Sunday, July 13, 2008

A Small Business Case Study in Six Sigma

score_tjpg_Revelle This article was written by Jack Revelle, SCORE Orange County Chairman

Six Sigma is a problem-solving methodology and management philosophy that was born at Motorola in the early 1980s. In recent years it has “caught fire” and is currently in use at a broad variety of both product- and service-oriented businesses. However, some ill-advised people falsely believe that Six Sigma is just for large companies. Frankly, this is just not true! The following example of applying Six Sigma supports the truth that it has universal application.

A small company assembled orders within its warehouse for delivery to its customers. Orders were written and phoned in by its customers one to two days in advance of requested delivery dates. More often than the company was willing to admit (actually about 15% of the time), the delivered orders did not match up with the orders that had been placed. 

Enter the tools of Six Sigma. Using process flow charts and process maps to graphically define the assembly and delivery processes, tally sheets for data collection, Pareto diagrams for data analysis, cause and effect analysis plus multi-voting to determine root causes, brainstorming to identify potential corrective actions, and force field analysis to analyze the various corrective actions and determine which action was the best choice, the company, led by an external Six Sigma facilitator, was able to significantly reduce its "go-backs." 

As a direct result of the foregoing, the company saved the cost of three full-time employees who previously worked exclusively on refilling and redelivery of orders.  This is commonly referred to as the “hidden factory.” This reduction in labor costs amounted to an annual savings of nearly $100,000.

I can personally attest to the authenticity of this example since I was the Six Sigma facilitator. I worked with this small business (now much larger) in Phoenix, Arizona for about two years and all this actually happened.

Those readers who think Six Sigma might be the problem-solving methodology that could help them to eliminate, or at the very least, reduce some of their business-related problems should view the website, You’ll learn about Define, Measure, Analyze, Improve, and Control, or DMAIC, the step-by-step approach to problem-solving known throughout the world as Six Sigma. Other sites that focus on Six Sigma as it relates to small business are and

For free assistance from Orange County SCORE-114 in learning more about and implementing Six Sigma in your business, call (714) 550-7369 and let our Client Services Manager (CSM) know what you need. The first step in problem identification and solution is to make the call.