The role of Six Sigma in cost reduction

The hospitals, manufacturing industries, and services industries are all experiencing tremendous pressure on the cost front. All the companies should conduct a thorough check of the costs involved, in the same way, that they view revenue generation and market expansion.

Enterprise cost reduction is a wider approach towards controlling the company’s expenses and leading the organization towards improvement. It does not only imply focusing on specific operational processes. Enterprise cost reduction addresses a number of key cost-aspects that span the enterprise, such as the business configuration, organizational structure and design, business and process complexity, external expenses and the benefits.

It is essential to identify the large and small costs incurred by the business. The savings on the purchase of the raw material and on the business trips add up to a considerable amount of money. This could be utilized for the promotional campaigns of the product. This, in turn, affects the sales and again the business turnover. Improved product sourcing and the controlled expenses can generate dramatic cost reduction.

It pays to investigate the raw materials being purchased and the source. The company must indulge in the products of more than one supplier, to ensure the availability of reasonably priced and quality goods, whenever required. Most companies spend a lot of time focusing on improvements in sales only. Their most common indulgence is to negotiate with buyers for a greater unit price.

How Does Six Sigma Contribute To Cost Cutting

Although Six Sigma was never perceived as a cost-cutting tool, it nevertheless contributed to that end. Six Sigma went about cutting cost in unique ways in all aspects of business operation.

  1. First, the voice of the customer helps in defining not just the appropriate quality but also quantity, which cuts down on wastage such as over and under-utilization of capacity.
  2. Stabilization of process variation saves a lot on the material conversion which results as improved productivity and quality and reduced cost of reworking and rejection.
  3. In graduating from 3 or 4 Sigma to Six Sigma, the overall reduction in COPQ is tremendous taking into consideration the huge saving originating from almost no rejection.

Take for example the case of a hospital, which after implementing Six Sigma in its cardiology department, could effectively cut down the overall process time required for admission. This produced a double-edged advantage; one, the reduction of 45 minutes meant fewer labour costs and two, the department could accommodate more patients due to increased productivity.

The enterprise cost reduction concept ensures fundamental and sustainable improvement to the company. Six Sigma helps the enterprise and its employees equally and can be understood as a vision, a philosophy, a symbol, a metric, a goal and a profitable methodology.

A Closer Look at Six Sigma Green Belt Certification

The world of Six Sigma has grown and diversified in the years since its inception. Today, you’ll find various belt holders working at all levels in national and international businesses. What’s more, the widespread adoption of Six Sigma practices and strategies has opened up new worlds for employment. Businesses large and small need certified experts on staff. For most people, starting off with a Six Sigma Green Belt is the ideal option.

Why Green?

Why should you consider leaping straight into a Green Belt certification rather than starting off with white or yellow belt courses? There are several reasons for doing so.

  • White Belts – While white belt certification can be a good way to get your feet wet with Six Sigma concepts, it’s not really a means to an end in its own right. Most companies don’t hire white belts, and this certification is really geared more for those who might implement some aspects of it into their daily work duties but decide not to make a career of Six Sigma.
  • Yellow Belt – Yellow belt certification is really “basic training”. It’s a springboard to higher belts and isn’t usually sought after by employers (at least in new employees – some companies do mandate that their current staff obtain yellow belt certification).

As you can see, a Six Sigma Green Belt certification is an ideal option for those hoping to get in on the ground floor with this process improvement system and still have good job prospects available to them.

What Will You Learn with Green Belt Certification?

For those who haven’t looked into the courses available, you’ll find that the certification courses vary from one educator to another. However, a quality training provider will give you an in-depth foundation on the following:
• Project definition
• Selection process
• Deployment
• Process mapping
• Input prioritization
• Capability analysis
• Statistical process control
• Integration of lean
• Project planning and deliverables
• Hypothesis testing
• Variation trees and funnelling

These are only a few of the topics you will learn from a quality program.

