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how to calc a company sigma value?

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  • #44559

    LS0976
    Participant

    Hello sigma world…
     
    How does a black belt determine a company sigma value… like 3, indicating a average company or even worse 2, a company in dire need to improve?
    is it a summay of all existing processes? or is it a calculation of the company main deliverable? or????

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    #143003

    Eric Maass
    Participant

    Alas, LS0976 (nice name) – this Sigma Value could be opening up a can of worms…and could be open to manipulation in addition to interpretation.
    You might want to step back and think about who is asking you to provide a company sigma value – and why. What do they hope or plan to do with the sigma value for the company?
    Like nearly all metrics, you have some flexibility when you define them and, if the metric is highly visible and used by the management team – the metric can drive behaviors…for good or for ill.
    You have some options to consider when you set up this metric:1) Do I (or does the requestor) want the metric to start off looking “bad”, so there is a lot of opportunity to improve the value of the metric?2) Do I want the metric to be very sensitive to process improvement and/or product improvement – so we can show some “early successes” that are reflected by the metric? 
    Anyway, the short answer builds on the fact that you have the flexibility to define the sigma metric for your company – you can go with a summary for all processes, or for all deliverables, or for the main deliverable, or for a weighted average of the processes or deliverables.
    Or, you could use the median…or the best value…or the worst value among the sigma values for the processes or deliverables.
    Once you set the metric, and the management team accepts that this is the metric, then you need to keep the measurement system, the calculation, consistent.
    If set up properly, it should be able to reflect real improvement over time. If you start at, say , 3 sigma for the company – as it improves, this will rise over time (with perhaps a few bumps along the way)

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    #143006

    LS0976
    Participant

    OK, I follow and agree with the starting point of reference….  but let’s say the requestor is the company CEO who wants a relatively fair sigma value so he may understand if his company is average or plus/minus avarage?
    Is there a set guideline to generate the company sigme value?
     

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    #143007

    LS0976
    Participant

    OK, I follow and agree with the starting point of reference….  but let’s say the requestor is the company CEO who wants a relatively fair sigma value so he may understand if his company is average or plus/minus avarage?
    Is there a set guideline to generate the company sigme value?
     

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    #143016

    LS0976
    Participant

    Hi Eric,
    I see you have done quite a bit of dialogue coaching in many memo exchange…
    Can you further help me? 
    Can you provide an ideal template to calculate a sigma value for overall company performance?
    I appreciate all you may offer
     

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    #143019

    Eric Maass
    Participant

    LS0976,
    I personally have not calculated a Sigma Level for an entire company, and would feel uncomfortable with such a calculation.
    However,  I did a search on this and found the following article that gave sigma levels for large organizations, and gave a brief description of its method for assessing sigma levels of large organizations here:
    http://www.sei.cmu.edu/str/descriptions/sigma6.html
    Best regards,Eric

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    #143023

    LS0976
    Participant

    Eric, thanks for clarifying and taking a next step!!

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    #143027

    Sorour
    Participant

    The Six Sigma Business Scorecard includes a process for calculating corporate sigma level by calculating an overall performance index, used as the yield for the corporation. – Paul

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    #143033

    Eric Maass
    Participant

    Thanks Paul!
    LS – I think Paul is referring to this book,
    Six Sigma Business Scorecard : Creating a Comprehensive Corporate Performance Measurement System Praveen Gupta, A. William Wiggenhorn
    The Table of Contents shows that the Corporate DPU and DPMO (which we discussed in the prior postings here) are addressed on page 86, and the Corporate Sigma Level is discussed on Page 87.
    Best regards,Eric Maass

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    #143037

    Mikel
    Member

    Praveens method is stupid and not valid. Don’t waste your time. Go search some of the threads with Praveen on this forum before wasting time and money on the book.
    Tell your CEO that Six Sigma is about driving a well defined strategy for growth, efficiency and effectiveness. Ask him to talk to his executives about how much of their time is involved with day to day decisions. If it is more than 25%, your company is no better than 4 sigma. Don’t waste the time to go through the meaningless exercise of calculating a company sigma level. If you do, don’t take Praveen’s advice – contact Mike Carnell or me and we’ll walk you through it (after trying to talk you out of it).

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    #143041

    LS0976
    Participant

    Hi Stan, Mike,
    OK, I give… please assist a walk through on the how to calculate an overall compamy sigma performance value?
    Also, why is there not much mentioned of this topic in all the books? out there on the market… rather the how to address a process issue…
    Many thanks in advance for your sincere coaching
    By the way, I am a Stan as well….
     
     

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    #143046

    Mikel
    Member

    Too bad – you know you can legally change your name ;-)

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    #143055

    Ranga
    Participant

    Hi
    Your company might be having multiple processes through which you must be serving your customers. You need to compute the dpmo of each processes and add then all and that would tell the dpmo of your organization. Use normality tables to indicate the sigma level of your organization.
    All that you do from sales to post sales service comes under the processes and your need to include them in your computation. You might also build a scorecard to look at which processes are your weak links so that you can focus on them to improve your organization.

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    #143056

    vikkee
    Member

    Hi,
    Why would anyone want to go through all that trouble ? In my view, there is nothing to be gained by calculating a company’s sigma score. It would be better left at the process/subprocess level.

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