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Six Sigma and ROI

Last Updated January 17, 2020

People walking in a city with a blurry background and a banner on the image that says "six sigma and ROI - determining potential return on investment".

Incorporating Six Sigma practices into business processes can have a huge impact on their return on investment (ROI). On the surface, ROI would seem to be a straightforward statistic to calculate. However, there are many variables to consider in the case of Six Sigma, as training and human resources costs can be more difficult to measure than capital expenditures on equipment or technology. That’s why a thorough understanding of Six Sigma principles is essential to determine ROI.

Measuring ROI

Generally speaking, ROI is a measure of gains relative to the initial investment. This measure is used both to determine if an investment is worth making and whether or not a particular initiative is producing the desired results. The goal of every business is to maximize ROI for all expenditures, including Six Sigma implementations. Just as an investment can be one-time or ongoing, the same holds true for ROI. In the latter instance, calculating ROI will involve projections of expenses and gains over time.

Six Sigma and Project Selection

The real key to determining which projects are the best candidates for Six Sigma implementation is to determine their potential ROI. While companies may gravitate toward simpler projects that have an easily calculable ROI, Six Sigma tools and techniques can be used to measure the effectiveness of more complicated business processes – and determine those with the greatest potential for ongoing ROI over time. It is critical to have someone with an in-depth understanding of Six Sigma weigh in on the selection of projects and provide insights into the potential ROI.

It can be argued that inefficient project selection is one of the leading factors behind project failure and poor ROI. Improving this one area can have a dramatic impact on both project success rates and ROI for the entire organization. Simply put, if you’re spending money in the right place, you are far more likely to get a better return.

Evaluating the Benefits and True ROI of Six Sigma

When evaluating Six Sigma and measuring its potential impact on ROI, it’s vital to consider all of the benefits of a project. While a simple cost-vs.-profit analysis is a big part of calculating ROI, it is only one part. There are also many hidden benefits that knowledge of Six Sigma can help you uncover.

For instance, reduced man-hours resulting from a more efficient process may be less obvious but just as beneficial to the company as a straight increase in profit. Likewise, improved levels of customer satisfaction can lead to more repeat business and referrals over time. It is important to consider the many tangible and intangible benefits of Six Sigma when calculating ROI. Unless you uncover all of these potential opportunities, it is impossible to make an accurate comparison of the ROI for various projects.

Master Six Sigma 100% Online for Improved ROI

Six Sigma practices can offer tremendous benefits to companies that know how to make the most of them. Individuals with specialized training and certification should be heading up Six Sigma initiatives and helping to calculate potential ROI. Whether you’re a company looking to develop internal expertise or an individual seeking to advance your career, an excellent starting point is the Certificate in Lean Six Sigma offered 100% online through Villanova University.

Recognized as a leader in Six Sigma education online, Villanova helps professionals master the complexities of Six Sigma and its impact on ROI. The certificate program consists of three certificate courses – Six Sigma Green Belt, Lean Six Sigma and one elective – and prepares participants for the corresponding certification exams.

All of Villanova’s online courses are led by noted Six Sigma experts and delivered through a proven, video-based e-learning platform. With the ability to view lectures via streaming video and participants can complete their coursework anytime and anywhere. Communication tools such as virtual whiteboards, online message boards, live chat rooms, email and two-way voice over IP (VOIP) allow for engaging interactions between students and instructors.

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