MBA Journal May 2011

Selling Success: Retail And The Six Sigma Revolution.

Although the Six Sigma movement started in manufacturing, these valuable concepts are spreading rapidly throughout many disparate industries. Retail is a notoriously mercurial market, with strong surges and unpredictable dips. This is due to the fact that retail profits are linked to changes in consumer spending, which are historically hard to predict. Six Sigma can remove much uncertainty from the retail industry, by cutting costs and helping retailers create a revenue "cushion" that can come in handy during hard economic times. How can Sigma Six specifically work in retail? First, let's consider an example of what not to do. In 2009, the Wall Street Journal published a story entitled, "Clarity Is Missing Link In Supply Chain." This article details how Best Buy, a retail giant, was unable to deal with a downturn in consumer spending. Best Buy had become accustomed to issuing the same product orders week after week, and when the financial crisis set in, they had no specific method for cutting weekly orders.

They responded in an ad hoc manner, simply guessing at the size of orders they would need. Suppliers down the line improvised as well, and when the various guesses didn't match up, Best Buy ended up with shortages. In the company's own estimation, this led to lost sales revenue. This disaster was caused by a fundamental lack of transparency and cooperation in the halls of Best Buy. As much as in any industry, retailers rely heavily on accurate and up-to-date inventory data. Without the data, it's impossible for retailers to quickly react to changes in customer demand. This is the kind of haphazard project planning that Six Sigma can eliminate in your business. A drop in consumer demand can show, in sharp relief, the deficiences in planning that may have existed in your company all along. Six Sigma was developed by Motorola to improve manufactured products reduce defects.

In manufacturing, the broad goal of Six Sigma is to reduce defects to less than 3.4 per 1,000,000 products, customers served, etc. It's probably impossible for retailers to exactly achieve this kind of efficiency, due to the lack of certain key data. For example, a retailer can never accurately measure how many customers entered their store and failed to locate the product that they need. Nevertheless, Six Sigma is an invaluable tool for any retailer. Although it may be hard to exactly pinpoint when you've reached the ideal ratio (3.4 per 1 million), Six Sigma concepts have a proven track record of increasing sales, reducing shrinkage, and maintaining customer loyalty. The Six Sigma revolution has far reaching implications for each and every manager in business today.

Significance of Using Six Sigma in Increasing the Sales

Increased competition in the market has forced businesses to price their products and services in a way to provide value to their customers. Six sigma statistical tools can help price analysts in determining the interest of customers in a particular service or product that has been made available to them at a specific price.

Businesses can use these calculations to adopt a price tag that can effectively balance the interest of their customer and revenues that are generated through sales. Six Sigma can also be used by businesses for comparing their pricing policies with their competitors to ascertain any shortcomings and devise appropriate solutions to make any amendments.

Scope of the Sales Project

The sales managers are interested in improving their business processes to achieve higher sales per sales representative. They usually find it cumbersome to allocate their sales force for proper training as they think that they should concentrate more on their sales.

While implementing the Six Sigma project for their sales team, it is important for the sales managers to ensure that such projects are not too complex for all those who are involved in implementing them and they should also take minimal time. Such a project can be directed towards some areas that have common theme; for example, while working out sales opportunities and leads, some members can concentrate on the sub-processes, such as overall sales procedure. A group discussion can point to few areas that require immediate attention and improvement. Efforts can be made in reducing the time cycle for sales, increasing the conversion rate of sales calls and re-launch of improved products or services and so on.

Effectiveness of a project

Effectiveness of a process plays an important role in brining about the good results from a sales process. Black belt training and Green belt training provided to small groups in the sales force that covers different regions can be very effective.

With the standardization of a sales process, businesses can get a clear idea about the steps that are needed for the success of a procedure.

Increasing sales by optimizing products and services

With the Six Sigma implementation, businesses can enhance the efficiency of all their business processes resulting in competitively priced and high quality services and products to their customers. This will result in much higher customer satisfaction, helping businesses to develop customer loyalty. This is vital for the long term success for any business.

Businesses can achieve huge financial benefits in sales and marketing with the help of Six Sigma. If the scope of any project is well defined in its initial stages then all difficulties that are encountered in later stages can be sorted out with ease.

