Six Sigma

BITS Pilani Rama Mohan KV

Faculty Department
Pilani Campus

Session 4 30th August’2020

 BITS Pilani
Pilani Campus

< MM ZG539/QM ZG539, Six Sigma>

Lecture No. 4
Implementing Six Sigma

• Attributes of Good Metrics

• Balanced Scorecard
• Cost of Quality
• Benchmarking

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Metric Definition

Standards of measurement by which efficiency, performance, progress, or

quality of a plan, process, or product can be assessed.

A Business Metric is a quantifiable measure that is used to track and assess

the status of a specific business process. It's important to note that business
metrics should be employed to address key audiences surrounding a
business, such as investors, customers, and different types of employees,
such as executives and middle managers. Every area of business has specific
performance metrics that should be monitored – marketers track marketing
and social media metrics, such as campaign and program statistics, sales
teams monitor sales performance metrics such as new opportunities and
leads, and executives look at big picture financial metrics.

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Some examples of Metrics

Sales Revenue
Net Profit Margin
Gross Margin
MRR (Monthly Recurring Revenue)
Net Promoter Score

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Types of indicators

– Lagging indicators are typically “output” oriented, easy to measure but hard
to improve or influence
– Leading indicators are typically input oriented, hard to measure and easy to
influence.

While a lag measure tells you if you've achieved the goal, a lead measure tells
you if you are likely to achieve the goal. ... Lag measures track the success of
your wildly important goal. Lags are measures you spend time losing sleep
over. They are things like revenue, profit, quality, and customer satisfaction.

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Sample Leading and Lagging Indicators

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Attributes of Good Metrics

• Strategic. To create effective performance metrics, you

must start at the end point--with the goals, objectives
or outcomes you want to achieve--and then work
backwards. ...
• Simple. Performance metrics must be understandable.
• Owned. ...
❖ Customer Centric
• Actionable. ... ❖ Measure performance across time
• Timely. ... ❖ Provide direct information at the level at
• Referenceable. ... which they are applied
• Accurate. ... ❖ Aligned to organization’s mission, strategies
and action
• Correlated.
❖ Collaborated between providers, collectors
• Game Proof and users of data
• Aligned ❖ Amenable for analysis and insights
• Standardized
• Relevant

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Attributes of Good Metrics

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%3A%2F%2Ftdwi.org%2FBlogs%2FTDWI-Blog%2F2010%2F04%2FEffective-
Metrics.aspx&usg=AOvVaw361HsoU4As2TWnT4cNsdwP

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