Six Sigma and Total Quality Management: Concepts and Applications

Introduction

Today's economic agents are under increasing pressure to deliver high-quality products and services at extremely competitive prices. This challenge has been driven by a multitude of factors, two of the most important being the growing forces of globalization and the incremental, ever-changing demands of the customer base. In order to meet this challenge, organizational leaders develop and implement a wide range of strategies. They invest more and more in their human resources, which are considered the most valuable asset — this is especially true within the services industry, where staff members directly determine the levels of customer satisfaction. Aside from employee motivation and development, however, contemporary managers also focus on the technologies used throughout the operational process, the techniques and means of delivering products, and so on.

All the efforts mentioned above, together with others, are organized under the generic term of Total Quality Management — a modern approach to business in which organizational leaders focus on introducing quality efforts at all stages of organizational processes. Six Sigma is similar in that it also focuses on improved levels of quality, but its applications are somewhat different and arguably more novel and innovative. The aim of this report is to present the two concepts as they are depicted in the specialized literature and to reveal the practical applications of those findings. Before doing so, however, it is necessary to clearly understand the two ideologies of Six Sigma and TQM.

The specialized literature presents a wide variety of definitions of Total Quality Management; despite differences in formulation, however, the essence of the various explanations remains the same. J. M. Juran, for instance, argues that "Total Quality Management (TQM) is the set of management processes and systems that create delighted customers through empowered employees, leading to higher revenue and lower cost." Joel Ross and Susan Perry, on the other hand, argue that TQM is "the integration of all functions and processes within an organization in order to achieve continuous improvement of the quality of goods and services. The goal is customer satisfaction" (Ross and Perry, 1999). The concept of TQM is extremely broad, referring to improvements that can be made at all organizational levels, with the ultimate purpose of enhancing product quality and customer satisfaction. TQM is therefore a modern tool available to managers by which they can respond to the challenges of incremental customer demands.

The TQM and Six Sigma Concepts

The Six Sigma concept is more specific than TQM in that it does not refer to such broad applications, but to particular actions that organizational leaders can take to enhance the satisfaction of the final customer. The Six Sigma approach is built on numerous business models, most of which are traditional and long-established. Six Sigma thus incorporates various ideas on how to improve customer satisfaction and product quality, meaning that it is also constructed on the premises of total quality management. D. H. Stamatis (2004) goes as far as to "define Six Sigma as 'TQM on steroids.'" The core principle behind the Six Sigma ideology is that of delivering products in full accordance with the specifications of the customer. The requirement is for any process to register no more than 3.4 defects per one million opportunities; a defect is understood as any deviation from the initial desires of the customer.

The Six Sigma approach is generally achieved through two separate processes — DMAIC and DMADV — where:

DMAIC stands for: Define, Measure, Analyze, Improve, and Control.
DMADV stands for: Define, Measure, Analyze, Design, and Verify.

DMAIC is generically applied to already existing processes that are performing below desired levels and for which the organization seeks improvement. DMADV, on the other hand, is developed and implemented for new processes being introduced within the organization, which aim to perform at superior quality levels from the outset. Both DMAIC and DMADV are implemented by Six Sigma specialists — Green Belts and Black Belts — and overseen by Master Black Belts (iSixSigma, 2009).

The Six Sigma ideology is notable for the roles it assigns to various members within organizations. Models developed before Six Sigma would typically assign quality control and improvement roles exclusively to staff within the manufacturing department. The new model, however, states that these roles are assumed by people at all levels of organizational operations. Notably, it assigns martial arts terminology to these roles. The first category is represented by Yellow Belts — individuals trained to work with quality improvement. Then come Green Belts, who are regular employees that also focus on quality improvement under the supervision of Black Belts, who are in charge of Six Sigma implementation on specific projects and report directly to Master Black Belts. Master Black Belts play the generic role of coaches and, like Black Belts, devote all of their time and energy to Six Sigma endeavors. The final link is provided by champions and executive leaders, who oversee the integrated and universal application of Six Sigma across the entire organization (Harry and Schroeder, 2000).

