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Executive Summary

Six Sigma is a quality improvement tool which was developed by Motorola in 1980s with the sole purpose of standardizing processes by eliminating defects. It refers to the
ability of processes to produce output at defect levels below 3.4 defects per million opportunities. The implicit goal of Six Sigma is to improve the quality of all the processes to a level equal or better than that.

Six Sigma was traditionally developed to improve the quality standards in manufacturing sector, and it achieved a huge amount of success in the same. But now the focus is shifting from manufacturing to services. Many service sector companies as well as the service functions within every sector are adopting it as a tool to boost their efficiencies. But there is a lot more to achieve for Six Sigma in the services sector and loads of hurdles exist in the way to success.

General Electric, AlliedSignal, and many other manufacturing firms have saved billions of dollars due to the implementation of Six Sigma. But now its scope is not limited to manufacturing only. Companies are finding its use in non-manufacturing processes as well such as sales, accounts receivables, and R&D. For instance, Dow Chemical estimates that the application of Six Sigma to environmental, safety and health services has helped the company save $ 130 Million in the past two years. No surprise that the financial institutions, consumer product and healthcare firms are also jumping on to Six Sigma.

But different customers have different perspectives. Some bankers and doctors might immediately warn that standardizing processes will lead to inferior services. And their worries are valid too to some extent. Six Sigma won't work for every service and adjustments may be required even for the services for which it does apply. Nevertheless, many lessons learned from production lines are relevant to service processes as well.

Whether the adoption of the Six Sigma ethos by service businesses is a response to increasing expectations from customers, or whether this is an opportunistic strategy determined as an innovative means of achieving competitive advantage by a small number of pioneering firms, is still unclear. However, there are now clear indications that some substantial service-based, or service-dependent organizations like Citibank, Motorola, American Express, see commercial possibilities in the pursuit of perfection.

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* Contributed by: -
Ankur Gupta & Sumit Roshan,
IMT, Ghaziabad.