Companies can definitely improve their sales with Six Sigma but that can be possible only with the complete support of their employees. Management should appreciate this factor and ensure proper training to all their employees who are associated with a project.

The Accounting Department Steps Into Six Sigma

Companies that decide it would be beneficial to them to adopt Six Sigma principles will apply those principles to their entire organization. In order to make Six Sigma work, no exceptions can be allowed and this includes the accounting department. The accounting department is an important area of operations in a company, especially when Six Sigma is being considered. Six Sigma is the strategy that companies use to reduce their costs, and the place to find proof that the strategy is working is in the accounting department.

Every department in a company always has room for improvement, but in the past, the accounting department has been left out of the equation, but the things that make other departments in a company run more smoothly with Six Sigma may also work for the accounting department. The accounting department in a Six Sigma organization has been brought into the process of helping to implement the Six Sigma projects that other departments are currently operating and they can also be part of the accounting department’s daily operations.

The new duties the accounting department will be involved in include making sure that the Six Sigma projects can be completed in the most cost effective manner. The accounting department also concerns itself with the amount of time that these projects are taking. Those in the accounting department make sure that these projects are being done to ensure the highest quality.

In order to bring the accounting department into a Six Sigma framework, the accounting’s employees perform the same duties that they do in other departments. One of the activities that help to identify problems is to ask the participation of the company’s customers. This action can be done for the accounting department. Customers can be asked for their opinions as to what would make the accounting department run more smoothly. Six Sigma also requires that the Black Belts determine what they believe are the issues that keep a department from performing at its highest level; they can expand their duties in this area to include the accounting department.

An example of a Six Sigma project that the accounting department can use to increase its productivity is in the time that the department takes to close its books. The practices that are delaying the closing of the books can be identified with Six Sigma. It can also be used to determine the solutions to these delays and then, the Black Belts and Green Belts can use their expertise to start making those positive changes.

What is DFSS?

Motorola was facing a big problem in the mid-1980s. The cell phones the company was manufacturing at that time were of poor quality. Even the company's own vice-president of sales admitted this to be the truth. In 1986, Motorola invented a new quality management system called Six Sigma. This system aimed for near perfection by quantitatively calculating the degree to which a customer was not satisfied and tracing it back to product defects. By using statistical analysis and tools, Motorola improved their cell phones so much, the company won a national award in 1988.

Six Sigma's quantitative tools could be used to develop a product in new ways. The system allowed for the possibility of even designing or redesigning a product from scratch based upon Six Sigma analysis. This led to the development of an add-on to the basic Six Sigma methodology called Design For Six Sigma (DFSS). DFSS takes the Six Sigma philosophy to the next level.

The quantitative method used in Six Sigma is deceptively simple. Six Sigma is designed to eliminate product defects. A defect is defined as a product failing to meet customer requirements in some way. Defects occur within the context of opportunities. An opportunity is the total number of chances for a defect to occur during the production process. Motorola engineers defined the goal of Six Sigma to mean a product with less than 3.4 defects per million opportunities. This represents an impressive level of quality.

DFSS takes this goal and considerably enlarges it. DFSS is designed to bring the same high quality level to the design and implementation stages of product development. The ultimate goal of DFSS is to achieve an optimum level of quality before the product is even brought to market. DFSS thus seeks to anticipate the requirements of the customer before they even know about the product.

DFSS is far more comprehensive and ambitious than Six Sigma. This is only to be expected. Six Sigma focuses on making quality improvements to products after they are made. DFSS focuses on anticipating every possible defect and takes steps to ensure that no errors occur during each stage of the design process. Despite the differences in emphasis, sometimes the line between Six Sigma and DFSS becomes blurred. It may become obvious over the course of applying Six Sigma that DFSS is needed to design a new additional product or service.

The Difference Between Six Sigma and Kaizen

The philosophy of Six Sigma and Kaizen are similar; they both seek to improve the processes by which businesses operate. People who implement these two different strategies are constantly employing checks and balances that identify problems and the solutions to those issues. Why choose Six Sigma over Kaizen?

First, what is the definition of Kaizen? Kaizen is a Japanese concept that comes from two Japanese words; Kai means, “to correct” and Zen means, “good.” Together the word Kaizen means, “continuous improvement.” Continuous improvement is also the point behind Six Sigma, but the Kaizen strategy has one very big difference.

