Potential Benefits of Implementing Six Sigma Research Paper

Six Sigma is a method for quality improvement that focuses on the reduction in the number of defects. This is not a one-time initiative; rather it is a continuous process that achieves ongoing improvement in the operations of the organization. The objective of six sigma is to minimize any variation from the benchmarks and to attain perfection (Brue, 2002). Motorolla is the pioneer of the six sigma process and if this is used effectively it can provide the following benefits to the organization:

Achieving Competitive Advantage

In today’s business world, there is cutthroat competition amongst companies with every organization trying to get an edge over the other. However, there are few ways of doing so. Companies can either have a low-cost strategy whereby they compete on the basis of price. On the other hand, they can try to differentiate themselves on the basis of service or product variety. This is not easy and involves high costs. Nevertheless, companies can gain a competitive advantage by implementing the six sigma as this will increase organizational efficiency and improve the overall performance (Adams, 2003). This is imperative for any company because eventually the faster, more efficient companies will eventually take over the smaller companies. Motorola, General Electronics, Bank of America and Caterpillar, and Allied Signal are all benefiting from the use of six sigma (Snee & Hoer, 2003).

Lowers Cost

Successful implementation of six sigma reduces the operational cost as it improves the quality. Six Sigma reduces the number of defects and this reduces the cost of production, for the greater the number of defects, the greater the cost and vice versa (Pyzdek, 2003). According to Quality Associates International, the number of defects results in additional expenses for the company that is called ‘cost of poor quality and this is a percentage of sales. If the number of defects is 233 per million, the cost of poor quality is 5-15% of sales but if the number of defects is 3.4 per million- the target of six sigma, the cost of poor quality becomes less than 1% of sales. This shows that six sigma will directly increase the net income.

Improves Business Operations

Six sigma is a continuous process that incorporates the latest business knowledge, updates the current business practices, takes feedback, and improves continuously so as to attain perfection and avoid any defects. This will increase the chances of business survival in the capitalist world, improves business security, and enables a business to operate in emergency situations. Six Sigma enables a business to achieve all these goals because the process is very systematic and follows five steps called Define, Measure, Analyze, Improve, and Control. This keeps the businesses on the right track and hence leads to better project management (Freson, 2005).

Contribution to the Bottom Line

Six Sigma makes a significant contribution to the bottom line of businesses i.e. making a profit. The application of this total quality management program results in higher net profit because it reduces the cost by increasing perfection in production and reducing the number of defects. It also increases the efficiency of the use of resources and enables the firm to move towards value addition and the return on assets can be optimized. The six sigma process gives the firm insight into the market situation so that any untapped or future opportunities can be made use of (Adams, 2003).

Conclusion

This paper shows that the successful implementation of six sigma will give the firm many advantages. These include lowering the cost, providing the form with a competitive advantage, contributing to the bottom line, and improving business operations.

Bibliography

1. Adams, C. (2003). Benefits of Six Sigma.
2. Brue, G. (2002). Six Sigma for Managers. McGraw-Hill Professional
3. Freson, J. (2005). Six Sigma and Business Continuity. Web.
4. General Electronics. What is Six Sigma?Web.
5. Pyzdek, T. (2003). The Six Sigma Handbook. McGraw-Hill Professional
6. Snee, D. R. and Hoer, W. R. (2003). Leading Six Sigma. FT Press