Over the last few years, Six Sigma has almost become a household word.
The term “Six Sigma” is an evaluationof quality. However; Six Sigma is a business initiative, not a quality drive. It is a way of doing business that enhances quality and productivity. It also increases competitiveness and decreases cost.
Six Benefits of Six Sigma Methodology
Regardless of an organization’s business or size, Six Sigma methodology provides a standard approach to problem-solving in terms of Six Sigma projects. To get benefits or fruits of Six Sigma methodology, a Six Sigma Yellow or Six Sigma Green or Six Sigma Black or Master Black Belt project has to be given. The project has to be in a particular upward or business unit.
Let's Have a Look at Any Category of Benefits:
1. Decrease Operational Costs
For most of the companies operating globally, operational cost & risks are significant factors. These factors provide low profits or even losses. Some opportunities cannot be reduced, and the operational cost is always everywhere. Six Sigma methodology can provide a road map that can drastically decrease an organization’s vulnerability to risks. Also making organizations more effective & productive at delivering its product or service.
Hard savings are actual reductions in dollars now being used. Reduced budgets, fewer employees, decrease in prices paid on purchasing contracts are some examples of hard savings. Soft savings are projected reductions that should emerge from the project — for example, savings from less inventory, lower cycle times, and decreased scrap. Additional benefits may find by consistently meeting service-level agreements (SLAs) with customers, avoiding penalties, understanding revenue is faster, and so on.
Another central focal area for Six Sigma projects is to decrease costs. Costs associated with fantastic & inefficient quality products, services, or processes. Many companies want to overlook the importance of quality in their daily operations and product offering. It is essential to outline the impression that this confusion will have on the bottom line of such companies.
On average, U.S. companies give about 15 percent of their sales to resolving quality matters, issues, and bottlenecks. Costs that are associated with producing products or services with ineffective and ineffective quality. Six Sigma project can be moved to overcome or mitigate these costs.
They are as follows:-
(a) Inspection Costs:
Whenever a quality checker, inspector, or assessor examines a service or product, he or she is making a step that customers do not want to pay for. A Six Sigma project can be moved to reduce excessive investigation time or costs. In case of such projects, the flow or process would be set up such that any possible errors will be captured & fixed at the process step where they happen. Six Sigma is a Quality Assurance methodology. The six sigma project should be directed towards limiting the inspection function by giving the right output at once.
(b) Rework Costs:
The term ‘Rework’ means re-doing something that has now been done. Without any doubt, we can say that no customer needs to have this value because the target of right first time has not been reached by the process. The idea of rework means that the process has been set up in a way that provides incomplete or incorrect work to pass further along in the process so that it gets caught and corrected by someone downstream.
Six Sigma project can be moved to create an error-proof mechanism or increase the detectability of the process. This is for overcoming or mitigating the rework in all the operational processes. In other words, the defect bar should be the target of a Six Sigma project.
(c) Customer Complaints:
If Six Sigma project aims at reducing the reasons for a customer complaint, then business units will be able to decrease the cost of customer complaints to the organization. Customer charges can affect the bottom line drastically in cases; where the product or service has some critical faults. Moreover; costs can lead to the loss of repeat business from an actual client. Six Sigma project is also aimed towards increasing customer satisfaction score for a process, product, or service.
2. Advance Performance or Timeliness
Six Sigma projects help enhance the efficiency of the overall process. Moreover; developing the timelines in delivering the process output or increasing the on-time delivery of products or service every time can be the central areas for Six Sigma projects.
To better timeliness, Six Sigma projects can be targeted towards decreasing the number of machine setups or setup hours in a manufacturing process, increasing the productivity of production or assembly lines, fully or partially automating the process wherever manual interference in the processor function is more substantial than expected and so on.
According to the industry the company is working in, the language of process care areas may change. Before undertaking any Six Sigma project, it is essential to quantify or define all aspects of efficiency or timeliness. The error in a method or product should be studied with the help of data, facts, figures, and information.
3. Enhance Accuracy, Controls, and Policy Compliance
Six Sigma projects help increase accuracy by reducing Defects-Per-Million-Opportunities across the value stream in the process. The word ‘opportunity’ means the chance to make an error. DPMO is a probabilistic measure of failure rate or capability of a business or manufacturing process. This measure takes into report both actual defects & number of probable defects in every opportunity.
As DPMO increases, sigma-level of the method goes down and vice versa. Six Sigma project aides measure baseline and target process accuracy in terms of DPMO & Sigma Level. It is a precise way to measure process efficiency as it aims to stop the event of errors.
According to the Six Sigma methodology, the process which is in a state of numerical control is the constant process. With the aid of graphical & Statistical Process Control (SPC) tools, i.e., Control Charts and Run Charts, Six Sigma project supports track and monitor the security of the process continuously. There are many types of control charts; according to the kind of data under study.
The word ‘Compliance’ refers to consistent or adhering to the rule or protocol. The compliance can be physical as well as the surface. Six Sigma tools & techniques help assess departure from the plan, forecast, budget, or expectations. These techniques also help determine if clients or parties comply with the Service Level Agreements (SLAs).
4. Better Customer Service
The concept of the company is created in large portion by its communication with customers. Any company would want this communication to be as stable as possible. The reason being dissatisfied customers are vocal experts. Six Sigma projects can help know the number of changes customers are experiencing, what is driving that variation, and finally, how the number of unsatisfied customers can be reduced. Such Six Sigma projects can also be aimed at enhancing customer and merchant satisfaction.
Six Sigma projects can be undertaken for thoroughly knowing customers and not just their issues or concerns. The methodology can also help business predict customer needs and address them through a streamlined process. Six Sigma projects better assess the need to automate customer service use too. Six Sigma projects can be offered to address critical customer service issues. This depends on the industry that the company is operating in.
5. Increase Cash Flow
Six Sigma projects can also be targeted towards developing DSO, i.e., Days Sales Outstanding in the business. If DSO improves, then cash flow increases as well. The higher the DSO, the lesser the strength of the company to turn credit sales into cash. Six Sigma projects can be aimed at decreasing variation in making the demand, Accounts Payable Process, Accounts Receivable process, Inventory Management Process, etc.
Many critical defects, which are measurable, will have to be identified across all the processes, as mentioned earlier, to increase cash flow. It is a must to narrow-down the field of improvement too.
6. Better Regulatory Compliance
Usually, there are three phases of regulatory compliance. The first one is Finance and Audit, the second one is Information Technology, and the third one is Legal. Six Sigma projects can be offered in each of these aspects; depending on the errors identified.
Under the umbrella of Finance and Audit, projects can aim towards improving the fund allocation process, decreasing the cycle time or turnaround time in the cost estimating process, etc.
In the area of information technology or data security, a project can aim towards decreasing the risk of non-compliance, increasing the service quality of IT help-desk service, etc.
In the case of legal, Six Sigma project can point towards improving documentary and auditory compliance, the collection process of critical and non-critical documents, etc.
Six Sigma is a journey; however, an organization will start to experience transformation and excellence. After making several rounds of projects in multiple critical and non-critical functions, the recently developed organization experience will help the leadership team to begin shifting responsibility away from the employees and blame poor process design. Six Sigma will improve management to create empowered employees to identify and drive improvement ideas.