How to deploy Six Sigma in Small Business

Startup, Small, and medium sized businesses (SMEs) must continuously improve or die. A quality program becomes critical to ensure sustainability through time, but not all entrepreneurs are aware of the applicability of quality management techniques to small businesses, with most of them thinking it’s only for large companies.

About 84% of all U.S. companies have fewer than 50 employees. The figure is at a similar level across the world. SMEs account for 60 to 70% of jobs in most countries, and they also account for a disproportionately large share of new jobs. Unfortunately, the rate of failure is also high for small businesses.

A smaller company may not realize the huge returns of a large company, but that does not reduce the impact of a quality program’s return on investment. The problem is that day-to-day operations often divert the owner’s attention from what is good for the company in the long term, allowing only a small bucket of time (if any) to planning and preventing issues.

Studies in US, Canada, and Europe’s 500, have shown that there are some features that are common to all high growth SMEs:

- Innovation: innovators grow faster than non-innovators
- Attention to human resources: At the earlier stages, management capabilities and employee motivation are crucial to survival.
- Emphasis on strategies relating to enhancing, updating, or expanding the existing product line, and improving production. Successful fast-growing entrants are those that translate their strategic emphases into action by undertaking R&D.
- Emphasis on hiring skilled employees and training them
- Balance, an emphasis on striving to enhance their capabilities in all areas

Every company must satisfy customers, stakeholders, and employees to survive, but smaller businesses have a narrower buffer to shelter customers from error and waste, which is why implementing quality programs that prevent this from happening is a decision that can help small-business owners towards achieving these 5 objectives at the same time: Six Sigma practices depend on people skills to develop new projects, these projects will bring innovation and improve production, which will motivate employees and enhance capabilities in all areas.

Ideally, the best time to initiate and deploy a quality program is during the startup planning stage in order to incorporate quality into the product and service, but it can be implemented at any time, so long as everybody is on-board, especially management.

Six Sigma is one of the few quality methodologies that can be applied from the very beginning, and could result in high savings, especially in business that produce a high volume of standard products or services every day.

The first step to start implementing Six-Sigma is to train the management team and all the employees on the basics of Six Sigma and the DMAIC methodology, which will help the company start improving project by project and implementing theory right away (in a small business you don’t have time to learn just for fun!).

The DMAIC steps are as follows:

1. Define: define the scope of the quality program, even though it is recommended to apply it companywide, you can start with a pilot team. You can use the SIPOC to organize all the processes in the company and establish priorities. You also need to define the objectives, which is what you want to achieve with the program, and the main topics or issues to be tackled. You could organize a brainstorming session to do this.

2. Measure: the team needs to gather baseline data by measuring current process performance, process capability, and customer expectations. This will inform and guide the team on the size of the performance-gap and identify improvement opportunities. Usually you should measure process time, costs and defects. You can use control charts, run charts, and cycle-time analysis in this stage.

3. Analyze: Once your team has measured the baseline data, it’s time to analyze it. You can use the Pareto chart to identify main contributors, or brainstorm in a fishbone diagram to organize information and identify the major sources of controllable variation that is the root cause of defects.

4. Improve: in this phase, the team reduces the list of root-causes to a vital few and proposes a solution for optimum performance. An implementation plan can be put in place, with specific tasks, due dates, and responsibilities to make sure the project progresses. A pilot test is usually implemented before a full process change is put in place.

5. Control: the team will monitor if the results achieved are as expected, will implement any changes if needed and will also make sure that the improvements are sustained through time. This phase may involve a new control chart that shows the trends through time. Calculation of the real cost and benefits is critical in the first projects, In order to convince management and the rest of the employees that the effort makes sense.

Based on the results, an excellent practice to motivate employees is celebrating success, showcasing results, and providing some kind of reward to the ones participating in the project. In a small business, human resources are usually scarce, so doing more than day-to-day operations is hard in the short term, but eventually the results pay off with a lower rate of defects, more organized processes, happier customers, and therefore happy associates (management, clerical and front line employees).

Projects are a great way to initiate a quality program, motivate employees to participate, and get hard benefits right away. And what’s more- it’s never too late to begin!