European Business Improvements

Entry Date: 260508

Antony (2005) asserts that small and medium sized enterprises (SMEs) have a crucial role in the UK economy. Indeed, he suggests that SMEs are the very lifeblood of a modern economy. If one is to examine the UK Department of Industry (DTI) website, or that of the small business service (SBS), it becomes hard to disagree with Antony’s thinking.

A very brief summary of the key content of these websites shows:-

• Of the 4 million businesses in the UK as of January 2004, over 99% of them were officially termed SMEs. (Under 250 employees, and a turnover of under £11.2 million (DTI 2003))

• SMEs employ approximately 60% of the UK workforce.

Six-sigma is an established and proven tool that can bring many measurable improvements to a business (Pande et al 2000). There are many that agree that large corporations such as GE have seen such business advances by using the methodology that this methodology has now become a deliberate and focussed strategy in order to give them a sustained competitive advantage. (Snee, 2004)

If this is truly the case, one may ask why the SMEs are not adopting it when they are under constant pressure to improve their performance. If six-sigma is so good, if it can create and sustain such competitive advantage, then why would SMEs not want to adopt it?

Greegson and Borgston (2002) have examined many sources of literature on six-sigma and have found that more than half of what is available refers to GE. But they question why there is so little information written about the smaller organisations. These are, as stated, the economy’s lifeblood so why aren’t they adopting what is already tried and tested and proven?

A clue possibly appears in a recent paper from Mikel Harry. (Harry and Crawford 2004) Harry is seen as the father of the six-sigma movement, having been instrumental to its inception at Motorola, and then moving on to set up the Six Sigma Academy. In this paper he refers to two new ranks within the six-sigma belt system. He identifies these as white and yellow belts. Originally, Harry (2002) only referred to master black belts, black belts and green belts. Some organisations had autonomously created the rank of yellow belts, but generally these were not recognised within the industry as such.

Harry is now suggesting that a white belt can offer a much quicker return on investment, by completing approximately one project per month, rather than the two to three a year that is expected from a green or black belt. He argues that this is nothing more than an evolvement of his original system.

However, does this creation of new belts acknowledge that the original belt system was flawed, and that six-sigma in its original form might only ever work with larger organisations; and that the original “one size fits all” philosophy might be flawed?? If this is the case, where is the evidence from Harry that his new system will actually work with SMEs? Where is the justification for the return on investment?

Rowlands (2004) has already argued that the original six-sigma training and deployment was not suitable for SMEs, suggesting instead that an SME might do well to look toward Porter’s five forces and use this to provide a strategic direction for improvement.

Unfortunately, we can only conclude as did Antony (2005) that there is currently insufficient research into the effects of six-sigma on SMEs for hard and fast conclusions to be drawn.


References:

Antony Jiju, (2005) “Six Sigma in Small And Medium Sized UK Manufacturing Enterprises” International Journal of Quality & Reliability Management, Vol 22 No 8, 2005 pp860 – 874

Pande P.S. (2000) The Six Sigma Way, McGraw Hill New York, NY.

Snee R.D. (2004) “Impact of Six sigma on quality engineering”, Quality Engineering, Vol 12 No3. pp 9-14

Greeson DF and Borgsten JE; 2002 “Current literature: Basic references for students of six sigma” Six Sigma Forum Magazine, Vol 1, issue 1.

Harry M and Crawford J.D. (2004) “Six sigma for the little guy”, Mechanical Engineering, Vol 126 No 11, pp 8-10

Harry M and Schroeder R; 2002, Six Sigma; Doubleday, New York.

Rowlands H. (2004) “Implementation issues of six sigma in an SME”, First International Conference on Six Sigma, December, Glasgow.