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1.3 Benefits of Six Sigma Management

There are two types of benefits from Six Sigma management: benefits to the organization and benefits to stakeholders. Benefits to an organization are gained through the continuous reduction of variation and, where applicable, the centering of processes on their desired (nominal) levels. The benefits are as follows:

  • Improved process flows
  • Reduced total defects
  • Improved communication (provides a common language)
  • Reduced cycle times
  • Enhanced knowledge (and enhanced ability to manage that knowledge)
  • Higher levels of customer and employee satisfaction
  • Increased productivity
  • Decreased work-in-progress (WIP)
  • Decreased inventory
  • Improved capacity and output
  • Increased quality and reliability
  • Decreased unit costs
  • Increased price flexibility
  • Better designs
  • Decreased time to market
  • Faster delivery time
  • Increased ability to convert improvements and innovations into hard currency

In essence, Six Sigma is a roadmap for an enterprise to become more effective and efficient. An "effective" enterprise is one that does the "right" things "right" the first time, and an "efficient" enterprise is one that uses minimum resources to accomplish the "right" thing. The "right" thing is judged by the perception of customers and the marketplace. Simply put, the Six Sigma enterprise focuses on providing a value-added experience to current and future customers through its processes, products, and services. Processes that do not add value to the customer’s experience are candidates for elimination by management. A value-added process is a process that the customer is willing to pay for, does not involve rework or fixes, is done "right" the first time, and is not wasteful to the enterprise.

Louis Schultz, President of Process Management International, a consulting firm in Minneapolis, Minnesota, states that:

"The perception and performance of an enterprise determines its value. Six Sigma management focuses on driving effective and efficient performance across the total enterprise to increase the perception of the marketplace of its ability to deliver value-added processes, products, and services. The perception of the marketplace of the value of an enterprise is indirectly measured by market share, shareholder value, and the willingness of customers to recommend these processes, products, and services to other potential customers."

Benefits to stakeholders are a by-product of the organizational benefits. The benefits to stakeholders include the following:

  • Shareholders receive more profit due to decreased costs and increased revenues.
  • Customers are delighted with products and services.
  • Employees experience higher morale and more satisfaction from joy in work.
  • Suppliers enjoy a secure source of business.
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