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TQM 24,1

A case study
Application of Six Sigma methodology in a small and medium-sized manufacturing enterprise
Prabhakar Kaushik
Mechanical Engineering Department, UIET, MD University, Rohtak, India

4
Received August 2008 Revised October 2008 Accepted December 2008

Dinesh Khanduja
Mechanical Engineering Department, NIT, Kurukshetra, India

Kapil Mittal
Mechanical Engineering Department, YIET, Yamunanagar, India, and

Pawan Jaglan
Mechanical Engineering Department, NIT, Kurukshetra, India
Abstract
Purpose Six Sigma within small and medium-sized enterprises (SMEs) is rapidly emerging as the new wave of change in Six Sigma. The purpose of this paper is to review the implications of applying Six Sigma methodology over the SMEs, taking a specific case of a bicycle chain manufacturing unit. The study could be a paradigm initiative towards high quality products and services at low cost for every SME. Design/methodology/approach Based on the literature, this paper proposes a process flow chart to present a one-shot picture of the Six Sigma application in a bicycle chain manufacturing unit which falls in an SME environment. The methodology adopted is DMAIC methodology of Six Sigma, which had been mostly successful so far in large-scale industries. The methodology has been applied to reduce the bush rejection rate (bush is an important component of a cycle chain) by reducing defects inherent in the processes. The statistical techniques such as two sample t-test and process capability analysis have been used to establish the process capability before and after the Six Sigma application. Findings This paper is an attempt to justify the highly useful role of quality management techniques like Six Sigma for SMEs which are normally presumed to be in the domain of large industries. In this paper, Six Sigma methodology has been applied to a small unit manufacturing bicycles chains with dwindling productivity levels. After applying Six Sigma it was found that the chain manufacturing firm can increase its profit by controlling high rejection rate of cycle chain bush. Application of Six Sigma project recommendation brought up the process sigma level to 5.46 from 1.40 by reduction in bush diameter variation in the process of bicycle chain bush manufacturing. This increase in sigma level is equivalent to monetary saving of Rs 0.288 million per annum, which is a noteworthy figure for an industry of such level. The success of this study paves the way to further extend the Six Sigma application to more such industries working in the SME environment. Originality/value This paper provides documented evidence of Six Sigma implementation in a bicycle chain manufacturing unit which has been taken as representative of a small and medium-size industry. The study will yield a great value to academics, consultants, researchers and practitioners of Six Sigma. Keywords India, Manufacturing industries, Six Sigma, Small to medium-sized enterprises, DMAIC, DPMO Paper type Case study
The TQM Journal Vol. 24 No. 1, 2012 pp. 4-16 r Emerald Group Publishing Limited 1754-2731 DOI 10.1108/17542731211191186

1. Introduction Sigma is a Greek letter representing standard deviation or the amount of variation within a given process (McAdam and Lafferty, 2004). According to Harry and Schroeder (2000), Six Sigma is a powerful breakthrough business improvement strategy that enables

companies to use simple and powerful statistical methods for achieving and sustaining operational excellence. It is a business strategy that allows companies to drastically improve their performance by designing and monitoring everyday business activities in ways that minimize waste and resources while increasing customer satisfaction. Park (2002) described that Six Sigma implies three things: statistical measurement, management strategy and quality culture. It is a measure of how well a process is performing through statistical measurement of quality level. It is a new management strategy under leadership of the top management that creates quality innovation and total customer satisfaction. It is also a quality culture. It provides the way to do things right at the first time and to work smarter by using data information. It also provides an atmosphere to solve many critical-to-quality problems through team efforts. Statistical representation of Six Sigma describes quantitatively how a process is performing. The goal of Six Sigma is to design processes that do what they are supposed to do with very high reliability, ultimately producing very consistent products and services (Coronado and Antony, 2002). The numerical goal of Six Sigma is reducing defects o3.4 parts per million also known as defects per million opportunities (DPMO), reducing cycle time and reducing costs dramatically which impact the bottom line (Behara et al., 1995; Goh and Xie, 2004). Although Six Sigma has been implemented with success in many large corporations, there is still less documented evidence of its implementation in smaller organizations (Harry and Crawford, 2004). Due to growing importance of supply chain management issues in global market environment, large firms are heavily dependent on small- to medium-sized enterprises for the provision of high quality products and/or services at low costs. The increasing demand for high quality products and highly capable business processes by large organizations has left no choice on the SMEs to consider the introduction of Six Sigma business strategy (Keller, 2003). As small companies are more agile, it is mush easier to buy-in management support and commitment, as opposed to large organizations. The education and training component is much harder for smaller companies. Moreover, small companies do not have the slack to free up top talented people to engage in training followed by execution of Six Sigma projects as they are crucial to the day-to-day operations and problem solving within the company. Being able to link compensation to Six Sigma implementation is much easier in small companies compared to a large company (Rowlands, 2004). 2. Research background Wessel and Burcher (2004) in their study identify the specific requirements for implementation of Six Sigma based on a sample of SMEs in Germany. This study also examines how Six Sigma has to be modified to be applicable and valuable in an SME environment. This is the first study of its kind to be carried out on Six Sigma survey in SMEs. Burton (2004) proposes alternative Six Sigma deployment models that allow SMEs to implement Six Sigma at a pace where they can digest the methodology and achieve benefits, without significant resource commitment and overhead structure of the traditional Six Sigma. As a result, SMEs are sometimes able to achieve faster and more impressive benefits than their large customers. He also recommends an eight-step methodology for successful deployment of Six Sigma within SMEs.

