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What is the law of the market in six sigma?

gs: six sigma, market, law, lean laws

In manufacturing, it is important to eliminate wasteful habits that end up costing plants money. The overall goal of six sigma is to increase a company's profits by identifying and then eliminating factors that contribute to waste and customer dissatisfaction.

There are different ways to come to this goal. Lean Six Sigma focuses more on improving process flow and speed than on improving quality by combining the laws of six sigma with that of lean manufacturing. The concept of lean Six Sigma utilizes five different "laws" in order to make the process successful.

In order to fully understand the laws of lean six sigma, it's important to become familiar with the concept of six sigma as well as lean manufacturing. Basically, six sigma is a method used to provide business with the necessary tools to increase their overall performance and customer satisfaction. This is done by statistically analyzing various forms of data and information, then using it to anticipate the needs of their customers. The overall goal of Six Sigma is to increase a company's profits by identifying and then eliminating factors that contribute to waste and customer dissatisfaction.

Lean manufacturing, on the other hand, works to eliminate waste by first identifying what causes the waste. Most times, it falls into one of the following categories:

  • Overproduction - this refers to producing more than is required, resulting in wasted products and labor
  • Excess Transportation - transportation that costs the customer money but doesn't add any value to the end product
  • Excess Inventory - more inventory than is required to complete the project
  • Excess Processing - refers to using more of the labor force than necessary
  • Waiting - idle time, either via machines or laborers
  • Correction - wasted time fixing a problem because it wasn't done correctly the first time
  • Motion - wasting time to run errands like pick up parts, etc.

The Law of the Market
There are five main laws organizations follow in order to achieve lean six sigma. They are:

  1. The Law of the Market
  2. The Law of Flexibility
  3. The law of Focus
  4. The Law of Velocity
  5. The Law of Complexity and Cost

The Law of the Market states that the customer's needs and wants define what quality is and that those needs should be the highest priority with regards to improvement. It is important the customer values your work for obvious reasons - it's a chain reaction. The customer essentially provides the means to pay for the whole company, from supplies to salaries. Because the customer is supplying your company or organization with the money, their needs and wants should be the top priority.

Organizations can help improve customer satisfaction by adhering to the following fundamental principles:

In order for work to be considered value-added, it generally takes three factors. These include:

  • Necessary capacity. The employees and tools used must have the necessary capacity to perform the work and add value to it.
  • Proper information/instructions. The workers must have the proper information and instructions needed to complete the job with as little non-value added work, or waste, as possible.
  • Sufficient materials. This refers to the materials required to properly complete the work.

Companies and organizations who follow the Law of the Market will be able to better focus on their customers, which results in increased customer satisfaction. As companies make their customers a priority via the Law of the Market, the result will be customer loyalty and satisfaction, the main thing any company should strive for.

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