Wednesday, October 10, 2007

Six Sigma

Description "Sigma" is a measure of statistical variation. Six Sigma indicates near perfection and is a rigorous operating methodology aimed to ensure complete customer satisfaction by ingraining a culture of excellence, responsiveness and accountability within an organization. Specifically, it requires the delivery of defect-free products or services 99.9997 percent of the time. That means that out of a million products or service experiences, only 3 would fail to meet the customer's expectations. (The average company runs at around Three Sigma, or 66,800 errors per million.) To raise operations and product designs to the highest benchmark, Six Sigma programs constantly measure and analyze data on the variables in any process, then use statistical techniques to understand what improvements will drive down defects. Such programs also incorporate a strong system for gathering customer feedback. Companies have applied Six Sigma to functions ranging from manufacturing to call centers to collections. Some companies estimate that the Six Sigma methodology has helped them realize savings upwards of $1 billion. Methodology Six Sigma entails five key steps:
Define. Identify the customer requirements, clarify the problem and set goals;
Measure. Select what needs to be measured, identify information sources and gather data;
Analyze. Develop hypotheses, identify the key variables and root causes;
Improve. Generate solutions and put them into action, either modifying existing processes or developing new ones. Quantify costs and benefits;
Control. Develop monitoring processes for continued high-quality performance.Common uses Companies use Six Sigma to set performance goals for the entire organization and mobilize teams and individuals to achieve dramatic improvements in existing processes. More specifically, Six Sigma can:
Make processes more rigorous by using hard, timely data, not opinions or gut feeling, to make operating decisions;
Cultivate customer loyalty by delivering superior value;
Strengthen and reward teamwork by aligning employees around complex processes whose performance can still be easily, clearly and empirically measured;
Accustom managers to operating in a fast-moving internal business environment that increasingly mirrors marketplace conditions outside the company;
Achieve quantum leaps in product performance;
Reduce variation in service processes, such as the time from order to delivery, or offering a consistent, high-quality service experience;
Improve financial performance, through cost savings from projects, increased revenue from improved products and expanded operating margins.

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