Thesis Exposé

THE SIX SIGMA METHODOLOGY:

A CASE STUDY FOR THE ODYSSEE HOSTEL

Introduction

As understood generally, a business is a medium to generate revenue. Many may not know it, but organizations lose up to 30 of its total revenue to poor quality management. In order to regain lost revenue, one must define quality and implement an effective quality methodology.

There are three basic components of quality management – customers, processes, and employees. Customers define the quality, which is built into the business processes performed by the employees.

Six Sigma is a management system used to help meet customer needs by implementing process improvements. This is done by focusing on defect prevention, cycle-time reduction, and cost cutback.

Six Sigma relies on a handful of tools, which are applied within a simple model known as DMAIC.

Define the deliverable goals for internal and external customers

Measure the current performance

Analyze and determine the root cause(s) of the obstacle

Improve by implementation of better a process

Control the future process by monitoring the change

Simply stated, Six Sigma is about applying a structured, scientific method to improve any aspect of a business, organization, process, or person. Regardless if one is fixing a simple problem, redesigning a process, or orchestrating systems organization-wide, the DMAIC methodology can help in achieving the goal.

Problem Statement

Many believe that the six sigma methodology is only applicable to big companies with production lines. Others also commented that integrating the six sigma methodology into small businesses is a waste of time and energy; as the return on investment is slow and close to nothing.

Similarly, the ease of implementing the six sigma methodology within the service industry is also arguable. Services are not straightforwardly converted into numbers as opposed to manufacturing. It takes some effort and usually grading of a service to be transformed into statistics. Therefore, many organizations in the service industry are not accepting it as a crucial component for the business.

But the six sigma methodology is not only about statistics and engineering processes. Once accepted and understood, it can change ones perspective in dealing problems. In other words, a person who understands the six sigma methodology treats every setback as a new challenge and a mode to increase profitability.

Scope of Study

The thesis comprises a study of the possibilities of implementing the six sigma methodology in small businesses, in particular of those in the service industry. It also describes the possibilities and ways to implement the methodology without significant involvement of statistics and figures.

The deliverables include descriptions of the six sigma methodology prepared in a compact yet easily understandable perspective. It shall also describe many of the external principles involved in implementing the six sigma methodology. This is to facilitate in ones understanding of the various philosophies available for troubleshooting and problem solving, even without the necessity of implementing the six sigma methodology.

All these study is done in collaboration with a hostel in Berlin – The Odyssee Hostel. The hostel will serve as a case study of the possibility to implement a Six Sigma initiative within a small organization in the service industry.

The Odyssee Hostel

The Odyssee hostel is one of the four hostels wholly owned by the OdysseeGroup. They have engaged in the hostel business since 1998 and can be considered as one of the pioneers in the German market. The main patrons of this hotel are backpackers and low-budget travellers.

In the most recent data (as of December 2006) obtained from the corporate website, the company has a growth of 18.1% of generated turnover which is 2.59 million EUR. The group also provide employment to a total of 77 employees at that recorded time.

Contact details of the hostel can be obtained under “Involved Individuals”.

Research Layout

The main body of the thesis is divided in to two major parts which comprises of the Six Sigma theory and the case study. The theory describes a thorough but compact explanation of the Six Sigma theory. This includes the background and the thorough explanation of the phases in the DMAIC methodology. This part of the thesis will also include summaries of the related tools that can be used with the methodology.

The second part of the main body depicts the actual application of the methodology into the case study object. It will include at least one major project and several summarized smaller projects.

In the next part of the thesis, the observations of the outcome will be reported. This includes the hardships and mistakes made, and what should have been done to avoid it. It also includes the observation on how the staffs react to the change as employees play a big role in affecting final results.

At the end of the thesis, a conclusion of the rationality of implementing a Six Sigma initiative within the hostel will be drawn. The conclusion shall bring contribution to readers who have doubts and uncertainties in implementing the Six Sigma methodology when it comes to similar business structure and industry as the hostel. It will also note some opportunities and room for future research and revision.

Planned Schedule

August – September 2007

Work:

• Thesis planning and preparation
• Discussions with supervisors on initial thesis formats and revise if required

Deliverables:

• Completed thesis exposé

Milestone:

• Submission of thesis exposé

October 2007

Work:

• Six sigma methodology research
• Discussions with partner hostel to determine the six sigma project

Deliverables:

• Part one (the theory) of the thesis report

Milestone:

• Submission of drafted part one of the thesis report

November 2007 – January 2008

Work:

• Implementation of the six sigma methodology to hostel
• Compile and write thesis

Deliverables:

• Completed thesis

Milestone:

• Submission of thesis for final evaluation

Review on Literature

There are three reference books that will be used as a guide throughout this research. Further related references may be added in the future to accommodate the research of this topic.

Literature 1:

The Six Sigma Project Planner: A Step-by-Step Guide to Leading a Six Sigma Project through DMAIC

By Thomas Pyzdek

Published by McGraw-Hill Companies

ISBN: 0-07-141183-6

Website: www.mhhe.com

Literature 2:

The Six Sigma Project Planner: A Step-by-Step Guide to Leading a Six Sigma Project through DMAIC

By Thomas Pyzdek

Published by McGraw-Hill Companies

ISBN: 0-07-141183-6

Website: www.mhhe.com

Involved Individuals

Information with held!

Reference

References stated here exclude those already mentioned in under “Review on Literature”.

Peterla, Peter: Six Sigma for Small Business, in http://www.6sigma.us/six-sigma-article-small-business.php, last visited: 8 July 2007.

Craig Gygi, Neil DeCarlo, Bruce Williams, 2005. Six Sigma for Dummies®, Wiley Publishing, Indiana USA.