Business Assurance Thought and Link of of the Day, March 26, 2009: Business Continuity and Six Sigma
26th March 20091 Comment
Three articles on Business Continuity and Six Sigma are reviewed to compare and contrast how business continuity and Six Sigma can help to deliver stakeholder and ultimately business assurance.
To become more resilient, planning and preparedness can help organisations to manage the potential impact of disasters upon their critical operations. Business continuity management can assist in managing key risks which can impact upon quality, cost and service delivery. In a Six Sigma and Business Continuity article by Paul Kirvan:
“Business continuity, security and emergency management are all process-driven activities. As such, it makes sense to ensure that those processes are constantly being reviewed and improved. Six Sigma is a process that ought to be considered for these disciplines, as it deals with process improvement.”
To become more resilient, planning and preparedness can help organisations to manage the potential impact of disasters upon their critical operations. Business continuity management can assist in managing key risks which can impact upon quality, cost and service delivery.
Larger organisations may be comparatively better positioned to absorb a disruption to their critical business operations but the detrimental impact the brand or company reputation may not be so easy to recover, however the impact may be even more acute for smaller enterprises, this is confirmed by Tyrone Butler, Service Management Center Quality Leader, EDS
“Although a larger company might weather a few defects, they can destroy a small company’s reputation and customer base. Small companies are also more sensitive to idle inventory and capital equipment, rework, absenteeism, and machine breakdowns.”
In addition to supporting organisational resilience, driving enterprise value, Six Sigma enables you to exceed customer expectations. Tyrone goes onto say:
“Keep in mind that your strategic focus should not be on improving your bottom line and growth, but on enabling Six Sigma methodology to become your company’s route to “overachieving” your goals and exceeding customer expectations. If deployed well, Six Sigma will become part of your company’s DNA.”
The fundamental commonality is assessing the probability of risk by conducting a business impact analysis (BIA). This helps to identify critical operations requiring effective operational response and recovery plans to ensure the provision of key products and services. The continuity of critical operations is fundamentally comprised of business processes and their effectiveness depends upon their capability to deliver within determined key performance criteria without loss of quality, service, cost or time.
What is Six Sigma?
In simple terms, a definition of a six sigma process is one that produces 3.4 defective parts per million opportunities (DPMO).
Minimising defects in the delivery of critical products or services is dependant upon the process capability or confidence levels in delivering against predefined specification limits supported by complementary activities such as training and process optimisation. What differentiates this from other risk management approaches is that the analysis is performed from the customer’s perspective.
How does this relate to organisations?
Every organisation has critical stakeholder dependant relationships which ultimately require servicing to ensure the future enterprise sustainability and success. In another article discussing the role of Six Sigma to support Business Continuity, Tony Jacowski , a quality analyst for The MBA Journal, believes every organisation regardless of size is exposed to defective parts or services. A three step approach outlining how Six Sigma can be used to support business continuity was discussed and is given below:
a) So how do we use Six Sigma to manage business continuity?
(i) The first step is to perform a business impact analysis. This helps to define and prioritise all potential risks that may impact upon the organisational critical operations. The impact of the likely threats can then be statistically modelled to assist in establishing an accurate scenario and predict the most likely outcomes.
(ii) The next step is to cross functionally analyse the threats in detail to brainstorm cost effective and practical solutions. Input from across the organisation is fundamental as the external risks can have an impact upon other functions of the organisation.
(iii) Having prioritised the improvement suggestions, these are then implemented to assist in not effectively managing the potential impact of an operational disruption but also assist in continuing the fulfilment of stakeholder expectations and future enterprise success.
In conclusion
The articles suggest successful organisations demonstrate operational agility to adapt to the ever changing competitive and challenging operational environments. This requires continuous analysis and updating of organisational business continuity plans and their performance to improve the organisational security and business capability.
Implementing effective business management control systems can assist in ensuring the maintenance of operational efficacy and assure your stakeholders’ expectations of quality, security and service. In my opinion, this supports the essence of business assurance.
29th April 2011 at 6:22 am
hi there,
Thanks for sharing the press release online
Thanks,
Mike