Reality has it that Six Sigma deployments are quite expensive. Six Sigma trainings alone already command a high price. Still organizations adopt it because they know the advantages far outweigh the disadvantages. It wouldn’t hurt however if Six Sigma initiatives show positive good economics.
The economic effects of Six Sigma should then be evaluated against a company’s overall cost structure and revenues. This is done through a managerial accounting framework suited for a quality context. Such framework will help quality professionals, including greenbelts and black belts, speak the language of upper management.
Constructing this economic framework often starts with one criterion—the cost of poor quality (COPQ) criterion.
For example, Black Belt (BB) projects typically save $250,000 or more, and Green Belt (GB) projects frequently yield savings in the $50,000 to $75,000 range.2 Such figures are impressive when taken by themselves; their influence on a company?s overall profitability and economic health is even more impressive when they?re viewed in aggregate and in the wider context of the company’s other economic figures.
Six Sigma practitioners will find the article titled Six Sigma and Bottom Line very useful. The economic framework shows the direct significance of Six Sigma on the bottom line. Using this framework, they will be able to better communicate with upper management. Read more
