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The Key Concepts Of Six Sigma Business Essay

Six Sigma is a methodology that delivers businesses with the tools to enhance the capacity for their business processes. This increase in performance and decrease in process variation contributes to defect reduction and vast improvement in profits, employee morale and quality of product. (isixsigma, 2010)

Six Sigma was actually developed by Motorola that today enjoys wide-spread application in many sectors of industry. It really is a systematic way for process improvement that often uses the five steps defined by the acronym: DMAIC (Define, Measure, Analyse, Improve and Control). (Schroeder, 2008)

Six Sigma seeks to identify and remove the factors behind defects and errors in manufacturing and business processes, using a group of quality management methods, including statistical methods, and creates a special infrastructure of men and women within the business ("Black Belts" etc. ) who are experts in these procedures. Each Six Sigma project completed within an organization follows a precise sequence of steps and has quantified financial targets (cost reduction or profit increase).

Cigna Corp. , a 28, 000-employee provider of employee healthcare and related insurance benefits used Six Sigma to adjust to dramatic changes in the healthcare industry in which a 49% reduction in total inpatient case costs was achieved.

The following is the report according to Cigna's success story;

CORE PHILOSOPHY AND KEY CONCEPTS OF SIX SIGMA

Customers do not usually judge something or service by averages like performance but by what they actually get out of each product. Overall client satisfaction rests heavily on the consistency with which the products and services are delivered. That is a result of the combo of reduced process variation and improved process capability.

The following will be the core philosophies and key concepts of Six Sigma in virtually any organization:

Continuous efforts to attain stable and predictable process results (i. e. reduce process variation) are of essential importance to business success. The more variability in an activity the bigger the probability for a defect somewhere. At the heart of the concept is elimination of variation of process for defect removal.

Manufacturing and business processes have characteristics that may be measured, analyzed, improved and managed (DMAIC), in order to improve the existing company methodology or to create a fresh and improved defect- free methodology for production in the organisation.

Achieving sustained quality improvement requires commitment from the complete organization, particularly from top-level management to bottom level management in the organisation, every employee and worker is responsible for the success of the organisation or company at large.

(Berger, 2003)

DMAIC refers to a data-driven quality technique for improving processes, and is an integral part of the company's Six Sigma Quality Initiative. DMAIC means for five interconnected phases which are Define, Measure, Analyze, Improve, and Control.

Each step in the cyclical DMAIC Process must ensure the best possible results. The process steps:

The DMAIC Methodology

(ASQ, 2010)

(Figure 1)

Define

In the Define stage, the project team identifies the purpose and scope of the project and confirms a DMAIC project is actually appropriate. The company should know who their customers are, what they need in terms of products and services and what are their expectations, the company should know the clients critical to quality issues and their core business processes involved. The tools that can be used are project boundary, where in fact the company should define the project boundaries and the start/stop process. Another tool is process mapping which defines the processes to be improved in the company.

Measure

During Measure, the focus is on gathering data to spell it out the current situation by way of a data collection plan. It is advisable to identify the appropriate process measures and gather sufficient baseline data, so that once improvements are made the impact can be verified empirically.

Here a detailed process map is established, including documentation of variations in the way the process is carried out from as much sources as you can. With this information the project team can commence to see some of the factors that may be affecting process performance by comparing the client survey results.

Analyze

The purpose of the Analyze step is to determine the root causes of the procedure problems and inefficiencies and opportunities for improvement. A number of methods are used to recognize potential root causes, narrow down the possibilities, and confirm the partnership between the suspected causes and the performance of the procedure, such methods may be The reason and effect chart or use of Pareto charts. The business should determine if the process should be improved or redesigned.

Statistical analysis is an essential component of the step, and is used to show these relationships.

According to Cigna the analysis reveals some interesting facts, including:

· Re-admission metrics were misleading - in fact, understated - because they did not include subsequent admissions and treatments of problems apart from those related to the original diagnosis and treatment.

· Identification or engagement of patients at high risk was inadequate.

· Follow-up discharge plans and use of outpatient treatment were inadequate.

· Follow-up communication had not been effective (too much and too confusing).

Improve

Then comes the Improve step, which involves designing creative answers to fix preventing problems from ever happening again, especially the main causes. Techniques involve brainstorming, FMEA (Failure Modes and Effects Analysis), and piloting the improvement plan before rolling it out completely.

The same data that was obtained during Measure to determine the baseline is again gathered after improvements are set up. Data analysis and charting techniques are used to verify that performance has in fact improved sufficiently to meet up with the project's goal.

According to Cigna improvement included five components:

1. Redefine a more comprehensive, customer focused re-admission metric.

2. Improve discharge and follow-up planning.

3. Provide automatic ICM enrolment to providers and patients.

4. Consolidate patient communications, and improve delivery.

5. Implement protocols, templates and training for all care coordinators, including employee assistance programmes and nonclinical services, while emphasizing the value of a thorough, holistic approach to care.

