Are KPIs Important to Six Sigma?

The core of Six Sigma is reducing and/or eliminating waste or defects through process improvement. Beyond the initial process improvement efforts, it is about ensuring that standards are set in place that ensures that processes are perpetually improved. This is what is usually referred to as continuous improvement – without this, all Six Sigma projects will be rendered mute over time.

And why go through all this trouble of improving processes? To make sure that value flows through each process unhindered, all the way to the customer.

In order to improve a process, its performance has to be measured. You have probably heard the saying that what cannot be measured cannot be managed. It is in the measurement of performance that KPIs are important to Six Sigma.

What is a KPI?

Before we talk about how KPIs are important to Six Sigma, let’s define what they are. A KPI or key performance indicator is any numerical value that can tell an organization how well it is performing when it comes to achieving its goals. Organizations usually have goals that they wish to achieve, and KPIs tell them what progress they have made so far versus how much more progress they need to make to achieve their goals.

It is believed that KPIs are an invaluable tool for an organization’s decision-makers. By looking at the KPIs, they can tell if the performance they see is expected or below expectations. If the performance is below expectations, then leadership will make the appropriate decision to get the organization back on track. 

And the decisions are likely to lead to successful outcomes since they will be highly informed decisions. 

How to come up with good KPIs?

Now that you know what a KPI is, let us look at how one can come up with good KPIs. While this is not an exhaustive list, you are likely to come up with a good one if the KPI has the following characteristics:

• A good KPI has to be measurable, otherwise, there is no way it can be called a KPI.
• It also has to be related to the organization’s strategic objectives at that time, otherwise, you will end up measuring an irrelevant KPI.
• The KPI needs to be in line with the customers’ requirements and demands
• It has to be simple and well defined.
• It needs to be assigned to an owner; someone who is responsible for reporting and measuring it.
• The KPI needs to be assigned to an individual, team or department that is capable of making sure positive outcomes are achieved from measuring the KPI.

How are they important to Six Sigma?

The question of how KPIs are important to Six Sigma is all about picking the right project to work on. When the performance of an organization is measured, KPIs reveal whether certain targets are being met or not. By looking at which targets are not being met, an organization can identify the processes that need to be improved and start working on the appropriate Six Sigma project to meet those targets.

Without knowing which targets to aim for through the KPIs, it can be all too easy to work on irrelevant projects. Once this happens, the organization will not achieve its goals, and a lot of time, effort and money would have been wasted for nothing.

Besides that, measuring KPIs in Six Sigma projects tells the organization if the improvements efforts are leading them towards their goals. If not, then the Green Belt or Black Belt can take the appropriate action to ensure everything is on track. And by continually measuring the performance of projects, KPIs can also ensure that continuous improvements efforts are being followed through in the organization

Conclusion

As you can see, KPIs are also an essential part of Six Sigma. They ensure the Six Sigma projects being worked on are the right ones and are helping the organization achieve its goals. Overall, it is hard to see how Six Sigma can even be effective without KPIs.