Job Opportunities for Six Sigma Green Belt Certification Holders

You might be wondering just what types of careers you will be able to jump into with your certification. Actually, there are numerous different options within the various industries out there. Project engineers are usually green belt holders, but so are mid and upper-level project managers. Many business consultants also hold these certifications, as do clinical statisticians and mechanical engineers. The world is truly wide open for those who hold this type of certification.

Onward and Upward

Another reason to consider obtaining this certification is the fact that you can move up to black belt status with just one more course. It’s also a prerequisite for training providers that offer a Black Belt after their Green Belt programs. In some organizations, the green belt is part of a four-week black belt program.

With this certification, you can look forward to an immense number of career opportunities within virtually any industry on the planet. Every business and organization needs skilled Six Sigma personnel.


Lean Manufacturing Versus Six Sigma: Understanding Key Differences

Lean manufacturing and Six Sigma are prominent keywords in the lean procurement world. Understanding the differences and similarities between these two concepts is crucial in the comprehension of lean procurement and the benefits it can have for your company.

Lean manufacturing and Six Sigma philosophies were developed by Toyota and Motorola, respectively, in an effort to minimize weaknesses in the production process and maximize efficiency and profits. Since its inception, Six Sigma has become a catchphrase labelling the process by which companies look to improve themselves through lean efforts, however, by definition, Six Sigma is very different from its competitor.

The most significant difference between these two philosophies lies in what each concept aims to eliminate. While lean manufacturing looks to eliminate waste, Six Sigma principles look to eliminate imperfections. A company utilizing a lean manufacturing influenced modification plan looks to eradicate anything excess, which is labeled as waste. Six Sigma, however, focuses not on identifying and eliminating waste, but on identifying and eliminating imperfections in the final product.

Another difference lies in the fact that lean manufacturing efforts focus on inward efforts in the production and manufacturing process while Six Sigma efforts focus instead on customer wants and need and subsequently toward tailoring the product to meet those wants and needs. While lean looks at the process of production and minimizing the resources necessary in the production process, Six Sigma looks at the manufacturing process in regards to the final output, its lack of defects, and how it will rank in terms of customer satisfaction.

The ultimate goal of Six Sigma strategies is to improve the final product and thus customer satisfaction, while that of lean efforts is the saving of money, increasing company profits and passing on the savings to the customer in the form of price decreases.

Through these two strategies, whether used independently or conjointly, businesses can morph their production methods into more efficient, leaner processes. For a simpler breakdown of Lean Manufacturing Vs. Six Sigma philosophies, please see the following breakdown below:

A Basic Overview of the Differences:

Lean Manufacturing:
• Developed by Toyota
• Looks to eliminate “waste” or excess
• Focuses on internal efforts in the production and manufacturing process
• Takes a very deep look at the total manufacturing process
• Ultimate Goal- save money, increase company profits, and pass on the savings to the customer in the form of price decreases

Six Sigma:
• Developed by Motorola
• Looks to eliminate “imperfections” in final product/ service
• Focuses on customer wants and needs
• Only looks at manufacturing process in regards to final output
• Ultimate Goal- improve final product or service, and subsequently, customer satisfaction

Maximizing call centre resource utilization with Six Sigma

In the last few years, Six Sigma has achieved many new milestones, the most recent being its induction in the dynamic and fast-changing world of business process outsourcing. Six Sigma implementations in call centres and contact centres may be a relatively new phenomenon, but due to its unparalleled success, this trend is fast catching on and in the coming years, is expected to outdo conventional domains such as manufacturing.

How Does Six Sigma Help Call Centres?

  • Call centres, specially third party business enterprises that deal in outsourced services, operate on tight margins, making them perfect targets for Six Sigma implementation projects. Call centres that have implemented Six Sigma have been able to streamline their operations that mostly consist of managing inbound and outbound calls.
  • Streamlining call centre operations automatically results in better utilization of available resources, reduced operational costs and improved efficiencies, factors that are vital for the long-term success of call centre companies. Six Sigma also helps in streamlining the internal operations of call centres, which together make up a significant percentage of the overall operational costs.
  • By improving internal as well as external operations, Six Sigma makes way for enhanced customer care services and support, something that goes a long way in improving the call centre’s brand and corporate image. This in turn, automatically results in the better recognition of the call centre’s outsourcing services, thereby attracting new clients with every passing day.

