiation advantage. Cost advantage occurs when a firm delivers the same services as its competitors but at a lower cost. Differentiation advantage occurs when a firm delivers greater services for the same price of its competitors. They are collectively known as positional advantages because they denote the firm's position in its industry as a leader in either superior services or cost.
Many forms of competitive advantage cannot be sustained indefinitely because the promise of economic rents invites competitors to duplicate the competitive advantage held by any one firm.
A firm possesses a sustainable competitive advantage when its value-creating processes and position have not been able to be duplicated or imitated by other firms. Sustainable competitive advantage results, according to the Resource-based View theory, in the creation of above-normal (or supranormal) rents in the long run.
Customer satisfaction
Customer Satisfaction is the degree to which customer expectations of a product or service are met or exceeded. Corporate and individual customers may have widely differing reasons for purchasing a product or service and therefore any measurement of satisfaction will need to be able to take into account such differences. The quality of after-sales service can also be a crucial factor in influencing any purchasing decision. More and more companies are striving, not just for customer satisfaction, but for customer delight, that extra bit of added value that may lead to increased customer loyalty. Any extra added value, however, will need to be carefully accounted for. It is seen as a key performance indicator within business and is part of the four perspectives of a Balanced Scorecard. In a competitive marketplace where businesses compete for customers, customer satisfaction is seen as a key differentiator and increasingly has become a key element of business strategy. There is a substantial body of empirical literature that establishes the benefits of customer satisfaction for firms. These ten domains of satisfaction include: Quality, Value, Timeliness, Efficiency, Ease of Access, Environment, Inter-departmental Teamwork, Front line Service Behaviors, Commitment to the Customer and Innovation. These factors are emphasized for continuous improvement and organisational change measurement and are most often utilised to develop the architecture for satisfaction measurement as an integrated model.
Cost reduction
Policy of cutting costs to improve profitability. It may be implemented when a company is having financial problems and must "tighten its belt." In some cases, the firm is initiating a policy to eliminate waste and inefficiency. A cost reduction program may detract from the Quality of Earnings when significant cuts are made in Discretionary Costs.
DMADV- Define Measure, Analyse, Design, Verify
The most popular Six Sigma framework used in DFSS. It is an acronym for Define requirements, Measure performance, Analyse relationships, Design solutions, Verify functionality.
DMAIC- Define, Measure, Analyse, Improve, Control
The Six Sigma problem-solving framework for improving business processes. It is an acronym for Define opportunity, Measure performance, Analyse opportunity, Improve performance, and Control performance.
DFSS - Design for Six Sigma
A proactive approach to building Six Sigma performance into the up front design of a new product, service or process.
Hoshin Planning
The Hoshin Planning Process is a systematic planning methodology for: 1) defining the long-range key objectives of the organisation or company; and 2) ensuring the implementation of 'business fundamentals' required to successfully run the business on a daily basis.' Hoshin planning, therefore, is a two-prong planning approach that covers the organisation's strategy to achieve breakthrough results through its long-term objectives and ensure continual improvement through its short-term business fundamentals. Click to learn more.
Lean Six Sigma
A business improvement framework that integrates the Six Sigma methodology with the cost reduction benefits of the Lean Production approach.
Margins
In economics, a margin is a set of constraints conceptualised as a border. A marginal change is the change associated with a relaxation or tightening of constraints ' either change of the constraints, or a change in response to this change of the constraints. Margins are sometimes conceptualised as extensive or intensive.
An extensive margin corresponds to the number of usable inputs that are in some sense employed. For example, hiring an additional worker would increase an extensive margin.
An intensive margin corresponds to the amount of use extracted within a given extensive margin. For example, reducing required production from a given set of workers would decrease the intensive margin.
Process optimisation
Process optimisation is the practice of making changes or adjustments to a process to get results.
Process optimisation is the discipline of adjusting a process so as to optimise some specified set of parameters without violating some constraint. The most common goals are minimising cost, maximising throughput, and/or efficiency. This is one of the major quantitative tools in industrial decision making.
Quality assurance
Quality assurance or QA for short is the process of verifying or determining whether products or services meet or exceed customer expectations. Quality assurance is a process-driven approach with specific steps to help define and attain goals. This process considers design, development, production, and service.
Two key principles characterize QA: "fit for purpose" (the product should be suitable for the intended purpose) and "right first time" (mistakes should be eliminated). QA includes regulation of the quality of raw materials, assemblies, products and components; services related to production; and management, production and inspection processes.
It is important to realise also that quality is determined by the intended users, clients or customers, not by society in general: it is not the same as 'expensive' or 'high quality'.
Sigma level
A metric that counts defects per million opportunities (or DPMO). A metric of Six Sigma equates to 3.4 DPMO.
