Defining a Project

8/3/2019 Defining a Project

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Part II

Defining a Six Sigma Project


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In this part . . .

From the topmost to the lowest level applications,Six Sigma uses the Define-Measure-Analyze-Improve-Control (DMAIC) project methodology to achieve break-through improvement results. In this part, you go throughexercises and worksheets that build your mastery of defin-ing the problem to be solved and the project effort thatwill solve it. Consistent improvement requires your carefulstudy and precise scoping of what the problem actually is.


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1. Heres a business case example. Find and underline each of the five required business case elements:Procedures call for all shipments to be turned over to the carrier within four hours of receipt atthe dock. Shipping dock A has an average time of more than 12 hours, resulting in storage issuesand customer complaints. We had to add 100 square feet of storage to the dock, and have lostthree customers this month due to late shipments.

Solve It

In order to stimulate you to find problem areas in your business, following is a checklistof red flag items, any one of which could indicate a business problem area to address:

K Product returns K Low quality K Capacity restraints

K Receivable collection issues K Low yield K Long cycle times

K Stressful work K Rework K Excessive inventory

K Chaotic or complicated workflow K Waste K Customer complaints

46 Part II: Defining a Six Sigma Project

Q. After youve identified a potential prob-lem area, its time to prepare the businesscase. An effective business case mustinclude the following elements:

The specific system or process beingscrutinized

The area of the business affected The base goal or objective not being

met

The resulting problems or issues

The estimated impact, in dollars oranother metric

Underline each of these business caseelements in the following statement:

Our accounts receivable performancefor the finance invoicing area isntmeeting the goal of 47 days sales out-standing. Overall this poor perform-ance is causing cash flow and budgetproblems that are costing us as muchas $4 million per year.

A. Heres what the statement looks like withthe business case elements underlined:

Our accounts receivable performancefor the finance invoicing area isntmeeting the goal of 47 days salesoutstanding. Overall this poor perform-ance is causing cash flow and budgetproblems that are costing us as muchas $4 million per year.

Use the following template to create business cases and to start the process of select-ing appropriate Six Sigma projects:

The performance of ______________________________________________ isnt meeting thegoal of ______________________________________________________________ in the area of

__________________________________________________________________. This results in___________________________________________________________ causing these negativeeffects: _________________________________________________________________________.

Prioritizing and Aligning Projects withBusiness-Customer-Process Scorecards

Hopefully by now youve identified a number of problem areas in your business andhave prepared business cases for each (if you havent, check out the previous section,


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Getting Project Ideas by Using the Business Case Writing Tool, for tips). So now the ques-tion is What criteria should I use for selecting appropriate Six Sigma projects? Here are justa few options: Alphabetical, random, highest dollar, and even by throwing darts. But be care-ful! Even though youve identified legitimate problem areas that will yield good candidatesfor projects, haphazard project selection can still hamper or derail your initiative.

Always keep in mind that to obtain the maximum benefit from your initiative, you must linkyour Six Sigma project selection with the strategic needs of the business.

Take a look at Figure 4-1, which illustrates the overall concept of aligning Six Sigma with busi-ness goals and objectives.

At this critical point in the selection process, you probably have a number of Voices shout-ing at you and demanding attention: the Voice of the Customer(VOC), Voice of the Process(VOP), and Voice of the Business (VOB). Often you find these Voices competing with eachother for your attention. For example, the VOC wants lower prices, better pizza, and faster

delivery, the VOP wants the best possible ingredients regardless of the cost, and the VOBwants to make more money.

Take the Three Sigma Pizza Emporium for example. This business has a number of problems,and the Six Sigma team didnt know where to start on improvement efforts. So, the team com-pleted a business-customer-process scorecard, which is shown in Figure 4-2.

After multiplying the three column rankings for each process, the Six Sigma team at theThree Sigma Pizza Emporium decided that making pizza was the place to start improvementefforts. The team identified several key projects in that area.

Name of Ark Process

Processes that need some

amount of improvement

(from Business Cases)

Impact on

Customer Needs -

Internal or

External (VOC)

The effect this

process has on

meeting the needs

and expectationsof the customer

Improvement Need

or Amount (VOP)

A rating based on

existing performance

levels that are

required to meet theneeds of the business

Importance to

Meeting Business

Goals and

Objectives (VOB)

The effect improving

this process will

have on existing

goals and objectivesof the business

Overall Ranking

The score resulting

from multiplying

the ratings in the

three columns

Inventory management 2 1 4 8

Staffing and training 3 3 2 18

Phone-in ordering 4 2 3 24

Preparing pizza 5 4 3 60

Delivering pizza 5 2 5 50

Impact ratings: 1=Little 2=Somewhat 3=Moderate 4=High 5=Extreme

Figure 4-2:

Business-

customer-

process

scorecard.

