Sourcing Strategies and Procurement Processes
Not long ago, purchase function was seen to be a desk job, monotonous paper work, dull and passive and more of an administrative function. The purchase managements were the fall guys whose only aim was to keep feeding shop floor and avoiding stock out situation. Today the situation has changed totally. Procurement function is considered […]
Information System for Business Effectiveness
Introduction In this digital age with fierce competition, it is essential that managers within organization are completely aware and receptive to evolving changes. One the quickest evolving change is within information systems. This change in information systems is contributed to advances in computing and information technology. Applying a concept that information system is strictly under […]
Some Insights into the Infosys and TATA Sagas that are Relevant to all Organizations
Many of you would have read about the dramatic events of the last two days pertaining to the Indian IT (Information Technology) bellwether and behemoth, Infosys, which was played out in the public domain and which culminated in the resignation of its first non-founder chairperson, Vishal Sikka, amidst allegations of malfeasance of corporate governance and […]
International Trade Terms – INCOTERMS
Globalization has given impetus of international trade which is increasing by the day. International trade involves multiple agencies, transportation agents, carriers as well as Customs and Banks etc of the two countries involved in trade. Any Export or Import transaction involves transportation of goods predominantly via sea or air and in some cases over the […]
Configuration Control and Setting Up of Base in ERP System
ERP systems were developed based on generic need of various types of organizations, belonging to diverse business segments and further evolved through continuous adding up of new business processes. Consequently, any ERP system now offers numerous functionalities, which overwhelm most of the enterprises, during project implementation. Enterprises are needed to pickup relevant components of the […]
Sigma or standard deviation is a statistical measure of dispersion in data. It is a measure which uses the characteristic of past data to make judgements about how the process will perform in the future. If a given set of data has normal probability distribution then the number of defects that will occur in the process over a period of time can be known depending upon the sigma level of the process.
The sigma (standard deviation) is multiplied with the numbers 1, 2, 3 etc to come up with a range. For example lets assume that the average of a data set is 10, while the sigma is 2. Hence 1 sigma will include all the data points between 10 +/-2 i.e. between 8 and 12. A 2 sigma measure would include 10+/-2(2) i.e. all data points between 6 and 14. So on and so forth.
However, it is a known fact that in a normal distribution the points tend to be around the mean. Therefore all the points will be closer to the average. Hence as one goes to farther and farther sigma levels the additional gains in terms of productivity are less.
To be a six sigma organization, the processes of an organization must be able to support this kind of efficiency sustainably. Building such robust processes requires a lot of intelligence and effort.
| Sigma Level | Defects/Million | Percentage Defects |
| 1 | 691462 | 69% |
| 2 | 308538 | 31% |
| 3 | 66807 | 6.7% |
| 4 | 6210 | 0.62% |
| 5 | 233 | 0.023% |
| 6 | 3.4 | 0.00034% |
| 7 | 0.019 | 0.0000019% |
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The Cost of Poorly Performing Processes – Need for Six Sigma
February 12, 2025
