What is an average cost of sigma level improvement
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Answer:
Typical North American companies' average Sigma level is around 3 Sigma. In other words, 25-40% of most company's annual revenue gets chewed up by their cost of quality. Thus, if a company can improve its quality by 1 sigma level, its net income will increase hugely, approximately 10 percent net income improvement (see Table 3.1).
Explanation:
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Furthermore, when the level of process complexity increases (eg. output of one sub-process feeds the input of another sub-process), the rolled throughput yield of the process will decrease, then the final outgoing quality level will decline, and the cost of quality will increase. For example, if a company satisfies its single process yield with 93.32% of good, 3 sigma level, it may end up with an unacceptable final yield which represents a very high cost of quality.
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