How to save money by using Six Sigma
Six Sigma is one of the major cost savings programs that are being implemented, by many different manufacturers. The Six Sigma method promotes incorporating a method of operation, which will lower costs by reducing waste. Through the use of Six Sigma, everyone involved in the process is a winner. The manufacturer saves money, and then can produce a higher quality product. The customer is happier because he receives a higher quality product on a consistent basis, and often times the savings in costs is passed down, from the manufacturer to the consumer. The cost savings of using Six Sigma are real and are definitely attainable by any company willing to develop a Six Sigma method that is specifically tailored, to meet specific company needs, and to address existing challenges.
The Six Sigma method is focused mainly on reducing variation, which means decreasing the resulting loss of resources that comes with inconsistencies. The concept of saving money by using Six Sigma to eliminate waste is fairly simple. Identifying waste in its many forms can be a challenge, yet through using Six Sigma, there are numerous ways that you can save money, by using what resources you have more wisely. Here is what you need to know about how to save money by using Six Sigma-
- Material waste-This is often the most obvious and easily quantifiable waste. The reality is that when you have materials wastes, you are throwing money in the trash. When a product has a defect, you have the option of simply throwing away the defective product, and starting the manufacturing process over, or to try to repair the defect, by replacing or repairing parts. Regardless of how you choose to fix the problem, a defect costs money for materials, time, energy, etc. The extra costs that you incur, because of having to find some way to account for defective products, means that you make less as a business, and have to ask your consumers to pay a little bit more in order to cover the costs. This heavily affects the bottom line of any business, since, the cost of a defective product was the cost incurred, because of the time wasted on the un-sell-able product, the time spent disposing of the defective product, and the cost of re-starting the process to hopefully create a new product free from defect. Worse yet, this process takes time, especially considering that most of the time a whole batch of products that has defects, rather than a single product. Keep in mind that in the time it takes to correct a problem, you could have created more acceptable quality products, and increased profits. Because of this it stands to reason that if you can save yourself time, then you can also save some money.
- Labor costs-For everything that is made the costs of labor are a significant portion of the total cost of the product. Usually there are many hands touch a product, from the delivery person, to the assembly line worker, to the truck driver and the person stocking shelves. Every one of these people is paid because the consumer is buying a product. Employees (humans) are responsible for just about every portion of the production process. This is true even if you have a manufacturing process that is highly computerized; overusing your machines for default corrections is still costing you money. Remember that a piece of equipment can never be a perfect judge of quality. Keep in mind that when you do the job right the first time, you only pay for the labor (and energy consumed by equipment) once, and therefore you saving both time and money.