How Six Sigma Helps To Cut Costs
Just about every industry is using some type of quality improvement program to help them in controlling waste and having an organization that is productive. Six Sigma is one of the most popular programs out there. Developed by Motorola over 20 years ago, Six Sigma has been able to save companies billions of dollars through the detection and elimination of wastes. With Six Sigma you are able to have control over the manufacturing process and many other areas of your business where you may be simply throwing money away.
When you combine Six Sigma with lean manufacturing, you are able to come up with a system that can assist in cutting wastes and really helping you to have control over your company. With Six Sigma you can easily find ways to provide for the employees and for the customers as well. Employees will be happier as they have the necessary tools and equipment to do their jobs. Customers are happier as they have the products they want quicker and there are fewer issues related to the quality of the products. The goal with Six Sigma is to have an error ratio of 3.4 for every 1 million opportunities! This is an astonishing figure when you really step back to see just how many people you have working on your products and just how many machines are producing them. Getting the defect ratio to this small amount is a great goal for any company and it will be able to save you a ton of money!
There are many ways that Six Sigma is able to help in cutting costs for the company. Some of the ways that you have cost-cutting help include the following:
1. Reducing lead time. Wasted time is huge! Spending too much time setting up the machinery really does slow down the overall production. You also have issues with employees that have to wait on the machine and their co-workers. Essential you end up paying people just to stand around and this can become pretty frustrating! It is helpful to look into Six Sigma to eliminate this waste from your company.
2. Reducing wasted material. As you focus on changing the development of the products and other things, you are less likely to end up having materials that are just wasted. You need to look into recycling the extra materials so you aren't wasting money and so you have something to do with all of them. It is also helpful to consider using Six Sigma to retool the amount of raw goods that are needed in the first place.
3. Process stabilization. This means that you have rejection and rework set in place so that you are having results with the process. You will get rid of the things that are not value-adding to the company.
4. Labor cost reduction. When you streamline, you can reduce labor costs as you will not need as many employees watching over one area. You can shift these people to new areas as the company starts to increase production so you don't need to cut jobs.
When turning to Six Sigma it is important to remember the planning phase. You cannot just jump right into this program and expect it to work. You need to actually take time to work on it and to make sure that you are using the right type of planning and leader to help you pitch it to your staff. The mindset change is the biggest challenge. People are always naturally resistant to change and it can be quite difficult and frustrating to deal with as you want to really get people to believe in Six Sigma and how it can benefit the company for many years to come.