When Six Is Really 4.5


In teaching Six Sigma workshops at Dartmouth, we ensure that everyone understands that “Six Sigma,” as presented in the industry, is in fact mathematically 4.5 sigma. So when folks say Six Sigma is 3.4 defects per million (dpm), they are in fact not referring to plus-and-minus six standard deviations from the mean (even though they may not know it), as 3.4 dpm is only 4.5 sigma.

The true six sigma defect rate is 2 defects per billion. The figure shows this error.

Where does this confusion come from? When Six Sigma was developed, it was defined as a Cp of 2 and a Cpk of 1.5. These process capability indices are where the confusion lies. A Cpk of 1.5 permits a shifting of the process mean of 1.5 sigma, hence the true statistical measure of Cpk = 1.5 is 4.5 sigma (or 3.4 ppm). True statistical six sigma (Cpk = 2) is elusive indeed at 2 dpb!

Dr. Ron

Just Say No, IBM!

Over the years, OEM after OEM has fallen prey to Foxconn, lured by the temptation of higher margins by outsourcing product to the Taiwanese ODM. H-P, Motorola, Dell, Sony and Apple are among the many, many companies that outsource billions of dollars worth of product build each year.

Sadly, IBM, one of the few remaining major holdouts, appears on the brink of ending its streak. Big Blue is set to announce a deal to to codevelop something called “environment-friendly” products.

Pending release of financial terms, it’s unclear what IBM stands to gain from the program.

IBM has ventured down the environmentally friendly path before. In 2007, it committed $1 billion to fund Project Big Green, an effort toward environment-friendly, energy-efficient products and services. This is its first known deal with Foxconn, however.

It shouldn’t happen.

As The Economist pointed out earlier this month, China’s reputation for workmanship remains a negative in consumers’ eyes. “The poor external reputation of China’s products hurts not only Chinese companies but also Western firms known to be selling Chinese-made goods.” Citing last year’s scandals over various Chinese-produced toys, the US and India have passed new laws governing imports from the World’s Workshop.

And myriad stories have cited Foxconn’s dismal and imperialist working conditions.

IBM is America’s crown jewel, the greatest electronics company the world has ever known. Getting in bed with scofflaws like Hon Hai cheapens its luster and diminishes its reputation. IBM should walk away.

UPDATE: Whew! That wasn’t so bad. The Wall Street Journal is reporting Foxconn is licensing IBM’s GreenCert technology for estimating the amount of greenhouse gas emissions pumped from factories. It could have been much worse.

Just 3 Minutes

Three minutes is not much time. It’s about the amount of time to get a coffee from the vending machine or maybe not quite enough time to visit the restroom. Three minutes doesn’t seem important.

You have probably spent multiples of three minutes looking for a stencil that was misplaced. The job couldn’t get started until that stencil was found. Three minutes, 10 minutes; what’s the big deal?
Let’s say your company has a two-shift, five-days per week operation, and on each shift three minutes is lost each day. Assuming 250 days per year, this is 1500 minutes or 25 hours of lost production time in a year.

How much is this costing your company? Using ProfitPro cost-estimating software that I developed and information in annual reports, I analyzed the typical subcontract assembler’s profitability. It nets out that each hour lost on a typical assembly line is worth about $3500 of production. So 25 hours per year is almost $90,000 of lost production – all because of just three minutes.

And I’ll bet some of us are losing 30 minutes a day.