International Journal ''Total Quality Management & Excellence'', Vol. 37, No. 3, 2009. 417 A NEW REDUCTION-DEFECTS MODEL FOR SMEs BASED ON SIX SIGMA METHODOLOGY: A CASE STUDY Luca Cagnazzo 1 , Paolo Carbone 2 , Paolo Taticchi 1 1 Department of Industrial Engineering, University of Perugia, Perugia, Italy, 2 Department of Electronic Engineering, University of Perugia, Perugia, Italy Invitation paper UDC:167.7;001.8 Abstract: There is evidence today of a growing competitiveness among companies and an increasing attention to Total Quality Management (TQM) principles. Within TQM methodologies, Six Sigma is one of the main techniques exploited by academics and industries, in order to reduce defects in large productions. Six Sigma has been widely adopted worldwide in a variety of industries and it has become one of the most important subjects of debate in quality management. Six Sigma is a well-structured methodology that can help a company to achieve the expected goals through continuous project improvement. Some challenges, however, have emerged with the execution of the Six Sigma. A plethora of academic works have been developed on its application for large enterprises, furnishing practical results of success implementing cases and an optimal base for future research. Nevertheless, little research has been carried out for verifying Six Sigma compatibility with Small and Medium Enterprises (SMEs). For this reason, starting from the analysis of small companies’ needs and from a literature review on this issue, this article presents a new model (DCMCR), based on the Six Sigma approach, designed for SMEs. To validate the new framework, a case study with the implementation of the model for the suppliers’ analysis has been carried out and empirical data are presented. 1. Introduction The use of Total Quality Management (TQM) as an overall quality programme is still prevalent in modern industry, but many companies are extending this kind of initiative to incorporate strategic and financial issues (Harry, 2000). After the TQM hype of the early 1980s, Six Sigma, building on well- proven elements of TQM, can be seen as the current stage of the evolution (Wessel and Burcher, 2004): although some conceptual differences exist between TQM activities and Six Sigma systems, the shift from the firsts to a Six Sigma program is a key to successfully implement a quality management system (Cheng, 2008). Six Sigma is a business strategy that seeks to identify and eliminate causes of errors or defects - defined as anything which could lead to customer dissatisfaction (Jiju, 2004) or failures in business processes by focusing on outputs that are critical to customers (Snee, 1999); it uses the normal distribution and a strong relationship between product Non- Conformities (NCs), or defects, and product yield, reliability, cycle time, inventory, schedule, etc. (Tadikamala, 1994); the activities of Six Sigma are not limited to process or operation levels, but extended to all the levels of an enterprise to reduce cost and produce high quality products. Six Sigma has been widely adopted in a variety of industries as a proven management innovation methodology to produce high-quality products and reduce the cost at all the levels of an enterprise. General Electric and Motorola are the two most well known success cases of Six Sigma implementation (Han and Lee, 2002). Moreover, the Six Sigma movement is also gaining acceptance in healthcare, marketing, engineering, financial and legal service organizations, in additions to achieving major benefits in the manufacturing sector (Szeto and Tsang, 2005). Nevertheless, very few studies have been reported about the successful application of Six Sigma in Small and Medium Enterprises (SMEs), that represent the life-blood of modern economics (Antony et al., 2005). This paper reports a case study in which a new model for SMEs, based on the Six Sigma methodology, has been developed starting from a deep analysis of the SME needs and from the existent literature on Six Sigma both for large and small companies. In order to test its effectiveness, the authors implemented the model in an Italian company, for the supplier management issue. First quantitative results are shown and further development of the model with new implementing areas are discussed.