Since its inception during the 1980s by Motorola, six-sigma has become a well-known quality improvement program in manufacturing processes but is less popular in the service setting. Although it has been proved to be effective in financial services and the healthcare industry, it is not effective for all industries. This paper reviews the existing literature on the use and implementation of the six-sigma methodology and draws key benefits that firms derive after its successful implementation.

The six-sigma philosophy was first originated by Motorola in 1987; the very concept was evolved to reduce defects in the products and processes. The company won the Malcolm Baldrige National Quality Award in 1988 for evolving such a process. Then onwards, six-sigma has been given credit for the success of organizations (Breyfogle et al., 2001). Six-sigma seeks to reduce defects as low as 2 ppb (parts per billion) outside the customer's specification limits; in other words, the process variation in six-sigma is half the specification limits. Here, in six-sigma, the outputs are normally distributed and 99.73% outputs are within the ±3 limit (Chase et al., 2007). In the ±3 limit, 0.27% outputs are outside the specification limit, which means that 2,700 ppm (parts per million) is the defect rate. The six-sigma philosophy reduces this probability of producing output outside the specification limit as low as 2 ppb.

Since its inception, six-sigma has been adopted by various industries, though it has always been considered suitable for manufacturing industries. Antony et al. (2007) argued that although the original goal of six-sigma was to improve processes in manufacturing industries, the service sector also needs its attention. They further argued that six-sigma will help to improve the processes in the service sector as well, which will, in turn, enhance customer satisfaction and increase market share, ultimately increasing profitability. The service sector in India contributes around 55% of the GDP while the manufacturing sector contributes around 15% of the GDP.

The service sector needs to embrace six-sigma for enhancing customer satisfaction and its overall experience. Since this concept was meant for manufacturing processes, the six-sigma philosophy in the service sector needs to understand the source of defects and develop the means to reduce these defects so as to achieve higher profits.

Chen et al. (2005) took the Taiwan automobile industry as an example to see the effect of the six-sigma method on the quality process. The authors used Kano's five quality mechanism, Herzberg's dual factor theory, and Maslow's hierarchy of needs to measure the performance of customers' requirements. The authors prepared a questionnaire, established customers' requirements and identified key quality specifications. They finally suggested how to control quality mechanism and what the steps of evaluation of the process are. They used the Define, Measure, Analyze, Improve, and Control (DMAIC) approach to improve product quality. In their paper, the authors recommended the Taiwan automobile industry to use the six-sigma method to achieve perfect product quality and service value, which will, in turn, result in better customer satisfaction and profits.

Systems Management Journal, Six-Sigma, Quality Improvement Programs, Financial Services, Gross Domestic Product, GDP, Organizational Culture, Critical Success Factors, Quality Function Deployment, Project Management Skills, Capability Maturity Model, CMM, Software Industry, Insurance Companies, Business Process Management Systems.