Approach to Exports and International Marketing Business Model
Today every individual entrepreneur owned businesses as well as Corporates have changed the way they look at their vision and business planning. Companies how ever big or small are no longer operating in domestic markets alone, for they have at their disposal the entire global market which is just waiting to be captured. The globalization […]
The Ranbaxy Fiasco
The Indian pharmaceutical market has been booming for several years. India has the largest number of pharmaceutical manufacturers which supply to the United States. Since the United States is the biggest pharmaceutical market in the world, several Indian manufacturing firms have been able to achieve rapid growth within a very short span of time. Ranbaxy […]
Creating a SIPOC Chart
The SIPOC Chart, being one of the fundamental documents of any process improvement project must be developed in such a manner that it is easy to understand. It must also be coherent with the logic inbuilt in the process. There is a method which has been described to ensure the proper development of the SIPOC […]
Business Process Improvement – A Perspective
Development of Global Business Organizations, Multi National Corporations and the Corporate has always found a lot of academicians as well as the think tanks and Management Experts taking interest in analyzing the past, the present trends and prophesying the future trends. The study of growth of trade, the industries and the Organizations and the various […]
Logistics Operations in Supply Chain Network
Logistics has aided and contributed to enabling global trade. Third Party Logistics Service Providers both at global levels and local levels form major partners to manage and offer Supply Chain services and the second major factor being the Internet and IT technology that helps manage information and data ahead of or along with flow of […]
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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