Better processes produce lower costs, higher revenues, motivated employees and happier customers. The most dramatic examples of economic value driven by process improvement come from the companies that have led the adoption of the Six Sigma (and Lean Six Sigma) methodology – most notably General Electric (GE). Mikel Harry, one of the founders of the Six Sigma methodology, has documented the economic impact of focusing on process improvement. Using the base measure of his methodology – Sigma, Dr. Harry provides a tangible example of how companies like GE have benefited from a commitment to process improvement:
With just a one-sigma shift, companies will experience a 20% margin improvement, a 12% to 18% increase in capacity, a 12% reduction in the number of employees, as well as a 10% – 30% capital reduction.
Many companies do not take the step to manage their business processes because they don’t believe they will see the kind of return on investment needed to justify taking action.
Many articles have been written about General Electric’s efforts in Six Sigma. I found this article interesting for a couple of reasons.
- They used the Six Sigma methodology to improve their business processes.
- They provide a ‘tangible’ example of the kinds of savings they have achieved.
I do believe that improving your business processes will lower costs, increase revenues and can motivate employees. I believe that if you pay attention to the touch points with your customer, you will have happier customers.
I found their chosen metrics interesting – I rarely see a company measure the reduction of employees. I do think that the metrics a company chooses to measure will reflect the value of that metric to the company.
As the economy slowly makes its recovery, now would be a good time to improve your processes to lower costs, increase revenues, motivate employees and make your customers even happier.
What steps has your company taken to improve their processes?