Gopal Kanji (2002) argues that business excellence is the core element of any organizational triumph, and states that business excellence is achieved through performance measurement. In a modern context in which organizational success is determined by a company's ability to satisfy the changing needs of various categories of stakeholders — customers, employees, shareholders, or the general public — performance measures must focus on the company's ability to satisfy the needs of each of these groups. With these premises in mind, Kanji promotes his own model of performance measurement: the Kanji Business Excellence Measurement System (KBEMS). This model is constructed on two components, each assessing distinct performance criteria. The first set of criteria focuses on leadership features and assesses the means by which the company is able to satisfy the customer by focusing on their needs; implement management by fact and improve organizational processes; focus on the role of human resources and improve their performance; and finally, integrate all of the above in a continuous process of organizational improvement. The second component of the KBEMS model revolves around organizational values and assesses process excellence, organizational learning, and the satisfaction of stakeholders (Kanji).

While this model provides a strong theoretical foundation for quality management within any organization, its practical application is impeded by a lack of specific sub-models. The satisfaction of various stakeholder categories is a broad concept, and its measurement raises numerous challenges requiring the use of additional models. Overall, while it is an interesting approach to quality control, it is rather general. It does, nevertheless, have the major benefit of assessing the company as a unified system that must measure and enhance its performance at all organizational levels and in relation to all categories of stakeholders.

Literature Review

A similar view is forwarded by Manu Vora (2002), who argues that business excellence can be attained through an increased emphasis on quality control. Unlike Kanji, Vora's approach is more specific and therefore more readily implemented. What Vora essentially argues is that the final results of an economic agent can be enhanced once emphasis is placed on customer satisfaction, employee satisfaction, and operational processes. Provided that all these endeavors are successfully managed, the company will achieve the desired financial results. What is pivotal, however, is that the strategies implemented in managing processes and relationships with customers and employees be integrated in a universal, organization-wide approach. Vora's findings are further strengthened by empirical data drawn from the experience and results of several companies awarded the Malcolm Baldrige National Quality Award.

A third perspective comes from Bart Victor, Andrew Boynton, and Theresa Stephens-Jang (2000). These researchers recognize the growing importance of quality management and examine it from the angle of employee processes. Looking at actual empirical results, they find that more than half of real-life TQM implementations at the level of organizational staff members have failed to achieve the desired results. The reasons they identify for this failure revolve around the inability of managers to develop and implement a dual model through which employees focus on both task completion and continuous improvement. In other words, a necessity arises for managers to enable staff members to successfully combine standardized work — with which they are already familiar — with the emergent requirements for learning and improvement. Victor, Boynton, and Stephens-Jang's results point to the necessity of finding a balance between standardized work and a continuous learning process, and also indicate that employees who have managed to find this balance report higher levels of on-the-job satisfaction and lower levels of stress.

A crucial contribution to total quality management is made by Mohamed Zairi (2002), who examines quality management in the context of current external threats — for instance, the growing competitive threats promoted by intensifying forces of globalization, and the necessity for any organization to operate in accordance with growing environmental concerns. In this context, Zairi points not only to the necessity of TQM for organizational survival, but even more so to the importance of sustainable TQM models that maintain organizational competitiveness. The basic idea is the ongoing necessity for organizations to continually adapt to the changing features of both their micro- and macro-environments.

The model proposed by Zairi is in many ways similar to previously presented concepts in that it argues for and promotes the importance of TQM in customer satisfaction, employee motivation, and organizational processes. Nevertheless, it also introduces a new element: the tremendous role played by information systems. This is represented by the IT infrastructure, its usage by organizational members, and the culture that promotes the integration of technologies and information in achieving company success. In this regard, Zairi's work introduces the less frequently discussed concept of IT's role in TQM — a role that is extremely broad and present at virtually all organizational levels. Information is gathered and assessed to enhance employee satisfaction and performance; assess customer satisfaction and identify new needs; assess the company's competitive position; develop and test potential business strategies; and more.

