Selecting the Right Six Sigma Projects

Guidelines

1
 Overview

Understand
• How to choose good projects
• How to beware of “bad” projects
• How to have projects approved
• The requirement for backlog projects

2
 Why Is Project Selection Important?

Careful project selection is important to the Champions / Mentors

and Belts because:
• Improvement culture depends on news of successful projects having significant
BUSINESS IMPACT.
• Poor project selection is the most common root cause of project delays and
failures.
• Good project selection allows the project team to be empowered to make and drive
improvement changes.
• Good project selection will lead to success and encourage further projects to be
undertaken by the team.

3
 Why Should We Care?

• As Champions and Mentors, we

are expected to select and validate
Six sigma projects that are aligned
with the Business Plans.
• Selecting and validating the “right”
project leads to success. Key
objectives are:
• Choose projects that align with
your primary responsibilities.
• Choose projects that eliminate
waste (MUDA)
• Choose projects that can be
managed and resourced.
• Choose projects which are
achievable (success breeds
success)

4
 Basic Project Terms

• Y’s – the output of X’s

– Key process output variable or customer requirement
– The Y (output) is affected by the X’s (inputs)
• X’s
– Key process input variable
– If the X’s are not controlled then the Y is affected

y  f ( x1 , x2 ,..., x k )
If we understand and control the X’s -
then the Y’s will be in control

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 The Project Desirability Matrix

In addition to Business Impact, there are two other attributes of projects

that should be considered when evaluating the desirability of a project:

• EFFORT REQUIRED - Includes not only your own time as a Champion / Mentor, but
also the time that will be required of your team members and expenditure of money.

• PROBABILITY OF SUCCESS - An assessment that takes into account the various risk
factors:
– TIME - Uncertainty of the completion date
– EFFORT - Uncertainty of the investment required
– IMPLEMENTATION - Uncertainty of roadblocks

6
 The Project Desirability Matrix (continued)

The 3 attributes of a potential project can be visualized on

the following matrix:

7
 Project Selection - Examples of “Bad” Projects

“Bad” projects rate poorly on one or more of the following

attribute scales:

1. Little or no business impact

– Is little or no benefit to customers (internal / external)
– Requires heavy capital investment but has a poor ROI.
– Is not supported by the process owner.
– Is driven by personal agendas instead of business drivers
– Cannot be quantified either in hard or soft savings
More . . .

8
 Project Selection -Examples of “Bad” Projects (Continued)

2. Effort Required
– Requires heavy resourcing that cannot be supported
– Adding resources but not providing good project leadership
– Trying to a resolve “world hunger” / “boil the ocean” project
– Assigning projects to Belts who are already handling too many projects
– The Champion not taking ownership

3. Probability of Success - Improving a process which:

– Will not show the benefits for more than 9 months
– Has a high dependency upon completion of other risky projects
– Requires support from other people which has not been negotiated or
agreed up-front
– Is not aligned with management objectives or business plans

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 Project Selection - Validation and Backlog of Projects

Project Validation

• Champions + Mentors + Belts must work together to ensure the

nominated projects have good probability for success

• All selected projects must be validated by the local financial

representative for cost savings and viability

• Champions and Mentors should ensure that all projects are reviewed by
their Business Unit before being launched

• Not all projects can be worked on immediately therefore all potential

projects should be retained in a project “hopper” so that once a project
has been successfully completed the project team can begin to work on
another one from the hopper. . . . . .

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 Project Selection - The Project Hopper

Potential
Projects
Hopper

Projects Defined and Agreed by Champions / Belts

Project Champion selects Belt for the project

Process Owner provides team resources to support the project

Team implements the project and identifies further

opportunities for improvement

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 Six Sigma/Lean and Design Improvements

• Six Sigma/Lean tools can be applied to manufacturing, transactional

and design processes

• Customer and Business Improvements plus Financial results are

attainable (both hard and soft savings) on all these types of Six
Sigma projects

• Choosing the right project scope, metrics, tools and team are critical
to success

• Six Sigma/Lean can help drive project performance excellence as

well as being an enabler to achieving operational goals

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 Scoping the Project – the BIG Y’s

Projects should align with the business strategy (What drives your
business, and how will you measure the project success?)

