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The Berkman Letter Practical analysis and commentary for business, law, and more.
My new manager is pushing for Six Sigma practices, so I am trying to understand the real benefits of what sounds like a big implementation effort.
Below is a link to study that suggests mixed financial outcomes for companies implementing Six Sigma practices. The most interesting finding is that Six Sigma may be more effective in companies that already have strong cash flows than in companies that generate little cash.
Six Sigma is a methodology for eliminating waste within the company and its processes. If a company has a specific process in question, the procedures can be examined to see if time or materials can be reduced. The more time that can be saved, the more money can be saved. If the process generates a lot of excess waste of materials and an examination of the process identifies a way to reduce that waste, money is saved. This examination would fall under "Lean Six Sigma" or "Lean Manufacturing". So in this sense, you can save a lot of money that can be infused back into the company to help expand. Six Sigma also involves using a process called "5S". It is quite an involved process that allows the company to identify tools, materials, and basic junk that serves no purpose and toss it. Then with what is left, there is a specific place for everything, and everything is stored in its place. So to give you an answer to your question, implementing Six Sigma, Lean Six Sigma, Lean Manufacturing and the 5S process really is a big implementation effort but in the long run, it is a very good thing to do. Just remember that it can't all be done in a day. It needs to be planned and executed in a methodical manner, one step at a time. Upon completion, you will see that it does pay off in the long run. A great deal of money can be saved by successful implementation of the Six Sigma processes.