Reasons for Office/Workplace Politics
Politics arises when employees try to gain something which is beyond their control by tarnishing their colleague’s reputation. It has been observed that employees who are indulged in office politics pay less attention to their work. Individuals play politics at the workplace when they tend to misuse their power simply to come in the limelight […]
Why is India Following a Loose Monetary Policy?
Ever since the great recession ended in 2009, the entire world has been following loose expansionist monetary policies. However, after a decade of such policies, most countries in the world have now started resorting to monetary tightening. The Federal Reserve has raised interest rates four consecutive times in the past four years. The Reserve Bank […]
Asset Management and Budgetary Control
One of the major financial functions is the management of fixed assets. Asset management module primarily maintains asset register, which provides information about asset related transactions. Asset Management thus helps in keeping track of fixed assets, handling fixed asset depreciation for fiscal reporting and revaluation of asset. Budgetary control (BC) module is another important finance […]
How Organizations Should Deal with Sexual Harassment in the Present Times
In recent months, there have been several instances of women across the economic and social groups coming forward with complaints and retelling of the cases of sexual harassment and gender discrimination against authority figures. For instance, Harvey Weinstein, the Hollywood Director and Scriptwriter have found himself in the center of a raging storm where several […]
Train the Trainers – Need for Training the Trainers
Train the trainer refers to upgrading existing knowledge and honing skills of individuals who further train people. Remember, there is no end to learning. No one is perfect and there is always a scope for improvement. Training people is no cake walk and you really need to be absolutely prepared to handle even the minutest […]
The final step in the metrics is to measure the financial benefits that are accruing to the firm because of the Six Sigma project being undertaken. This is important and is also an area of concern. Most criticisms of Six Sigma say that the benefits that are presented in such analysis are incorrect and actually do not accrue to the firm. They claim that the true picture of the projects is often different.
However, to get the resources sanctioned from the finance department, it is essential that the Net Present Value (NPV) of the project be presented to them. The most common category of gains that accrue to an organization because of six sigma projects is as follows:
Increased Revenue: The most obvious benefits of the six sigma project would be an increase in revenue. This could be driven by many factors.
With more efficient processes, the firm may be able to produce goods more cheaply than others and hence sell more increasing revenues. Or with the help of six sigma projects, the firm could increase the quality of its products increasing customer loyalty and adding to revenues.
Avoided Costs: The firm can avoid many costs in the form of regulatory penalties, expansion costs etc, if its processes are efficient.
Let’s assume that a factory manufactures 100 cars. If by efficiently redesigning the processes, the factory can now manufacture 120 cars, then the fixed costs of manufacturing those 20 cars have been avoided. Governments sometimes penalise inefficient behaviour in companies.
For instance if the company does not pay its taxes on time, it has to pay penalties. Six sigma projects can make these processes efficient and avoid such costs for the management.
Reduced Costs: The operational costs of the firm can be drastically reduced with the help of six sigma projects. With the help of Six Sigma, Motorola was able to offer pagers which were much better in features than the competitors at a price which was much less than that of the competitors.
Non-Monetary Benefits: There are several non-monetary benefits that accrue to the firms as well. In many cases these translate into indirect monetary benefits. However since they cannot be precisely measured they must be called non-monetary. Common examples of such benefits are as follows:
Critics of six sigma say that analysts use fuzzy numbers and double counting to increase the NPV of the projects in question. However there is no doubt about the fact that efficiency has never harmed an organization.
Undertaking six sigma projects and completing them efficiently will only make the organization better off.
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What the Current Wave of Protectionism and Populism mean for the Future of Globalization and Free Trade
February 12, 2025