• Planning
– Strategic Business Plan
– Business Profit Plan
– Strategic planning review
• Assessment
– Balanced scorecards
– Customer feedbacks and surveys (Voice of the Customer)
– Strategic personnel review (Project Resources)
• Execution
– “On the floor” (walking the talk)
– Performance reports (the measurement system)
– Visual workplace (everyone can see what is being done)

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Defining The Right Objectives for the Project

pecific
easureable
chievable but aggressive

elevant to the business strategy

ime bound
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 Picking the Correct ‘Y’ Metrics for the Project

• Align with business strategy by choosing the right metrics for your
transactional business processes, for example:

• On time delivery to request and promise • Orders won / lost

• Stock-outs • Expediting costs
• Lead time performance • Air freight
• Stock obsolescence • Overtime
• Expedites/month • Damaged inventory
• Sales errors/month • Customer satisfaction/ customer complaints
• Items processed/month • Engineering change requests
• Warranty incidences • Time for software development
• Stock orders filled upon entry • EDI errors
• Phone calls / day / person • Blocked Stock (days)
• Number of orders / month • Credit Blocks

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 Understanding the X’s Effect - Example

• Potential errors or deficiencies • Potential causes

– Sales price incorrect
– Specification or order information
incorrect
– Excessive cycle time to process
inquiries
– Incorrect packing lists-quantity or
description
– Incorrect Invoices-quantity,
description or price
– Interpretation of customer
requirements.
– Translation into order entry
system (typographical error)
– Insufficient training
– Data integrity (EDI error)
– Process capability

If we understand and control the X’s -

then the Y’s will be in control

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 Defining the Savings and Benefits

• What are the benefits and savings: • Who should help in the validation:

– Are there hard savings that can be achieved. – Financial Champion

– Are there blue dollar savings – Financial Champion

– Are there intangible benefits? – Process / Business Owner

– Are there customer benefits? – Sales – Internal / External

– Are there internal business benefits? – Business Management Team

– How can these be measured? – MBB / BB

– How will these be validated? – Champion / Belt

– Who will collect the data? – Project Team

– Who will analyse the data? – Process Owner

– Is there historical data that can be used as a – IT / Systems

base-line?

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 Tracking Financials

• Dealing with “soft” cost savings

– Process improvements
– Time savings
– Reduction in customer complaints
– Reduction in customer invoice deductions / collection efforts
– Reduction in claims
– Establishment of better data collection / tracking mechanisms
– Reallocation of headcount

The Financial Champion always has to

agree and approve recorded savings

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 Tracking Financials

• Dealing with “hard” cost savings

– Scrap / defect reduction

– Overhead or burden cost reduction
– Increase in sales
– Reduction in credits paid
– Cost avoidance
– Reducing inventory
– Reducing blocked stock
– Reducing causes of administration return errors
– Working capital improvements

The Financial Champion always has to

agree and approve recorded savings

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 Assigning the Right Team

KEY QUESTIONS

• How well is the project scoped?

• Does the process owner agree with the project?

• Will the process owner provide resource and time for the project?

• Does the project cross operational boundaries?

• How easily can data be collected, and does a mechanism currently

exist to collect data?

• Do the team members want to be part of the project?

• Is the process currently stable and capable?

• Will you need cross functional support?

• Is the team empowered to develop solutions?

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 Assigning the Right Team

Example of a Manufacturing Project Team

• Deployment Champion
• Process Owner
• Financial Champion
• IT / Systems
• Black or Green Belt (depending on the complexity of the project)
• Process Specialists (the experts in the process)
• The Customer (the Voice)
– Internal
– External
• Team members with process knowledge

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 Assigning the Right Team

Example of a Transactional Project Team

• Deployment Champion
• Process Owner
• Financial Champion
• Black of Green Belt depending on the complexity of the problem
• IT / Systems
• Customer Service Specialist
• Customer (the Voice)
– Internal
– External
• Team members with process knowledge

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 Using the Right Tools for VOC and VOP

• Voice of the Customer / Voice of the Process

– Customer surveys, audits, scorecards help identify the voice

of the customer

– Process Mapping help to identify the Voice of the Process –

walking the talk

– Fishbone / 5 Why / Murphy’s Analysis help to identify the X’s

– Cause and Effect Analysis helps to identify the critical and Key X’s
that influence the ‘Y’ (voice of the customer)

– Control Plans help to identify what we do and do not control and

what actions we have to take to close the gaps.

