Monday, August 30, 2010

6 sigma vs. The Customer

In the quality world the term “six sigma” has become the phrase used to describe perfection. In statistical terms six sigma means a sustainable three parts per million error rate, or out of 1 million products manufactured day in and day out only three can be found to have any errors in them. That is 0.999997 accuracy. This is not an easy task in manufacturing, nor is it any easier in safety, i.e., one million effort hours (five work years) with only three hours of injury time out or slow down.

In a former career I did quality improvement assistance with a manufacturing company in Japan. On one of the long flights from the States to Tokyo I sat next to a man who worked with General Electric, a company famous in the quality world for their six sigma culture. The inevitable subject came up as I asked him to tell me about the real world of six sigma. I was shocked when he told me that he didn’t really believe in it!

His commentary went something like this:
“I am involved with accounting for nuclear reactor installations in Japan where some 90% of all electricity generation comes from nuclear power plants. Our contracts involve billions of dollars and that is why I fly to Japan every week. Three sigma, 0.997, is relatively easy and four sigma, 0.9997, is also fairly achievable. Once you get beyond four sigma, the level of detail necessary to get the next 9 is ever more excruciating. We do not do accounting to six sigma. It is possible, but we would have to add an army of additional paid accountants to achieve this level of sustainable excellence. Instead we control to the level of customer invisibility. That means we do not get at all near to the three thousand dollars out of a billion level of accuracy because the customer is unwilling to pay for what it takes to get there. We give them what they are willing to pay for and that is a function of their financial pain (risk) tolerance. It is a customer cost vs. benefit decision.”

So what does this have to with safety? I think it means you need to find out what your company leadership’s level of complacency is (pain/risk tolerance) and count on you won’t be able to get much better than that. If the answer is “level one” OSHA regs, count on about a double digit injury rate, 0.80 injury free (TCIR of 10-20, i.e., 10-20% medical incidents). To this regs approach, toss in the “level two” observation type of programs that are done well; JSA, Near Miss, Inspections and the like and you are up to about 0.90 injury free (TCIR 3-9) or so. To get better beyond “level two” performance you will have to add “level three” people who daily pursue safety accountability excellence and then the level four, five and six tools that ever (relentlessly) pursue the zero injury safety culture.

However, there is good news to this approach; you don’t have to add an “army of accountants.” The resources necessary for a zero injury safety culture are the people you already have on the payroll. Once their job description, training and performance measurement includes the accountabilities and level three through six actions necessary to achieve zero, your organization will continually improve toward the goal of “no injuries in my lifetime.”

The Doc

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