Operational Process Perspective

Why is this important?

The Six Sigma metric (which was pioneered by Motorola in the late 1980s and later adopted very successfully by global giants such as General Electric and Honeywell as well as many other companies of various sizes) informs managers as to the stability and predictability of process results.

The goal is that process defect or error rates will be no more than 3.4 per one million opportunities. As an analogy, consider a goalkeeper of a football team who plays 50 games in a season and who faces 50 shots from the opposing team in each game. If a defect is when the team scores, then a Six Sigma goalkeeper would concede one goal every 147 years!

It is important to stress that Six Sigma is both a measure and a performance improvement methodology. As a methodology Six Sigma represents a set of tools that enable continuous or preferably breakthrough performance.

These tools are based on the DMAIC principles:

  • Define customer requirements (internal or external); that is, their expectation of the process.

  • Measure the current performance; what is the frequency of defects?

  • Analyse the data collected and map to determine cause and effect and opportunities for improvement; why, when, and where do the defects occur?

  • Improve the target process by designing solutions to improve, fix or prevent problems.

  • Control the improvements to keep the process on the new course; how can we ensure that the process stays fixed?

DMAIC implementation is through an in-house team of Six Sigma certified employees, known as Master Black Belts, Black Belts or Green Belts depending on their experience and levels of involvement.

In essence, the promise is that by reaching Six Sigma performance levels, customer dissatisfaction will decrease significantly and that, ultimately, superior and sustainable financial results will be achieved.

With respect to Operational Process Perspective, below are a few KPI's which a businessman should be mindful of:

  1. Six Sigma level

  2. Capacity utilisation rate (CUR)

  3. Process waste level

  4. Order fulfilment cycle time (OFCT)

  5. Delivery in full, on time (DIFOT) rate

  6. Inventory shrinkage rate (ISR)

  7. Project schedule variance (PSV)

  8. Project cost variance (PCV)

  9. Earned value (EV) metric

  10. Innovation pipeline strength (IPS)

  11. Return on innovation investment (ROI2)

  12. Time to market

  13. First pass yield (FPY)

  14. Rework level

  15. Quality index

  16. Overall equipment effectiveness (OEE)

  17. Process or machine downtime level

  18. First contact resolution (FCR)