International Payment Systems
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The World of Private Equity
The term “private equity” evokes many emotional reactions. Many investors have made a lot of money thanks to the strategies being followed by private equity companies. However, many companies no longer exist because of these private equity funds. The investments being made by these funds is rapidly growing. Private equity funds have a lot of […]
How 5G Will Affect Businesses?
5G is the latest buzzword in the telecommunication sector. For a layman, it is difficult to understand what the buzz really is all about. Modern-day consumers have lived through the introduction of 3G and 4G. They believe that 5G will just be a minor enhancement over the way things are currently functioning now. However, that […]
What is Ease of Business rankings and why do they matter to countries like India?
The Recently Published Ease of Business Rankings The news that India jumped 30 places in the Ease of Business Rankings as published by the World Bank and which covers 190 countries worldwide was met with jubilation and chest thumping by the Indian Government, which promptly announced that the Indian Economy was on a path to […]
Why Globalization Succeeds When the Workforce is Young ?
In a previous article, we looked at how globalization benefits the young more than the elderly. This article looks at how a youthful workforce is necessary for globalization to succeed. The reason for this is that when the majority of the workforce is young, there is more number of people who are competing for the […]
Six Sigma Project initiatives help the organization in a wide variety of ways and at very different levels. This article describes the immediate operational benefits that an organization derives as the result of implementing a Six Sigma project.
Six-Sigma efficiency is impossible to achieve if the mode of production used by the organization is craft production. To be efficient enough to run processes that have less than 3.4 defects per million, organizations need to be systems dependant. Thus Six Sigma mind set helps transform a people driven organization into a process driven one!
Six Sigma results in massive cost savings to the organization involved. These cost savings are highlighted by the fact that after a Six Sigma project any organization has considerably less requirement for labour hours. Also the requirement of skilled labourers is also reduced. Hence, both these factors combined have an effect of drastically reducing the labour bill of the organization.
Six Sigma projects realise a large amount of their financial value from their ability to eliminate or at least reduce wastage. Since the process is critically analysed for costs and corresponding value addition, measures are taken to eliminate wastage to a large extent.
An ancillary benefit of Six Sigma projects is that it creates a system which is much more efficient than the earlier one. Hence the organization can implement systems like Just In Time Inventory practices and cut still more costs.
Organizations are plagued with defective processes which result in the manufacturing of defective products. Each defect has costs attached. The costs include material, time, overheads and loss of reputation for the firm. Implementing Six Sigma projects often pays for itself in the long run by providing the financial benefits of near zero defects to the firm that implements it.
Customers do not like unreliable products or organizations. This can be verified by the fact that many companies that have implemented Six Sigma have not only found their costs reduced but their market share increased considerably. Hence, Six Sigma is also capable of positively impacting the marketing of the firm.
All of the sources mentioned above can be seen as the revenue model of the Six Sigma project. In the financial evaluation of a project, the revenue (cost reduction) from various sources must be considered before deciding whether the project is worth the effort or not. The idea is to find scenarios that the firm will be in with the project and without it.
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The Cost of Poorly Performing Processes – Need for Six Sigma
February 12, 2025
