Six Sigma


Six Sigma is a statistical measure used to ensure quality of products and services. The six sigma academy has developed a break through strategy consisting of measure, analyze, improve and control, that allows companies to make exceptional bottom-line improvements. In addition to the material and labor savings, which flow directly to the bottom line, a company engaged in six sigma can expect to see:

a. Improved customer satisfaction

b. Reduced cycle time

c. Increased productivity, Reduction in total defect

d. Improved process flow.

Implementing, six sigma program in manufacturing means more than delivering defect-free product after final test or inspection. It also entails concurrently maintaining in process yields around 99.9999998 percent, defective rates below 0.002 parts per million and virtually eradicating defects, rework and scrap. Other six sigma characteristics include operating processes under statistical control, controlling input process variables, rather than the usual output product variables, maximizing equipment uptime and optimizing cycle time. In a six sigma organization, employees assess their job functions with respect to how they improve the organization. They define their goals and quantify where they are currently, their status quo. Then they work to minimize the gap and achieve six sigma by a certain date.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Line of Sight

The Shift to Customer Service


You may wonder what, exactly, caused the economic shift to service away from manufacturing. Some of the more prominent reasons are described herebelow:

  • Increased efficiency in technology. Because of the development and improvement of machines and computers, production and quality have increased. Two resulting side effects have been an increased need for service industries to care for the technology, and a decrease in manufacturing.
  • Globalization of the economy: Beginning in the 1960s, when worldwide trade barriers were lowered, a variety of factors have contributed to expanded international cooperation and competition. Since that time, advances in technology, communications, diplomacy, and transportation have opened new markets and allowed decentralized worldwide access for production, sales, and service.
  • Deregulation of many industries: the 1970s saw deregulation of industries (e.g., airlines, telephone) alongwith oil embargoes and political unrest (Vietnam, Iran) reducing US competition while allowing other countries free access to those areas of the world. The rapid deregulation of major US public services, competition (with an emphasis on providing service excellence) has flourished.
  • More women entering the workforce: Because more women are in the workplace, many of the traditional roles in society have shifted out of necessity or convenience to service providers.
  • Desire to better use leisure time: More than ever, workers of developed nations enjoy increasing amounts of leisure time. This has heightened a desire to relax, enjoy children, and do other things they value—people want to use their free time in more personally satisfying ways. To accomplish this, they now rely more heavily on service industries to maintain their desired lifestyles.
  • Expectation of quality service: Most customers expect that they will receive a quality product or service. If their expectations are not met, customers simply pick up the phone to call or visit a competing company where they can receive what they think they paid for. This created a need for more and better trained customer service professionals.
  • Better educated customers: Not only are customers more highly educated, they are also well informed about price, quality, and value of products and services. This has occurred in part because of advertising and publicity by companies competing for market share by the activity of consumer information and advocacy groups.

 My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please contact www.asifjmir.com, Line of Sight

Company Performance Appraisal


Company performance appraisal studies the trends of specific profitability and productivity ratios derived from financial statements for at least past three  periods (year, quarter, month). Its main purpose is to diagnose problem areas through establishing productivity indicators for continuous monitoring and control of the whole enterprise, in order to set up an appropriate productivity improvement programs.

 

In conducting company performance appraisal, two basic comparisons have to be made:

a.       Between current performance and a historical base performance;

b.       Between actual performance and the target.

 

The former indicates whether performance is improving or declining and at what rate. The latter requires that performance or productivity targets be set and matched against actual performance.

 

Using profitability along as the basis for evaluating the overall performance of an organization makes it difficult to identify the cause of profitability changes. Are they due to productivity or price-cost movement? The following demonstrates this relationship:

 

            Output value     =          Quantity sold     X          Unit price

 

 

             Profitability       =          Productivity       X          Price recovery

 

 

             Input value        =          Quantity used    X          Unit cost

 

Considering the relationships over time, profitability is defined as charge in output value compared with change in input value; productivity as the change between quantity of output and/or quantity in unit price, and change in unit cost.

 

In effect, what is computed are performance ratios classified into:

  • Change in profitability;
  • Change in productivity;
  • Change in price recovery.

 These performance ratios are then evaluated in relation to their effect on profits. In general, a drop in profitability, in productivity or in price recovery reduces profits. Lower productivity signals a need for further analysis and for correction action. However, increased productivity does not necessarily lead to profitability on a short-term basis. The effect of increased productivity will be realized only in terms of long-term profitability.

 My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please contact www.asifjmir.com, Line of Sight