A call centre that achieves such a reputation, then finds it easier to race ahead of its competitors, expand its operations, diversify and maximize profitability.

Other Benefits of Six Sigma

Six Sigma also has a positive effect on the morale of call centre employees who mostly operate in the highly stressful work environment. Using innovation and time-tested tools and techniques, Six Sigma helps in reducing the overall workload of call centre representatives, allowing them to offer improved services to customers. With less work to do, call centre employees also find it easier to learn new concepts and techniques related to their profession.

For example, in their spare time, call centre representatives can opt for online academic courses to augment their professional careers. They can also take special training sessions conducted by the call centre in order to augment their existing professional skills.

The fact that Six Sigma helps in maximizing call centre resource utilization is now common knowledge, something that is prompting more and more call centres to try Six Sigma implementations. Even before Six Sigma entered the domain of business process outsourcing services, the race to reach the top was always present, but with the introduction of Six Sigma, the so-called race has attained new dimensions and characteristics.

In the future, the only call centres that will emerge as winners will be those that make the best possible use of quality improvement systems and resource multipliers such as Six Sigma.



Who Needs to be Involved in Six Sigma Workouts? Everyone!

However, just like an individual might fail to achieve these objectives if he overlooks the vital components such as biceps, triceps, calf muscles, abdomen, and upper body, businesses too can fail to achieve the set goals and objectives if the vital components of Six Sigma workouts fail to make their respective contributions.

Here, we will take a look at some of the vital components of Six Sigma workouts and discuss their respective contributions.


The employees play an important role in Six Sigma workouts because they are the ones who best understand the existing processes. They are thus in a better position to provide the necessary inputs and feedbacks to the Six Sigma implementation team members and if needed, to the top management as well. Six Sigma workouts just cannot succeed without employee support and cooperation. Ultimately it is the employees that implement the changes as might have been prescribed by professionals such as Black Belts.

Project Sponsors

Project sponsors are often members from the senior management who shoulder the responsibility of identifying improvement opportunities that might exist in a given business process. They also share the responsibility to ensure that the Six Sigma workouts are carried out exactly as planned and that the stated goals and objectives are achieved within the specified time and costs.

Apart from these, they also act as a direct link between the top management and the implementation team members so as to expedite problem-solving and avoid resource crunch situations that often occur during Six Sigma workouts.

Six Sigma Professionals

It would not be wrong to classify Six Sigma professionals such as Black Belts and Master Black Belts as the most vital components of Six Sigma workouts because without their technical expertise, it would become literally impossible to think about Six Sigma implementations let alone actually going about doing that.

Six Sigma may have to do a lot with common sense and following a practical approach to problem-solving, but since there are still many technicalities to be dealt with, businesses just cannot think about starting the Six Sigma workouts all on their own.

The services of Six Sigma professionals do not come cheap and this is why many smaller businesses often fail to undertake Six Sigma workouts and avail of the associated benefits. However, since it’s quite certain that the long-term benefits of hiring the services of Six Sigma professional will far outweigh the current costs, businesses should try their best to make available the funds as might be required for using the services of Six Sigma professionals.

After analyzing the above factors, we can easily conclude that the benefits of Six Sigma workouts will accrue only to those businesses that know exactly how to make all these vital components work together like a well-oiled machine. As for the rest, it would not be wrong to say that they will have to do a lot more to realize the benefits of Six Sigma workouts.


Can a Lean Six Sigma Scorecard Be the Answer to Strategy Execution?

The Lean Six Sigma scorecard being proposed in this article has one major advantage over the Balance Scorecard (BSC) framework developed by Kaplan and Norton. The proposed scorecard enables the establishment of causality while the one developed by Norton and Kaplan is not guaranteed. Causality is critical in strategy execution. Without causality, it is nearly impossible to measure the impact of various strategic initiatives on a company’s overall goals; therefore, it would difficult to tell if an organization was headed in the right direction, similar to driving in the dark without the lights on.

