Six Sigma: The Lowdown
Six Sigma is a set of statistical tools that act as a lens through which hidden problems can be identified and root causes uncovered, better equipping leadership to think through tough issues. It provides the metrics required to reduce variability in process execution so as to enable on-going improvement in competitiveness and manufacturing and business operations.
As Community Manager for a Six Sigma business website (Expert Market), I have learned many different ways that Six Sigma not only can benefit your business, but can transform it to becoming more agile and respond faster to change. Here are the top 6 benefits:
- Increase Productivity Utilizing people effectively at all times is a difficult task for any business, but especially for manufacturers who typically have a large workforce to manage that operates across different locations, regions, languages and cultures.Six Sigma can empower you to precisely measure time spent on direct and indirect activities and identify the root causes of low productivity. You may think you’re employing too many staff but find it’s actually insufficient training or supply chain issues that are holding up production. Applying a methodological approach across locations helps to provide clarity on what the real issue is, to then address it most effectively.
- Reduce Costs Defective processes cost money. Understanding operations with a view to improvement is one of the most efficient ways to reduce costs in any business. At the core of the Six Sigma methodology is its process improvement framework which consists of the following five steps: Define, Measure, Analyze, Implement and Control (DMAIC). Statistically, this process has been shown to reduce problems to less than 3.4 defects per million opportunities. By spending less on reworking defective products, a company could typically reduce its cost of achieving quality by 20% and increase its operating revenue by 50%. Accomplish this improvement across multiple sites and you can literally transform your operations to a new level of cost effectiveness.
- Improve Market Share Companies that have been implementing Six Sigma correctly for some time have reported profit margin growth of around 20% each year for every Sigma process shift (up to about 4.8s – 5.0s). Sigma process shifts allow the operator to calculate how near (or far) a process is from Six Sigma.As most companies start around 3s, the earlier Sigma shifts have a dramatic effect on the amount returned to the company’s bottom line. Sustained improvements in profit margins over years empower companies to continue to create products and services with added features and functions, allowing them a consistently greater share of the market.
- Increase Competitive Edge How well a company performs in respect to customer-facing activities has a strong impact on revenue generation and forms a significant part of its cost structure. While every customer encounter is different, Sigma recognizes that having too many variables within customer-facing procedures can be as detrimental as it is in back-end processes – perhaps more so.Six Sigma will identify common components that can be standardized in order to dramatically enhance performance and provide the information needed to strengthen and improve consistency across customer relations. Data gathered can also be used to empower marketing strategies and put a company ahead of the competition.
- Reduce Waste Waste within a business and manufacturing environment can relate to many things apart from time, costs and materials. Six Sigma can help identify the unnecessary movement of information, people and products and reveal untapped employee creativity, ideas and skills.Referred to collectively as Lean manufacturing, excess work processes that add no value in the eyes of the customer can be a serious drain on resources. These activities can be eliminated, as can overproduction, by showing where to cut the manufacturing of products and output of services beyond the requirements of immediate use. In this way, Six Sigma can be an ideal complement to a Lean manufacturing program.
- Increase Employee Satisfaction Dealing with employee queries relating to the finer points of pay entitlements, terms of contracts and company regulations can eat into production time, frustrating employees and bog down HR and supervisory staff. Six Sigma can take the guesswork out of what qualifies as overtime, premium time and vacation allowance.Errors resulting in under and over-payments, and the time and effort it takes to correct them, can be eliminated. Enabling employees to access their own accurate and updated payroll data during their free time not only saves time but can be a real boost to staff morale too.
In conclusion, Six Sigma can be a powerful and strategic methodology to consistently measure results, which can then become a new baseline for improved performance, ultimately getting you closer and closer to operational excellence. Those organizations that can embrace this philosophy across their enterprise can effectively transform their manufacturing operations into a world class, unstoppable leader.
Amy Harris can be found on