Six Sigma and Benchmarking: Enhancing Process Performance

Posted on Mar 5, 2025 in Other subjects

Six Sigma and Statistical Process Control

Six Sigma is a methodology used to understand, measure, analyze, and improve performance with the ultimate goal of virtually eliminating all defects, reducing variation (standard deviation), and paying attention to the mean. The objective is to make customers happy. The philosophy of Six Sigma emphasizes that managers need to understand processes to improve them, commit to their implementation, and participate actively in the process. One of its tools is Statistical Process Control (SPC). SPC examines process variation deriving from common and special causes that need to be treated differently from one another.

DMAIC and DMADV

1) DMAIC: is a data-driven quality strategy to improve existing processes and achieve a higher level of performance. It stands for Define, Measure, Analyze, Improve, Control. It can be part of other process improvement initiatives, such as TQM, BPR, and Lean. (We will focus on this process in this course.)

2) DMADV: is an approach used to create a new process.

Statistical Process Control Defined

Statistical Process Control can be defined as “a technique that monitors processes as they produce products or services and attempts to distinguish between normal or natural variation in process performance and unusual or ‘assignable’ causes of variation”.

Process Variability

Process variability can be due to:

  • Special causes: (e.g., some material that is not quite optimal, poor maintenance, or a staff member not performing well). These must be controlled and removed from the operation system.
  • Random causes: (e.g., orders forgotten, testing error, or lorry breakdown). These are a normal part of the process, and it is impossible to remove them.

Process Capability

Process capability: A process capable of producing (99.7% of the time) according to specification (i.e., what marketing has promised).

  • Accurate & precise: We are 99.7% producing output within the limits = capable process.
  • Inaccurate but precise: The process is precise in terms of producing outputs that vary very little (variation is low), but inaccurate means that the mean is outside the specification range. We need to take a measure to bring the process within the limits.
  • Accurate but imprecise: The process mean is within the specification limits, but the variation is too big. We need to investigate what is causing this variation, and it is much more difficult to combat it.
  • Inaccurate & imprecise: The mean is outside the specification range, and the variation is too big.

Benchmarking

A benchmark is a reference point, some standard by which other phenomena are judged. It is a temporarily fixed point, with the location or magnitude decided by relevant metrics or measures.

Benchmarking is a technique whereby you review the performance of others to judge your own performance and then use that judgment to identify areas for improvement. Benchmarking is the activity of comparing methods and/or performance with other processes in order to learn from them and/or assess performance.

Comparison requires equivalent values from competitors who are comparable. When it is done properly, it is called benchmarking.

Why Use Benchmarking?

We use benchmarking to:

  1. Understand our competitive positioning.
  2. Identify relevant areas of improvement.
  3. Understand where to look in order to identify best practices.

How to Do Benchmarking

  1. Use indicators (e.g., level and replenishment rate of inventories) to measure performance.
  2. Compare performances within or across industries, or within and across organizations that are comparable.
  3. Identify top performers (e.g., supermarkets).
  4. Study their best practices to select the best resource for us.
  5. Adopt the best practice with proper adjustments and creative solutions. We need to generate a ‘benchmarking best practice’ that gives us first-mover advantage in the search for inputs and resources.
  6. Benchmarking should be constantly updated and improved in order to (i) gain new competitive advantages and (ii) adjust to the external context (e.g., customer demands, competitors’ behaviors, regulations).

Types of Benchmarking

6 types of benchmarking (Slack et al.):

  • Practice benchmarking: is a comparison between an organization’s operations practices, or ways of doing things, and those adopted by another operation.
  • External benchmarking: is a comparison between an operation and other operations which are part of a different organization.
  • Non-competitive benchmarking: is benchmarking against external organizations which do not compete directly in the same markets.
  • Competitive benchmarking: is a comparison directly between competitors in the same, or similar, markets.
  • Performance benchmarking: is a comparison between the levels of achieved performance in different operations.
  • Internal benchmarking: is a comparison between operations or parts of operations which are within the same total organization.