Arpita Goyal is a certified digital content writer, currently working as a freelancer with Henry Harvin Education.
All large organizations be it multinational corporations, big corporate houses, or global production units are applying Six Sigma techniques to better their business processes, nowadays. However, a huge misconception that ‘Six Sigma methodology doesn’t work for startups’ spins around it. Well, the universal nature of Six Sigma techniques and their effectiveness in process optimization and quality control make them an indispensable tool for organizations of all sizes.
A total number of startups registered under the Ministry of Commerce and Industry of India has crossed the mark of 55,000 in 2020. More than 1,500 come up annually as well. Unfortunately, 90% of these fail within the first 5 years according to a survey by the Institute of Business Value and Oxford Economics. Only 21 of these have joined the unicorn club with a combined valuation of $73.2 Bn. They, too, do not dominate the world market.
The reasons for this failure include inferior quality of products with defects, sub-optimal usage of business processes, less productivity, increased costs, lack of customer retention, lack of innovation, and so on. Fundamentally, Six Sigma techniques being universal in nature solves this for all organizations be it a startup, a small business, or an MNC.
The ideal time to incorporate a quality program is during a startup planning stage to produce customer-approved quality output. Six Sigma induces innovation and enhanced employee morale leading to increased productivity. Using Six Sigma results in a defect rate of fewer than 3.4 errors per million opportunities or defect-free output 99.99966% times.
Startups must improve constantly, or they risk dying prematurely, as seen in the Indian scenario. Six Sigma offers a tremendous opportunity for improvement, which is a perpetual need for a startup. It is, in fact, much more relevant for startups than a big business organization, which is just establishing its plan of action and process metrics. It is better to set up a production process along its lines rather than wait for the chaos and then do damage control.
Could Six Sigma be the soul missing from the body of your startup?
Image Source – Simplilearn.com
Six Sigma is a series of techniques used to identify reasons behind slow manufacturing processes and eliminating the risks, errors, or defects involved in it. This data-driven methodology improves the business process by streamlining operations and assuring superior quality. Thereby, increasing customer satisfaction and profitability, cost and time delay reduction, employee morale boost, and decrease in process variation.
It handovers the tools to enhance the capabilities of the business process with better usage of resources. In other words, the mantra of Six Sigma is ‘Doing more with less while doing it better’.
Here the 5 key benefits that are reasons enough to deploy Six Sigma for your startup in 2020:
1. Stronger Customer Loyalty and Retention
Customer loyalty and retention are significant for a startup’s survival and growth into a multinational corporation. The success of the firm, a result of a high degree of customer satisfaction, lies in the customer’s confidence in the business.
For instance, Citibank used the process mapping method of Six Sigma to recognize the wasteful steps that were leading to customer dissatisfaction and lost accounts. They modified processes and implemented a reporting process to meet specific client needs. This stemmed in improved client satisfaction and loyalty along with increasing their market share.
2. Elimination of waste and efficient resource use
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Six Sigma reduces variability during various processes that do not bring value to the customer. Thus, lean comes into picture that cuts variation in business processes and helps preserve costly resources. Establishing root-cause analysis, it helps reduce defects and improve operations to diminish inefficiencies and achieve quality control of production.
The two models of Six Sigma — DMAIC (to improve existing processes) and DMADV (to create new processes when making a new product/service from scratch) — help make better decisions for startups. From the beginning, it enables employees to find problems and recurring issues for better business solutions. This results in overall quality enhancement of a product/service considering the earlier issues faced by the customer.
3. Reduced Production Costs
This robust methodology can be used in the petrochemical industry, healthcare, banking, government, software, or any other for that matter. Wherever the statistical analysis may be used, it helps minimize waste by reducing defects. This leads to the minimal cost of production and higher gains which is necessary for a startup. The newly established firm need not bear the costs associated with the failure to create a quality product.
For example, the United States Army lowered its costs by nearly $20 billion through the application of Six Sigma tools across numerous units. They intensified their cost savings and boosted performance by focusing on task management. They brought new meanings to ‘the cost of quality’.
4. Employee Motivation and Empowerment
In any organization be it a startup, it is the employees who have a better understanding of the production process. Studies show that sharing Six Sigma techniques with employees results in employee development, increases their confidence in the new venture, and boosts team morale. Almost always, this has led to an improvement in the quality of the business processes.
Startups where workers combine Six Sigma tools with their knowledge of the process report 25-50% more productive than their competitors. The consequence of the full engagement of employees is the creation of a climate of improvement and empowerment in the startup. Examples show that the use of DMAIC tools in HR management brings a significant reduction in employee turnover and induces millions in cost savings.
5. Productivity Enhancement with improved quality
Ever since Six Sigma has been a part of business strategy, it has yielded notable success for the companies. Six Sigma Professionals with their problem-solving techniques analyze the process bottlenecks that decelerates the production and performance of the startup.
Then using DMAIC strategies and lean tools, they fix issues assuring quality control with enhanced productivity. Shorter cycle times and better time management is a key ingredient in the recipe for success in a startup.
For instance, Allen medical improved the production rate of their Arm Boards. The number of arm boards produced increased from 5.3 to over 6 per hour. Using the techniques, they saved approximately 45 seconds per arm board.
Anyone looking to start with better business solutions, seeking assured quality throughout various process cycles, and taking a lead from the first day should incorporate Six Sigma practices in their organization. Considering the pandemic affliction of 2020, it has become even more relevant in the current scenario. The importance of a Six Sigma certification online cannot be overstated, considering the flexibility in terms of the learning opportunities and its widespread applicability across different stages of business processes.
The DMAIC (Define, Measure, Analyse, Improve, Control) and DMADV (Define, Measure, Analyze, Design, Verify) steps help achieve extensive management infrastructure. This gives better versions for the production lines to win the market.
Staying competitive and emerging victorious in a 2020 world with dwindling prospects is crucial but not easy. Six Sigma continues to show effective results for startups ensuring high savings and a high volume of defect-free quality products. Companies that adopted this quality control mechanism in their initial days were the ones that could become the most successful ventures of the world. The innovators applying Six Sigma in their startups grow faster than the non-innovators.
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