What is 'Six Sigma'

Six Sigma is a quality-control program developed in 1986 by Motorola that emphasizes cycle-time improvement and the reduction of manufacturing defects to a level of no more than 3.4 per million. As of 2016, Six Sigma has evolved into a more general business-management philosophy focused on meeting customer requirements, improving customer retention, and improving and sustaining business products and services. Six Sigma is applicable to all industries, and a number of vendors, including Motorola itself, offer Six Sigma training; special certifications include yellow belt, green belt and black belt.

BREAKING DOWN 'Six Sigma'

Six Sigma represents an ideology that focuses on statistical improvements to a business process. Six Sigma advocates for qualitative measurements of success over qualitative markers. Therefore, practitioners of Six Sigma are those business people who use statistics, financial analysis and project management to achieve improved business functionality.

Six Sigma has evolved to define numerous ideas within business and is sometimes confusing. First, it's a statistical benchmark. Any business process that produces less than 3.4 defects per 1 million chances is considered efficient; defects are considered anything that's produced outside of consumer satisfaction. Second, it's a training program and certification that teaches the core principles of Six Sigma. Practitioners can achieve Six Sigma belt levels, ranging from white belt to black belt. Finally, it's a philosophy that promotes the idea that all business processes can be measured and optimized.

The Five Steps of Six Sigma

True believers and practitioners in the Six Sigma method follow an approach called DMAIC: define, measure, analyze, improve and control. It is a statistically driven methodology that users learn through Six Sigma certification or companies implement as a mental framework for business process improvement.

The ideology behind DMAIC is that a business can solve any seemingly unsolvable problem. First, a team of people, led by a Six Sigma champion, defines a faulty process on which to focus, decided through an analysis of company goals and requirements. This definition outlines the problem, goals and deliverables for the project. Second, the team measures the initial performance of the process. These statistical measures make up a list of potential inputs that may be causing the problem and help the team understand the process's benchmark performance.

Third, the team analyzes the process by isolating each input, or potential reason for failure, and testing it as the root of the problem. Through analysis, the team identifies the reason for process error. From there, the team works to improve system performance. Finally, the team adds controls to the process to ensure that it doesn't regress and become ineffective once again.

RELATED TERMS
  1. Lean Enterprise

    Lean enterprise is a production and management philosophy that ...
  2. Workflow

    Workflow describes the steps in a business work process.
  3. Rust Belt

    The Rust Belt is a colloquial term used to describe the region ...
  4. Acceptable Quality Level - AQL

    The acceptable quality level (AQL) is a statistical measurement ...
  5. Absolute Performance Standard

    The absolute performance standard is a benchmark for quality ...
  6. Jack Welch

    Jack Welch was the chairman and CEO of General Electric between ...
Related Articles
  1. Small Business

    A Guide To The Six Sigma Green Belt

    Curious about the Six Sigma Green Belt? Here's what you need to know.
  2. Small Business

    Should you get a Six Sigma Black Belt? Average salary: 99K

    Interested in the Six Sigma Black Belt but unsure whether you need one? Here's a guide to the quality improvement role and how it differs from other belts.
  3. Investing

    What are the Biggest Hedge Funds in the World?

    In spite of a rough year in 2016, some firms have thrived.
  4. Investing

    Consulting Companies Look Promising

    It might be time to start investing in the business of guiding business.
  5. Trading

    How To Manage Bull Put Option Spreads

    Learn how to halt options losses when the market moves quickly in an unfavorable direction.
  6. Investing

    4 Reasons To Invest In Motorola Solutions (MSI)

    Discover the rationale behind investing in Motorola Solutions and why the company is poised for growth in the future after its recent spinoff.
  7. Retirement

    Ready to Retire? Here's How to Sell and Close Your Small Business

    Learn the essential steps to prepare to sell your business with the best possible outcome, a secure retirement for you and your family.
  8. Personal Finance

    Alternatives to Business School

    Universities don't have a monopoly on information—advance in your career without business school.
  9. Tech

    Motorola Unveils Command Center of the Future (MSI)

    Motorola Solutions is showcasing what the command center of the future can look like using virtual reality and eye tracking technologies.
  10. Small Business

    5 Key Steps to Start Your Own Small Business

    Understand what a small business is and what it takes to build one. Learn about the five key steps needed to start a small business.
RELATED FAQS
  1. What is operations management theory?

    Historical and modern operations management theory can be used to benefit businesses. Read Answer >>
  2. How can small businesses manufacture demand?

    Create demand for a small business product or service by focusing on the brand and market. Continue to learn offer excellent ... Read Answer >>
  3. How do companies balance labor supply and demand in human resources planning?

    Find out what it means for a company to balance labor supply and demand, and learn how human resources planning can strategically ... Read Answer >>
Hot Definitions
  1. Capital Asset Pricing Model - CAPM

    Capital Asset Pricing Model (CAPM) is a model that describes the relationship between risk and expected return and that is ...
  2. Return On Equity - ROE

    The profitability returned in direct relation to shareholders' investments is called the return on equity.
  3. Working Capital

    Working capital, also known as net working capital is a measure of a company's liquidity and operational efficiency.
  4. Bond

    A bond is a fixed income investment in which an investor loans money to an entity (corporate or governmental) that borrows ...
  5. Compound Annual Growth Rate - CAGR

    The Compound Annual Growth Rate (CAGR) is the mean annual growth rate of an investment over a specified period of time longer ...
  6. Net Present Value - NPV

    Net Present Value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows ...
Trading Center