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SIGMA CALCULATION FOR THE ORGANIZATION

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  • June 7, 2006 at 3:14 pm #43656

    GSD
    ★ 10 Years ★
    Participant

    Hello All,
    Can somebody advise me the way to calculate sigma score for the organization as a whole.In my organisation there are processes like data processing for Healthcare,Insurance,Retail,Order Management coexist with Call centres and other Banking and financial systems. Hence appreciate if someone could advise me the way to calculate “ONE” sigma score for the organization.
    I have heard somebody telling me GE as a company operates at 4.5 sigma. How do they come up with this figure when it has different verticals and segments?
    Thanks

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    June 7, 2006 at 4:26 pm #138764

    Ken Feldman
    ★ 10 Years ★
    Participant

    Good question.  I was always mystified on how they (GE) could roll up such disparate businesses and get an overall value for sigma.  Never could get a straight answer.  Maybe one of our posters will share an insight.  Personally I thought the roll up figure was crap and nonsense.  To say GE is 4.5 when doors were falling off of refrigerators and aircraft engines were far in excess of that figure never made sense.

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    June 7, 2006 at 4:59 pm #138768

    Ritz
    ★ 10 Years ★
    Member

    I’ve never met someone from GE who actually quoted a number – my guess is that it’s simply a myth that gets passed around.  I can still recall my original BB instructors quoting nonsense like “most companies operate at a 3-sigma level” and “cost of poor quality is likely to be 25% of sales”.  I can’t see anyway that kind of number would be meaningful.  I’d focus efforts on business line core process capabilities and worry less about a roll-up.
    Hey Darth – you think they took an average and disregarded the standard deviation?
    Ritz

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    June 7, 2006 at 6:36 pm #138775

    Heebeegeebee BB
    ★ 10 Years ★
    Participant

    Might be avgs of DPMO’s.

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    June 8, 2006 at 10:07 am #138803

    Yadav
    ★ 10 Years ★
    Participant

    Hi All,
    I don’t think it’s possible or advisable to calculate Sigma level of whole organization. I have seen in some cases that organization sigma level is calculated by taking average of  sigma levels of some key  processes which is not a right approach. 

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