THOUGHT FOR THE DAY

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THOUGHT FOR THE DAY

• Whats the difference
• between a manager and a leader?

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• A manager focuses on doing things right
• A leader is concerned with doing the right things

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SESSION 6 SELECTING YOUR SIX SIGMA PROJECT

• INTRODUCTION TO
• IMPROVING BUSINESS PERFORMANCE SIX SIGMA, LEVEL
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• APRIL 16 - 18, 2007

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SESSION OBJECTIVE

• Outline approach for selecting
• Six Sigma projects

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FUNDAMENTALS OF PROJECT SELECTION

• Two fundamental criteria
• The effort required to implement
• Time/resources informed cost/benefit analyses
• The probability of success
• Risk/reward factors

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PROJECT DESIRABILITY MATRIX
IMPACT
High
Medium
Low
Effort
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PROJECT SELECTION

• A Problem
• A Process
• A Financial Benefit
• A metric
• A goal
• A customer metric

Source Greg Brue and Rod Howes, The McGraw Hill
36 Hour Six Sigma courses
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PROJECT SELECTION

• Does your company/industry have items 1 through
  6?
• If not, you are a Six Sigma enigma
• Six Sigma is not for you

Source Greg Brue and Rod Howes, The McGraw Hill
36 Hour Six Sigma courses
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PROJECT SELECTION HAS MAJOR IMPACT

• Good Projects have many positive benefits
• Customer satisfaction/financial/employee/quality
• Bad Projects result in
• Loss of Commitment
• Wasted Resources
• Outcomes below expectations
• Lowering of morale loss of credibility
• No improvement in Customer Satisfaction

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Use a Systematic Approach to Project Selection
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Finding Potential Projects

• FIRST QUESTION
• WHO CHOOSES POTENTIAL PROJECTS?

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ANSWER TO FIRST QUESTION

• Organization leaders
• or
• Executive Team
• Develop list of possible projects
• Assess the possibilities and then
• Short-list those that align with corporate goals
  and objectives
• NOTE NOT ALL IMPROVEMENT DECISIONS ARE SIX
  SIGMA DECISIONS
• Consolidating facilities from 2 offices to one
  does not need a six sigma approach to implement
  you know what has to happen you need to move
  operations to the single office and dispose of
  the other
• APPLY SIX SIGMA ONLY TO PROBLEMS FOR WHICH YOU DO
  NOT KNOW THE SOLUTIONS

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Establish Basic Criteria 1

• Corporate
• Be related to corporate mission/goals
• Must be approvable by senior management
• Financial
• There needs to be a potential to save money by
  reducing variation and defects thereby providing
  the opportunity to turn COPQ into bottom-line
  savings
• Allow Six Sigma team to attack/reduce/eliminate
  costs all process has a connected cost

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HOW LONGS YOUR LIST?

• AS LONG AS YOU LIKE BUT YOU WILL NEED ADDITIONAL
  CRITERIA TO SCREEN LONG LISTS
• OR ALTERNATIVELY
• ADD CRITERIA TO THE BASIC CRITERIA AND THEN DRAW
  UP A SHORTER LIST

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Establish Basic Criteria 2

• Applicable
• Must be definable and de-limitable includes
  identifying inputs and outputs
• Process must allow for stabilization you need
  to know its process capability ie will meet a
  customers needs as defined by specification
  limits
• Must involve repetitive, recurring processes
  the more the better given the focus on
  eliminating variation
• Allow rigorous data collection/analysis within
  short time
• It must lend itself to Six Sigma approach of
  understanding the causes of variation and
  reducing and or eliminating them to minimize
  defects.
• Doable
• Small enough to handle but big enough to matter
• Be implemented within a reasonable timeframe (4-6
  month max)
• if longer break-up into smaller discrete projects

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Whats Your Approach?

• Top-down
• Approach based on corporate strategic plan and
  goals/objectives
• Bottom-up
• Approach based on budget limitations and/or
  expectation, the costs of doing business
• Outside-in
• Approach based on the Voice of Customer and
  their requirements that your customers consider
  critical to quality

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POSSIBLE PROJECTS 1

• Think Cost of Poor Quality (COPQ)
• Eliminating defects with measurable costs
• Include
• Excess Inventory
• Rework and repair
• Overstaffing
• Duplicate and excess paperwork
• THESE ARE TEMPORARY FIXES THEY DO NOT SOLVE
  UNDERLYING PROBLEM

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POSSIBLE PROJECTS 2

• THINK NON-ADDED VALUE FACTORS
• (activities that add cost but not value for
  customers)
• System downtime
• Materials Handling
• Sorting and Stacking
• Delivery expediting
• System utilization
• Inspection and rework
• Data entry rework
• Requoting
• ELIMINATE THESE FOR IMMEDIATE BOTTOM-LINE RETURNS

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POSSIBLE PROJECTS 3

• VALUE FACTORS
• (activities that add value and directly impact
  customers)
• Assembly
• Order entry
• Billing
• Fulfillment rate
• Processing transactions

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Project Problem Statement

• It must be quantifiable and specific
• Good Statement
• Currently the MIS application is causing 5 days
  in delays affecting 4 multi-user capabilities,
  which are adversely costing 2,000 in excess
  labor per month along with 18,500 in interest
  costs per year
• Bad Statement
• We feel by developing a new MIS application to
  replace the existing application would result in
  an increase in productivity and we believe
  employees would be motivated to perform at higher
  levels. This would cost a little over 10,000
  for installation and only 500 per seat

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Project Objective Statement

• Follow up Problem Statement with Objective
  Statement
• Good Objective Statement
• The objective of the project is to reduce the 5
  days of delays to 1 day and a user capability to
  unlimited user based with a minimum of 10 users
  or more.
• Bad Statement
• We need to increase productivity by installing a
  new application

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Good Project Think SMART

• S Specific
• M Measurable
• A Achievable
• R Realistic
• T Time-bound
• YOU NEED TO KNOW
• WHAT YOURE GOING TO DO AND WHY

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USE DATA TO HELP PICK YOUR PROJECT

• Pareto Charts
• Separate factors and charts them in descending
  order from the most troublesome to the least
• Pareto Principle Distilled
• 80 of trouble comes from 20 of problems
• IE Only 20 of problems are vital factors

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USE DATA TO HELP PICK YOUR PROJECT

• Pareto Charts
• Involves 3 levels of charting
• Separate factors and charts them in descending
  order from the most troublesome to the least
• Pareto Principle Distilled
• 80 of trouble comes from 20 of problems
• IE Only 20 of problems are vital factors

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Example Pareto Chart(s)
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