Application of Six Sigma in an SME 5

TQM 24,1

Snee and Hoerl (2003) argue that there is nothing inherent in Six Sigma that makes it more suitable for large companies. They also suggest that the greatest barrier to implementation in small companies to date has been the way the major Six Sigma training providers have structured their offerings. More recently, as more and more sets of deployment guides and training materials have become available, the pricing structures have begun to change. Today, it is much easier for SMEs to obtain good external resources without a large up-front payment. Once an owner of the business (in small firms) is convinced of the advantages conferred by Six Sigma and visualizes the benefits, it is much easier to implement Six Sigma at smaller firms and to realize its benefits (Adams et al., 2003). They suggest that the initial focus on SMEs can be to reduce quality costs or waste in the system. Effort and investment, as well as results in smaller companies, are more visible within a short time. Tennant (2001) argues that, in small organizations, if one visible and important person is actively against Six Sigma, then this attitude must change or the initiative must be a non-starter. In other words, in small companies, the top management team need to be visibly supportive of every aspect of Six Sigma initiative and they must demonstrate by their active participation, involvement and by their actions that such support is more than lip service. He also accentuates the point that it is far more important for small- and medium-sized enterprises to ensure that every iota of effort is directed exactly where it is needed for maximum benefit, so an overall quality strategy plan is vital right from the start of the Six Sigma initiatives. Six Sigma is about overall management strategy, culture and change, and the organization needs to build all of this into a sound corporate strategy plan. Wilson (2004) identifies the following advantages for small-businesses embarking on Six Sigma initiative:
. . . . .

Stronger, more intimate relationships with customers. A limited number of sites. Fewer layers in the management hierarchy. Faster and effective internal communication. Strong owner influence.

3. About the case study Present study was carried out in a SMEs unit manufacturing bi-cycles at Sonipat in Haryana (India). The main product of the unit is manufacturing bi-cycle chain and the components in manufacturing it are plate, pin, bush and roller as shown in Figure 1. Bush is the main component of chain assembly and is originally in the form of a coil. The tolerance limit of bush diameter is 5.23-5.27 mm. The initial observations showed very high rejection rate in manufacturing of bush. The rejection rate of bush was 8.0 percent because of high variation in bush diameter. So, there was a great need to reduce rejection rate of bush by reducing defects inherent in the processes. 4. Application of Six Sigma DMAIC methodology For solving any problem, the methodology adopted must cover all possible causes of problem. If the methodology of problem solving is not comprehensive enough, the solution obtained at completion will not be correct and problem will resurface sooner or