Control

Finally in the Control phase, steps are taken up to ensure that increases in size obtained during Improve are maintained, avoiding heading back to the old techniques the company used to run things. Common tasks include establishing ongoing data tracking and an idea for identifying when the procedure performance starts to slide and taking appropriate action. At the end of this phase, the project manager transfers ownership back to the process owner, and the team communicates the project results to all stakeholders.

According to Cigna a full-year study was designed using 286 patients signed up for the ICM programme compared with 517 patients with similar problems in a control group.

(Bright hub articles, 2010), (isix sigma, 2010)

Probable Implementation Roles

One of the key innovations of Six Sigma is the professionalizing of quality management functions. Ahead of Six Sigma, quality management used was largely relegated to the production floor also to statisticians in another quality department. Six Sigma borrows fighting techinques ranking terminology to define a hierarchy (and career path) that cuts across all business functions and a promotion path straight into the executive suite. Six Sigma identifies several key roles because of its successful implementation.

Executive Leadership includes the CEO and other members of top management. They may be responsible for establishing a vision for Six Sigma implementation. They also empower the other role holders with the freedom and resources to explore new ideas for breakthrough improvements. The executive leaders must show determination and confidence along the way, they must back it up with all integrity and must practise and model patience with their employees and organisation most importantly.

A CEO needs no qualifications to establish and support and promote the design for Six Sigma initiatives. He or she is at least minimally qualified by virtue of being the most notable person in the organization and ultimately responsible for all financial results of the organisation. The more knowledge that the CEO has on Six Sigma the better for the organisation at large.

Champions are in charge of Six Sigma implementation over the organization in an integrated manner. They may be selected by Executive Leaders from upper management.

Champions serve as mentors, leaders and coaches supporting the project teams and ensuring the resources necessary. The champion promotes Six Sigma methodology throughout the business and especially in specific functional groups. The qualifications of an champion depend on the business and the Six Sigma infrastructure.

Master Black Belts, identified by champions, act as in-house coaches on Six Sigma providing technical leadership of Design for Six Sigma (DFSS).

They devote 100% of their own time to Six Sigma. They have the highest level of technical and organisational proficiency. They assist champions, coordinate the various projects and guide Black Belts and Green Belts when necessary. Aside from statistical tasks, their time is spent on ensuring consistent application of Six Sigma across various functions and departments.

The master black belt must have the ability to use statistical and non-statistical tools, to teach, and also to facilitate and coordinate activities. They must have the ability to facilitate problem-solving effectively without actually overtaking a project.

Black Belts operate under Master Black Belts to use Six Sigma methodology to specific projects. They are simply accountable for leading DFSS projects and teams full time. They will be the key agents, fully dedicated and thoroughly been trained in Six Sigma techniques and tools plus they devote 100% of their own time to Six Sigma. They primarily focus on Six Sigma project execution, whereas Champions and Master Black Belts concentrate on identifying projects/functions for Six Sigma.

Green Belts will be the employees who take up Six Sigma implementation with their other job responsibilities. They receive more simplified training than black belts and work on DFSS only part time; they can spend from 10% to 50% only of their time on DFSS. They operate under the guidance of Black Belts and support them in obtaining the entire objectives. They often help black belts acquire data and develop experiments, they could lead small projects, or they may form DFSS teams, facilitate their work, and manage projects from begin to finish.

Yellow Belts are employees who've been been trained in Six Sigma techniques within a corporate-wide initiative, but have not completed a Six Sigma project and aren't expected to actively engage in quality improvement activities.

(iie, 2010), (Brue, 2003)

The Probable Six Sigma organisation in Cigna

Six Sigma organizations is a structure or chart which ultimately shows the various managerial positions of employees in a Six Sigma organisation from top level management (Executive managers or head of organisations) to bottom level management (Green belt or yellow belt personnel depending with the organisation). The next is the probable organisational structure according to Cigna;

http://www. sixsigmaalchemy. com/images/six_sigma. jpg

(six sigma alchemy, 2010)

Conclusion

In conclusion, from the experience of Cigna we can see the effectiveness and efficiency of Six Sigma in an organisation. That's by following a Six Sigma DMAIC methodology, Cigna has been able to get process and organisational improvement in a manner that is systematic, sustainable, confirmed with data, and in alignment with customer and stakeholder quality expectations.

We can easily see that by using Six Sigma medical insurance provider company Cigna were able to obtain the following impressive results.

· A 53% decrease in re-admissions.

· Savings around $3, 000 per patient and the earlier mentioned 49% decrease in total in-patient care costs.

· A 14. 9% improvement in the speed of patients taking medications as prescribed.

Along with the impressive cost benefits in outpatient care, Cigna saw even more significant savings for patients in the ICM inpatient care programme:

· The final number of admissions in the ICM group decreased 53% vs. increasing 11% in the control group.

· The total cost for inpatient care decreased by 49% in the ICM group vs. an increase of 225% in the control group.

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