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Do the Advantages of Six Sigma Impact the Bottom Line?

written by: Rupen Sharma, PMP • edited by: Michele McDonough • updated: 5/28/2013

What are the advantages of Six Sigma? Which companies use Six Sigma? If an organization leverages the advantages of Six Sigma, will it be more profitable? Read on for the answers to these questions.

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    What Honeywell Says

    Six Sigma is one of the most potent strategies ever developed to accelerate improvements in processes, products, and services, and to radically reduce manufacturing and/or administrative costs and improve quality. It achieves this by relentlessly focusing on eliminating waste and reducing defects and variations.

    Source: Honeywell Aerospace Engineering

    There are several other companies that swear by Six Sigma and even go as far as calling it a revolution. Just what is Six Sigma?

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    Definition

    Six Sigma is a process improvement methodology that is used to improve business by improving quality. The goal is to achieve Six Sigma, i.e., Six Standard Deviations from the mean. In real terms, this means trying to achieve 3.4 defects or less per 1,000,000 opportunities.

    A simpler way to understand this is by taking opportunities as manufactured products. When an organization has achieved Six Sigma, it means that from a million products, there can only be 3.4 defects. There is no company in the world that I know of which has achieved Six Sigma. All of them strive toward it. That means that by adopting Six Sigma you are also practicing continuous improvement. This is one of the advantages. Now, let’s look at a few more.

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    Advantages

    Some other key advantages of Six Sigma are:

    • Focus on Customers
    • Less Waste
    • Informed Decision-Making
    • Continuous Improvement
    • Systematic Problem Solving
    • Data Analysis Before Decision-Making
    • Reductions of Incidents
    • Measuring Value According to the Customer
    • Developing Leadership Skills
    • Fewer Customer Complaints

    Looking at the advantages, it’s no wonder that companies such as GE, Motorola, Citigroup, Sun Microsystems, The Home Depot, and Express Scripts use Six Sigma. The fact is the list of companies using Six Sigma in some form or another is growing. Each of these companies has leveraged the advantages of Six Sigma. Let’s see some critical factors that can determine the success and adoption of Six Sigma in your organization.

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    Leveraging the Advantages of Six Sigma

    Leveraging the advantages of Six Sigma requires certain critical traits within an organization. Some of these traits are:

    • Support from very senior leadership, such as the CEO, managing director, etc.
    • A culture of accountability
    • Support from systems and structure in the organization to align with the initiative
    • Communication and trust
    • Celebrating success with recognition and rewards
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    The Bottom Line Impact

    If you are impressed by the advantages and feel you should give it a shot in your organization, avoid treating Six Sigma like a silver bullet. There are many other variables, apart from business improvement initiatives, that impact the bottom line. Six Sigma does not guarantee an increase in the bottom line, However, a successful implementation of Six Sigma can lead to a substantial rise in profits. For example, Express Scripts reported an 83 percent improvement in floor space utilization and 71 percent improvement in productivity after leveraging Six Sigma with Lean methods. In addition, Six Sigma helps in Cost of Quality analysis.

    There have been many bottom-line success reports by organizations that have implemented Six Sigma. All these reports assume business fundamentals are already in place. For example, would Six Sigma help if you are selling a product that doesn’t provide value to the intended customer? It wouldn’t. However, if you already have a product that is selling and want to build efficiencies, then go ahead and leverage the advantages of Six Sigma.