Bush

Inner plate

Pin

Application of Six Sigma in an SME 7

Outer plate

Roller Outer link

Inner link

Figure 1. Components of cycle chain

later. A process flow chart is prepared to proceed in a sequential manner and to present a one shot picture of the entire methodology, as shown in Figure 2. In this paper, the high rejection problem of bush was studied in depth and all the five phases in Six Sigma methodology, i.e. Define, Measure, Analyze, Improve and Control (DMAIC) has been successfully implemented to achieve the existing sigma quality level from 1.40s to 5.46s as explained below. 4.1 Define Define the problem and define what customer requires (Henderson and Evans, 2000). In define phase, process map and high-level process map a SIPOC (Supplier, Input, Process, Output, Customer) diagram was drawn for bush as shown in Figures 3 and 4. These diagrams were used to document manufacturing sequence of bush and to identify the process or product for improvement. 4.2 Measure In measure phase, a measurement system analysis is conducted which includes the Gauge repeatability and reproducibility (Gauge R&R) studies. The purpose of Gauge R&R study is to ensure that the measurement system is statistically sound. Gauge R&R studies determine how much of the observe process variation is due to measurement system variation. Two persons are needed to perform this experiment, which in this case were the operator on line and the investigator. The sample size was ten and two readings were taken on each sample, thereby making a total of 40 readings. The gauge used for this experiment was a micrometer. From the results of Gauge R&R study, repeatability and reproducibility comes out to be 27.02 percent and 0.00 percent and put the percentage study variation to be 27.02 percent, which is o30 percent, indicating that micrometer was correct. 4.3 Analysis According to Kapur and Feng (2005), the analyze phase examine the data collected in order to generate a prioritized list of source of variation. Many statistical tools are used to carry out the analysis which are explained as follows. 4.3.1 Process capability analysis. Process capability analysis was performed to find out actual state of the process. Rational sub-grouping was done and 20 samples were

TQM 24,1

Literature survey

Case study of manufacturing industry

Identification of problem

Data collection - Identify specific problem - Define customer requirements - Set goals - High-level process map - Measurement system analysis - Identify variation due to measurement system - Data collection plan - Draw conclusion from data verification - Process capability analysis - Determine root causes - Map cause and effect diagram - Design of experiment - Create solution statement - Implement improvement solutions - Monitor improvement progress - Make control charts - Establish standard measures to maintain performance

Define

DMAIC methodology

Measure

Analysis

Improve

Control

Improvement results

Figure 2. Flow diagram of methodology adopted

Conclusions

drawn, in a group of five. Minitab was used to draw process capability analysis curve for bush diameter as shown in Figure 5. Z Bench sigma value of process was found to be 1.40 and existing DPMO level of the process comes out to be 80,213.07, which is remarkably high and this shows that there are lot of opportunities for improvement in the process. 4.3.2 Fishbone diagram. Using process capability analysis, the DPMO level and sigma level of the bush diameter rejection was known. Now it was the time to find out the causes of bush rejection. Using expert experience and critical analysis of actual process, a Fishbone diagram (as shown in Figure 6) was drawn to find out the causes of more bush rejections.

Raw material receipt

Visual inspection Reject Ok Assembly with inner plate

Inspection Cutting and curling Inspection Hardening Ok Polishing

Application of Six Sigma in an SME 9

Reject

Figure 3. Process map for bush

High-level process map Supplier Input Process Process capability and critical analysis of rejection Output Customer

Cycle chain manufacturing unit

Bush rejection data

Decrease DPMO

Cycle manufacturing management

Thinking

Customer satisfaction and relationship

Six sigma methodology

Figure 4. High-level process map for bush rejection

Flow

4.3.3 Two-sample t-test. In two-sample t-test four important factors were taken for study identified from Fishbone diagram. In first case, two-sample t-test was done for operator skill (unskilled and skilled) by taking the sample size of 50 each for skilled and unskilled operator. In second case, two-sample t-test was done for rod replacement (after 15 h and after 25 h) by taking the sample size of 50 each for rod replacement after 15 and 25 h. In third case, two-sample t-test was done for regrinding of curl tool (after 20 h and after 30 h) by taking the sample size of 50 each for regrinding after 20 and 30 h. In forth case, two-sample t-test was done for rod-holding mechanism (old and new) by taking the sample size of 50 each for old and new mechanism. First case: two-sample t-test for operator skill (skilled and unskilled) is shown in Table I. Using Minitab, the two-sample t-test shows that as the p-value for bush diameter comes out to be 40.05 therefore operator skill cannot be a factor for bush rejection.

