It has often been said that an organization embracing the Six Sigma methodology enjoys lots of savings and profits. There is however a price to pay. Charles Waxer said in his article, “it takes money to save money using the Six Sigma quality methodology. You can’t expect to significantly reduce costs and increase sales using Six Sigma without investing in training, organizational infrastructure and culture evolution.”
Waxer’s question was “How much financial commitment does Six Sigma require and what magnitude of financial benefit can you expect to receive?” To get the answer, he did extensive research, investigating the companies themselves–getting it from the horse’s mouth so to speak. He went to four companies that according to him were the ones who invented and refined Six Sigma, thus most mature in their deployments and culture changes.
The four companies are: Motorola, Allied Signal (merged with Honeywell), GE, and Ford. Waxer put side by side the Six Sigma cost and savings by company. The results are quite interesting. It shows a 1.2-4.5% of revenue. And to any CEO or CFO that is significant. For a $30 million a year company, that can translate into between $360,000 and $1,350,000 in bottom-line-impacting savings per year.
With these figures, who woudn’t want to invest in Six Sigma initiatives?
