FREE online courses on What is Six Sigma - Six Sigma Costs And Savings

 

Costs And Savings

 

The financial benefits of implementing Six Sigma at your company can be significant.

 

Many people say that it takes money to make money. In the world of Six Sigma quality, the saying also holds true: it takes money to save money using the Six Sigma quality methodology. You can't expect to significantly reduce costs and increase sales using Six Sigma without investing in training, organizational infrastructure and culture evolution.

 

Sure you can reduce costs and increase sales in a localized area of a business using the Six Sigma quality methodology -- and you can probably do it inexpensively by hiring an ex-Motorola or GE Black Belt. I like to think of that scenario as a "get rich quick" application of Six Sigma. But is it going to last when a manager is promoted to a different area or leaves the company? Probably not. If you want to produce a culture shift within your organization, a shift that causes every employee to think about how his or her actions impact the customer and to communicate within the business using a consistent language, it's going to require a resource commitment. It takes money to save money.

 

How much financial commitment does Six Sigma require and what magnitude of financial benefit can you expect to receive? We all have people that we must answer to and rhetoric doesn't pay the bills or keep the stockholders happy.

 

"Companies of all types and sizes are in the midst of a quality revolution. GE saved $12 billion over five years and added $1 to its earnings per share. Honeywell (AlliedSignal) recorded more than $800 million in savings."

 

"GE produces annual benefits of over $2.5 billion across the organization from Six Sigma."

 

"Six Sigma reportedly saved Motorola $15 billion over the last 11 years."

 

The above quotations may in fact be true, but pulling the numbers out of the context of the organization's revenues does nothing to help a company figure out if Six Sigma is right for them. For example, how much can a $10 million or $100 million company expect to save?