Types of Return Policies
As mentioned in previous articles, return policies can be very important from a consumer’s point of view. There have been several surveys conducted which show that most customers (especially online customers) do take return policies into account before they make a decision to shop with a particular retailer. Retailers which have stricter return policies have […]
Why We Should Not Let the Present Global Crisis Go Waste and Make Positive Changes
Never Let a Serious Crisis Go Waste The Chinese term for crisis is a combination of danger and opportunity, which means that a crisis is a good time for opportunity as well. In other words, whenever we are confronted by a crisis whether it is personal or collective, we have the chance to make serious […]
Export Marketing Channels
For any Business Organization which is eyeing a foreign market as a part of its Exports strategy, getting its Marketing and Supply chain in place forms a critical part of the initial process which will determine his initial foray into the markets. While doing business in foreign markets is very lucrative, the initial cost of […]
How to Invest In Commodities Markets
There is more than one entry route if one wants to gain an exposure in the commodities market. Positions can be built via many alternate routes. In this article we will look at some of these routes as well as their pros and cons. Physical Purchase Physically purchasing the commodities is the most direct and […]
Goldman Sachs and the 1MDB Scandal
The 1MDB scandal is a scandal of epic proportions that was uncovered in Malaysia almost five years ago. This scandal has led to a lot of consequences in Malaysia. For instance, this was the main reason behind the sudden downfall of the previous Malaysian Prime Minister Najib Razak’s government. The main accused, Jho Low, who […]
Sigma or standard deviation is a statistical measure of dispersion in data. It is a measure which uses the characteristic of past data to make judgements about how the process will perform in the future. If a given set of data has normal probability distribution then the number of defects that will occur in the process over a period of time can be known depending upon the sigma level of the process.
The sigma (standard deviation) is multiplied with the numbers 1, 2, 3 etc to come up with a range. For example lets assume that the average of a data set is 10, while the sigma is 2. Hence 1 sigma will include all the data points between 10 +/-2 i.e. between 8 and 12. A 2 sigma measure would include 10+/-2(2) i.e. all data points between 6 and 14. So on and so forth.
However, it is a known fact that in a normal distribution the points tend to be around the mean. Therefore all the points will be closer to the average. Hence as one goes to farther and farther sigma levels the additional gains in terms of productivity are less.
To be a six sigma organization, the processes of an organization must be able to support this kind of efficiency sustainably. Building such robust processes requires a lot of intelligence and effort.
| Sigma Level | Defects/Million | Percentage Defects |
| 1 | 691462 | 69% |
| 2 | 308538 | 31% |
| 3 | 66807 | 6.7% |
| 4 | 6210 | 0.62% |
| 5 | 233 | 0.023% |
| 6 | 3.4 | 0.00034% |
| 7 | 0.019 | 0.0000019% |
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