The worst scenario, of course, is the closure of the business. Such disastrous consequences can easily be avoided by implementing Six Sigma principles and methodologies.

In the contemporary commercial world, Six Sigma tools are increasingly used in business forecasting and related fields - in spite of some people having reservations about their accuracy and precision.

Business forecasting is neither a guessing game nor does it depend on the whims and fancies of a few top management professionals. It is no longer a part of someone's subjective feeling, but is an objective observation based on authentic facts and figures, leading to successfully charting out the future course of a business.

Six Sigma Approach

The ever-increasing customer awareness and competition in business have brought about many innovations, including the use of Six Sigma as an effective management tool.

For making business forecasts, Six Sigma depends on a scientific approach and uses available facts and figures. A data-oriented approach helps Six Sigma avoid the possibility of errors in business forecasting decisions, which used to be a common phenomenon in the days applying conventional techniques.

Perceptible Results

Six Sigma promotes a better understanding of the business process, leading to an improvement in cycle time by eliminating non-value-added steps from the process. It is very much like the traditional Lean approach towards waste elimination, driving accountability through the ownership of process.

As a result, the process cycle time can be reduced by 40-45% - bringing about greater regularity in the performance of the process.

Limitations of Six Sigma in Business Forecasting

One can also use the traditional process and tool of Define, Measure, Analyze, Improve, Control (DMAIC) to bring about improvement in business and transactional processes.  Of course, this kind of use is quite non-traditional.

It is worthwhile to remember that one can't afford to have the mindset of a purist while trying to improve transactional or business process. It is best not to adopt a purist mindset regarding the application of the process and tools. One has to step out of the box of traditional Six Sigma tools and look to other tools for process improvement.

Businesses should not lose sight of the basic purpose of applying the tools in use. It is counter-productive to stress statistics too much. What is required is to develop a deeper understanding of why a particular tool set, such as Regression or Lean, should be applied, in order to have a new perspective on the results and what they mean to the team.

The Relevance of Six Sigma in Forecasting

Six Sigma facilitates business forecasting by helping businesses to measure the needs of their customers in the coming months and years. Once the forecasts have been made, the business can then proceed to make suitable production or service plans to suit its future requirements.

By virtue of basically being a quality management system, Six Sigma can successfully be applied in almost any business dimension. The area of business forecasting is no exception. All that is required is a little innovative approach on the part of a business while applying Six Sigma concepts.