Objective

Link Six Sigma tobusinesspriorities

Achievebreakthroughimprovement

Integrate into day-to-day business

Project identificationand launch

Solution to theproblem and a finalreport

Implementation andfinancial benefit

Phase

Recognize

Output

Define

Measure

Analyze

Improve

Control

Realize

Figure 4-1:

Project

alignment to

business

needs.

47Chapter 4: Putting the Right Foot Forward: Defining a Six Sigma Project


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Figure 4-3 is a blank scorecard template you can use to prioritize the problem areas for yourpotential Six Sigma projects by considering all the important Voices in your process. You canprint this form from www.dummies.com/go/sixsigmaworkbook .

Project Definition I: Writinga Problem Statement

Before mounting your white horse and leaping right into solving your business problems,you need to define and describe the problem by using aproblem statement. This tool clarifiesthe issue by specifically identifying what has to improve to meet your goal, the magnitudeof the problem, where the problem occurs, and the financial impact. The problem statementcan then be used to communicate the problem to the people whose support you need.

Following is a checklist that shows all the critical elements of a successful problem statement:

K A description of the problem and the metric used to describe it.

K The process name and location of the problem.

K The time frame over which the problem has been occurring.

K The size or magnitude of the problem.

Name of Ark Process

Processes that need some

amount of improvement

(from Business Cases)

Impact onCustomer Needs -

Internal or

External (VOC)

The effect this

process has on

meeting the needs

and expectations

of the customer

Improvement Need

or Amount (VOP)

A rating based on

existing performance

levels that are

required to meet the

needs of the business

Importance toMeeting Business

Goals and

Objectives (VOB)

The effect improving

this process will

have on existing

goals and objectives

of the business

Overall Ranking

The score resulting

from multiplying

the ratings in the

three columns

Impact ratings: 1=Little 2=Somewhat 3=Moderate 4=High 5=Extreme

Figure 4-3:

Business-

customer-

process

scorecard

template.


Q. The Six Sigma team at the Three SigmaPizza Emporium created a problem state-ment to pinpoint the businesss problemswith pizza production. The first draft ofthe problem statement read as follows:

There is a problem with the number ofundercooked pizzas.

A. When the team presented this problemstatement to the General Manager, hisresponse was, So what? I knew that! Theteam leader told the team to try again,using the checklist above. The next draftread as follows:

In the last six months, 5 percent ofpizzas had to be scrapped prior to

boxing due to undercooking. The boxershad no procedures for sending pizzasback for additional cooking time. In addi-tion, 2 percent of the pizzas delivered to

customers were undercooked, resultingin 125 customer complaints. Pizza scrap-

ping cost the company $23,550 during thelast six months, in addition to a loss ofcustomers.

If you compare the new statement withthe previous critical elements checklist,you see that all critical elements havebeen included. The General Manager nowhas a clear picture of the problem, and hewill no doubt support the Six Sigma proj-ects conducted by the team in this area.


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2. Now its your turn to help the Three Sigma Pizza Emporium team write another problem state-ment. If you recall from the scorecard created in the section Prioritizing and Aligning Projectswith Business-Customer-Process Scorecards, pizza delivery was the second-ranked problem area.Take the following incomplete statement, and rewrite it as an effective problem statement, makingsure to include all items from the checklist:

Customers are complaining about delivery times.

________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

An example solution to this practice problem is located at the end of this chapter. Of course, thereis no single right answer. The only requirement is that your solution contains all the necessaryelements.

Solve It

Following is a blank problem statement template to help you organize your thoughtsas you prepare for your next project:

A description of the problem ___________________________________________________

_____________________________________________________________________________

The metric used ______________________________________________________________

_____________________________________________________________________________

Specifically where the problem is occurring______________________________________

_____________________________________________________________________________

How long the problem has been occurring _______________________________________

_____________________________________________________________________________

The size or magnitude of the problem ___________________________________________

_____________________________________________________________________________

Project Definition II: Writingan Objective Statement

One more tool is important for you to make sure that your improvement projectlaunches properly. This tool is called an objective statement, which directly addressesthe problem statement. In order to be effective, the objective statement must containall of the following elements: It must improve some metric from some baseline to some

goal, in some amount of time with somepositive impacton some corporategoal orobjective. Simply put, the objective statement must indicate the level of improvementexpected from improvement efforts, including specific, quantifiable amounts and thetime required to complete.


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Six Sigma practitioners often use a memory jogger, called SMART, to help writeeffective objective statements. Each letter reminds you of a goal to achieve in yourstatement:

Specific: Make sure that the specific deliverables and outcomes are stated and

that you answer the question, Whats the specific purpose of this project?

