CONSULTANCY SERVICES

Operational Excellence

Six Sigma

Introduction

Sigma, σ , is used by statisticians to measure variation in any process. Six Sigma in turn means a very high quality level of 3.4 or less defects or errors per million opportunities for defects or errors in products or services. The beauty of Six Sigma is that it is both an engaging management philosophy with realm of possibilities, as well as a structured tool that can help any organisation achieve world class performance.

Six Sigma can be viewed in different ways – as a metric, a principle, as a methodology, as well as a management system.

As a metric, Six Sigma prescribes the disciplined use of fact-based data. By consistently applying a systematic data-driven approach, Six Sigma practitioners are able to increase predictability, consistency and accuracy of processes in producing defect-free products and error-free services.

As a principle, Six Sigma’s core is variation reduction. It is variation in processes that leads to defects, cost of poor quality, customer dissatisfaction as well as market loss and lost opportunities. By focusing on strengthening its processes and making them more reliable and capable, the organization will achieve superb quality levels, greater efficiencies and higher levels of profitability.

As a methodology, Six Sigma is tested and validated by General Electric, Samsung, Bank of America and many global enterprises. The five phase Define, Measure, Analyze, Improve, and Control methodology together with a comprehensive suite of statistical tools explain its success compared to the many unsubstantiated management philosophy out there.

As a management system, Six Sigma is an enterprise-wide improvement initiative that is applicable in operations, sales, design, procurement, logistics and any process in the organisation. Management must lead the Six Sigma initiative and is responsible to define a set of key performance metrics, measure their actual performance and initiate improvements to the system.

The upshot is, in challenging the entire organisation to achieve a Six Sigma level of near perfection, Six Sigma captures the imagination and has proven to inspire dramatic improvements to the bottom line.

Benefits of Implementation

Depending on the industry type, a 3 Sigma level company can expect the following benefits:

• gains of USD 20,000 to 100,000 from each completed improvement project
• reduction in reject rates by 50 to 70%
• increase in process capabilities (Cpk) to 1.3 or higher
• reduction in lead-time for transactional processes by 30 to 50%
• decrease in manual administrative efforts in transactional process by 30 to 50%
• increase in inventory turns by 30 to 50%
• increase in operating margins by approximately 40%

An organization can expect even more spectacular gains as it moves up the sigma level.