| Just how did six sigma manage to gain a reputation as | | | | tool (good quality equals more money). However, this is |
| a cost cutting tool? After all, the process was meant | | | | far from the truth. |
| to eliminate defects, not increase the bottom line. | | | | A rational approach used by black belts and master |
| As it turns out, however, the two goals are | | | | black belts means that cost saving efforts are an |
| complementary. In the first place, six sigma places an | | | | integral part of six sigma implementation. |
| emphasis on the voice of the customer. The customer | | | | So how does an implementation team approach the |
| determines not just quality but quantity as well; knowing | | | | issue of cost cutting? Let's take a look below.o The |
| what the demands are will save money in terms of | | | | team takes a look at calculated implementation of the |
| over and under utilization of capacity. | | | | program, aimed at the market as well as safer cost |
| No rejection means much less costs, so graduating | | | | control.o Risk management becomes better as |
| from 3 or 4 to Six sigma means huge corporate | | | | factors which contribute to risk are identified early on |
| savings. In addition, stabilizing the process variation | | | | the in process and are mitigated.o There will be a |
| saves money in terms of material conversion, which in | | | | higher yield in the project portfolios as resource use is |
| turn leads to improved productivity. | | | | optimized through the pursuit of low intensity risk/gain |
| Let's use our example of a hospital once again. Once | | | | combination's. |
| six sigma has been implemented in a cardio | | | | The big problem with Six Sigma in terms of cost |
| department, process times should be cut down | | | | cutting occurs when one looks at the increased |
| effectively. | | | | disposition of companies to move operations off shore. |
| The cut in time means less costs incurred both in labor | | | | Developing countries have a market that is determined |
| and an increased capacity for more patients during the | | | | solely by the low costs of labor, a fact which many |
| day. In effect, the hospital is doubling its cardio | | | | companies find appealing. Big corporations can |
| department income and then doubling it again. | | | | significantly improve their ROI as labor costs are not |
| Six sigma is often mistaken as a purely quality control | | | | nearly as high as those in developed countries. |
| process, and therefore miscast as a high expenditure | | | | |