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The Six Sigma Business Scorecard consists of measurements for various leadership and operational processes specified as quality management processes in the ISO 9001:2000 standards. To establish measurements for effectiveness that meet ISO 9001 requirements, it is necessary to construct a business
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process flowchart, identify key processes, establish criteria for effectiveness, and determine measurements for effectiveness. The Six Sigma Business Scorecard consists of the seven categories listed below: 1. 2. 3. 4. 5. 6. 7. Leadership and Profitability Process Management and Improvement Employee Innovation Purchasing and Supplier Management Operational Excellence Sales and Distribution Service and Growth The corresponding 10 key measurements include 1. Employee Recognition 2. Profitability 3. Rate of Improvement in Process Performance 4. Recommendations per Employee 5. Total Spending/Sales 6. Suppliers Defect Rate 7. Operational Cycle Time Variance 8. Operational Sigma 9. New Business/Total Sales 10. Customer Satisfaction These measurements focus on purchasing, sales, customer satisfaction, rate of improvement, operational excellence, innovation, and profitability (the ultimate measure of business effectiveness). The Operational Excellence category includes the remaining key business processes. The Six Sigma Business Scorecard can therefore be a great mechanism for implementing effectiveness measures in a quality management system and can make the ISO 9001:2000 a value-added system by improving the corporate performance.
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To integrate Six Sigma and ISO 9001 requirements, business leaders must understand how the ISO 9001 standard on performance will affect various elements of the business. The Six Sigma Business Scorecard can be used to identify key business processes, establish measures of performance, and link those measures to the profitability of the company. As required by the ISO 9001 standard, therefore, a procedure must be established to list a final set of measurements, collect necessary data, analyze data, identify opportunities for improvement, and formalize improvement action using the corrective action system. Once the measurements are established, reviews of performance levels and trends become part of the management review meeting. During this review meeting, performance against planned goals is discussed, and any necessary actions to achieve continual improvement goals are implemented. To benefit from the Six Sigma methodology and comply with the continual improvement requirements of the ISO 9001 standards, businesses must apply the methodology economically. Improvements to products or services need to be linked to corporate profitability. The improvements must be accomplished in a cost-effective manner and only if benefits outweigh the cost. In addition, businesses need to be sure they have a process for sustaining improvements.
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The Six Sigma Business Scorecard attempts to address concerns about implementing Six Sigma economically. The methodology requires a top-down approach driven by the corporate strategy. When the top-down approach is combined with the tactical approach of Six Sigma, powerful results are achieved. To achieve the real improvement possible with the Six Sigma Business Scorecard, one of the first tasks that needs to be undertaken is a business opportunity analysis. This will enable the business to identify the best projects to tackle for
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improved profitability. The tangible benefits realized by the company may include reduced waste, lower reprocessing and warranty costs, increased margins and hence improved profitability, and lower investment in working capital. In addition, intangible benefits can be gained through an ingrained culture of customer and quality focus. Currently, the Breakthrough strategy of implementing Six Sigma requires a significant initial expense for training corporatewide Executives, Champions, Green Belts, and Black Belts in Six Sigma awareness and methodology. Companies that have committed to significant training corporatewide without proper planning struggle to identify projects that will allow them to achieve any return on the investment. The goal of Six Sigma is to achieve the highest quality at the lowest cost. The costs of implementing the Breakthrough methodology are estimated to break down in the following way: communication (1 percent), recognition (4 percent), planning (5 percent), organizational restructuring (10 percent), project implementation (30 percent), and training (50 percent).
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