Measurable: Be sure that your objective is both quantifiable and verifiable andthat it includes such things as quality, quantity, cost, and timeliness.

Aggressive, butAttainable: A challenging objective makes the project interestingand fulfilling, while also providing worthwhile returns. However, dont try tosolve world hunger.

Relevant: The objective must be relevant to business goals.

Time bound: You must state a definitive time frame for reaching your objective.

Q.The Three Sigma Pizza Emporium teamcreated an objective statement. The firstdraft of the statement for pizza produc-tion looked like this:

Retrain employees to reduce thenumber of undercooked pizzas.

A. The team leader sent the team back tothe drawing board with instructions toinclude all the critical elements requiredfor a proper objective statement. Theteams next effort read as follows:

Our goal is to reduce the number of

pizzas scrapped from undercooking from5 percent to less than .05 percent by June30. In addition, we also want to reducethe number of undercooked pizzas thatreach customers from 2 percent to zeroby the same date. Doing so will helprestore our image as a quality pizza

parlor and will save the company$50,000 annually.

If you compare the new draft to therequired elements mentioned at thebeginning of this section, youll find thatall are included.

3. Returning again to the Three Sigma Pizza Emporium situation, see if you can help the team pre-pare an effective objective statement for the pizza delivery problem. Take the following incom-plete statement and rewrite it as an effective objective statement, making sure to include allrequired items:

Improve pizza delivery times.

________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

An example solution to this practice problem is at the end of this chapter. Of course, there isno single right answer. The only requirement is that your solution contains all of the necessaryelements.

Solve It


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Following is a blank objective statement template to help you organize your thoughtsas you prepare for your next project:

The metric to be improved_____________________________________________________

_____________________________________________________________________________

The current baseline __________________________________________________________

_____________________________________________________________________________

The goal _____________________________________________________________________

_____________________________________________________________________________

The time frame for improvement _______________________________________________

_____________________________________________________________________________

The corporate goal or objective ________________________________________________

_____________________________________________________________________________

The impact on the goal or objective_____________________________________________

_____________________________________________________________________________

Launching a ProjectYoure probably chomping at the bit to launch your project. Youve written the busi-

ness case, youve made sure your identified problem area is important to the company,and youve written a problem statement and an objective statement. So, you say, letsgo! However, dont get ahead of yourself there are still a few things to remember andmanage as the project starts.

To make sure the launch process is orderly, follow this checklist:

K Identify everyone who has to approve the project.

K Obtain written approval.

K Identify the people impacted by your project.

K Notify the impacted people of whats to come.

K Get final approval from the project team leader.

K Identify Six Sigma skill levels (Belts) that are needed.

K Identify the process members who will participate.

K Identify the entire project team by name.

K Fire!


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Solutions to Defining a Six Sigma Projecta Heres a solution to the business case example:

Procedures call for all shipments (the specific process) to be turned over to the carrier within4 hours of receipt (the base goal not being met) at the dock. Shipping dock A (area of the busi-ness affected) has an average time of more than 12 hours, resulting in storage issues and cus-tomer complaints (the resulting problem). We had to add 100 square feet of storage to thedock, and have lost three customers this month (the impact) due to late shipments.

b Now its your turn to help the Three Sigma Pizza Emporium team write another problem state-ment. If you recall from the scorecard created in the section Prioritizing and Aligning Projectswith Business-Customer-Process Scorecards, pizza delivery was the second-ranked problemarea. Take the following incomplete statement, and rewrite it as an effective problem statement,making sure to include all items from the checklist:

Customers are complaining about delivery times.

An effective problem statement for this case reads as follows:

Since June 30, the average time to deliver a pizza within our market area, a 15-mile radius, is35 minutes. During this time we had a low of 22 minutes and a high of 66 minutes, and weexceeded our advertised guarantee of 30 minutes 55 percent of the time. The result of these slowdelivery times is customer complaints, free pizzas to the customer, and a loss of business. Freeand scrapped pizzas resulted in a revenue loss of $23,800 during the period. Driver costs forredelivery cost the company an additional $6,600. Lost customers are estimated to represent$45,000 in annual business.

c Returning again to the Three Sigma Pizza Emporium situation, see if you can help the team pre-pare an effective objective statement for the pizza delivery problem. Take the following incom-plete statement and rewrite it as an effective objective statement, making sure to include allrequired items:

Improve pizza delivery times.

An effective objective statement for this case reads as follows:

Our objective is to reduce the number of pizzas delivered in more than 30 minutes from 55 per-cent to less than 5 percent by June 30 of next year. Doing so will further enhance our image ofexcellence and will save the company over $60,000 annually.


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Defining a Project