As previously mentioned, a model that draws significantly on the principles of total quality management is Six Sigma. This model is largely statistical and has significantly impacted how organizations forecast their operations, apply statistical methods, and strive to reduce defects. Gerald Hahn, William Hill, Roger Hoerl, and Stephen Zinkgraf (1999) argue that the business role of statistics — in a context in which more and more managers enthusiastically implement Six Sigma — is changing rapidly. According to them, the concept was initially implemented in manufacturing but has since evolved to be integrated at various other organizational levels not traditionally associated with quality control. The direct impact has materialized in a changing role for the statistical and financial departments, which are no longer perceived as mere data-recording facilities but now play an increased role in business strategy development. Additionally, Six Sigma has managed to integrate both visionaries and executive leaders in the creation of a realistic, innovation-based approach that stands increased chances of supporting organizational success. Overall, the contribution by Hahn and colleagues represents a fresh perspective on quality control by introducing the role of statisticians in broader business efforts.

The final perspective to be presented was offered by David Rylander and Tina Provost in 2006, and it revolves around the tremendous role played by Six Sigma in enhancing the quality of the relationship between an organization and its customers. While this may not seem novel, it is noteworthy that the authors argue Six Sigma should be combined with online efforts, and that this combination would significantly contribute to organizational performance. Their findings draw on General Electric's experience with Six Sigma, which makes them particularly reliable as they have been empirically observed and tested. The premise of Rylander and Provost's article is that the abundance of technological applications has distanced the customer from the company, and that this gap is created by a lack of human contact. The two authors propose a model of Six Sigma ideology according to which online communications with customers are enhanced. In their own words, "the goal is to systematically generate actionable information that will enhance the ability to swiftly attend to customer satisfaction issues by making managers responsible for bringing human contact back into the realm of customer relationship management (CRM)."

The analysis of the specialized literature has led to the following key findings:

— Organizational performance must be measured in terms of the company's relationship to all categories of stakeholders.
— All organizational efforts aimed at quality improvement must be integrated in a universal, organization-wide approach.
— A specific application of TQM centers on employees finding a balance between their traditional standardized work and a continuous process of improvement.
— Information technology — encompassing both infrastructure and information management — is pivotal throughout the TQM process and indispensable to overall organizational success.
— The Six Sigma model contributes to internal shifts in the roles played by organizational departments, the most relevant example being reflected in statistics and finance.
— Six Sigma can be used to build better relations with the customer, including within the virtual environment.

Each of these findings can readily be applied within a real organizational context. For exemplification, consider the case of Lufthansa, the leading European airline company. Each of the above strategies can be implemented to enhance the quality of the company's services, thereby leading to superior levels of customer satisfaction and consequently higher financial results.

First, as argued by Gopal Kanji, Lufthansa should commence its quality improvement efforts by measuring its current business excellence. This should be achieved through a gradual assessment of the means by which the company is able to satisfy the needs of its customers, its employees, the general public, and other categories of stakeholders. For instance, is the company able to offer clients a sense of safety and security in the context of ongoing security threats? In terms of staff members, is the organization able to provide a safe, dynamic, and rewarding working environment in which employees are committed to their employer? Relative to the general public, is Lufthansa making sufficient efforts to reduce the levels of pollution and waste generated by its aircraft? Once these and other questions are answered, the company's management team will have a strong starting point for future improvement endeavors.

Then, as argued by Vora, the management team at Lufthansa would have to ensure that the strategies they develop and implement to achieve enhanced quality levels and increased financial results are applied at all levels, rather than only in certain departments. In other words, the leaders at the European airline would have to ensure that their quality improvement strategies simultaneously address the customer, the employees, and organizational processes. For instance, they ought to concurrently offer incentives to employees, provide price reductions to customers, and offer grants and subsidies to environmental organizations focused on alternative energy sources and other pollution-reduction measures. The benefits of such an approach would be significant: a strengthened organizational reputation, better-committed employees who perform at superior levels, and better-satisfied customers — all ultimately leading to incremental revenues.