Stringent implementation of Six Sigma and a defined accounting policy: key to Six Sigma success
An article published in Industry Week recognizes the popularity of Six Sigma programs for improving business activities, but warns that the implementation of Six Sigma can backfire in certain situations. Two such situations are highlighted in the article: the different levels of intensity in the implementation of a Six Sigma program, and miscalculations in the savings that actually result from Six Sigma implementation.
For the first anomaly, the article gives an example of a company that brought in Six Sigma with a properly formulated strategy and well-defined leadership, and another company which only had inadequate training sessions before ushering in Six Sigma. In the latter scenario, the results of Six Sigma implementation were naturally not satisfactory, and this resulted in only limited savings for the company. A more stringent training program by the same company in the following year brought in better results.
The other loophole (miscalculations in Six Sigma savings) can also be tightened if companies put a clearly defined accounting policy in place to calculate the savings on account of Six Sigma. Industry Week reports:
To prevent these situations from occurring, organizations need to define the policies and procedures to calculate Six-Sigma savings and identify a review and validation mechanism using finance and accounting. Initiatives should be monitored in the same ways capital projects and other major efforts are monitored. The appropriate financial adjustments should be made to reflect the savings in future budgets to support the program’s institutionalization.