We have all seen companies declaring x millions of customer served/ products developed. McDonald’s stopped updating their Golden Arches at the 99 billion mark. The concept of per million served is useful in understanding the basic concept of Lean Six Sigma.
Six Sigma is the technical measure of how many unhappy customers experiences are observed/reported for every one million customers served.
If the coffee shop served a million customers in a month, how many of the customers experienced poor service? If only 3 (yes, only 3) customers were unhappy, then the coffee shop achieved Six Sigma. The highest level of the sigma standard is equivalent to only 3.4 bad customer experiences for every million opportunities/customers served.
Do you think the coffee shop only had 3 unhappy customers in a month? If 223 customers had bad experience then the coffee shop is a five-sigma company, If the 6,210 customers were not satisfied then the sigma level drops to 4. If 66,807 customers/ a million received inaccurate orders the coffee shop would be 3 six sigma.
Six Sigma is a measure of customer satisfaction that is near perfection. Most companies are between 2 and 3 sigma level, with between 308,538 and 66,807 unsatisfied customers per millions served. Irrespective of industry, this implies an error /defect/noncompliance/delayed delivery rate between 7-31%.
If you have between 7 – 31% defect/error/unsatisfied customers or sigma 2 – 3, then you are not creating as much return for your stakeholders and investors. Management is under intense pressure to increase the bottom line and profitability and often begin to lay off employees. In the next article I will discuss why laying off employees as a short-term profitability goal is not a great approach.
For now, use our sigma calculator and learn what your current quality level is. Discuss your findings in your next team meeting. Download Simple Six Sigma Calculator.