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“Only the over-all review of the entire business as an economic system can give real knowledge.” —Peter F. Drucker

You may have heard of Six Sigma, a process-focused strategy and methodology for business improvement. Companies such as General Electric, Honeywell, Motorola, DuPont, American Express, Ford, and many others, large and small, have been using it toimprove business performance and realize millions of dollars in bottom-line savings (Honeywell 2002, Welch 2001, Young 2001). Six Sigma is a strategic approach that works across all processes, all products, and all industries. Six Sigma focuses on improving process performance to enhance customer satisfaction and bottom-line results. Motorola created the methodology in 1987, and the use of SixSigma by others increased rapidly during the 1990s. Six Sigma remains in widespread use as of this writing.



Six Sigma Beyond the Factory Floor

You also may have heard how Six Sigma has been used to improve the performance of manufacturing organizations, but thought it doesn’t apply to your situation. Perhaps you don’t work in manufacturing. Perhaps you want to improve results in afinancial services organization. If so, you must ask whether Six Sigma can be used to improve the performance of your organization, and if so, how. The answer to the first part is a resounding yes! In our experience, and that of many others, Six Sigma works in all processes, in all parts of the organization, and in all organizations, services and health care as well as manufacturing.The second partof the question (how) is answered throughout the remainder of this book. Six Sigma “beyond the factory floor” refers to improving processes in the non-manufacturing parts of the economy (the rest of the economy beyond manufacturing, such as financial services, e-commerce, health care, and so on). For reasons discussed shortly, we refer to this as the real economy. This real economy includesbusinesses that do not manufacture, such as banks and law offices, non-profits (including non-profit hospitals), and all the other (nonmanufacturing) parts of organizations that do manufacture products. For example, Figure 1.1 shows a systems map for a manufacturing company. You can see from this graph that manufacturing is only one of many processes—such as delivery, finance, and human resources—neededto operate the company. Figure 1.2 shows a systems map of a typical manufacturing facility. Here again you see that many non-manufacturing processes are needed to run the facility, such as purchasing, shipping, and maintenance. The real economy therefore consists of all businesses that do not manufacture physical products as well as all the other functions and processes involved in manufacturing.All processes in an organization present opportunities for improvement. This is what we mean by a holistic view of Six Sigma—seeing the big picture and not allowing our deployment or results to be limited by preconceived notions about Six Sigma and where it applies.

Chapter 1

A Holistic View of Six Sigma


Product Processes Design Requirements Collection and Definition Market SegmentSelling INTERFACES Ordering Distribution Billing Collection Service Business Processes Translation Development Manufacturing Delivery Enterprise Processes Planning Financial Personnel Mgmt. Info. Sys. Legal Communications Pubic Relations

Market Place

R&D Product Engineering

A corporation’s core processes.
Marketing Information Systems Accounting Logistics*


Operations Services*

Sales Utilities & Manpower


Receiving W house

Manufacturing Process

Finished Product W house


* Multiple interconnections within these units.



A manufacturing facility.


Six Sigma Beyond the Factory Floor

This book is organized according to the three major levels at which organizations must...
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