– Failure Mode and Effect Analysis helps to identify the risks in the
process.

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 Using the Right Tools for the Project

Six Sigma/Lean Tool Box (Lean Tools)

– Brainstorming
– Customer Surveys
– Customer Performance data (for example: scorecards)
– Process maps
– Pareto’s
– Cause & Effect Matrix
– Standard Operating Procedures
– Business reports

The Belt and the team select the tools

appropriate to the project

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 Using the Right Tools for the Project

Six Sigma/Lean Tool Box (Statistical Tools)

– PFMEA’s (check for risks and causes)

– Control Charts
– Capability Study
– Basics Statistics
– Box Plots
– IMR Charts
– 1t and 2t tests
– ANOVA
– Multi Vari
– Kappa and MSA studies
– Correlation and Regression

The Belt and the team select the tools

appropriate to the project

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 Collecting the Data and Using Basic Statistics
• Simple, practical and graphical tools such as a Pareto diagram can help identify gaps in the

process

– A team can learn a lot just from simple graphical analysis

– A Parteo diagram can help you scope and define your project

100
60000
80

Percent
50000 D=Risk
D=Risk
Count

N=Warranty
N=Warranty
40000 60
H=Sales
H=Sales Error
Error
30000 L=Cust. Relats.
L=Cust. Relats. 40
20000 E=Job
E=Job
Expenses
Expenses 20
10000
A=Distrib.
A=Distrib.
0 Conces.
Conces . 0

Defect
Count 30191.8
45.4
9093.4 8938.5 6735.7 5008.1 2678.3 917.7 2940.9
13.7 13.4 10.1 7.5 4.0 1.4 4.4
Percent 45.4 59.1 72.5 82.6 90.2 94.2 95.6 100.0
Cum %

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 Collecting the Data – Process Capability

Key Questions
• Is the Process Capable?
– What is the Y – what are the X’s that could influence it?
– Where are the X’s recorded and measured?
– What are the critical X’s that could influence the ‘Y’?
– Is the measurement system capable?
– What is the specification for the process?
• Why do we care?
– We can compare the “voice of the customer” with the “voice of the process” (requested
versus actual). This identifies where gaps are.
• How do we improve capability?
– Change the center of the process (the mean)
– Reduce the spread of the process (the variation)

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 Collecting the Data – Process Capability

Conduct a Measurement System Study (MSA Gage and Attribute)

– Gauge and Kappa outcomes
• Compare results--Is there repeatability?
• Compare against a standard or expert: Is the measurement system meeting the
standard expected?
• Compare operator-to-operator results: Is there reproducibility?

– But beware: You may have to create a real measurement system first!
• Processes may not be tracked with measurable statistics
• People may only be watching leading indicators or reviewing outputs of the process
– You must identify the inputs, before you can identify the inputs that control the
outputs!
• The project team may not even know what are the inputs--much less how to measure
them

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 Communicating Project Results

• Communicate Success - Over do it! Give credit for success and publish it
• Communicate across all applicable groups/boundaries
– Monthly Success Stories
– Successfully Demonstrated Practices (use the SDP repository)

The Visual Enterprise

Your Site’s Metrics Team News
High Level
Balanced Scorecard Health Projects
Metrics

Diagnostic Flow Charts Team

Metrics Process Maps Successes

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 Summary

The “Right Projects”:

 Are linked to a key business issue or objective
 Are prioritized based on the value to the Business and the resources and time
required
 Have clearly defined deliverables
 Have an identified “process owner”
 Have defined boundaries
 Have “SMART” objectives
 Well-selected and defined improvement projects will translate into better,
faster results

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 Summary

Project Feasibility Criteria

• Determine resources needed
• Estimate the complexity
• Estimate the time to achieve the results
• Estimate the likelihood of success
• Determine if expertise is available
• Determine if support is required from other
departments in the organization

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