How can you improve your business and make it more profitable? Do you have the tools and the knowledge to do this? The Six Sigma business model can help improve your business. Please read on for more.
The Six Sigma business model is a set of tools and techniques which companies can use to solve problems, and which can serve as a framework for developing a leadership mindset.
The name of the system comes from the ‘magic number’. A process is classed as being at Six Sigma when there are fewer than 3.4 defects per million opportunities. The goal of Six Sigma is to pursue the degree of near perfection.
Motorola created the process in the 1980s with the aim of quantifying the defects that occurred during the manufacturing process and reducing them to an absolute minimum.
It became mainstream when GE adopted it and saved more than $200 million by greatly cutting the rejections in their manufacturing process.
Six Sigma’s main use is to improve operational efficiency by reducing the variations that occur in your business’ processes.
This reduces the number of defects that occur in your finished products, and can, therefore, be hugely beneficial for companies that handle high production volumes, or those that handle high-value cases.
Six Sigma is not just for companies that have a huge production line, however.
It can also be employed in smaller and medium-sized businesses, and in companies that produce virtual, instead of physical goods, or that offer services.
It can be combined with other methodologies, such as lean methodology, to create a smooth and efficient process which does not produce unnecessary waste.
Six Sigma relies on using a systematic approach to whatever task it is that you need to complete, or whatever it is that you are making. Using the Six Sigma approach will bring you several benefits, including:
Six Sigma methodology is data-driven and statistics heavy. The approach can be applied to anything from selecting the right product or project to align with your goals, to selecting and training the right people to obtain the best results in the long term.
The process is divided into five macro phases:
You can do this with almost any business. Let’s take, for example, the hypothetical example of a small martial arts school. The school wants to improve retention of new students.
To start with, they would measure the flow of students by looking at which sessions new students come to, and the retention rate. That covers the ‘define’ and ‘measure’ part of the system.
Next, they would analyze the data they have collected. Are new students that attend on a specific day for their trial class more or less likely to attend than others that come on a different day?
If so, what differs between those days? Is there a specific instructor teaching on one of those days? Is there a difference in the number of students in the classes?
The improve phase involves seeking the best solution for the problem. Improvements must be implemented systematically. It would not be wise to change the instructor, and format of the class at the same time, for example.
Rather, the owner of the school would plan an experiment and would change one variable for a few weeks, looking at how that alters the churn rate of students.
Once the correct improvements have been identified, they can be moved into the control phase.
The control phase involves controlling the new system so that ongoing measures can be taken to prevent the problem (the rapid churn of students) from happening again.
The control methods may be something simple such as modifying the marketing policy to steer students to a specific night.
Alternatively, it could involve operating instructions to warn assistant instructors to stick to a specific class format for Beginner’s Only classes.
The process control methods should be clearly documented, and the improvement process should be recorded, so that it is clear in the future why a certain process exists at all.
The Six Sigma system focuses heavily on documentation and processes, and there are some clear reasons for this.
The goal of the Six Sigma system is to provide businesses with the information that they need to make sound decisions. You cannot do that if you are operating on gut feel alone.
In addition, most businesses have some turnover of employees, and it is important that all employees understand why certain things are done in a particular way.
Even lower-level employees are not usually particularly motivated to follow a process “because that is how we have always done it”.
People are not robots, and they like to know why they are doing things, and what difference it makes.
Your employees will be more motivated, and more likely to do things properly if they understand the reasoning and feel respected.
Clear, detailed documentation, flow charts and processes can go a long way towards improving adherence, especially in the long term.
They also protect the process, and the business, so that if the department head who laid out a specific process moves on, those who are left behind are more likely to understand why a certain the process was set up in a certain way.
Six Sigma is a system that is quite heavy on theory and writing, but it has clear real-life applications.
When you employ Six Sigma, especially a Lean or Creative variant of it, you empower yourself and your business to make decisions based on strong information, rather than gut feeling.
It’s a small change to how you think but it is something that will give you confidence in the decisions that you make, and that confidence will carry over into every part of your business.
Six Sigma can apply to any business and any process, with the correct approach and the correct data.
Is your business lacking a continuous improvement framework and constantly adding extra costs into your business without showing any real customer benefit?
Then you need to speak to us at High Velocity Business Improvement Coaching.
We coach your business to understand your problems, the size of the problems and how to solve the true root cause of the problems.
This means you can fix minor issues before they become major problems and deliver a better overall customer experience for your customers.
Please contact us today to book a free consultation or for more information.