With Kaizen, every employee is encouraged to participate in making suggestions that will improve the company’s practices. It does not matter in which department the employee works, every person’s input is recorded and considered. In contrast, Six Sigma operates on a strict hierarchy. The upper management, which includes the board of directors, the CEO and others in top management, is the only entity that suggests new ideas to be implemented in the company.

In the Six Sigma system, middle management is where the people who identify problems that need to be corrected can be found. Middle management includes those who spend 100% of their time on Six Sigma principles and they report to upper management. They are also mentors for the people below them, so they have a dual role to play in Six Sigma. The people below middle management are the ones who will put all of the new suggestions into effect. Unlike with Kaizen, they are never the ones that will make suggestions as to how something can be improved.

Why choose Six Sigma over Kaizen? The Six Sigma system is a much more organized manner of running a business. When a business has separate duties for different jobs, it is easier to find where a problem may exist. With everyone’s opinion being given equal weight, those who have to decide which the most important problem is have a large list of suggestions to wade through; it can be highly time-consuming.

Kaizen and Six Sigma are two different ways of doing business that hope to lead to the same place; they both seek to improve their products and stay ahead of the competition. Companies that already have a hierarchy in place would be able to step into Six Sigma principles quickly, because they are already set up to manage their businesses in this manner.

What's Involved in Achieving a Six Sigma Certification

Employees interested or required to go for a Six Sigma certification may wonder what it is they need to do in order to achieve this accomplishment. What exactly is Six Sigma and what are the requirements for someone to acquire a certification within it?

Six Sigma is a business management strategy that focuses on improving processes and solving quality-related problems by finding ways to minimize defects in a good or service. The main Six Sigma's purpose is that of the quality of the final product that is being produced, the aftermath of negative feedback from test audiences or consumers, in which to address these issues.

The reasons that someone goes for the certification in Six Sigma is two fold - either they are required to by their employers for a project or they have an interest in becoming certified, whether that be just to have the knowledge or one day consult or teach Six Sigma itself. There are several levels of Six Sigma - yellow belts, green belts, and black belts.

Yellow belts are the first step towards the higher levels of certification, this being the entry level for beginners for the methodology itself. These individuals have some minor background or knowledge of Six Sigma and are looking to move on to that of green belts. Yellow belts don't lead any project within Six Sigma on their own, but they might be asked to be in charge of smaller projects to prove their knowledge and skills.

At this level, yellow belts learn how to implement the Six Sigma methodologies, learning as they go through projects. After the completion of the required courses, depending on the program and school, yellow belts are expected to continue on to that of green belts, who usually mentor yellow belts, helping them learn all and experience what they were taught when they were the lower belts.

Green belts help to deploy Six Sigma projects, as well as begin leading their own, showing their knowledge of the Six Sigma training. The knowledge that a green belt holds helps him to continue, if they so chose, to that of a black belt. Black belts in Six Sigma have risen to the ability of leadership and team dynamics, as well as understanding the needs of the company's customers, and leading larger projects that are assigned. It is generally recommended that black belts go to be masters of Six Sigma.

Certification within Six Sigma can be an essential tool for any employee, where they be interested in learning about the methodologies or required in order to help on a company's project.

Putting Your Best Foot Forward When It Comes To Business

As the saying goes you never get a second chance to make a first impression and while this is true on an individual level it is also true of your business. When you consider that you only have one chance to impress a customer or client with your business it is important to realize that you must do everything possible to create a great first contact for each and every person and this begins with those employees that are your first line of contact with the customers.

In order to ensure that your customers and clients have the best overall experience this will require you to not only hire the best people for your front line positions and train them well but to always make sure that they are looking their best as well. Each employee must look and act the part of a trained professional and must have good people skills to get the job done.

Too many times businesses focus on their management team and give little consideration to those employees who are in first and sometimes constant contact with the customers and clients of their business. It is important to realize that without these employees that there would be little need for a management team.

Enhancing your customers’ experience and making it the absolute best it can possibly be may seem like a difficult task but you will find that if you have the right employees working for you on the first rung of your business that the success will trickle up to the top rungs of your business. Every employee you have within your infrastructure serves an important purpose and is a valuable member of your team. Together they can make your business a success or a failure, the choice is really up to you.