TQM 24,1

Process capability analysis for bush diameter LSL Process data 5.23000 LSL 5.25000 Target 5.27000 USL Sample mean 5.24500 100 Sample N 0.01030 SD (within) Target USL Potential (within) capability 1.40 Z.Bench 1.46 Z.LSL 2.43 Z.USL 0.49 Cpk 0.65 CCpk

10

Figure 5. Process capability analysis of bush rejection data before implementing DMAIC methodology

5.23 Experiment within performance PPM < LSL 72,614.61 PPM > USL 7598.46 PPM total 80,213.07

5.24

5.25

5.26

5.27

DMAIC methodology Machine Curl tool regrinding Rod-holding mechanism Bush rejection Inconsistency in selecting the point of checking Inconsistent view of the scale Man Skill level of operator

Rod replacement Strip feeding mechanism

Grade

Instrument calibration

Figure 6. Fishbone diagram

Material

Method

Second case: two-sample t-test for rod replacement is shown in Table II. Since the p-value for rod replacement comes out to be o0.05 therefore this might be a factor for bush rejection. Third case: two-sample t-test for curl tool regrinding is shown in Table III. Using Minitab, the two-sample t-test shows that as the p-value for curl tool regrinding out to be 40.05 therefore this can not be a factor for bush rejection. Forth case: two-sample t-test for rod-holding mechanism is shown in Table IV. Since the p-value for rod-holding mechanism comes out to be o0.05, therefore this might be a factor for bush rejection.

4.4 Improve In improve phase, design of experiments was done to find out the optimum conditions for the vital few factors found out after the two-sample t-test. These experiments were conducted to optimize the value of the parameters rod replacement and rod-holding mechanism. A 2 2 experiment was designed, i.e. an experiment with two factors each levels. Table V shows the significant vital factors for bush diameter variation.
Operator Operator 1 Operator 2 N 50 50 Mean 5.24600 5.24500 SD 0.00808 0.00814 SE mean 0.0011 0.0012

Application of Six Sigma in an SME 11

Notes: Sample 1 was taken for unskilled operator, sample 2 was taken for skilled operator. Difference m (operator 1)m (operator 2). Estimate for difference: 0.001000. 95% CI for difference: (0.002220, 0.004220). t-test of difference 0 (vs not ): t-value 0.62. p-value 0.539. df 98. Both use pooled SD 0.0081

Table I. Two-sample t-test and CI: bush diameter operator skill

Rod replacement After 15 h After 25 h

N 50 50

Mean 5.2490 5.23800

SD 0.0102 0.00990

SE mean 0.0014 0.0014 Table II. Two-sample t-test and CI: bush diameter, rod replacement

Notes: Sample 1 was taken for rod replacement after 15 h, sample 2 was taken for rod replacement after 25 h. Difference m (after 15 h)m (after 25 h). Estimate for difference: 0.005000. 95% CI for difference: (0.001021, 0.008979). t-test of difference 0 (vs not ): t-value 2.49. p-value 0.014. df 98. Both use pooled SD 0.0100

Curl tool regrinding After 15 h After 25 h

N 50 50

Mean 5.24500 5.24600

SD 0.00678 0.00808

SE mean 0.00096 0.0011 Table III. Two-sample t-test and CI: bush diameter, curl tool regrinding

Notes: Sample 1 was taken for regrinding of curl tool after 20 h, sample 2 was taken for regrinding of curl tool after 30 h. Difference m (after 20 h)m (after 30 h). Estimate for difference: 0.001000. 95% CI for difference: (0.003960, 0.001960). t-test of difference 0 (vs not ): t-value 0.67. p-value 0.504. df 98. Both use pooled SD 0.0075

Rod-holding mechanism New Old

N 50 50

Mean 5.25000 5.24500

SD 0.00904 0.00814

SE mean 0.0013 0.0012 Table IV. Two-sample t-test and CI: bush diameter, rod-holding mechanism

Notes: Sample 1 was taken for new rod-holding mechanism, sample 2 was taken for old rod-holding mechanism. Difference m (new)m (old). Estimate for difference: 0.005000. 95% CI for difference: (0.001586, 0.008414). t-test of difference 0 (vs not ): t-value 2.91. p-value 0.005. df 98. Both use pooled SD 0.0086

