Six Sigma Basic Key Terms - Part III (Business Metrics)

Six Sigma Basic Key Terms - Part III (Business Metrics)

Business Metric: A unit of measurement that provides a way to objectively quantify a process. Any measurement that helps management understand its operations might be a business metric; number of products completed per hour, per cent of defects from a process, hours required to deliver a certain number of outputs or provide a service, and so on. Business metrics provide data that six sigma managers can use to better understand their processes and identify target areas for improvement.

Mean: Average the sum of a series of values divided by the number of values.

Median: Midpoint in a series of values.

Mode: Value that occurs most often in a series of values.

Range: Difference between the highest value and the lowest value in a series, the spread between the maximum and the minimum.

Standard Deviation: Average difference between any value in a series of values and the mean of all the values in that series. This statistic is a measure of the variation in a distribution of values.
Specification limit: One of two values that indicate the boundaries of acceptable or tolerated values for a process.

Process Width: Spread of values +/- sigma from the mean – process width, also known as normal variation.

Control Limit: One of two values that indicate the inherent limits of a process.
Process Mapping: Creating flowcharts of the steps in a process – operations, decision points, delays, movements, handoffs, rework loops, and controls or inspections. A process map is an illustrated description of how a process works.

Baseline: A standard for comparisons, a reference for measuring progress in improving a process, usually to differentiate between a current state and a future state.
Gap Analysis: A technique used to compare a current state and a target future state.