Mikel Harry
Six Sigma Management Institute

Doug Crawford
Six Sigma Global Registry
Phoenix, Ariz.

It is almost a certainty that anyone engaged in U.S. manufacturing or design today has been exposed to a Six Sigma initiative of some sort. These practices have helped U.S. manufacturers improve their products and stay engaged with their customers. Over the years since the concept was introduced, Six Sigma has broadened out to encompass more and more functions governing the route to putting manufactured parts into the hands of customers.

There is a new brand of Six Sigma that promises to deliver even more powerful results than before. Dubbed Third Generation Six Sigma, or just Gen III, it can show companies how to deliver products or services that, in the eyes of customers, have real value.

Now the bad news, at least from the standpoint of U.S. manufacturers: The first companies to embrace Third Generation Six Sigma are foreign. Korean steel maker Posco is implementing Gen III techniques corporation wide. Posco is the third-largest steel maker in the world. Moreover, the Korean Standards Association has adopted Gen III techniques and is trying to propagate these methods throughout that country. Electronics maker Samsung, also in Korea, has begun a Gen III program. And the government of India has bought into the idea and has begun promoting it both in private and government-owned industries there.

The word "value," in the context of Gen III, needs some explanation. It is perhaps best understood by analogy to previous Six Sigma efforts. As practiced in the 1980s and '90s, Six Sigma focused first on reducing defects. Later, the emphasis was on minimizing costs. Six Sigma efforts at such companies as Motorola, GE, and DuPont were successful at reaching both goals.

One difficulty with both first and second-generation efforts is that they didn't address some of the larger issues that make for commercial success. It is possible to field defect-free products using lowestcost production that is world class and still lay an egg in the market. The ingredient that is missing is the concept of value, and that is what Gen III addresses. It broadens the scope of improvement projects to encompass such ideas as product utility and customer access.

But there was another problem with past Six Sigma programs: It took a lot of expertise on the part of practitioners to run projects effectively. The training necessary to do anything meaningful was extensive. Improvement efforts typically were conceived and executed by high-level managers and could consume a lot of company resources. Consequently, only large firms tackled Six Sigma endeavors though the benefits could be substantial for firms of any size.

Gen III changes this scenario drastically. For one thing, the training and infrastructure needed to get useful results from a Gen III project are much less than previously has been the case. Gen III introduces the concept of the White Belt Six Sigma practitioner. This is an individual who facilitates use of Six Sigma in work cells or similar settings. Higher-level White Belts typically ferret out small benefits from applying Six Sigma to problems that would not justify the time and attention of a Six Sigma Black Belt.

There may be a misconception, however, that White Belt training is merely an overview of Six Sigma methods. White Belt training is not just a survey course. It is actually about 40 hr of instruction in how to do useful problem solving. The primary difference between White Belts and the higher-ranked belts of previous generations is that the problems a White Belt addresses are more localized. That means they tend to concern tasks confined to a work cell or in a department within a company.

A White Belt project typically takes about a month, start to finish. So a White Belt can conceivably handle 12 such projects in a year. And it is not unusual for a White Belt project to bring about $25,000 to the company bottom line. That means the total savings/year for a trained White Belt can be in the $300k range.

It is interesting to contrast the localized approach of Gen III with Six Sigma conducted in the late 20th century. The first Six Sigma projects needed the expertise of Black Belt practitioners, individuals who have had at least 160 hr of Six Sigma training and who have mastered relatively sophisticated tools and statistical techniques. Sufficiently large projects might even require the services of a Master Black Belt managing a team of Black Belts.

Black Belts typically tackle big problems: These problems might cut across divisional boundaries and product lines, and involve company facilities that are geographically dispersed. It might take three months to finish a Black Belt project. But the savings can hit $300k per project, so a single Black Belt can potentially bring a company $1.2 million to the good annually.

Six Sigma efforts conducted in the late '90s were devised to be run by experts who had less training. These Green Belt projects could employ practitioners with 80 hr of instruction. They would use many of the same tools as a Black Belt but focus on what's called, in Six Sigma vernacular, line-of-sight problems. Such efforts handle difficulties that can be ironed out within a single division or location of a company.

The savings from Green Belt projects are typically more modest but the efforts are shorter. A typical figure is about a month and a half to execute a Green Belt plan that brings $100k to the company bottom line.