Advantages Of Six Sigma And Change Management

An unsteady economic climate has made it necessary for businesses to find innovative ways to maintain their hold on an ever-changing market. Building and maintaining a reliable customer base has become increasingly difficult for a large number of companies. This is likely due to the fact that many consumers have less money to spend, less job security and thus, a greater focus on saving rather than spending. Industrious business owners have found a trustworthy mechanism, however, for safeguarding their future and ensuring that they maintain consistent profits. The Six Sigma and change management process enables company owners to reap the total benefits of every asset that they have, while eliminating key areas of waste and overspending. It focuses on building the right type of morale within senior managers for devising and implementing the strategies that are intended to guide the company towards success and optimal resource management.

Many companies find that as they grow, there is a need for a continual audit of the processes and procedures that they employ. While one way of doing things may have sufficed when the company was operating on a much lower scale, as business begins to increase, the original operating plans are likely to become outdated. This creates a much higher potential for unnecessary spending, wasted manpower and thus, a higher overhead than is feasible for maintaining profits in a down economy.

With the Six Sigma program, it becomes possible for upper level managers to streamline the operating processes of their businesses while reducing operating costs. Unfortunately, one of the key obstacles in the change process is the reluctance that many senior level employees have towards making modifications in what is generally a comfortable standard. Where good ideas can make dramatic improvements in both productivity and profitability, many individuals are too wary of change to take the courageous steps that are required for implementing it. Because the existing business model performed well in the past, it is often the assumption that making changes could cause more harm than good. In truth, however, many of these same managers risk a dramatic loss in company profits by opting to make no changes at all.

One major part of the Change Management training that Six Sigma provides is the building of awareness in senior employees for the need to make radical adjustments in operations in order to obtain optimal levels of success. The training will focus on market differences, production and cost increases and changes within the average consumer. Managers are then shown how to use the practical processes and tools that will allow for successful change management. In essence, this area of Six Sigma training offers managers the knowledge that is needed to courageously step forward as an effect agent of change while providing these same individuals with the skills that are needed to oversee their endeavors through to the most advantageous end.

The difference between green and black belts

The difference between green belts and black belts in six sigma are many. Within an organization, there are people who decide which projects the company will devote itself to creating. These people belong in upper management. There are also those who will be responsible for performing the duties that need to be done in order to create the new products or develop new services. These people are in middle management and they are comprised of both black belts and green belts.

In companies that are implementing six sigma methodologies, the black belts are the part of management that execute projects that upper management has decided to begin. Specifically, the definition of a black belt is someone whose duties are strictly devoted to six sigma. Their work includes ensuring that six sigma methodologies are applied to all aspects of a project. On the other hand, green belts are not immersed in six sigma 100 percent of the time they are at work; they will help execute six sigma projects as well as perform the other duties they had within the company before six sigma was introduced.

As part of management, black belts are known as the coaches or mentors of green belts. They are the ones the green belts will go to when they need to clarify anything about six sigma processes that they do not fully understand. This is also a role that green belts will play for their team members who are not well versed in six sigma principles, because they have been trained in six sigma. They can also become certified after they have been identified by black belts who recognize their abilities in executing their six sigma duties.

Another big difference between black belts and green belts is how much of a commitment these two groups of people want to make toward completing a project. The black belts, who devote all of their time at work toward executing six sigma projects, need to have a high level of commitment to being a leader in the company. Green belts are different, because they are the employees who want to be members on a team who help each other to bring a six sigma project to fruition, rather than lead other people in the project. Their training emphasizes the side of six sigma that identifies problems a company is having successfully running their businesses rather than being the innovators of new projects.

Six Sigma Implementation- A Good Corporate Strategy

Six Sigma is a methodology that is specifically designed for improving the business. It helps the businesses in successfully eliminating any product, finance, machinery or employee related issues. The ultimate goal is to create quality in the products and services offered to the customers. Today Six Sigma is being extensively used worldwide for a Total Quality Management.

The term Six sigma was coined in the early 1980s by Bill Smith, who was a manager in Motorola. He spoke about Six Sigma approach that was used as a metric to ascertain the number of faults or lack of quality in any service or product and a plan was devised for improving the quality of products or services. This business model adopted by Motorola by following the six sigma program became such a roaring success that many other companies implemented Six Sigma in their businesses and cornered huge profits and enhanced their financial stability and market value as well.

