Six Sigma for Small

Business
Six Sigma has proven to work for huge companies like
Motorola and GE, which accumulate a lot of waste and
redundancy because of their sheer size. But what about
smaller organizations? What about local businesses?
What about your company?
Is Six Sigma worthwhile for smaller institutions who don’t
have hundred-man teams, or thousand-step processes?
Well, in October 2017, three people asked that same
question. They conducted a study, and they published
their findings in the Advances of Mechanic Engineering
section of SAGE Journals.
Two of the authors – Murilo Riyuzo Vendrame Takao and
Iris Bento da Silva – work in mechanical engineering at
the University of São Paulo, in São Carlos Brazil. The other
author, Jason Woldt, teaches management classes at the
University of Wisconsin-Platteville. They put their heads
together to create a comprehensive study on the effects
of Six Sigma, as it applied to one specific small-to-
medium-sized enterprise…
A plumbing product distribution business.
Spoilers: Six Sigma works.
It has worked for huge businesses like General Electric,
and it still works for small- and medium-sized enterprises
(SMEs) like your neighborhood lemonade stand.
“This article uses a case study highlighting the
implementation of Six Sigma methodology in a North
American manufacturer of plumbing products (SME). Each
step of the process is properly described, and the results
are also presented,” the authors said.
“We conclude that it is possible to identify the improvements
and benefits achieved by the implementation of the Six Sigma
quality program in an SME environment.”
How did they reach this conclusion? What did they find?

The Six Sigma Difference

They discovered that Six Sigma is different from other
quality management programs because of the structured
application of its tools and procedures (and, specifically,
how those tools integrate with the goals of an
organization).
These tools are used to facilitate each step of DMAIC – a
project development framework, and a tent-pole of Six
Sigma. It stands for…
Define: Figure out the scope and importance of your
project, identify the needs of your consumers, and then
assemble the team responsible for the project’s execution.
Measure: Pinpoint the problem you’re trying to solve,
gather all the data you need, determine priority problems,
and establish goals.
Analyze: Discover the cause of the priority problems and
figure out where the problems start.
Improve: Propose, evaluate, and implement solutions to
priority problems.
Control: Maintain the scope of the long-term goal, monitor
performance, and take corrective action to keep on track.
There are dozens of tools that can be used during DMAIC,
and the research dives into their case study to show a few
tools in action.
The case study covers a period of about 18 months,
following (as previously mentioned) a plumbing product
distributor. The company wasn’t being well-received by its
customers, and it endeavored to find out why.
Enter the Define phase. One of the tools they used was
called voice of the customer (VoC), which defines the
needs and requirements of your customer base. It’s a very
important tool for a company that’s not getting a lot of
positive reviews. For the case study, VoC showed that
customers expected prompt delivery, correct product
selection, and a knowledgeable distribution team.
Moving into the Measure phase, the company wanted to
describe their problem – but not with words. They wanted
to use data. So, they did a little data collection, and what
did they find? Their order fulfillment cycle was out of
whack with the rest of the industry. It took them 46%
longer to deliver products than their competitors. They
were violating one of the VoC principles defined in the first
phase: prompt delivery. That’s  why customers were
upset. After this discovery, they committed to lowering
their OFCT – the time from the order entry to the final
delivery of a product – in hopes that it would improve
their reputation with customers.
So, with their problem discovered, they ventured into
the Analyze phase, where they worked to answer one
question – why was their delivery so slow, compared to
their competitors? They brainstormed causes, and came
up with four potential causes: (1) the accuracy of the
sales plans, (2) safety stock issues, (3) vendor delivery
performance, and (4) falling behind the manufacturing
schedule. They conducted regression analysis on all
potential causes, to see which one would cause the most
trouble. And they found it. After creating a Pareto
diagram, they realized that 74% of their sales came from
only 21% of their products – and there wasn’t enough
safety stock to get those in-demand products to all the
customers who wanted them.
That led to the Improve phase, where they aimed to
solve the problem. They started by implementing a
monthly demand review, to make sure the in-demand
products stayed  in-demand, and it wasn’t a one-time
fluke. The second measure was to
actually order  and provide  the customers with the
products they wanted.
The Control phase was simple. They wanted to make
sure their solutions worked for as long as possible, so they
created plans to monitor sales on their bestselling 21% of
products (to make sure they weren’t exceeding or under-
supplying demand). And every year, they’d review how
well those products sold; if a product started following out
of high demand, they could replace it with a product that
was coming into high demand.

The Results
After 18 months with the plumbing product distributor, the
researchers came to a confident conclusion.
“This case study illustrates that quality management and its
tools should be increasingly adopted regardless of whether they
are SMEs or large companies. Thus, in order to achieve
competitiveness, the Six Sigma methodology should be much
more applied in the SMEs, due to the interrelationship with the
stakeholders and limited use of consultancies.”
Using Six Sigma principles, the company in the case study
increased their annual sales by $248,034. They reduced
delivery time by more than four full days.

The Takeaway
This research is another point in favor of process
improvement methodologies. It doesn’t matter how big
your company is, how many employees you have, or how
much revenue you gross every year.
All. Companies. Have. Processes.
Whether you’re distributing plumbing supplies, making
billion-dollar acquisitions, or selling lemonade on the
street corner, Six Sigma is absolutely worth looking into.