This is a buzz word in almost every organization today. Let us first understand what is sigma ?

Sigma is the 18^{th} letter of the Greek alphabet. It is denoted as “**σ**”. In mathematics it is used to measure variation (recall the term “standard deviation”- σ) .

** Six sigma! – **Does that ring a bill ? Alright.. tell me the name of the company that hit your mind first—Motorola, GE.. ?

Allow me to help you with this:

**Six Sigma** is a set of techniques and tools for process improvement. It was introduced by engineer Bill Smith while working at Motorola in 1986. Motorola pioneered the concept and used Six sigma principles in their organization for the first time and created a benchmark for others to follow. In last 2 decades, this methodology is evolved multiple folds and implemented by many organizations successfully across the globe. The beauty of this methodology is that it’s concepts are universal that they can be applied to any industry as it focuses on improving process, which is the base of any organization set up.

By definition, Six sigma is a yardstick to measure process performance/ capability scientifically. There are 2 commonly used methods to calculate Sigma level basis the “Data” type:

*Discrete Data type- DPMO method**Continuous Data type- Z value method*

**DPMO method (****The defects per million opportunities):**

Let’s say, there is a process setup with certain number of folks that work on Order processing. Audit team selected a sample of 100 transactions using sampling techniques and performed audit.

If each transaction has 5 opportunities of errors then 100 transactions shall have 100 X 5= 500

Total opportunities (O)= 500

Say, auditors detected 20 defects in their sample.

Defects (D)= 20

Defects per opportunity (DPO)= 20/500= 0.04

Defects per Million opportunity (DPMO)= 20* 1000000/500= 40000

Now, refer to Sigma table to figure sigma level which is 3.3 (ST)

*Remember: Definitions for “defect” and “opportunity” are fundamental to measuring process capability using sigma**.*

** 2. Z value method**

This method is used when you have continuous data type and data distribution follows Normal distribution. Refer to the below curves. The total area under a normal curve is always 1 and the shaded area below is the defect ( anything outside LSL/USL is defect).

Now, we can easily calculate area of the shaded portion (area of defect region) if we know the standard deviation,mean and LSL/USL . Here is how calculation is done:

Z Upper = Usl- Mean/ σ

Z lower = Mean- LSL/ σ

Z score = Z Upper+ Z lower

where “σ” the standard deviation.

Once you have calculated Z score, refer to Z table for corresponding sigma value score.

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Hope it helps! happy learning!

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