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How Six Sigma Helps Reduce Cost?

Six Sigma is a series of methods and tools for upgrading business processes and quality management. Six Sigma seeks to enhance quality by identifying defects, figuring out their cause, and upgrading processes to expand the repeatability and veracity of process results. By bettering accuracy and reducing imperfections, the quality and timeliness of product delivery will be raised.

What are the Benefits of Six Sigma?

Six sigma is in essence a management philosophy seeking to improve business processes. It is denoted by a set of techniques and tools that can only be achieved through formal, hands-on, project-based training. Six sigma is popular for being a data-driven and highly analytical approach in resolving business problems and upgrading business functions.

  • You will decrease waste

Six sigma ideology is focused on helping companies optimize processes to minimize total waste production. The distinctive process will help companies to recognize the amount of waste generated and which area it is formed. This will assist in saving time, money, and resources.

  • You will increase efficiency

Aside from helping waste creation, six sigma also leverages effective processes. Six sigma aids businesses to utilize their resources to their full potential.

  • You will reduce errors

Six Sigma gives heed to ‘quality’. The quality of products will impact the business’s future outcomes. It’s always advised to be in check regarding the quality of the products and services offered. Six sigma does just that.

  • You will reduce your company’s legal risk

Owing to Six sigma’s commitment to quality, taking up Six sigma will help companies and businesses within international compliance standards.

  • You can apply it to any industry

Indeed Six sigma is applicable to almost all industries. Be it healthcare, manufacturing, retail, higher education, and more.

Ways to Save Your Company With Lean Six Sigma

During the decision-making process, especially in the automotive sector, the success of an organization lies in its ability to respond quickly to the needs of its customers. This customer needs should be accompanied by low production costs and minimum lead time to introduce a product to the market, and deliver better performance than existing competitors in the market.

Six Sigma is a potent weapon that helps reduce costs. Preventing defects and enhancing products and processes results in higher profit and greater market share. This is achieved through two of the six Six Sigma methods: DMAIC and DMADV.

The process development will cost your company money. This is a fact that prevents some organizations from adopting a proven way to improve the process. Sadly, many companies view it as too expensive to operate.

Indeed companies will have to invest more to successfully use Lean Six Sigma and incorporate it into corporate practice, the cost should not be the only consideration. Companies considering the use of a process-enhancing approach are best served by asking, “Do six Sigma benefits outweigh its costs?”

Increased Money – Lean Six Sigma reduces wastes and helps processes work more productively. Organizations that apply Sigma’s six principles are able to sell, manufacture and deliver a wide range of high-quality products and services while using a few resources – an improved product definition.

Increased Customer Satisfaction – Customer satisfaction is the focal point of Lean Six Sigma. One of the first steps a project team takes is to identify how a customer is affected by quality issues. The team then pinpoints the vital issues that the process may need to enhance customer satisfaction. Linking process advancement with customer satisfaction helps ensure that implementing Sigma’s six principles will produce customers who would provide excellent reviews about the company. These items can dramatically increase sales and profits.

Employee Transformation – Once employees master the principles of Lean Six Sigma and learn to employ them, there is no turning back. Six Sigma certification can help enhance problem-solving skills and the skills to identify defects.

Reducing costs is important, but how does Six Sigma help companies do that? Imagine that you are buying something plastic, such as a small toy. The material is melted and placed in a syringe. Melted plastic penetrates the mold and hardens to form a toy.

Reduced Costs – Production costs decrease when Lean Six Sigma is applied to inadequate processes. Six Sigma practices help minimize flaws and misconceptions in the production process and limit the time-consuming refinements of the company and resources without adding value. Six Sigma methods also help eliminate unnecessary steps in the production process. Six Sigma has helped many organizations reduce costs.

When business managers look for ways to reduce costs, they tend to look at larger cost centers and implement short-term solutions with results that affect customer satisfaction. With Six Sigma, corporate processes – not just cost-effective institutions – can be systematically evaluated and analyzed to produce real, sustainable results. From asset management to work, energy consumption to transportation, waste disposal, and improved performance of all workplaces can reduce costs, without having a negative impact on customer satisfaction.

Poor Quality Cost (COPQ)

Mistakes cause cost overruns. Six ways to improve Sigma can reduce the number of errors; therefore, it can reduce costs. Without errors, the whole company suffers from poor quality (COPQ) costs. Other costs associated with poor quality include.

  • Loss of customer loyalty
  • Lost sales
  • High risk
  • Increased administrative costs
  • Refunds and grants
  • Low staff morale
  • Warranty repair and replacement
  • Service calls

Some experts say that the average company loses 5 – 30% of COPQ’s total sales. It is impossible to know how many firms operate by mistake under the assumption that they are inferior, but it is fair to say that many others do not even know where they stand with COPQ. Carrying out Six Sigma training can ease a company’s COPQ, by guiding employees to implement a repetitive system for quality improvement.

What have we learned so far:

In addition, taking steps with Six Sigma to reduce disability and poor quality can lead to greater customer satisfaction, improved product reliability, and increased market share at a reduced cost.

Are you interested to know more about Six Sigma and how it functions? SKILLOGIC provides umbrella training in Six sigma courses that are accredited by ICFQ and TUV.

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