Six Sigma And Finance

Six Sigma can be described as a set of management initiatives that aim at reducing defects by improving the efficiency of existing business processes. The only problem is that the success of Six Sigma initiatives depends on the level of support provided by all the functional departments in an organization.

The success of Six Sigma implementations depends on the ability of the implementation teams to identify and alter systems that are responsible for the efficiency of a business process. For successful implementation of 6 Sigma concepts and methodologies, organizations need to increase coordination between all the teams involved in the implementations. Consistent support and guidance from senior management is also necessary for ensuring the success of Six Sigma initiatives.

Six Sigma Implementations And The Finance Department

6 Sigma implementations do help in reducing operational costs, but an organization cannot afford to make strategic decisions based on vague assumptions. Organizations need to measure the monetary value of benefits that is being derived through the implementations. The task of assessing the financial spin-offs of the implementations is often entrusted to the finance department that assesses the improvements in relation to the organization's bottom line.

The finance department utilizes project tracking software that measures the improvements being made and generates reports showing the financial payoff. The software is used all throughout the implementation process and the data collected is stored for future referrals. This is important because 6 Sigma programs aim at continuous quality improvements, normally a 30%-60% improvement in around 6 months. Data available from past implementations makes it easier to deploy new Six Sigma concepts and methodologies in an organization.

Selecting The Most Suitable Finance Personnel

For ensuring that the financial functions are successfully carried out, organizations need to select only the most experienced employees. Outsiders can also be hired for this purpose but it is always better to opt for existing employees as they have a better understanding about the organization's business processes.

If the selected employees are new to the concept of Six Sigma, it is necessary to provide adequate training before allocating them the responsibilities that they are supposed to shoulder. Finance personnel selected by an organization, act as the official scorekeepers and report any deviations that might affect the organization's bottom line.

Finance And Quality Issues

Quality improvements are one of the main objectives of 6 Sigma implementations. However, for producing high-quality goods or services that satisfy customer needs, it is necessary to deploy the financial measurement tools and systems at all stages of the implementation process. At the start of the implementation process, a financial impact analysis is conducted to identify the derivable monetary benefits. During the implementations, the actual monetary value of benefits is assessed and reported to the senior management. During the final stages of the implementations, the actual and planned results are compared to provide the necessary feedback to the quality department.

The success of any quality improvement technique such as Six Sigma can be ensured if the implementations are done in accordance with quantifiable financial results. The financial skills of selected personnel also go a long way in ensuring the success of 6 Sigma implementation programs.

About the author: Tony Jacowski is a quality analyst for The MBA Journal. Aveta Solution's Six Sigma Online offers online six sigma training and certification classes for lean six sigma, black belts, green belts, and yellow belts.