Six Sigma

What is 'Six Sigma'

Six Sigma is a quality-control program developed in 1986 by Motorola that emphasizes cycle-time improvement and the reduction of manufacturing defects to a level of no more than 3.4 per million. As of 2016, Six Sigma has evolved into a more general business-management philosophy focused on meeting customer requirements, improving customer retention, and improving and sustaining business products and services. Six Sigma is applicable to all industries, and a number of vendors, including Motorola itself, offer Six Sigma training; special certifications include yellow belt, green belt and black belt.

BREAKING DOWN 'Six Sigma'

Six Sigma represents an ideology that focuses on statistical improvements to a business process. Six Sigma advocates for qualitative measurements of success over qualitative markers. Therefore, practitioners of Six Sigma are those business people who use statistics, financial analysis and project management to achieve improved business functionality.

Six Sigma has evolved to define numerous ideas within business and is sometimes confusing. First, it's a statistical benchmark. Any business process that produces less than 3.4 defects per 1 million chances is considered efficient; defects are considered anything that's produced outside of consumer satisfaction. Second, it's a training program and certification that teaches the core principles of Six Sigma. Practitioners can achieve Six Sigma belt levels, ranging from white belt to black belt. Finally, it's a philosophy that promotes the idea that all business processes can be measured and optimized.

The Five Steps of Six Sigma

True believers and practitioners in the Six Sigma method follow an approach called DMAIC: define, measure, analyze, improve and control. It is a statistically driven methodology that users learn through Six Sigma certification or companies implement as a mental framework for business process improvement.

The ideology behind DMAIC is that a business can solve any seemingly unsolvable problem. First, a team of people, led by a Six Sigma champion, defines a faulty process on which to focus, decided through an analysis of company goals and requirements. This definition outlines the problem, goals and deliverables for the project. Second, the team measures the initial performance of the process. These statistical measures make up a list of potential inputs that may be causing the problem and help the team understand the process's benchmark performance.

Third, the team analyzes the process by isolating each input, or potential reason for failure, and testing it as the root of the problem. Through analysis, the team identifies the reason for process error. From there, the team works to improve system performance. Finally, the team adds controls to the process to ensure that it doesn't regress and become ineffective once again.

RELATED TERMS
  1. Six Sigma certification

    Six Sigma Certification is a process of verification of an individual's ...
  2. Lean Six Sigma

    Lean Six Sigma is a managerial approach that combines Six Sigma ...
  3. Lean Enterprise

    A production and management philosophy that considers any part ...
  4. Total Quality Management - TQM

    The continuous process of reducing or eliminating errors in manufacturing, ...
  5. Acceptable Quality Level - AQL

    A statistical measurement of the maximum number of defective ...
  6. Three-Sigma Limits

    A statistical calculation that refers to data within three standard ...
Related Articles
  1. Investing

    A Guide To The Six Sigma Green Belt

    Curious about the Six Sigma Green Belt? Here's what you need to know.
  2. Markets

    How Lean Six Sigma Works

    Based on both lean management and Six Sigma, Lean Six Sigma helps companies create a management system that promotes perfection through efficiency.
  3. Investing

    Should You Get A Six Sigma Black Belt? Average Salary: 98K

    Interested in the Six Sigma Black Belt but unsure whether you need one? Here's a guide to it and how it differs from other belts.
  4. Markets

    Two Penny 3D Printing Stocks To Watch Out For (TKSTF, SGLB)

    We look at two penny stocks in the 3D printing sector.
  5. Investing

    The Next Financial Crisis: Housing or Equities?

    Here are one expert's big-picture predictions for the housing market, oil stocks, and more.
  6. Trading

    How To Manage Bull Put Option Spreads

    Learn how to halt options losses when the market moves quickly in an unfavorable direction.
  7. Retirement

    Ready to Retire? Here's How to Sell and Close Your Small Business

    Learn the essential steps to prepare to sell your business with the best possible outcome, a secure retirement for you and your family.
  8. Managing Wealth

    4 Reasons To Invest In Motorola Solutions (MSI)

    Discover the rationale behind investing in Motorola Solutions and why the company is poised for growth in the future after its recent spinoff.
  9. Professionals

    Alternatives To Business School

    Universities don't have a monopoly on information - advance in your career without going back to school.
  10. Investing

    The Basics of Business Development

    What exactly is business development? Sales, marketing, growth? It's all that and more. Investopedia explains the concept and provides examples.
RELATED FAQS
  1. What is the difference between Lean Six Sigma and Six Sigma?

    Learn the differences between Six Sigma and Lean Six Sigma. These Kaizen philosophies streamline business processes to increase ... Read Answer >>
  2. What is operations management theory and how can it help a business?

    Discover the aspects that make up historical and modern operations management theory, and find out how they can be used to ... Read Answer >>
  3. How historically valid is the 80-20 rule?

    Discover more about the 80-20 rule, including how it is applied to selling and marketing situations, business performance ... Read Answer >>
  4. How can small businesses manufacture demand?

    Create demand for a small business product or service by focusing on the brand and market. Continue to learn offer excellent ... Read Answer >>
  5. Why is the Bullish Belt Hold useful for traders?

    Discover one of the most common candlestick chart trading patterns, the bullish belt hold. Learn why this pattern is considered ... Read Answer >>
  6. What do you need to know to create a business model?

    Learn what a business model is, its importance and the primary elements that are needed in order to create a successful business ... Read Answer >>
Hot Definitions
  1. Glass-Steagall Act

    An act the U.S. Congress passed in 1933 as the Banking Act, which prohibited commercial banks from participating in the investment ...
  2. Quantitative Trading

    Trading strategies based on quantitative analysis which rely on mathematical computations and number crunching to identify ...
  3. Bond Ladder

    A portfolio of fixed-income securities in which each security has a significantly different maturity date. The purpose of ...
  4. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  5. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  6. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
Trading Center