The Cost of Poorly Performing Processes – Need for Six Sigma
February 12, 2025
The International Monetary Fund (IMF) is often in the news. Every now and then some countries approach the IMF when they need funding to save their failing economies. Almost every educated person on earth has heard about the IMF. Also, everybody thinks that the IMF is a global institution with almost unlimited access to money. […]
Disaster Recovery and Business Continuity concepts are more relevant to IT and technology companies as well as the service industry that is dependent upon technology as their backbone than any other industry. The reason being that IT systems, network, hardware as well as software and communication systems etc are highly sensitive and vulnerable and hence […]
To survive and grow your business in the current times, you have got to learn the ropes of business once again. If you look at the market, you will see a lot of brands and organizations that were in the fore front in the last few decades no longer exist. The leadership in the market […]
Brazil is the most expensive country to live in Latin America. The real problem is that Brazil has become more expensive than most countries in Europe and maybe it is expensive when compared to America as well. The real problem is that people in these developed countries make three times the income of an average […]
Loose or Tight Monetary Policies ? The debate over whether central banks around the world must pursue loose monetary policies or tight monetary policies has become sharp in the aftermath of the global financial crisis. Loose monetary policy refers to the practice of central banks keeping interest rates low, stimulating the economy as banks would […]
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% |
Your email address will not be published. Required fields are marked *