What the heck is Six Sigma?
If you are reading this you have probably heard the terms Six Sigma. So what is it? Six Sigma is a process methodology that has two main end goals:
1) to reduce cost and
2) increase customer satisfaction
This methodology involves various strategies and tools that are based on measurements, targets and metrics. Usually teams and project managers at various organizations implement these strategies to existing or new processes, however they can also be used at start-ups and for personal projects as well.
Six Sigma allows us to:
a) identify problems
b) validate our assumptions about those problems
c) brainstorm solutions
d) come up with strategies and plans for implementing solutions
Using tools (eg. statistical analysis) and strategies (eg. process mapping) to solve problems, we are able to visualize and predict outcomes with high accuracy and also understand the cost implications for these problems.
Let’s get a little technical
Six Sigma or 6σ is a statistical representation of a perfect process. What is a perfect process? It is a process where there are only 3.4 defects per million opportunities. Six Sigma can be calculated using the following formula:
A yield of 99.99966% is equal to Six Sigma (6σ) or 3.4 defects per million opportunities.
Let’s visualize this with an example. Assume that you run a small startup and you are in the business of shipping custom coffee mugs. Currently you ship around 10,000 mugs a week. However you have noticed that on average you are getting around 50 complaints from customers every week with respect to defective packaging or product.
Using the equation above that equals: {(10,000–50)/10,000} * 100 = 99.5% yield. This equals around 4 sigma, 4σ (see table below)
In order to get to the perfect process (6σ) the aim for your startup is to come up with process improvements to reduce the defects closer to 0.034 defects per week in order to achieve 99.99966% yield (6σ).
{(10,000 – 0.034) / 10,000} * 100 = 99.99966%
Now obviously 0.034 defects is impossible in this case however the goal of six sigma is to ensure continuous improvement of your processes to get as close as possible to the target defect level. When you get closer to that level you will for sure notice improvements in customer satisfaction which is one of the main goals of Six Sigma.
