Six Sigma–Key Metrics for Project Selection

In the thirteenth chapter of their book Six Sigma:  The Breakthrough Management Strategy Revolutionizing the World’s Top Corporations, the authors Mikel Harry, Ph.D., and Richard Schroeder discuss how to select and prioritize Six Sigma projects within a corporation.

Here are the various metrics that can be used to select projects.

1.  Defects per million opportunities (DPMO)

The total number of defects per unit divided by the total number of opportunities for defects per unit, multiplied by 1,000,000.  Let’s say there are 10 defects per unit that has 100,000 opportunities for such defects per unit.    This means that there is 1 defect per 10,000 opportunities, or 0.01%.   If you multiply this percentage times 1,000,000 you get 100 defects per million opportunities.   This is somewhere between 5 sigma (233 DPMO) and 6 sigma (3.4 DMPO).

2.  Net cost savings

Reductions in variable or fixed costs.

3.  Cost of poor quality

The cost of repairing defects once they are detected, or the warranty and product liability costs of defects that are not detected in the factory and get in the hands of consumers.

4.  Capacity, cycle time

The number of units a process is able to produce in a given period of time, and the length of time it takes to produce a product or service.

As you could probably guess after reading the book so far, the authors think that a focus on “capacity and cycle time” is the least fruitful approach.   Why try to increase capacity if you are not trying to increase quality?   So that MORE defective parts can fly out of the machine?

The focus on cost of poor quality and net cost savings is a good one to show how defective quality impacts the bottom line.  However, the one most easily adaptable to the world of Six Sigma is the first one, the focus on defects per million opportunities or DPMO, and this is what the authors recommend as a key metric.

Another good metric for project selection is customer satisfaction, but the only problem with this is to make sure it is actually measurable.   Once the characteristics of the product are identified as critical-to-quality, then you can be sure that the efforts you make in reducing defects are going to translate to greater customer satisfaction.

There are other metrics possible, but the ones mentioned here are the key metrics towards making quality improvements have the greatest possible impact on the bottom line.

In the next chapter, the authors focus on an interesting topic:   the psychology of Six Sigma.


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