Excerpted from Harry, Mikel, and Schroeder, Richard,"Six Sigma - The Breakthrough Management Strategy Revolutionizing Corporations", Doubleday, New York, 2000, pp.9-11.
The quest to achieve Six Sigma had its birth at Motorola in 1979 when executive Art Sundry stood up at a management meeting and proclaimed, "The real problem at Motorola is that our quality stinks!" Sundry's proclamation sparked a new era within Motorola and led to the discovery of the crucial correlation between higher quality and lower development costs in manufacturing products of all kinds.
At a time when most American companies believed that quality cost money, Motorola realized that done right, improving quality would actually reduce costs. They believed that high-quality products should cost less to produce, not more. They reasoned that the highest-quality producer should be the lowest-cost producer. At the time, Motorola was spending 5 to 10 percent of annual revenues, and in some cases as much as 20 percent of revenues, correcting poor quality. That translated into a whopping $800 million to $900 million each year, money that, with higher-quality processes, could be returned directly to the bottom line. (Motorola's belief that high-quality products should cost less to produce has since been proven over and over again to be true.)
As Motorola executives began looking for ways to cut waste, Bill Smith, an engineer at Motorola's Communications Sector, was quietly working behind the scenes studying the correlation between a product's field life and how often that product had been repaired during the manufacturing process. In 1985, Smith presented a paper that concluded that if a product was found defective and corrected during the production process, other defects were bound to be missed and found later by the customer during early use of the product. However, when the product was manufactured error-free, it rarely failed during early use by the consumer.
Although Smith's findings were initially greeted with skepticism, customer dissatisfaction with a product that failed shortly after it had been purchased was very real. As a result, Smith's finding ignited a fierce debate within Motorola. Was the effort to achieve quality really dependent on detecting and fixing defects? Or could quality be achieved by preventing defects in the first place through manufacturing controls and product design? Later data would show that a concerted effort at detecting and fixing defects would lead Motorola only to four sigma--placing it only slightly ahead of the average American company. At the same time, the company was finding that foreign competitors were making products that required no repair or rework during the manufacturing process.
Others at Motorola began to take a second look at Smith's work. If hidden defects caused a product to fail shortly after the customer began using it, something needed to be done to improve the manufacturing process. As a result, Motorola began its quest to improve quality, and simultaneously reduce production time and costs, by focusing on how the product was designed and made.
It was this link between higher quality and lower cost that led to the development of Six Sigma--an initiative that at first focused on improving quality through the use of exact measurements to anticipate problem areas, not just react to them. In other words, Six Sigma would allow a business leader to be proactive, rather than reactive, to quality issues.
The difference between previous total quality approaches and the Six Sigma concept was a matter of focus. Total quality management (TQM) programs focus on improvements in individual operations with unrelated processes. The consequence is that with many quality programs, regardless of how comprehensive they are, it takes many years before all the operations within a given process (a process is a series of activities or steps that create a product or service) are improved. The Six Sigma architects at Motorola focused on making improvements in all operations within a process, producing results far more rapidly and effectively.
A quantum leap in manufacturing technology occurred at Motorola when it applied Six Sigma to the development of its Bandit pager--a name the company selected because those involved in the project "borrowed" every good idea they could find from products already on the market. Within eighteen months, and for a price tag of less than $10 million, Motorola's twenty-three Bandit engineers had designed a pager that could be produced in its automated factory in Boynton Beach, Florida, within seventy-two minutes from the time an order was placed by computer from any Motorola sales office. Pagers could be ordered with various options and could be custom-built for individual customers. Moreover, the Bandit's superior design and manufacturing process resulted in an average life expectancy for its pager of 150 years. The company's pagers were so reliable that product testing was ultimately eliminated; it was much more cost-effective to replace a pager, in the unlikely event that it failed, than to spend time and money testing a product that was virtually defect-free.
As Motorola saw a reduction in defects and in manufacturing time, the company also began to reap financial rewards from the Six Sigma concept. In other words, the company had higher-quality products and happier customers at a cheaper cost. Within four years, Six Sigma had saved the company $2.2 billion. Motorola's Six Sigma architects had done what most companies thought was impossible. By 1993, Motorola was operating at nearly six sigma in many of its manufacturing operations. Within a short time, Six Sigma began to spread like wildfire to other industries--and beyond manufacturing divisions alone.