Can Six Sigma help you identify hidden profit? Yes, if you know where to look. Six Sigma started as a means to improve quality. Engineers at Motorola found they could make bigger improvements by counting defects per million instead of defects per thousand. From there it grew into a methodology to improve operations, and then it grew into a way of doing business. In some cases, it’s grown into what could best be called a religion, but we’ll save that discussion for another day. Many have asked, “What’s so great about it, and how will it help us?” If you understand the concepts and what to look for, you can find significant hidden value and profitability.
In modern manufacturing, production and development, Six Sigma can be described as a subset of Lean Methodology. “Lean” means speed; Six Sigma means “correct every time, from the customer’s perspective.” In Lean we eliminate waste to dramatically improve the speed of an operation; In Six Sigma we eliminate the defects that cause delays, annoy customers and erode profits.
So does a company need Six Sigma? Is it the right tool to identify hidden value? Start by asking six (pun intended) questions:
Are design and development deadlines missed frequently? We find that Production improves its efficiency long before the office does, and the delays come from lack of information. Those management system flaws are in the office, not on the shop floor. If you create a value stream map, you’ll see where the delays are and how they can eat up your profits. If you’re “running at Six Sigma quality,” then you miss no more than three deadlines per million.
Is there too much WIP? (Work In Progress) Extra WIP ties up capital, and it’s an indicator of operational issues throughout the company.
Are there frequent shipping delays? Each delay is a defect, each delay is expensive.
How often are deliveries inaccurate? Are the right products delivered at the right time, every time? You can quantify the dollar loss of each erroneous delivery…and managers are often surprised at how expensive it can be.
Are too many products defective? Poor quality costs money, and a competent process improvement consultant or Six Sigma practitioner will be able to quantify this value.
Is there too much overtime? More often than not, excess overtime is an indicator of “doing things twice instead of doing them right,” and that expense spreads throughout the entire supply chain.
If you answered YES to any of these questions, then Six Sigma just might be the right tool to help you identify hidden value and make a dramatic improvement in profits.
Gordon Adelsberg is a Lean Six Sigma Coach at Go-Lean-Six. He can be reached at