What is Stratification ?
Stratification is used mostly in the define stage of a six sigma project. When to use the stratification technique is still on the decision of the people involved in the project. However fairly good cues are given by the fact that the spread of the data is too large. If the points are scattered all […]
Doing Business in India
The recent report by the World Bank about doing business in India places the country at 130 among the nearly 180 countries surveyed. India has risen by four places as compared to 2015 and other parameters in the index have improved. The change of government in 2014 which ushered in a pro business and pro-reform […]
Socialism and Prosperity in the Nordic Countries
The United States Democratic Party has been praising the economic arrangement in Nordic nations for a very long time. Right from Bill Clinton to President Obama, they were all fans of the so-called Nordic socialism and wanted to introduce the model in America as well. The Democratic primaries were riddled with both Hillary Clinton as […]
Job Analysis and Human Resource Planning
A Job can be described as a group of tasks which is assigned to the individual employees for ensuring achievement of the organizational goals. When this job is analyzed in terms of determination of the skills, duties and knowledge required for completion of tasks, it is regarded as Job analysis. In the words of Geisler […]
The Problems with Protectionism
The world seems to have turned on its head. Countries like the United States and the United Kingdom were earlier frontrunners in the race for globalization. They were increasingly pressurizing developing countries to open their markets. They thought this would allow them to have increased sales for their products. They never thought the reverse could […]
Prior to the introduction of Six Sigma philosophy, there was a debate as to whether Six Sigma is a goal worth pursuing. Many experts in the area of quality believed that wastage was a way of life. Trying to eliminate wastage would cause more wastage. They believed that it was possible to eliminate waste but the endeavour would cost too much and the benefits would not be worthwhile. Hence the then current state of affairs, according to them was the best state of affairs. However as Juran, who was to become a breakthrough quality leader later pointed out the costs of poorly performing processes (COPPP), the argument shifted heavily in favour of Six Sigma way of life.
Here is a representation of the typical costs that a poorly performing process incurs:
Appraisal costs are costs incurred to find out deficiencies before external customers are affected by them. These do not include routine quality checks that need to be carried, but to the excessive quality checks that lead in the wastage of resources. Examples of such costs would be:
Double checking our activities to ensure that there are no errors may be a good thing to do. However, Juran was of the opinion that it leads to considerable wastage of resources. Juran believed that there should be a mechanism which alerts in case of an error. Hence instead of double checking everything, resources will be used to make good the errors pointed out by the system. The idea was to develop a continuous measurement system and make quality checks process driven rather than people driven.
Internal process deficiency costs are the ones that are incurred to repair, replace or discard effective work. They are called internal deficiency costs because the customer will not know what has happened. However, more often than not, as one of these costs happen, the delivery time is also delayed. As a result customer service levels also take a beating. Examples of such costs include:
External process deficiency costs are the costs that are incurred on failures that happen when the product or services is being delivered to the final customer. These are the mistakes that occur in front of everyone and has a huge impact on the public opinion of the firm. Usually the firm has to spend an additional amount to regain the customers lost confidence. Examples of such costs include:
After Jurans analysis was well accepted by the management world at that time, Six Sigma became a rage. The costs of poorly performing processes were too high if all the hidden costs would be considered and hence organizations worldwide began implementing Six Sigma to become more cost effective and hence more competitive.
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