Although the proposed Lean Six Sigma Balanced Scorecard uses the same theoretical framework as the one developed by Kaplan and Norton, there is a distinct difference in the execution of the framework versus that of Kaplan and Norton.

Here is the approach used in the execution of the proposed Lean Six Sigma Balanced Scorecard.

Implementation of the Lean Six Sigma Balanced Scorecard

Step 1 – Development of a Corporate Strategy Map and Scorecard

The Executive team along with a facilitator trained in the development of a Balanced Scorecard will define/develop the strategic objectives across the four perspectives outlined in the “original” Balanced Scorecard framework (Financial, Customer Service, Processes, and Learning and Growth).

One of the most effective ways is to teach executives how to develop a company strategy map by breaking them up into teams. The executives will then present the strategy map to their peers and follow by merging each of their strategy maps into a single one that everyone agrees on. This technique of “Learning by Doing” is particularly effective.

Once the company strategy map is developed, key performance Indicators and targets, which can be used to measure the overall effectiveness of its strategy highlighted in the corporate strategy map, will be developed.

Step 2 – Utilize the DMAIC framework to stabilize key processes

This step is where the proposed Lean Balanced Scorecard deviates from the original Balanced Scorecard. It is assumed that the organization will undertake a Lean Six Sigma project that will be used to i) identify some of the requirements to meet the objectives in the scorecard, and ii) stabilize any unstable processes.

As in any Lean Six Sigma engagement, the DMAIC (Define, Measure, Analyze, Analyze, Improve, Control) methodology is used. The Define phase of the project will be used to identify which processes will support the objectives in the strategy map developed in Step 1 and scope out the project.

Once the Define stage is complete, a project team along with a Lean Six Sigma (LSS) expert will go out and measure these processes to identify i) opportunities for improvement (primarily those that will support the objectives in the strategy map), and ii) root causes of any process instability.

Upon completion of the measurement phase, the project team and the LSS expert will analyze the results of the measurement. From this point, projects will be identified to meet the objectives in the corporate scorecard and stabilize the processes.

In the control phase of the DMAIC methodology, the project team and LSS expert will work with selected business units to develop their scorecard linked to the corporate scorecard. The improvement and stabilization projects will be implemented.

Step 3 – Implement a continuous improvement process and company-wide culture of continually improving

The project team works with the business units to develop a continuous improvement process that is aligned with their individual scorecards. Continuous improvement teams will monitor the scorecards and will launch performance initiatives to reverse the trend of the performance indicator within the scorecard when performance measures are not continuously meeting targets.

Step 4 – Establish causality

Once, the processes used to drive the objectives in the scorecard are stabilized, the company, as a whole, will start to measure the key performance indicators and targets within the scorecard. At this point, the company will start to establish the chain of causality across the various objectives within the scorecard to determine which strategies are effective and the drivers of those strategies. Causality will enable the company to truly determine which initiatives yield the highest Return on Investment (ROI).

This article outlined very briefly a proposed Balanced Lean Six Sigma scorecard. Though more detailed explanations are required, do you think the modifications we proposed would help overcome some of the limitations in the existing balanced scorecard?


Lean Six Sigma: the importance of speed vs schedule

In any organization, sticking to a schedule and a proper budget is of the essence. However, when it comes to quality improvement projects that are designed to improve those elements, it can often seem to throw them off track temporarily. Using Lean Six Sigma to accomplish goals and set various quality improvement projects into motion can accomplish both things at once. You can have the speed that you need for getting improvements made and get rid of wasted expenses and other processes that are hindering the profitability of an organization with one simple tool. Lean Six Sigma is a very useful process in many different industries and organizations around the world. Not only does it offer a chance for improved quality in products and services, but it does so in a quicker and more efficient manner.

