Indias Angel Tax
Obtaining funding for a startup is extremely difficult. It is said that startups receive money only from friends, fools, and family. However, there is another class of investors which provide money to these organizations. They invest in companies which are at very early stages of their product development. They belong to the same ecosystem as […]
Inventory Migration Scope
Inventory Migration is a mammoth project exercise involving internal teams as well as many external agencies. Detailed planning, process, simulation, and training are the basis to ensure successful inventory migration exercise. Project Teams would consist of teams from all functional departments namely finance, legal /compliance, inventory planners, IT, procurement, marketing, order fulfillment and logistics & […]
Government Spending vs. Government Taxation
The state of the American economy is deteriorating at a rapid pace. This is large because of the indiscriminate spending being undertaken by the American government. In order to understand the true scale of this spending, let’s have a look at some numbers. In 1987, the entire budget controlled by the United States government amounted […]
What Six Sigma is Not ? – Fallacies about Six Sigma
Six Sigma has really become a management buzzword. A lot of people use it in very different contexts. As a result a variety of meanings have been conjured up for the very simple six sigma process. To simplify matters and to ensure that the readers have an accurate understanding of what the Six Sigma process […]
Information System for Training and Development
Introduction A successful organization is built on satisfied and trained employees. They are the company’s greatest assets. Employee development is defined as formal education, on-the-job training, previous job experience, personality mapping, and improvement in the current skill sets as to prepare the employee for future. A trained and developed staff will contribute to productivity increase, […]
Six Sigma Project initiatives help the organization in a wide variety of ways and at very different levels. This article describes the immediate operational benefits that an organization derives as the result of implementing a Six Sigma project.
Six-Sigma efficiency is impossible to achieve if the mode of production used by the organization is craft production. To be efficient enough to run processes that have less than 3.4 defects per million, organizations need to be systems dependant. Thus Six Sigma mind set helps transform a people driven organization into a process driven one!
Six Sigma results in massive cost savings to the organization involved. These cost savings are highlighted by the fact that after a Six Sigma project any organization has considerably less requirement for labour hours. Also the requirement of skilled labourers is also reduced. Hence, both these factors combined have an effect of drastically reducing the labour bill of the organization.
Six Sigma projects realise a large amount of their financial value from their ability to eliminate or at least reduce wastage. Since the process is critically analysed for costs and corresponding value addition, measures are taken to eliminate wastage to a large extent.
An ancillary benefit of Six Sigma projects is that it creates a system which is much more efficient than the earlier one. Hence the organization can implement systems like Just In Time Inventory practices and cut still more costs.
Organizations are plagued with defective processes which result in the manufacturing of defective products. Each defect has costs attached. The costs include material, time, overheads and loss of reputation for the firm. Implementing Six Sigma projects often pays for itself in the long run by providing the financial benefits of near zero defects to the firm that implements it.
Customers do not like unreliable products or organizations. This can be verified by the fact that many companies that have implemented Six Sigma have not only found their costs reduced but their market share increased considerably. Hence, Six Sigma is also capable of positively impacting the marketing of the firm.
All of the sources mentioned above can be seen as the revenue model of the Six Sigma project. In the financial evaluation of a project, the revenue (cost reduction) from various sources must be considered before deciding whether the project is worth the effort or not. The idea is to find scenarios that the firm will be in with the project and without it.
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The Cost of Poorly Performing Processes – Need for Six Sigma
February 12, 2025
