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Six Sigma Case Study: Amazon.com

Small businesses and multinational corporations all over the world use Six Sigma to turn their failing processes around. Companies like 3M and General Electric. In fact, one of the world’s largest and most successful e-commerce companies uses Six Sigma to great effect. A household name, we’re all familiar with their trademark smile logo. Amazon.com.

Ever since beginning life as an online bookstore, Amazon.com has drastically expanded its product range, breaking into the technology market with their range of Kindle e-readers and tablets. They have even implemented innovative practices like same-day delivery, set to reach new heights for efficiency with automated drone delivery. Their steadily growing catalog of Amazon Originals is also set to rival online giants like Netflix. But have you ever wondered how Amazon became one of the largest online retailers in the world? Today we learn the answer: Six Sigma.

How Amazon Have Incorporated Six Sigma into Their Work

Six Sigma has always been firmly rooted in Amazon’s company culture. With around 2000 items ordered every sixty seconds, Amazon can’t afford to let standards slip. As far back as 1999, the company began a program of Operational Excellence aimed at improving company processes. Amazon defines Operational Excellence in two ways. Firstly, to deliver continuous improvement for customer experience. Secondly, to drive productivity, margin, efficiency, and asset velocity across the entire corporation.

To achieve their goal, Amazon set about hiring the best and brightest – a common Six Sigma tactic –  from top schools around America. They took things one step further by training their employees as Six Sigma Black Belts. Using Six Sigma methods, they were able to reduce variation by actively seeking it out using DMAIC, Root Cause Analysis, and similar tools. They reduced waste by cutting spending, eliminating none-value-adding process stages, and cultivating Kaizen-based company culture. The result was a completely different company with greater inventory management, increased efficiency, and stronger value stream control.

Amazon is devoted to excellent customer service and experience. Before they revamped their business operations at the start of the millennium, they were indistinguishable from any other online bookstore. Using Six Sigma, they have made rapid progress in becoming a global online retailer. With a culture focused on continuous improvement and greatest efficiency possible, Amazon has taken over the world. In doing so, they have emerged as a technology giant to stand alongside the likes of Apple or Microsoft.

The Importance of Data and Metrics

Six Sigma is more than just a methodology for improving an organization’s quality. Most people don’t understand the nuances and complexities of Six Sigma beyond its well-known uses. Those who aren’t quite au fait on the subject may see Six Sigma as a simple improvement strategy. But they often don’t question how it improves businesses or what it needs to function. In truth, data drives Six Sigma success.

Without sufficient data, you simply cannot make decisions without data to support and justify them. Six Sigma’s data-driven nature derives from the six standard deviations practitioners use to keep defects in check. Like Six Sigma, data drives everything for Amazon. From the types of purchases, customers make online to how people use their technology. Moreover, Amazon uses various metrics to constantly harvest data that shed light on areas for improvement and opportunities for expansion. For Amazon, data isn’t just a means to improve customer experience. It’s a way of life.

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