Lean Six Sigma Training is by no means simple in and of itself. There is a lot to learn about the basic principles of Six Sigma, along with the various principles of Lean itself. When combined together, the problem-solving strategies of Six Sigma and the waste reduction and speed of Lean Processes can prove to be a powerful tool for any organization. However, understanding the difference between having a schedule and getting things done with speed is very important.

After all, speed is what can make or break a business. Customers want high-quality services, but they also want to enjoy the speedy delivery of those services and/or products. Having both is sometimes a complex task, but Lean Six Sigma points out that the speed a company has is directly tied to their success. Set up a Six Sigma Process that will help your organization determine where they can increase speed without disrupting the entire schedule of the process as a whole. Figure out which steps can be removed without effect and which ones can be improved so that they run more fluidly and efficiently.

Speed has a very bad reputation in the business world because it is often associated with being hasty and rushed. Any business knows that rushing is directly tied to poor quality, which is why so many businesses value schedule and quality over speed. However, with the right Lean Six Sigma applications, your organization can easily achieve both. Don’t compress schedules or try to squeeze too much into the one-time frame. Instead, focus on streamlining processes and making the flow smoother and more effective. This is a very significant contradiction to understand for anyone who is involved in an organization that needs a boost. Speed can be achieved without affecting the schedules, as long as the proper Lean Six Sigma training is utilized to result in a positive outcome.


How can you reduce the Product cost?

The aim of a company or a business is to satisfy customers requirements effectively. This requires you to produce good quality products and make it available to customers at a low price. Six Sigma is a business methodology that will greatly help you in making this possible. It was created in 1986 by Motorola. It comprises of a set of tools and templates which help businesses improve manufacturing processes. It makes these processes more efficient by improving product quality and decreasing cost. It studies the available data from previous processes measures the performance. This data is used to create processes that are better and effective. The reduction in the cost of a commodity can be brought about primarily by reducing the production cost. This is done by a reduction in wastage, avoiding defects, saving time consumption and reducing human effort as much as possible.

Data-Driven Approach:

Six Sigma is a data-driven approach and hence it relies on the data available to design the processes. This causes a reduction in production cost by ensuring that the processes designed are standardized, not subject to variation and consistent. The process of doing this is referred to as DMAIC. It stands for Define, Measure, Analyze, Improve and Control. Let us look at each of these phases.

1. Define: Here a project is identified which can be performed by the company and will contribute to your growth. Then it is prioritized with respect to its requirement and processes involved.
2. Measure: The current performance levels are measured to know the current stance of the company and the team. The processes are studied carefully to identify appropriate metrics.
3. Analyze: Variables are identified at this phase and the possible cause of these variables. You also identify the inputs required to various processes.
4. Improve: New ideas are generated, the best among these are identified. The possible solutions to problems are evaluated and a plan is constructed to implement them.
5. Control: This is the most important phase. All the methods and documents are drawn up which records the changes performed so that it can be monitored and continued.

DMAIC is a simple, easy to follow, yet efficient method that acts as a guideline for reducing production costs. It is very important for people trying to implement these principles to have a very good understanding of Six Sigma principles and processes. In addition, the entire team or organization should be involved in working towards a common goal. A culture of continuous improvement and betterment should be set up which will motivate all employees to improve both as a team and as an individual. It is not just the senior managers or department heads who work towards these goals, but the entire team as a unified body. Each individuals ideas, contributions and insights are recognized. With these techniques in place, the product cost can be greatly reduced without compromising on product quality.

Assuring the 100% efficiency: Six Sigma

The various approaches and methodologies prescribed by Six Sigma have proven itself as far as efficiency and quality management is concerned. The standards of quality had been greatly improved by implementing a quality management system that is greatly methodical and consistent. It has been applied across various industries such as retail, healthcare, software, pharmaceuticals etc. the products and services are tested to ensure that the desired standards as well as the expectations of the customer, is met. Six Sigma, therefore, provides great improvement in terms of profit and cost reduction.

