The Marriage of BPM and Six Sigma

Companies are just discovering the benefits of combining BPM and Six Sigma. Ideal for enhancing the long-term performance of business processes, the BPM/Six Sigma union helps companies better characterize, understand, and manage entire value chains. It also helps companies improve control and predictability of corporate business processes and generate sustainable enterprise improvements in performance levels.

BPM aligns processes across an enterprise using technologies to provide visibility and management at any point in a business process. BPM and associated technologies help model data flow, people, resources, and systems in an organization. They also help build or modify processes to better align enterprise systems with business objectives and market needs. Unfortunately, BPM lacks the analytical tools to solve difficult and complex process problems.

Six Sigma, on the other hand, is a quality improvement and problem solving methodology. It has the tools necessary to solve the complex problems BPM can't solve. Where Six Sigma falls short is in its ability to collect huge amounts of data across enterprises, the direct result of a lack of standardized process monitoring technology. Six Sigma also falls short in controlling business processes. It often uses manual methods and controls, which inhibit its ability to sustain long-term performance initiatives.

Without BPM, Six Sigma may founder because executives lack the critical data needed to focus their efforts. Instead, the executives bounce all over the place looking for performance weaknesses, or they focus on areas where successful performance improvements provide only marginal results. With BPM, Six Sigma projects can pinpoint problems and address the underlying causes.

Honeywell Improves DSO Metric

In addition to identifying quality improvement targets, BPM enhances Six Sigma projects by speeding the collection and distribution of critical data. Honeywell International, the Morristown, NJ, technology company, recently applied Six Sigma to its accounts receivables process. Its efforts were initially stymied because key information was dated by the time it reached decision-makers.

When it came to the days sales outstanding (DSO), for instance, internal teams were assigned to monitor and catch invoicing mistakes and reduce that DSO number. But it took too long to get data on categories like discount terms, over/under shipments, and warranty entitlements, to the proper people. As a result, the teams were always one month behind.

Honeywell combined its Six Sigma efforts with a BPM initiative, accelerating the process. Now the company gets daily, weekly, and monthly information that managers can access at any time. Their percentage of exception-free invoices has jumped from 67 percent to 75 percent. The jump unlocked about $30 million in accounts receivables, according to the company. The BPM/Six Sigma union also gave Honeywell a much clearer cash flow forecasting capability.

Additional BPM/Six Sigma Applications

Motorola uses the Balanced Scorecard at all its divisions to guide its Six Sigma projects. The company took Six Sigma and implemented it corporate wide, making it the means by which to execute the strategy dictated by the Balance Scorecard approach. Balanced Scorecard initiatives are often more effective when they are automated through a BPM system.

Crompton Corporation, a Middlebury, CN-based specialty chemical company, uses BPM to track its Six Sigma programs by region and byproduct line to see how those projects are doing. Feeding Six Sigma data into its BPM system is faster and more accurate than its previous approach. Now, Crompton tracks all it Six Sigma projects using its BPM system.

Other companies employ the BPM/Six Sigma union to improve product design. These companies stand a better chance of developing a new product right the first time using Six Sigma. It can provide new product growth projections and help in gathering data via focus groups and surveys to determine customer expectations and desires. BPM supplements those capabilities by providing current information in customer buying patterns and attitudes and by forecasting future customer satisfaction.

Use of BPM and Six Sigma To Rise

Combined BPM and Six Sigma are a powerful tool. The two approaches are synergistic. What one lacks the other provides and vice versa. Together, they are a better approach to understanding, analyzing, and improving business processes than other methodologies alone. Unfortunately, this union has not become a mainstream approach to improving enterprise-related business processes. One reason may be that companies are unaware of how well these two initiatives work in concert with each other.

Nevertheless, companies with revenues greater than $200 million have been adopting
Six Sigma at a 28 percent rate, according to trend analyses by Don Redinius, Agillist Group, Inc., a business performance improvement solutions company. While this rate is significant, it is bound to improve as companies come to understand the synergies between BPM and Six Sigma. The union is ideal for providing long-term, enterprise-wide performance solutions.

Peter Peterka is President of 6 Sigma us. For additional information on Six Sigma Black Belt or other Six Sigma Consulting contact Peter Peterka.