Running a business would be
amazingly simple in the absence of variability.
Business owners would know exactly what to expect today and ten years
from today because there would be no change.
In the absence of variability, businesses would have straightforward
ways to optimize sales, profits, and customer satisfaction because they could
precisely anticipate all of the influential factors.
Let's imagine a bakery business
that has no business variability. Day
after day, customers order a total of 324 cakes, 112 pies, and 1234 loaves of
bread. In addition, customers arrive at
the bakery at the exact same time every day.
The number of orders and time these orders were placed last Monday were
exactly the same as Thursday two months ago, and the same can be said of every
In this scenario, it is easy to
plan how much flour, milk, eggs, and other ingredients you need to purchase and
keep in stock. All the equipment and
people work on the same timetable every day without any variability, so every
cake, pie, and loaf of bread is produced to the customers' expectations and is
ready and waiting for them when they arrive.
Business is good because sales,
manufacturing, and customer satisfaction are all at their best. For example, you can prepare all the right
products just in time for when the customers want them, so the customers can be
in and out of your bakery within minutes.
You have only satisfied customers, who are glad you anticipated their
needs and didn't waste their time.
In the absence of variability, this
story would be found in almost any industry, service, or business. If there was no variability, then once you
had a model for how things progress over time you would have no variability
from your expectations, no uncertainty. You could be certain of what would
happen under any selected circumstances.
New product development would be
fast, easy, and rapidly transferred to production. Through a simple set of experiments, you
would find what you need to change in order to make your bread, or your
integrated circuits or your cellular phones, the best possible, and then you
would make the change with full confidence that the product will be better just
as the experimentation proved. Without
variability, there could be no differences in the final product that the
experimentation didnít anticipate.
Engineering also would be
straightforward. You could optimize
manufacturing because making one pie, or integrated circuit, and making more is
as simple as putting the product on a copy machine. There would be no need to anticipate defects
(or dissatisfied customers as a result of this defect) because there would be
no variability in the way the product turned out.
Accounting would be simple. You would know what to expect each month in
sales and expenditures, so you only need to analyze the financial data once to
see how to minimize your costs and choose the best price. Making profits would
be almost like having your own private mint.
Unfortunately, no business is immune
to the effects of variability. It is
this very uncertainty of what to expect which makes manufacturing, engineering,
and running a business so much more challenging. Because we daily see the
effects of variability on our businesses, why is the importance of variability
so hard for some people to grasp? The
focus of Six Sigma is on variability because it is the uncertainty of business
which concerns us all.
What is important to
the Customers that can be impacted by Variability? Customers are concerned with performance
(products must work), system performance (products must work in the customerís
systems), reliability (products must continue to work), delivery (products are
available when needed or expected), price (products must cost a fair, reasonable,
and competitive amount), and responsiveness (products must be accompanied by
service that provides answers and help when requested).
Variance shows up in
many aspects of an organizationís products, processes and services. Here are some examples of Variances
associated with each of these expectations:
- Variance of key parameters in manufacturing
- Sensitivity of design to Variance
- Sensitivity of design to manufacturing variability in system
- Sensitivity of design to the environment
- Variance of manufacturing parameters that impact durability
- Variance of processing that can introduce defects
- Sensitivity of design to
the environment (e.g.: humidity, temperature)
- Variance and uncertainty in demand for the product
- Variance in capacity, and demand for other products in line
- Variance in Yield
- Variance in Cycle Time
- Uncertainty in customersí expectations, competitorsí pricing
- Variance in manufacturing costs
- Variance in response time