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HERE ARE SOME TIPS FOR SUCCESS
Six Sigma is exploding in popularity across the corporate landscape. Motorola initiated the program in 1987, and, since then, countless other organizations have employed it. While Six Sigma originated within the manufacturing arena, organizations are now applying it in functional areas such as purchasing, shipping and receiving, sales, and administration. This methodology even holds promise for improving the efficiency and effectiveness of the finance function.
One company that has applied Six Sigma successfully within its finance department is a $750 million manufacturing company, which we'll call Med Solutions Inc. (MSI) for confidentiality purposes. At the time of our field-based research, MSI had more than a dozen Six Sigma projects under way within its finance function. We'll focus on the project that reduced the cycle time of the quarterly financial reporting process from 109.3 hours to 31.7 hours. Before beginning our description of MSI's experiences, we'll provide a brief overview of Six Sigma. Later we'll offer some tips for success that can help you adopt Six Sigma within your own finance function.
WHAT IS SIX SIGMA?
Six Sigma relies on the voice of the customer (VOC) and objective data, rather than anecdotal opinions, to improve existing business processes. The primary framework used to guide Six Sigma projects is called DMAIC (define, measure, analyze, improve, and control). In the define stage, the project team defines the problem and clarifies the project's scope. In the measure stage, the team collects data to analyze the problem and assess the process's current or baseline performance. In the analyze stage, the team determines the problem's root cause(s). In the improve stage, the team creates and implements solutions that eliminate or minimize the root cause(s). During the control stage, the team uses ongoing measurement and other tools to control the process so the problem doesn't reappear. Figure 1 provides a more detailed description of the DMAIC framework and a sampling of the Six Sigma tools that can be used for each stage.
To carry out a Six Sigma project, a Green Belt or a more highly trained Black Belt leads the project team. Green Belts typically have other job duties besides their Six Sigma responsibilities while Black Belts often don't. A variety of organizations provide...