TQM 24,1

12

Minitab was used to plot the main effects plot and interaction plot between the vital few factors (rod replacement and rod-holding mechanism). Table VI shows the readings of significant factors at various levels. The main effect plot (Figure 7) suggests that rod replacement is a minor factor and rod-holding mechanism is a major factor. Interactions plot (Figure 8) shows that the lines are not parallel to each other so there are interactions present between the factors. The change in the response mean from the low to the high level of rod replacement depends on the level of rod-holding mechanism. 4.5 Control /R control chart was drawn to visualize the presence of assignable In control phase, X cause of variation after implementing the changes in factors proposed by DOE and for

Table V. Significant vital factors for bush diameter variation

Vital factors Rod replacement Rod-holding mechanism

Low level 25 h Old

High level 15 h New

Sl. No. 1 2 3 4 5 6 7 8

Rod replacement After After After After After After After After 25 h 15 h 25 h 15 h 25 h 15 h 25 h 15 h

Rod-holding mechanism Old Old New New Old Old New New

Readings bust diameter (mm) 5.23 5.23 5.24 5.25 5.23 5.23 5.24 5.25

Table VI. Readings of significant factors at various levels

Main effect plot for bush diameter 5.246 Mean of bush diameter 5.244 5.242 5.240 5.238 5.236 5.234 5.232 5.230 After 25 h After 15 h Old New Rod replacement Rod-holding mechanism

Figure 7. Main effect plot for bush diameter

Interation plot for bush diameter 5.250 Rod replacement After 25 h After 15 h

Application of Six Sigma in an SME 13

5.245 Mean

5.240

5.235

5.230 Old Rod-holding mechanism New

Figure 8. Interactions plot for bush diameter

ensuring that the process continues to be in a new path of optimization. A total of /R chart. The X /R chart is as shown in Figure 9. 100-sample size was taken for drawing X 5. Improvement results Application of project recommendation brought up the sigma level to 5.46 with DPMO level of 0.02 (an improvement of 80,213.05) as shown in Figure 10, which is equivalent to monitory saving of Rs. 0.288 millions (1 US$ Rs. 42 approximately) (see Appendix) which is substantial for a small organization. The chain bush manufacturing process had been chosen in the bi-cycle chain manufacturing unit because it represents the general process of a manufacturing unit operating in a SME environment. The success
X-R chart of bush diameter (mm) 5.27 Sample mean 5.26 5.25 5.24 5.23 2 0.08 Sample range 0.06 0.04 0.02 0.00 2 4 6 8 10 Sample 12 14 16 18 20 LCL=0 _ R=0.03461 4 6 8 10 Sample UCL=0.07318 12 14 16 18 20 LCL=5.23004 = X =5.25 UCL=5.26996

Figure 9. /R chart for bush X diameter after improvement

TQM 24,1

Process capability of bush diameter (mm) LSL Process data LSL 5.23000 Target 5.25000 USL 5.27000 Sample mean 5.25000 Sample N 100 SD (within) 0.00358 Tar g et USL Potential (within) capability 5.46 Z.Bench 5.58 Z.LSL 5.58 Z.USL 1.86 Cpk 1.86 CCpk

14

Figure 10. Process capability analysis of bush rejection data after improvement

Experiment within performance PPM < LSL PPM > USL PPM total 0.01 0.01 0.02

5.23

5.24

5.25

5.26

5.27

of Six Sigma application in this case study can definitely encourage the other manufacturing units to use Six Sigma as a quality tool to reduce the losses in their processes and reap rich benefits from it. 6. Conclusion Six Sigma for SMEs is an emerging topic among many academics and Six Sigma practitioners over the last two to three years. Very few studies have been reported about the successful applications of Six Sigma in SMEs. As small companies are more agile, it is mush easier to buy-in management support and commitment, as opposed to large organizations. The education and training component is much harder for smaller companies. Moreover, small companies do not have the slack to free up top talented people to engage in training followed by execution of Six Sigma projects as they are crucial to the day-to-day operations and problem solving within the company. Being able to link compensation to Six Sigma implementation is much easier in small companies compared to a large company. This paper is an attempt to justify the highly useful role of management techniques like Six Sigma for SMEs, which are normally presumed to be in the domain of large industries. Bush diameter variation is found to be a big problem in bi-cycle chain manufacturing industry. Application of Six Sigma project recommendations brought up the sigma level to 5.58 and estimated saving from the project after implementation is expected to be around Rs. 0.288 millions per annum which is substantial for any small manufacturing industry.
References Adams, C.W., Gupta, P. and Wilson, C. (2003), Six Sigma Deployment, Butterworth-Heinemann, Burlington, MA. Behara, R.S., Fontenot, G.F. and Gresham, A. (1995), Customer satisfaction measurement and analysis using Six Sigma, International Journal of Quality & Reliability Management, Vol. 12 No. 3, pp. 9-18.

