Guidelines for Calculating Financial Benefits of Six Sigma Projects

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Posted by: Judy
Posted on: Tuesday, 8th August 2000, 12:00 AM.

We began the six sigma program about a year ago. We complete three or more financial calculations. A high level preliminary estimate during the define phase, a detailed financial cost/benefit analysis during the measure phase which is updated during later phases as more information is obtained, and the a final estimate before the project is closed. We realize actual savings over a 12 month period and compare to the forecast.

Savings (and project costs) are broken down into hard savings (direct impact to the income statement), and soft savings (indirect impact and not directly measurable, reduced manhours required to perform a job but not a reduction in headcount, customer satisfaction).

Project savings are tracked in a separate system, not a part of the General Ledger using an abbreviated, high level chart of accounts.

We have a goal that 75% of the Six Sigma projects will deliver a significant amount of hard savings to the company.

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 Message Thread:

Guidelines for Calculating Financial Benefits of Six Sigma Projects by Tim Connell on Sunday, 30th July 2000

Calculate Financial Benefits by iSixSigma Community on Tuesday, 1st August 2000

Project Cost Saving Guidelines by Carol on Wednesday, 2nd August 2000

Gap Analysis to Financial Success by Trevor S. on Thursday, 3rd August 2000

Re: Guidelines for Calculating Financial Benefits of Six Sigma Projects by Judy on Tuesday, 8th August 2000

Re: Guidelines for Calculating Financial Benefits of S by Muhamad Saini Mokhtar on Wednesday, 23rd February 2005

Re: Guidelines for Calculating Financial Benefits of Six Sigma Projects by Grady Tucker on Tuesday, 8th August 2000

Re: Guidelines for Calculating Financial Benefits of Six Sigma Projects by Doug Mader on Friday, 18th August 2000

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