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Back to Basics: Metrics of Six Sigma

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Six Sigma. These two words have probably done more to codify and make comprehensive processes for removing defects to better serve the needs of the customer than any other single business concept.  

Sounds great, you might be saying, but what has it got to do with my business? 

As we’ve discussed in previous articles, Implementing Six Sigma and Moving forward with Lean and Attivo-All-In-One, harnessing the principles of Lean and Six Sigma are easier than you may imagine. Taking a close look at doing so is well worthwhile as the business transformation and upside are substantial.  

As you may recall, we explained the underlying five phases of Six Sigma in these earlier articles: DMAIC: Define, Measure, Analyze, Improve, Control. 

The Metrics of Six Sigma 

To fully understand Six Sigma we need to know what the basic metrics of Six Sigma: 

Critical to Cost, Critical to Quality, Critical to Schedule, and Critical to Safety.  

Each are crucial in their own way and collectively by calculating these metrics it’s possible to quantify the efficiency, effectiveness, and impact that a process has on an organization. Even if the steps within a process or an entire process itself may not seem advantageous to the organization, only by applying Six Sigma metrics can that determination be made, either in favor of the process as it is, modifying it, or eliminating it altogether. 

Using these metrics as a yardstick, a team can evaluate the process and diagnose its health. In doing so, the objectives are to save time, money, resources, and accelerate growth. To begin the evaluation of all processes, each step must be defined as well as all the roles that affect it. These are the four basic metrics of Six Sigma: 

Critical to Cost (CTC): Defines the cost of inventory on hand, the amount of labor put into production, all overhead costs and the cost of raw materials.  

Critical to Quality (CTQ): Measures (and predicts) the accuracy or expected look of a product and is incredibly useful to gauge customer satisfaction.  

Critical to Schedule (CTS): Quantifies the time it takes to for components in the manufacturing process to pass through one or more stages of a process. Which includes the scheduling of delivery, time-on-hand of goods stocked, and arrival times for materials.  

Critical to Safety (CTS): Focuses on the safety concerns for customers consuming services or products; adhering to safety standards whether at the company or the federal level. 

Knowing these four basic metrics provides a foundation for the use of Six Sigma to review existing practices and pave the way for the implementation of better, more efficient processes which can lay the groundwork for ongoing continuous improvement.  

In addition to creating greater efficiencies, a primary goal of Six Sigma is in eliminating waste. Of course, one of the most obvious and concerning forms of waste is capital expenditures which create a drag on margins and erode profits. While its always necessary to allocate money to pay for the materials, labor, and production inherent in any manufacturing environment, the metrics of Six Sigma can help identify and reduce wasteful spending or over processing which may be  occurring in one or several processes.  

Examples of costly waste are needlessly high amounts of inventory, unnecessary steps within a process, or supplier issues which go unaddressed despite identifiable wasteful spending or delivery inefficiencies. Perhaps not surprisingly, a large percentage of out of control costs originate in the supply chain and flow down.  

Zero in on waste 

Once Six Sigma tools and methodologies are in place, it becomes much easier to locate issues which cause waste. After analyzing the source of these inefficiencies, it is up to management to support the process team and suggest improvements to the existing process. They can also suggest entirely new processes and create workable solutions to ensure better outcomes and ongoing improvements using Six Sigma. This new ability to create uniformity and standardizing of practices must be acknowledged and adopted by everyone from the management team to the workers on the shop floor to succeed.  

Not only should the rationale use of Six Sigma metric be made clear, but the upside must also: Greater labor efficiencies, cost reductions, more prudent allocation of resources and other improvements can now be measured along with the resultant accelerated growth of the business, higher customer satisfaction, and investor return. The power of Six Sigma is that these issues and better outcomes are to the benefit of all stakeholders, now and far into the future. Competitors not engaged in the use of Six Sigma are obviously at a disadvantage.  

At Attivo, we’re strong proponents of Lean and Six Sigma for the simple reason we’ve seen the power of using these methodologies. For decades, a wide spectrum of organizations have proven the value of implementing quality management processes. From American corporations and organizations overseas, ranging to large multinational conglomerates to small and mid-sized businesses.  

We invite you to consider how your organization can better align your operations and managerial practices to meet your own specific strategic, financial, and corporate responsibility objectives. We designed Attivo All-In-One, powered by SAP Business One, to deliver an inventory of customizable modules to best meet your needs and deliver operational improvements you can measure in cost, quality, safety, and time. 


Interested in learning more?

Our consultants are ready to answer any of your questions.

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