Burton, T. (2004), Six Sigma for small and medium sized businesses, available at: www.isixsigma.com/library/content/ (accessed June 20, 2008). Coronado, R. and Antony, J. (2002), Critical success factors for the implementation of Six Sigma projects in organization, The TQM Magazine, Vol. 14 No. 2, pp. 92-9. Goh, T.N. and Xie, M. (2004), Improving on the Six Sigma paradigm, The TQM Magazine, Vol. 16 No. 4, pp. 235-40. Harry, M. and Crawford, J.D. (2004), Six Sigma for the little guy, Mechanical Engineering, Vol. 126 No. 11, pp. 8-10. Harry, M.J. and Schroeder, R. (2000), Six Sigma: The Breakthrough Management Strategy Revolutionizing the Worlds Top Corporations, 1st ed., Double Day A Division of Random House Publication, New York, NY. Henderson, K.M. and Evans, J.R. (2000), Successful implementation of Six Sigma: benchmarking: general electric company, Benchmarking: An International Journal, Vol. 7 No. 4, pp. 260-82. Kapur, K.C. and Feng, Q. (2005), Integrated optimisation models and strategies for the improvement of the Six Sigma process, International Journal of Six Sigma and competitive advantage, Vol. 1 No. 2, pp. 210-28. Keller, P. (2003), Does Six Sigma work in smaller companies, available at: www.qualityamerica.com/knowledgecentre/articles/ (accessed July 25, 2008). McAdam, R. and Lafferty, B. (2004), A multilevel case study critique of Six Sigma: statistical control or strategic change?, International Journal of Operations & Production Management, Vol. 24 No. 5, pp. 530-49. Park, S.H. (2002), Six Sigma for productivity improvement: Korean Business Corporations, Productivity Journal, Vol. 43 No. 2, pp. 173-83. Rowlands, H. (2004), Implementation issues of Six Sigma in an SME, First International Conference on Six Sigma, Glasgow, December 16-17. Snee, R.D. and Hoerl, R. (2003), Leading Six Sigma, Prentice Hall, Upper Saddle River, NJ. Tennant, G. (2001), Six Sigma: SPC and TQM in Manufacturing and Services, Ashgate Publishing, Aldershot. Wessel, G. and Burcher, P. (2004), Six Sigma for small and medium-sized enterprises, The TQM Magazine, Vol. 16 No. 4, pp. 264-72. Wilson, N. (2004), The small company and Six Sigma: advantages of the small business culture, available at: www.sixsigmaforum.com/protected/articles (accessed June 20, 2008).

Application of Six Sigma in an SME 15

Appendix
Current PPM 80,213.07 Achieved PPM 0.02 Cost/pc Rs. 0.06 PPM reduction 80,213.05 PPM Monthly production 5,000,000 pcs Saving/month 8,0213.05 5,000,000/106 401,065.25 pcs Cost saving/annum 401,065.25 0.06 12 288,766.98 2.88 lacs 0.288 million

Table AI. Cost saving calculation on account of reduction in bush rejection rate

TQM 24,1

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About the authors Prabhakar Kaushik is an Assistant Professor in the Department of Mechanical Engineering at MD University, Rohtak, India. His research interests are in the areas of industrial engineering, engineering management, Six Sigma and quality control techniques. Dinesh Khanduja is an Associate Professor in the Department of Mechanical Engineering at NIT, Kurukshetra, India. His research interests are in the areas of industrial engineering, SQC, Six Sigma, and quality management. Kapil Mittal is an Assistant Professor in the Department of Mechanical Engineering at YIET, Yamunanagar, India. His research interests are in the areas of APQP, engineering management, and quality planning. Pawan Jaglan is a Research Scholar in the Department of Mechanical Engineering at NIT, Kurukshetra, India. His research interests are in the areas of SQC, Six Sigma, and quality tools.

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