Simply defined, the term Six Sigma refers to a set of tools based on a data-driven approach to continuous improvement that aims to eliminate defects (often, but not always, in manufacturing). The “six” comes from “six deviations” between the “mean” and the nearest specification limit. Sparing the statistics modeling details, it requires that there be no more than (about) 3 defects per million parts — 3.4, actually, or one in which 99.99966% of all opportunities to produce are free of defects. A defect is anything outside your customer’s allowable spec.
A six sigma “opportunity” is then defined as the total quantity of chances for a defect (there are calculators for this purpose). The process usually involves what’s called DMAIC: Define, Measure, Analyze, Improve and Control.
The underlying reason is simple: save money (not to mention, customers). According to the Six Sigma Academy, successful six sigma projects can save nearly $250,000 on average per project. GE estimated benefits of over $10 billion during its first five years of six-sigma efforts.
Learning the procedures for implementing a six-sigma initiative requires some training, and ideally, a pilot project or two. That’s where six sigma and ERP can complement one another. By beginning your ERP project with well-defined processes – a hallmark of six-sigma — then you’re making what one ERP writer calls “a conscious decision to let your business drive your ERP software, rather than the other way around.”
The idea is to reengineer your business processes to the highest standard (lowest defects) and then let those processes drive your ERP implementation.
Easier said than done? Certainly. It takes the up-front work to design the processes, test the execution and only later build into your systems and software the thinking that will drive it thereafter, based on your commitment to low defects. But while it may sound counterintuitive, baking these systems and thinking into your project will actually make the ERP project faster and cheaper. You will have defined the processes and eliminated the ambiguities up front that are otherwise too common to most ERP implementations.
In other words, instead of letting the software drive your business process changes, you orchestrate and engineer those changes first (a perfect Six-Sigma process description) and then let those drive the software.
For those interested in learning more… about either six-sigma or ERP, we’re here to help.