Effects of FIFA World Cup on the Economy
The FIFA World Cup is an international sporting event. This event is held every four years. However, the host country changes every time. Countries have to bid against each other in order to win the rights to host the next World Cup. Many economists have questioned this practice. However, none have been able to find […]
Are Multinational Companies a Boon or a Bane?
The economic power that many multinational companies wield is commendable, to say the least. Companies like Amazon and Apple have a valuation of over a trillion dollars. This is more than the GDP of most countries! Hence, in purely financial terms, multinational companies do wield tremendous influence on the day to day operations of many […]
Global Economy – Meaning and its Salient Aspects
The other modules discuss the phenomenon of globalization and the ongoing global economic crisis among other topics. This module is intended to discuss the salient aspects of the global economy including the structural features and the way in which several competing trends and factors influence the workings of the global economy. For instance, the global […]
How Genuine is China’s Growth Story?
The Chinese economy has received a lot of positive press in the past two decades. The rapid economic growth that China has registered is being touted as an economic miracle. It is incredible how China rose from being a desolate third world country to being the second largest economy in the world. However, the Chinese […]
The Instex Payment System
Leaders all over the world are upset with America’s hegemonic behaviour. In the past two years, Trump’s policies have caused uncalled for damage to the economies of many countries. This has been done by unnecessary trade wars and sanctions. Iran is one such country which is facing American sanctions. The opinion of the European leaders […]
Six Sigma is not a mere methodology or a quality tool. It is a philosophy i.e. a systematic way of thinking to solve quality problems. Six sigma involves use of statistics to convert raw data into facts about how the processes of the organization are being run. The thrust is on creating processes which can replicate the same results over and over again with near 100% predictability.
Experts in the field of quality have been fighting variation for decades. It is this variation that can be attributed towards creating inconsistent processes. These inconsistent processes lead to different experiences for different customers. It may even lead to different experiences for the same customer at different times.
Thus variation has a significant monetary impact on the working of the organization. This is because it is the root cause of process deficiencies and dissatisfied customers. It is for this reason that top management of various organizations of the world have systematically tried to remove variation from their processes.
Variability is inherent in every process. It a part and parcel of business, however it needs to be managed with an iron fist. This is because variability in every business process tends to cumulate and the end result is mediocre performance. Consider the case of a hotel. There are many processes in a hotel like checking in, ordering room service, housekeeping and check out.
Here is how minor defects in each of these processes are capable of leaving customers thoroughly dissatisfied and enraged. Let’s assume that each of these processes has a 97% efficiency. Therefore out of a 100 cases, only 3 defects will be present. Here is what happens:
Total Number of defects for the hotel: 0.97 × 0.97 × 0.97 × 0.97 = 0.8852 = 88.52%
Hence even though each of the processes may be doing pretty well if you look at it from an individual standpoint, the organization is doing badly. Any business where roughly 12% of the customers will have bad experiences predictably cannot be expected to survive for long.
The answer to this challenge that variation poses can be found only in Six Sigma. Six Sigma achieves for 99.99966% accuracy meaning 3.4 defects per million.
The Six Sigma philosophy stems from the belief that statistics and numerical facts can be used to control the quality of manufacturing processes and service organizations.
Six Sigma processes are completely driven from the point of view of the customer. They start by identifying what is important to the customer i.e the critical to quality metrics. The next step is to identify the gaps in the process that are the cause of not being able to meet the CTQ’s and as a result causing immense customer dissatisfaction.
The usage of Six Sigma has grown by leaps and bounds. Today almost every major organization in the world is following Six Sigma initiatives and making their processes more controlled and more predictable.
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The Cost of Poorly Performing Processes – Need for Six Sigma
February 12, 2025