Implementing Six Sigma Methodologies

Implementation of Six Sigma program is based on the theory that reducing defects in the products or services is a much better approach than offering them at a lower cost or depending on the customer loyalty. It understands that defects of any kind are expensive. Therefore, development of high quality product at the right price is necessary for the satisfaction of customer and it also helps in increasing the profitability.

Though, it is not possible to eliminate the variations entirely, but all efforts should be made to reduce them. The ultimate target of Six Sigma is to have just 3.4 defects in 1 million opportunities.

Many traditional methods give importance to their output and establishment of controls, Six Sigma works towards eliminating them. It relies on the voice of customers to bring about a positive change.

Various Six Sigma Levels

Correct implementation of Six Sigma is only possible when the professionals responsible for its implementation are properly trained in this program.

Six Sigma certification program is just like other professional programs where individual is certified after gaining knowledge in a field. This program consists of several stages and each one has a qualifying level where trainees have to clear some tests. On the successful completion of the Six Sigma program, professionals are awarded various belts such as master black belt, green belt and black belt.

Green Belt

This is the first level where a person has to finish two weeks of training and then pass a qualifying exam.

Black Belt

In this program, a person has to complete four weeks training, which also includes the curriculum of Green Belt. This level helps individuals in mastering the Six Sigma roadmaps, cross functional process improvements and various arithmetical terminologies.

Master Black Belt

Any person who has undergone more than four weeks of training and has implemented it in a company as a Six Sigma program manager is awarded with a Master Black Belt.

Getting six sigma green belt certification

Six Sigma is a well-known way of creating improvements within an organization, and certain businesses even provide their staff with training and certification in this approach. Others find that that have to look for this career booster on their own.

If you are in the latter category, consider the type of training that suits you best. Some programs make online options available, and in other cases, you would be required to attend classes onsite. Regardless of which route you take, you must conduct genuine DMAIC projects and successfully complete an exam as well.

What you can do

Begin by analyzing the independent agencies that provide this training and certification, and find the one seems to meet your needs. These choices include American Society for Quality, Motorola, Six Sigma Online and Six Sigma. Focus on the time required, the cost, the possibility of training online and the reputation of the certifying agency.

Once you have been accepted to participate in a program, you will be trained in process improvement and measurement, the DMAIC approach, team dynamics, statistical analysis, and other related topics. To accomplish this, note that you will be using a statistical software package to work with data. Ordinarily, you will know in advance the minimum score that you must achieve in order to remain in the program and to be certified as well.

What you must do

In some programs, you will only have to submit one Six Sigma project, and in other cases you must complete at least two. In addition, it may also be possible to for you to complete one of your projects while you are at work if you obtain the necessary approval from you supervisor. Topics usually covered in doing a project of this type include defect reduction, cost savings and similar business measures. You may also be asked to submit an affidavit that has been signed by your project sponsor.

Review the requirements of your certifying body and adhere to them exactly. Next you must submit the results of your project in the prescribed format, along with any required paperwork. Be aware that, along with the cost of your training program, you may have to pay a modest fee to obtain your Six Sigma certification.

What is Lean Six Sigma

Lean Six Sigma is one of the branches of the Six Sigma system that seeks to optimize the process in order to reduce costs. Its end goal is not just to limit costs but to make the technique more effective. It helps organizations by not just making things more efficient but in coming up with more efficient things. It is also referred to as the Six Sigma Lean, Lean Speed or Lean Method.

Lean helps identify steps to make the company run in a more efficient manner from the first stage down to the last stage of product formation. During economic recession, manufacturing concerns have turned to Lean Six Sigma to find answers on how to reduce costs without sacrificing quality of their products.

The Lean system makes use of the DMAIC processes which means Define, Measure, Analyze, Improve and Control. The main focus of this methodology is simply to eliminate all types of wastes. Cutting costs becomes one of the natural results.

To get a certification in Lean system, the company must focus on five primary areas: control of process, improvement of process, data analysis and getting to the root cause of the problem, measuring and collecting data and finally, define issues and prioritize them.