It is an approach that ensures quality in production by improving each individual process. When we refer to quality here, we are talking about ensuring that the expectations of the customer are met and the requirements of the client are satisfied. We need to assure the customer that the product is of the best possible quality available in the market. For this leaders or managers are appointed who will ensure that the products are satisfactory and meet the necessary standards. His responsibilities will include:

1. Take care of the quality management processes and ensure that the quality of all products and services is checked.
2. Maintain high standards and ensure that these conditions are met.
3. Improve the standards that have already been set in order to facilitate continuous improvement
4. Review sales statistics and identify a drop in sales due to insufficient quality of products.
5. Ensure that the quality standards are understood by all employees and they are motivated to work towards the common goal.

The quality assessment and management techniques and methodologies keep changing with time. Therefore we must stay updated on recent developments and trends. We must be aware of new products being launched, attend seminars and workshops and spread the knowledge.With respect to quality, there are 2 terms we need to be aware of:Quality Control and Quality Assurance

Quality Control

It is a system that comprises of processes and activities that determine the overall quality of products. It checks the accuracy and uncertainties involved and is often a regular process. It ensures data correctness, identifies errors and corrects them.

Quality Assurance

This is a process that is executed to make sure that the expectations of a customer are met. The requirements of a customer should be satisfied for a product to be considered as complete. It prevents defects and works towards perfection. It, therefore, brings about an overall improvement in quality.


All businesses are working towards perfection. The better your results, the more customers you get and in turn more profit. Therefore in the competitive market, businesses are working towards achieving Zero Defect. Quality Assurance and efficiency play a huge role in businesses and Six Sigma can help you get there. With such modern business methodologies and strategies, you can place your company at the head of the race and ensure success.

Zero Defect in Quality Management: Possible with Six Sigma

The main aim of Six Sigma is to reduce defects produced in various business processes and thereby improving the quality of the results obtained. Thus companies that follow Six Sigma methodologies work towards designing a quality management system that produces Zero Defects. Many people feel that it is impossible to attain this goal of producing Zero defects. But when we say “Zero Defects” it does not mean achieving complete perfection. It refers to a state where wastes are eliminated and the number of defects produced is reduced as much as possible. This enables companies to achieve the best possible quality to its customers.

What Do We Mean by Zero Defects?

If we consider the term Zero Defects literally, we realize that it is technically not possible. Most projects that involve complex processing and are quite a large scale in terms of output cannot possibly be able to ensure not to produce a single defect. According to Six Sigma a target is set as to how many defects are permissible. The ideal target or the “Zero Defect” is defined as 3.4 defects per million opportunities. Six Sigma also prescribes a process of continuous improvement in order to improve quality slowly and steadily.

Zero Defects Implementation:

In order to achieve this concept of Zero Defect, we need to reduce wastage in all existing projects. This refers to eliminating all unproductive tools, employees, processes etc. Then a process of improvement is set up in place of those eliminated. This greatly reduces costs and time consumed.

This Zero Defect theory focuses on 4 aspects of projects:

1. Quality refers to requirements being met. Therefore Zero defect, in turn, implies that all the requirements of the customer are being met.
2. Quality is integrated into business processes from the starting. Therefore you need not solve problems at a later stage.
3. Financial terms are used to measure quality. It takes into account waste, revenue, and productivity.
4. Standards are set as close to perfection as possible and performance is judged based on this.

Pros of Zero defect:

As discussed earlier, Zero Defect helps get rid of wastes and greatly reduce cost. It helps us build products to customer satisfaction. This improves customer loyalty and helps you build a customer base and a better standing in the market. It invariably brings better profit and more sales.

Cons of Zero defect:

There is a possibility that the employees and leaders are striving towards a perfect process that is not realistic. The team goal, therefore, can never be met. This can negatively impact the performance and put enormous strain on employees. It adversely impacts their morale and job satisfaction. Another disadvantage that is overlooked is that the concept of Zero defect is variable from organization to organization. Therefore in a supply chain with other manufacturers, there may be negative impacts.
Considering all the Pros and Cons we may conclude that with proper planning and implementation along with the sustained continuous improvement of processes, it is possible to achieve great success by working towards Zero Defect.