2017-03-01 00:00:00ProductivityEnglishLearn what the Six Sigma methodology is and discover some of the many reasons it is a powerful and useful concept for businesses.https://quickbooks.intuit.com/ca/resources/ca_qrc/uploads/2017/06/Project-Manager-Uses-Six-Sigma-Methods-To-Break-Down-And-Analyze-A-Task.jpghttps://quickbooks.intuit.com/ca/resources/productivity/business-benefits-six-sigma/Business Benefits of Six Sigma

Business Benefits of Six Sigma

3 min read

Businesses use Six Sigma to try to operate as efficiently as possible while eliminating as many defects in their products or services as they can. It’s an approach that can be used in any industry. The goal of Six Sigma is to increase profitability by decreasing waste, defects, and variability (standard deviation) of a business’s products.

How Six Sigma Helps Businesses

Six Sigma can lead to improved customer loyalty, since fewer defects result in higher levels of customer satisfaction. Time management improves, since employees become more efficient and productive when they’re using Six Sigma techniques. Project cycle times can improve and get shorter as employees find problems and analyze data. A business’s overall strategic planning can improve; Six Sigma helps management focus on areas that need major improvement.

The Main Six Sigma Objective

The main objective of Six Sigma is to reduce variation among a product or service through the implementation of measurement-focused strategies. Two of these major strategies are known as DMAIC and DMADV. DMAIC stands for “define, measure, analyze, improve, and control,” and it’s a system for improving existing business operations. DMADV is used to develop new processes for the business with high quality standards; it stands for “define, measure, analyze, design, and verify.”

The Steps Involved

As mentioned above, DMAIC is used for improving existing projects. The steps involved with it are:

  • Define: Clearly define what problem needs to be solved.
  • Measure: Collect as much data as possible on every aspect related to the problem.
  • Analyze: Analyze the data to determine the root causes of the problem.
  • Improve: Create and implement changes that reduce or eliminate the error.
  • Control: Monitor the new changes to the process to ensure the improvements are working.

Utilizing DMADV to design new projects entails:

  • Define: Define the project’s ultimate goals.
  • Measure: Identify required resources and potential risks.
  • Analyze: Create and test multiple solutions to the problem.
  • Design: Based on customer wants and feedback, choose the best solution.
  • Verify: Confirm that goals of the project are being met on a regular basis.

Example Organization Needing Six Sigma

Six Sigma is primarily about reducing defects in products. Six Sigma aims for a low value for defects per million opportunities. The quality standards of Six Sigma are so high that they result in a business having only 3.4 defects per million opportunities. For example, assume that you manufacture pencils, and you have identified five areas of possible defect for each pencil: the wood, the graphite, the eraser, the eraser holder, and the logo imprint. Assume the manufacturing line has four defect for each 100 pencils. This means that there are 500 (5 x 100) potential defects for each 100 pencils made. The company defect rate is then 4 / 500. This equates to a DPMO of: DPMO = (4 / 500) x 1 million = 8,000This company is very far away from the quality standards of Six Sigma. The DPMO is 8,000 and should only be 3.4. Many quality improvement standards need to be implemented and monitored.

Six Sigma Certification

Various methodologies exist for implementing the ideas of Six Sigma. Typically, Six Sigma certified consultants oversee these strategies. These consultants are ranked by experience and knowledge via different belts, similar to martial arts rankings.

  • A white belt can work on problem-solving teams and support overall Six Sigma projects but may not be part of an actual Six Sigma team. White belts only understand the basic ideas of Six Sigma.
  • A yellow belt is the lowest level of a participating project team; yellow belts review items that support the overall project.
  • A green belt assists with data collection and provides analysis support to black belts. A green belt can lead teams of green and/or yellow belts.
  • A black belt has a high level of experience and leads problems-solving Six Sigma projects.
  • A master black belt leads entire projects and develops key metrics and strategic direction on the project. This is the highest-level Six Sigma professional.

Six Sigma methodologies can dramatically improve the quality of a product, service, or entire business. Simply beginning the process is a sure-fire way to make the quality of your products and services much better over time.

References & Resources

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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