The Value concept can be viewed as an equation: V = (U A)/C where V = value, U = utility, A = access, and C = cost. Access refers to factors such as the volume produced, the timing of availability to the market, and the location of distribution. Utility is the form, fit and function of the product.

The equation gives a shorthand explanation of how to maximize value: Get the right form, fit, and function at the right volume at the right time and place at the lowest possible cost. To increase value, maximize the numerator for a constant denominator.

From the standpoint of the design engineer, the value equation introduces additional considerations when planning designs. Designers still need to worry about form, fit, and function, as they have always done. But under Gen III, they may also have to make a different set of trade-offs for factors such as part access, serviceability, maintainability, simplicity, and so forth. In other words, they have a formal platform on which to base Design-for-X initiatives.

The quest for value in Gen III doesn't leave behind the concepts used in previous Six Sigma efforts. Practitioners still make use of statistical tools such as variance and standard deviation that help with decisions about processes. But Gen III goes beyond mere problem solving. It is basically an organizing strategy. It expands the scope of Six Sigma through a four-step process called ICRA. These letters stand for Innovation, Configuration, Realization, and Attenuation. More specifically, they are shorthand for a process that consists of innovating opportunity, configuring details, realizing outcomes, and attenuating the gap between where you are and where you want to be.

ICRA represents a sequence of steps through which ideas pass as they are refined in Gen III. Ideally, a company would take its ideas through ICRA in four distinct areas: market, business, product, and processes. All corporations possess competencies to one degree or another in each of these areas. The ICRA technique helps identify those competencies, defines where the company currently resides on the competency scale, and brings visibility to how far the company has to go in each discipline to realize world-class stature.

Training methods comprise another significant difference between Gen III and what's gone before. Six Sigma training used to mean a lot of time spent in classrooms. There was simply no substitute for face time with an experienced instructor.

Advances in online technology have changed this situation. Internet resources now permit the delivery of a curriculum that is at least as effective as classroom training, and perhaps even more effective. Such online teaching techniques substantially cut the cost of training and delivering information. Moreover, the economies of online delivery methods bring Gen III within reach of small businesses and even individuals who wish to improve their skills.

Also as part of Gen III, a Black, Green, or White Belt can become fully certified by the Six Sigma Global Registry (SSGR). The SSGR is an integral part of the Six Sigma training programs offered by Arizona State University and the Six Sigma Management Institute.

These credentials are highly important to Six Sigma Practitioners because the SSGR credential is endorsed by Arizona State University, Society of Manufacturing Engineers, and the Korean Standards Association.

The thrifty nature of the online approach stems not just from economies of scale for instructor time. A more significant expense connected with offsite training, especially for smaller businesses, is the cost of lost production time and travel. Many small businesses run quite lean and cannot afford to take employees out of production for the four to six weeks that Six Sigma training has demanded.

One alternative to offsite training has been to bring in a consultant who would conduct a classroom at the plant. The big benefit of this approach is that the course content can be tailored to a company's specific needs. However, this assumes the consultant has had hands-on experience with Six Sigma projects. Not all consultants operating in Six Sigma have such experience. Without it, training will likely focus on Six Sigma theory and not its application. Students may have difficulties applying theories given without realworld examples that have obvious parallels in their own surroundings.

Online training, in contrast, has progressed to the point where it can provide these sorts of meaningful contexts. Note that the online coursework we are referring to is not merely PowerPoint slides combined with streaming audio, as is often the format for ordinary Webcasts. Rather, its mainstay is "over-theexpert's-shoulder" video training, OTES for short. OTES is what it sounds like — video recording the actions and words of an experienced instructor. It lets students see concepts, ideas, graphs, and equations being built as the instructor explains them, just as would take place in a classroom.

But OTES is actually better than a classroom in at least one regard: It provides students an opportunity for instant replay for concepts that don't sink in immediately.

Modern online teaching methods also use action-capture video software and discussion boards with instructors. The discussion boards are interactive. They let students instantly move from online class to online dialog with a professor. In addition, students can have several applications running, such as a word processor and spreadsheet, while the OTES video runs. This lets students take good notes or crank through example calculations as the instructor discusses them.

All in all, just about everybody in the organization can get trained in these techniques and apply them. In as little as six weeks they can begin creating Six Sigma value for their employer.


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