Six Sigma
Invented by Motorola, Inc. in 1986 as a metric for measuring defects and improving quality. Since then, it has evolved to a robust business improvement methodology that focuses an organisation on customer requirements, process alignment, analytical rigor and timely execution. For more about this process, please visit the Six Sigma page.
Six Sigma Black Belt
A Six Sigma expert highly skilled in the application of rigorous statistical tools and methodologies to drive business process improvement.
Six Sigma Certification
A confirmation of an person's capabilities with respect to successfully leading and supporting Six Sigma project teams. It entails learning the appropriate skills, passing a written proficiency test, and displaying competency in a real-world environment. Achieving Six Sigma certification is a way to demonstrate your energy and intent to be a leader within the quality profession.
Six Sigma Champion
The Champion typically has day-to-day responsibility for the business process being improved and their role is to ensure the Six Sigma project team has the resources required to successfully execute the project.
Six Sigma Consultant
A company or individual with experience and expertise in Six Sigma business improvement implementations who is hired for a limited time to advise and facilitate Six Sigma implementation.
Six Sigma Consulting
A service provided to organisations to help improve business processes, services, and/or products using the Six Sigma methodology. Guidance may be provided on specific topics or on strategic planning for Six Sigma implementations.
Six Sigma Green Belt
A Six Sigma practitioner trained in the methodology and tools to need to work effectively on a process improvement team. Green Belts may act as team members under the direction of a Black Belt or may lead their own less complex, high impact projects.
Six Sigma Leadership Principles
A set of guiding principles required to help leadership identify the best way to drive results and support teams. The four principles are Align, Mobilise, Accelerate, and Govern.
Six Sigma Master Black Belt
A Black Belt achieves "Master" status after demonstrating experience and impact over some period of time. Master Black Belts address the most complex process improvement projects and provide coaching and training to Black Belts and Green Belts.
Six Sigma Quality
A level of quality that represents only 3.4 defects per million opportunities.
Six Sigma Software
A computer program that provides data analysis, project management, resource management and reporting functionality for Six Sigma projects and overall implementations.
Six Sigma Sponsor
A member of the leadership team that is responsible for selecting Six Sigma projects and is ultimately accountable for a project's results.
Stakeholder
Person, group, or organisation that has direct or indirect stake in an organisation because it can affect or be affected by the organisation's actions, objectives, and policies. Key stakeholders in a business organisation include creditors, customers, directors, employees, government (and its agencies), owners (shareholders), suppliers, unions, and the community from which the business draws its resources. Although stake-holding is usually self-legitimising (those who judge themselves to be stakeholders are de facto so), all stakeholders are not equal and different stakeholders are entitled to different considerations. For example, a firm's customers are entitled to fair trading practices but they are not entitled to the same consideration as the firm's employees. See also corporate governance.
Voice of the Employee or VOE
Voice of employee refers to the participation of employees in influencing corporate decision making. Employees are given a voice through informal and formal means to minimise conflict, improve communication and encourage staff retention through motivation and fair treatment. Employee participation is a form of empowerment and motivation that leads to increased productivity and retention.
Voice of the Customer or VOC
Voice of the customer (VOC) is a term used in business to describe the process of capturing a customer's requirements. Specifically, the Voice of the Customer is a market research technique that produces a detailed set of customer wants and needs, organised into a hierarchical structure, and then prioritised in terms of relative importance and satisfaction with current alternatives. Voice of the Customer studies typically consist of both qualitative and quantitative research steps. They are generally conducted at the start of any new product, process, or service design initiative in order to better.
Understand the customer's wants and needs, and as the key input for new product definition, Quality Function Deployment (QFD), and the setting of detailed design specifications.
There are many possible ways to gather the information ' focus groups, individual interviews, contextual inquiry, ethnographic techniques, etc. But all involve a series of structured in-depth interviews, which focus on the customers' experiences with current products or alternatives within the category under consideration. Needs statements are then extracted, organised into a more usable hierarchy, and then prioritised by the customers.
It is critical that the product development core team own and be highly involved in this process. They must be the ones who take the lead in defining the topic, designing the sample (i.e. the types of customers to include), generating the questions for the discussion guide, either conducting or observing and analysing the interviews, and extracting and processing the needs statements.
Voice of the Customer Initiates:
- a detailed understanding of the customer's requirements
- a common language for the team going forward
- key input for the setting of appropriate design specifications for the new product or service
- a highly useful springboard for product innovation.
X's
Often referred to as Big X's, these are the factors or variables that will have the greatest impact on the Big Y's.
Y's
Often referred to a "Big Y's", these are the business results that matter. Big Y's represent measures directly linked to critical customer requirements. |
Definitions