Six Reasons Your Organization Needs Six Sigma
In the 2000 GE annual report Jack Welch wrote,
“Six Sigma has galvanized our company with an intensity the likes of which I have never seen in my 40 years at GE”.
However, what are the actual benefits of implementing Six Sigma? Here are my six top reasons to go for it!
1. Changes the organisational culture from reactive problem solving to proactive problem prevention
2. Bottom line cost savings (5%-20% of turnover per annum)
3. Improved quality of product or service as perceived by the customer (internal and external customers)
4. Reduction in process cycle times
5. Development of staff skills
6. Common language throughout the organisation: a data driven approach
Elaborating on two important points above:
Point 2 – GE’s gross annual benefit from Six Sigma could be as high as $6.6 billion, or 5.5 percent of sales, whereas AlliedSignals saved $175 million in 1995, and nearly double that in 1996. A company at a three sigma level spends 25% of its sales finances on the cost for poor quality. The figure drastically falls down to under 5% in Organizations practising Six Sigma.
Point 3 – the six sigma learning curve figure shows how improvement occurs over time following the decision to implement Six Sigma:
The figure indicates that the majority of improvement takes place during the first two years of effort. The reason for the curve being concave as opposed to convex is that faster improvements are observed at the outset if there is a worse quality to begin with. But as the quality gets better with time, it gets harder to reach the newer goals.
Much of the emphasis is on the first year improvement as it can be observed that more than 80% of the progress toward Six Sigma is made in about 20% of the total time over which the ultimate goal is to be realized.
Do you agree with the above? If not then what additional reasons would you add?
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This blog is about quality assurance, six sigma and the Toyota Production System. Hopefully you’ll gain a deeper understanding of this subject by reading the articles, conversations, images, links, thoughts and video clips I post regularly?
About me
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I’m an engineer and manager by education; quality, safety and environmental professional by experience and statistical enthusiast out of necessity. I believe that although it is easy to lie with statistics it is hard to tell the truth without them. I hold a Bachelor of Engineering (Hons) degree from the University of Northumbria, a Master of Science degree in Total Quality Safety & Environmental Management from the Open University & a Master of Business Administration degree from the University of Durham along with several other qualifications.
After completing a mechanical and production engineering apprenticeship with a turbine-generator manufacturer, I moved into planning for the offshore industry, followed by a move into quality for a consulting firm which specialised in the turnkey construction of combined cycle gas turbine power stations across Europe. Next I helped to establish a high-volume electronics company as a manager responsible for all aspects of quality, safety and environmental issues and then finally to a filter manufacturing company in NE England.
I am a European Foundation For Quality Management Business Excellence Assessor, Six Sigma Black Belt, Member of the Chartered Institute of Quality Assurance, Institute of Occupational Safety and Health, Senior Member of the American Society for Quality, Lead Environmental and Quality Systems Assessor and also a Member of the Chartered Institute of Management.
My favourite work related quote comes from Sir Henry Royce (1863-1933) :
“Strive for perfection in everything you do. Take the best that exists & make it better. If it doesn’t exist create it. Accept nothing as nearly right or good enough”.
Disclaimer
Come on guys …. please take everything I say in the spirit it’s intended. I’m not offering professional advice just my personal opinions – you can take them or leave them! The quality profession is a journey and as such my thoughts and opinions change from time to time as I come to learn more and develop my understanding about the things and issues that I am blogging about. This blog just provides a snapshot of the knowledge, views, and opinions that I hold at a particular point of time and these might most probably change over a period of time.
I reserve the right to evolve my knowledge, thoughts, and viewpoints over time and to change them without assigning any reason. My blog includes links to other sites/blogs operated by third parties. These are provided as a means of convenient access to you to the information/opinion contained therein. I am in no way responsible for the content of any other sites or any products or services that may be offered through other sites. The information in this weblog is provided “AS IS” with no warranties, and confers no rights.
This weblog does not represent the thoughts, intentions, plans or strategies of my employer. Feel free to challenge me, disagree with me, or tell me I’m completely nuts in the comments section of each blog entry, but I reserve the right to delete any comment for any reason whatsoever (abusive, profane, rude, or anonymous comments) – so keep it polite, please!
Remember: Taking Ex-Lax and sleeping tablets on the same night is rarely a good idea.
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