Sigma is a Greek letter that is
used in statistics to represent
the measure of variation in a data set. For decades, the
most commonly used measure of variation from standard was
the three standard deviations from the mean. The problem with
the measurement based on three standard deviations was, the
level of defects were higher due to the properties of the bell curve
never touching the axis. An increase in the number of standard
deviations from three standard deviations to six standard deviations will
increase the area covered under the curve. The larger the area under the
curve is covered, the lower the defect or the failure rate. Companies
like Motorola and GE were the first to adopt six sigma as a measure
of performance because they were interested in improving
the business process by reducing the defect or the failure rate.
Six sigma is a quantitative approach for measuring the
quality as well as the number of errors or failures per million operations,
and improving business performance. Six sigma was widely deployed
in manufacturing for the last few decades and several Fortune 500 companies have been successful
in implementing the process. The success of the six sigma approach
was the result of a combination of management efforts to change
the corporate culture where there is no tolerance for lower
quality, customer dissatisfaction, and defective product or service,
etc. The companies were interested in deploying six sigma approach
in manufacturing because of functional detachment in
the business. The functional detachment is focusing
on improving the business perfomance of a business function that seems
to have a measurable impact on the company's performance,
and ignoring the performance improvement of other functions
in the organization. In a manufacturing company,
the manufacturing function, which is also referred to as a
production operation is traditionally assumed to be the cost influencing
function as it is clearly represented in the income statement as cost of
goods sold. |
