Back To CourseSix Sigma Training & Methodology
6 chapters | 62 lessons
Deborah teaches college Accounting and has a master's degree in Educational Technology.
Six Sigma is a process improvement method that focuses on product quality. A successful Six Sigma process has no more than 3.4 defects for every million items produced. A defect includes anything that does not satisfy customer specifications. Let's meet Ms. Steep, the owner of the Terrific Teapot Company. She is investigating implementing Six Sigma into her production facility but would like to learn more about the benefits of the method first. Let's see if we can help her.
Since the Six Sigma method focuses on quality by stating the maximum number of defects that are permitted, the result should be a higher quality product to be sold to consumers. There are a number of benefits for the company as well as stakeholders that result from Six Sigma's focus on quality. Let's explore some of these benefits.
Since the focus of Six Sigma is on reducing defects, the method results in producing a better quality product. If Ms. Steep implemented Six Sigma, she would provide customers with a more consistent, higher-quality product. For instance, there would be no chips or cracks or inconsistencies in the glaze applied to the teapots. If customers are happy with the product (and the company), they will make repeat purchases and tell their friends about the wonderful products as well.
When companies start projects, they don't know what could go wrong along the way, and these uncertainties often lead to the project going over its deadline. When Six Sigma is used, a team identifies the potential things that could go wrong early in the project and develops solutions to address them. This approach allows project teams to meet their deadlines.
For example, let's assume that Ms. Steep is looking to manufacture a new teapot. Research and development have been completed and a project team has been assembled to bring the product to the market. By meeting early in the process and ensuring representation from all areas, such as sales, marketing, production, and shipping and receiving, the team has a much better chance of meeting its deadline.
When Six Sigma is used, all processes are analyzed to identify areas which require improvement. This approach can identify situations where employees are underutilized as well as overutilized, which allows the company to make changes. Let's assume that a review of the production line at Ms. Steep's company revealed that employees who package the teapots feel overwhelmed. They noted that there is too much packaging to ensure the teapots do not break in transit, and they don't have enough people to complete this task. As a result, employees are feeling overworked, stressed and unmotivated.
Based on this information, Ms. Steep could change the way in which this process operates to ensure her employees are not overwhelmed, thereby improving their productivity or the amount of product that can be produced in a period of time as well as their overall satisfaction with their jobs. An improvement in this process would result in filling orders more quickly.
Supply chain management refers to the process of managing goods and services from the beginning when they're raw materials until they become finished goods. Raw materials are unprocessed items that are needed in the production process; an example for Ms. Steep's company would be clay. Since the focus of Six Sigma is on reducing product defects, it would be logical to reduce the number of suppliers that a company uses to purchase raw materials. The fewer the suppliers, the better control the company has on the quality of the materials.
Let's assume that a review of Ms. Steep's company revealed that it purchases the raw materials needed for the teapots from ten different suppliers. If the company wants to reduce its defects, it should decrease the number of suppliers it purchases from as the company will be in a better position to control the quality of the raw materials.
Although not a benefit to the company directly, using Six Sigma and focusing on decreasing defects should result in a better product, which would attract more customers. Increased sales and lower costs from improving the process as well as productivity results in more income, which is available to be distributed to shareholders in the form of dividends. Shareholders are owners of a public company and receive dividends or a share of the profits of the company based on the number of shares that they own.
There are a number of benefits to using the Six Sigma methodology, which focuses on decreasing the number of defects of a manufactured product. Analyzing and reviewing the processes will identify inefficiencies, and once these are fixed, the quality of the overall product will be improved. Six Sigma also reduces project cycle times as representatives from different areas can come together early in a project and brainstorm to identify and develop solutions to potential roadblocks that might occur early on in the process. This early intervention should result in projects being completed on time.
Implementing Six Sigma improves productivity, which is the amount of product that can be produced in a given period of time while keeping employee satisfaction high. Analyzing processes identifies areas where employees are being underutilized and overutilized. Once identified, these situations can be remedied and employees who are underutilized will feel more engaged in their jobs, and those who are overutilized will have less stress.
Six Sigma also leads to improvement in supply chain management, which is the process of managing goods from their arrival as raw materials to finished goods. Raw materials are unprocessed goods that require some conversion before they are ready to sell to customers.
Finally, implementing Six Sigma can increase shareholder satisfaction. With Six Sigma's emphasis on reviewing processes, it should lead to lower costs and a focus on reducing defects should result in greater sales. Shareholders who are the owners of the company will enjoy a share of higher company profits that is distributed to them in the form of dividends.
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Back To CourseSix Sigma Training & Methodology
6 chapters | 62 lessons
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