The trainee usually learns various techniques. For instance, to be able to get to the root cause of the issue, the trainees are told to ask why 5 times. This is called the 5 why analysis. The explanation behind this strategy is that usually the first three answers to the whys would assume the reason for the problem. The fourth and fifth whys enable the trainee to arrive at a clearer idea as to why the issue occurred. In an overwhelming number of cases, 9 out of 10, the root cause is the inability of the management to understand the Lean methodology thus causing errors.

Another area where the Lean system is beneficial is during brainstorming sessions. A huge part of the Six Sigma process is accomplished by teams. At times, it may be necessary to combine teams to come up with better solutions and introduce improvements.

During brainstorming sessions, the leader learns defer judgment and criticism on off topic ideas. Everybody is welcome to make a suggestion no matter how unlikely the idea may see. This technique will ensure the success of brainstorming by extracting useful ideas to solve the problem.

As the business applies the principles of Lean, issues revolving on establishing a primary manufacturing technique, enhancing product quality, customer satisfaction and securing new customers are all addressed effectively.

Six Sigma... Why It Works

There are so many different opportunities out there of ways to run a business but by far one of the most successful techniques available is that of Six Sigma. While many believe that because 6 Sigma has been around for so long that it is outdated, quite the opposite is true. Six Sigma has been in existence for many years but this fact just gives it a leg up from other techniques out there because not only has this methodology been able to prove that it is effective and to stand the test of time but it has also had decades with which to work out the kinks and get things adapted for a variety of different businesses. This is what makes Six Sigma unique.

The uniqueness of Six Sigma also stems from the fact that it is a comprehensive program that does not just focus on one aspect of business management but on all aspects of running a business as well as all the people involved in running a business as well. Six Sigma training is not just supplied to those who are in the higher up positions but to all employees on all levels and this helps to create a team like atmosphere which is better for the company as a whole.

6 Sigma is more than just team building though and it is also used as a way of measuring results and keeping tabs on the process as a whole. Customer experience is also key and this is a process that very much takes into account that improving customer experience and the finished product will improve the company’s bottom line each and every time.

This process is by far one of the most popular management systems very simply because it has a proven track record in a variety of different industries time and time again proving itself beneficial and effective across the board. By far one of the best management systems very simply because it takes a multifaceted approach to business and one that makes many others pale in comparison.

Getting Six Sigma Certified Online

Increasingly, employers are searching for employees who can identify weaknesses and eliminate them when creating products and services. Six Sigma Certification Online prepares employees to become masters of this process.

Six Sigma Certification is based on standard deviation. People who seek Six Sigma Certification online typically do so to enhance their expertise or salary level. Some companies require their employees to be Six Sigma Certified before they are eligible to advance within the company.

Some of the largest companies and corporations in the world use Six Sigma Certification Online, including UPS, Pfizer, BP, Microsoft, Bank of America, John Deere, Mercedes-Benz, Toyota and Canon.

There are different levels of Six Sigma Certification that can be completed at different times, including yellow belt, green belt and black belt certifications. There is currently no standard method for certification, it varies by company. Most accepted training courses, however, all encompass some for of testing and projects as the means of evaluation. Training involves both showing knowledge gained in a classroom setting on a written test and showing an ability to apply it in real world situations and projects.

Many organizations offer Six Sigma Certification online. This process involves training in process measurement, statistical analysis, team dynamics and similar topics using a software package that must be purchased from an online vendor.

After studying the materials, an exam is required. A list is provided telling Six Sigma Certification students what materials need to be mastered for the exam. A minimum score is required to pass the test and that minimum is told to test takers beforehand.

Six Sigma Certification also requires completion of projects. Some courses require only one completed project, others require up to three. Some of the projects can be completed by working with an employer or through an internship.

The projects must be completed with certain objectives in mind. Some require the main objective be cost savings, some require it to be a reduction in defects in products and others have different, more specific goals. A signed document from your project sponsor stating that goals were attained is sometimes required as well.

Once completed, materials must be submitted to the certifying body in the format they have requested. After submission and payment of fees, the certifying body reviews all materials and decides whether to issue Six Sigma Certification.

Many places offer Six Sigma Certification Online. The key is determining whether or not the online certification is reputable in the eyes of employers and has a track record of proven results. Most sites have a list of FAQs and a list of companies they've worked with as clients to help potential Six Sigma Certification candidates decide whether that is the best company for them to seek certification through.