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Sigma A term used in statistics that measures standard deviation. In business, it is an indication of defects in the

outputs of a process and how far these outputs deviate from perfection.

Six Sigma A statistical concept that measures a process in terms of defects. At the six sigma level, there are only

3.4 defects per million opportunities. Six Sigma is also a philosophy of managing that focuses on eliminating

defects through practices that emphasize understanding, measuring, and improving processes.

The Basic Components of Six SigmaThere are three basic concepts that are common to all businesses that Six Sigma addresses:processes, defects, and variation. You may not have used these terms before, but lets look ateach one.

ProcessA fundamental concept of Six Sigma isprocess. A process is any set of repetitive stepsin anymanufacturing, services, or transactional environment to achieve some result.There are processes for all of your core business activities and functions. They are the steps thatthe people in your organization go through to do their jobs and deliver your products orservices.

Defects

Part of the Six Sigma methodologyincludes measuring a process in termsof defects. Six Sigma helps you eliminatethose defects so you can consistentlyand profitablyproduceanddeliverproductsor servicesthat meetandexceed your customers expectations.Defect A measurable characteristic of the process or its output that is not

within acceptable customer limits, in other words, not conforming to specifications.

The sigma level of a process

is calculated

in terms

of the number

of

defects

in ratio to the number of opportunities for defects.Examples Getting someone elses dry cleaning order Waiting for more than five minutes in the fast food drive-through line Shipping damage Incorrect invoices Missed deadlinesAnything with the prefix of re such as rework, rebill, rethink, redo,resend, reconstruct, rebuild, reprocess, re-paint, reestablish, recover,

resolve, recondition, rewash, rewrite, resubmit, renegotiate, repropose,

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revisit, return etc. You get the point!

Variation Any quantifiable difference

between a specified

measurement

or standard

and

thedeviation

from

such measurements

or standard

in the

output

of a process.

Variation

in

outputs can result

from

many

causes in the functioning

and

management of processes.

Six Sigma Will Help You to: Identify hidden waste and costs Identify and eliminate defects Increase profit margins Increase customer satisfaction Increase your employees satisfaction and level of commitment Grow and expand your businessLets briefly elaborate on these benefits.1. Identify hidden waste and costs: On a personal level, if I ask youto give me the last two years of your check register, do you think Icould find some waste? And are there hidden or natural spendingpatterns that dont need to exist?2. Identify and eliminate defects: In your business do you ever have

to spend effort and money on FedEx sending things overnight thatshould not have to be FedEx-ed due mainly to your poor planningor some other related defect caused by your internal process?3. Increase profit margins: How can you increase profit in your

business? There are typically two ways: 1) increase the price of the

services or product you are selling, or 2) decrease the cost ofgoods/services. This means you either need a differentiator toincrease your price or to decrease the cost of goods and servicesyou must identify and fix the defects that raise your costs.Increase customer satisfaction: For the small business owner, this

benefit should probably be at the top of this list. After all, your mainfunction is to make your customers happy and keep them wanting todo business with you. Companies exist for one purpose: to profitably

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serve customers. So it follows that any problem-solving initiativeshould help you do that. (See sidebar on next page for more on this.)Increase your employees satisfaction and level of commitment:

Your people and you can enjoy solving a problem that costs youtime and money. Employees feel like owners when they have the

tools and are allowed to fix costly problems in the business. It providesa greatsense of accomplishment for everyone.6. Grow and expand your business: Growth, like any other problem,

is a problemto solve. So what arethe market factors to growandexpand? Is your business ignoring a distribution channel, orperhapsthe Internet

is not being used effectively.What arethemostimportant factors for growth?What is your growthobjectiveforthis year? Six Sigma is about asking new questions and thensystematicallyfinding answers.0 Sigma A lowly slug. You have no grade point.

.1 Sigma I will tell you what to do next.

.2 Sigma You will ask what to do next.

.5 Sigma Bring me your problems.

1 Sigma Bring me your problems with your ideas.

2 Sigma Bring me your problems with your recommendations.3 SigmaBring me your problems with your recommendations. Ifyou dont hear from me, just proceed.

4 Sigma Take actionFigure 2-1. A possible scale of empowerment related to Six Sigma