5 Benefits of Six Sigma

Every company has its problems, from the largest corporation to the smallest family-owned business. When these problems come up, it can be hard to see the problems from an objective point of view, but continually tackling issues in service and quality is necessary for ongoing growth. Every business needs a strategy for improvement, and many companies are finding their solution in the Six Sigma business management strategy. As a standardized strategy, companies can easily pick up the methodology and work toward improved quality throughout their business. But what is the Six Sigma method, and how can it benefit businesses?

What is Six Sigma?

Back in the 1980s, Motorola was looking for a way to improve the quality of their consumer electronics, and turned to statistical models for help. In a nutshell, they found that by working toward perfection (sigma), the acceptable level of defect level was six—a rate of 3.4 defects per million opportunities. Using that acceptable rate, businesses can then make changes to improve their products and processes to try to meet these demands. Most businesses in the United States operate at around a 3-4 sigma level, with much higher rates of quality issues.

Today, it’s a wildly popular methodology, with certifications for consultants, branded training products, and other materials available to businesses that want to give it a try. Here are 5 benefits of implementing Six Sigma in almost any industry.

1. Increase long-term revenue

By improving the quality of their service and products with the methodology, companies can see immense long-term revenue increases, yielding benefits for the company and for shareholders. GE was a fairly early adopter of the Six Sigma method, and saw $300 million in increased revenue in 1997 (the first year of Six Sigma), and a full extra dollar per share in the first five years of implementation.

2. Improve quality

A defect is defined as anything that falls outside of a customer’s expectations. That changes from product to product, but any company knows a defect in their products when they see it. Six Sigma challenges organizations to minimize these defects and improve quality to the point that very few customers will ever have a problem. Even “products” that aren’t manufactured can benefit from the Six Sigma treatment. At Akron Children’s Hospital, customer service and overall quality was boosted in several different ways after implementing the method. MRI wait times were reduced by 90% (25 days to within 2 days), and the ER decreased the amount of time it took to locate airway supplies by 63%, improving the care the hospital could provide patients.

3. Expand innovation

Innovation is a necessary ingredient for any company, to prevent stagnation and promote ongoing growth. Six Sigma has been shown to promote teamwork and collaboration within organizations that take the initiative and begin to use the methodology. Instead of stifling innovation, as some have feared, the methodology often promotes new ideas and insights. In fact, 46% of organizations that implemented Six Sigma saw their innovation improve, possibly because teams were focused on solutions and possibilities over limitations.

4. Reduce costs

Obviously, any savings through Six Sigma is an indication of return on investment (ROI) and more available funds to apply to other projects. Almost every organization that implements Six Sigma can expect to see savings—sometimes massive savings. In 2007, the US Army gave the methodology a try, and saw an incredible $2 billion in saving throughout that year. Simply by streamlining processes like dining hall scheduling, recycling fuel, and task management, the organization cut costs massively, allowing them to use those dollars elsewhere.

5. Positively impact employee safety

Consistency and protocol both help to ensure employee safety, while improving quality and service. Six Sigma has been shown to have a positive impact on employee in 56% of cases, and can help improve employees’ working conditions in many ways. The Akron Children’s Hospital projects helped to reduce staff overtime in the cytogenics lab, saving the organization money and allowing staff to leave on time and enjoy reasonable work-life balance.

Getting Started

Interested in learning more about Six Sigma for your business? There are many resources for planning and implementing your first project. Many companies hire a consultant to help ensure projects go smoothly, since there are many variables to the methodology. Six Sigma could be just what your company needs to reach the next level of quality standards—and save money throughout the process, something any company can benefit from.