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What cost savings are available using six sigma?

This article will discuss what cost savings are available by using the Six Sigma methodology.
If you have been at all involved in business during the last two decades, then you've heard a whole lot about Motorola's development of the Six Sigma methodology.Six Sigma has been hailed as one of the most powerful quality management systems to have ever been developed, promising incredible results as you use Six Sigma techniques and tools to statistically analyze your processes in an effort to locate where you can improve the value of your processes and increase customer satisfaction and perceived value.
But can Six Sigma really improve your business that much?Is it really worth the cost that you have to invest in receiving all of the training, revising your processes, changing your methodology?Is Six Sigma a waste of money, or can you actually save money by improving your processes and increasing their value?

Six Sigma is different from a lot of other quality management systems because of its financial benefits and how it can improve the finances of your business, as long as you implement the system correctly, hire the right people, and make Six Sigma the way that you do business all the time.Six Sigma will also analyze the financial benefit of the process improvements that you are considering, to help you decide whether or not the process will be both financially viable and beneficial for your company.The financial benefits are then re evaluated when you analyze the process to make sure that the amount of money that you spend on improving the process will be offset by how much the project will benefit your company.With this idea in mind, Six Sigma is supposed to increase the productivity of your process, thus increasing your cost savings and also increasing your incremental revenue.Six Sigma is also geared towards ensuring that you can tell the difference between serious process improvements and improvements that actually give you little value over the long term.

The cost savings that you will receive from Six Sigma will depend on how much you implement the system.The cost savings that are available from Six Sigma are also dependent upon your processes, and really how bad they are to start with and how much you can improve them.Lean six sigma can also bring about even more cost savings and benefits as you work to cut waste in your processes.

If you work in manufacturing, and you apply six sigma or lean six sigma to your manufacturing processes, then the cost savings that you receive will be pretty easy to see.For example, let's look at the case study of Celestica.Celestica implemented lean six sigma, and ended up reducing equipment setup time by 85%, reduced the time between receiving and shipment by 71%, cut down on the floor space used by 34%, and also reduced scrap produced by 66%.You can see where cost savings would be found, obviously.And these cost savings are based simply upon eliminating wasteful movements and other things that you might not initially notice are costing you time and money, but are sucking up a lot of your time.The question, of course, is whether or not implementing lean six sigma or six sigma will translate into an increase in your revenue.It's obvious that you can save money, but will that increase how much revenue you get?Well, that's up in the air.For example, Xerox has not seen a revenue increase after implementing Six Sigma.However, if you think about it, you're still better off because of the amount of money that you are saving by increasing the productivity and the value of your processes.As long as you implement six sigma the way that you are supposed to, and you hire people who are really trained in six sigma you will be able to cut costs.

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