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Editor's Note

July 19, 2001
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I hear this word and immediately get a vision of a mathematical equation. I run to my bookcase or to my surveyor gurus for definition. But one book author has used sigma as a concept, not necessarily a definition, per se.

Sigma’s lineage dates back to the Greeks. It is the 18th Greek letter used to designate a standard deviation, but many of you probably already knew that. As a business term, sigma can measure the capability of any given process to perform defect-free work. The higher the sigma value, the less likely a process will produce defects.

So, a company working at two sigma makes over 50,000 mistakes per million opportunities. Not exactly something you’d brag about. A company that operates at 3.8 sigma is getting it right 99.9966 percent of the time. Pretty good, eh? Sure, in the vast picture of things. But what is that remaining percent? Looking at other industries, it is equal to 5,000 botched surgical procedures every week, four accidents per day at major airports, 200,000 wrong drug prescriptions each year. How good does it look now?

What does that percentage mean for your firm?

Considering this disconcerting set of examples, the sigma of a company needs to be altered—improved. The author explains a solution in five steps: Define the problem, Measure where you stand, Analyze where the problem starts, Improve the situation and Control the new process to confirm it is fixed. That’s DMAIC: Dumb Managers Always Ignore Customers.

Let’s break it down:

Define the problem. Focus on the process not the outcome, that creates the product or service. Map that process to easily recognize the links between the steps.

Measure the problem. Measure mistakes, measure opportunities for improvement, measure the competition. By concentrating on the problem, you won’t find a solution. You must look at today and to tomorrow.

Analyze the problem. Find out why errors are being committed and figure out how to fix them. Only then can you…

Improve the situation. Once you’ve pinpointed, weighed and investigated the problem at hand, you can implement changes.

Control the new process. Monitor all variables consistently. Assign someone the control. And don’t forget that any situation can relapse. New problems may arise, too.

Those Greeks. They really knew what they were talking about, didn’t they?

To contact the editor, send an E-mail to brownl@bnp.com or mail to 755 W. Big Beaver Rd., Ste. 1000, Troy, MI 48084.

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