6 Sigma Overview
Alvaro Maury, PhD
INAOE, Nov. 25, 2013
Alvaro Maury
• PhD in Experimental Solid State Physics, Temple University, USA.
• ASQ-certified 6 Sigma Black Belt • PMI-certified PMP (Project Management
Professional) • 20+ years career at AT&T Bell Labs, Lucent, &
Agere Microelectronics • Last 9 years at Silterra Malaysia: Manager of CMP (Chemical Mechanical Polishing)
group Manager of CI (Continuous Improvement) group.
What is 6 Sigma?
• Six Sigma is a set of strategies, techniques, and tools for process improvement.
• It was developed by Motorola in 1986.
• Six Sigma became famous when Jack Welch made it central to his successful business strategy at General Electric in 1995.
• Today, it is used in many industrial sectors.
Course Outline
• Day 1: Define Phase
• Day 2: Measure Phase
• Day 3: Analyze Phase
• Day 4: Improve Phase
• Day 5: Control Phase
Define Phase What is Six Sigma?
Definitions
History
Strategy
Problem Solving
Roles & Responsibilities
Six Sigma Fundamentals
Selecting Projects
Elements of Waste
Wrap Up & Action Items
Understanding Six Sigma
What is Six Sigma…as a Symbol?
σ, sigma, is a letter of the Greek alphabet.
– Mathematicians use this symbol to signify Standard Deviation, an important measure of variation.
– Variation designates the distribution or spread about the average of any process.
The variation in a process refers to how tightly all the various outcomes are clustered around the average. No process will produce the EXACT same output each time.
Wide Variation Narrow Variation
What is Six Sigma…as a Value?
Sigma is a measure of deviation. The mathematical calculation
for the Standard Deviation of a population is:
Sigma can be used interchangeably
with the statistical term
Standard Deviation.
Standard Deviation is the average
distance of data points away from
the Mean in a distribution.
By definition, the Standard Deviation
is the distance between the Mean
and the point of inflection on the
Normal curve.
Point of Inflection
The probability of creating a defect can be estimated and
translated into a “Sigma” level.
What is Six Sigma…as a Measure?
*LSL – Lower Spec Limit
*USL – Upper Spec Limit
The higher the sigma level, the better the performance. Six Sigma refers to a process having 6 Standard Deviations between the average of the process center and the closest
specification limit or service level.
+6 -1 -3 -4 -5 -6 -2 +4 +3 +2 +1 +5
Measure
“Sigma Level” is:
– A statistic used to describe the performance of a process
relative to the specification limits
– The number of Standard Deviations from the Mean to the
closest specification limit of the process
The likelihood of a defect decreases as the number of Standard Deviations that can be fit between the Mean and the nearest spec limit increases.
USL
6 Sigma
5 Sigma
4 Sigma
3 Sigma
2 Sigma
1 Sigma
Magnitude of Difference Between Sigma Levels
Example
• A manufacturer produces a part targetted to measure 10.0000 cm, with the USL=10.0423 cm, and LSL=9.9527 cm.
• A sample of 8 parts produces the following results: 10.0253, 10.0132, 9.9980, 10.0015, 9.9970, 9.9963, 10.0247, 9.9870
• At what sigma level is this process running?
Example
13
What is Six Sigma…as a Benchmark?
Source: Journal for Quality and Participation, Strategy and Planning Analysis
Yield
99.9997%
99.976%
99.4%
93%
65%
50%
PPMO
3.4
233
6,210
66,807
308,537
500,000
World Class Benchmarks
10% GAP
Industry Average
10% GAP
Non Competitive
COPQ
<10%
10-15%
15-20%
20-30%
30-40%
>40%
Sigma
6
5
4
3
2
1
What does 20 - 40% of Sales represent to your Organization?
What is Six Sigma…as a Method?
Define - the business opportunity
Measure - the process current state
Analyze - determine Root Cause or Y= f (x)
Improve - eliminate waste and variation
Control - evidence of sustained results
DMAIC provides the method for applying the Six Sigma philosophy in order to improve processes.
What is Six Sigma…as a Tool?
What is Six Sigma…as a Goal?
Sweet Fruit Design for Six Sigma
Bulk of Fruit Process Characterization and Optimization
Low Hanging Fruit Basic Tools of Problem Solving
Ground Fruit Simplify and Standardize
1 - 2 Sigma
3 Sigma
3 - 5 Sigma
5+ Sigma
What is Six Sigma…as a Philosophy?
Honeywell: Six Sigma refers to our overall strategy to improve growth and
productivity as well as a measurement of quality. As a strategy, Six Sigma is a way for
us to achieve performance breakthroughs. It applies to every function in our company,
not just those on the factory floor. That means Marketing, Finance, Product Development,
Business Services, Engineering and all the other functions in our businesses are
included.
Lockheed Martin: We’ve just begun to scratch the surface with the cost-saving
initiative called Six Sigma and already we’ve generated $64 million in savings with just
the first 40 projects. Six Sigma uses data gathering and statistical analysis to pinpoint
sources of error in the organization or products and determines precise ways to reduce
the error.
General Electric: First, what it is not. It is not a secret society, a slogan or a cliché.
Six Sigma is a highly disciplined process that helps us focus on developing and
delivering near-perfect products and services. The central idea behind Six Sigma is
that if you can measure how many "defects" you have in a process, you can
systematically figure out how to eliminate them and get as close to "zero defects" as
possible. Six Sigma has changed the DNA of GE — it is now the way we work — in
everything we do and in every product we design.
Conventional Strategy
Conventional definitions of quality focused on conformance to standards.
Conventional strategy was to create a product or service that met certain specifications.
• Assumed that if products and services were of good quality. then their performance standards were correct.
• Rework was required to ensure final quality.
• Efforts were overlooked and unquantified (time, money, equipment usage, etc).
Requirement
or
LSL
Requirement
or
USL
Bad Bad
Target
Good
Problem Solving Strategy
The Problem Solving Methodology focuses on: • Understanding the relationship between independent variables and the
dependent variable. • Identifying the vital few independent variables that effect the dependent
variable. • Optimizing the independent variables so as to control our dependent
variable(s). • Monitoring the optimized independent variable(s).
There are many examples to describe dependent and independent relationships. • We describe this concept in terms of the equation:
• This equation is also commonly referred to as a transfer function
Y=f (Xi)
This simply states that Y is a function of the
X’s. In other words Y is dictated by the X’s.
Example
If we are so good at the X’s why are we
constantly testing and inspecting the Y?
Which process variables (causes) have critical impact on the output (effect)?
Y=f (Xi)
Crusher Yield
Time to Close
= f ( )
= f ( ) Xn
Trial
Balance
Correct
Accounts
Applied
Sub
Accounts
Credit
Memos Entry
Mistakes , , , , ,
Feed Material
Type
Tool
Wear Lubricant , , , Speed
Y=f(X) Exercise
Exercise: Consider establishing a Y = f(X)
equation for a simple everyday activity such as
producing a cup of espresso. In this case our
output, or Y, is espresso.
Espresso = f ( ) X1 , , , , X2 X3 X4 Xn
Six Sigma Strategy
(X1)
(X7)
(X6)
(X5) (X3)
(X2)
(X4)
(X8)
(X10)
(X9)
We use a variety of Six Sigma
tools to help separate the “vital
few” variables effecting our Y from
the “trivial many.”
Some processes contain many,
many variables. However, our Y is
not effected equally by all of them.
By focusing on the vital few we
instantly gain leverage.
Archimedes said: “ Give me a lever big enough and
fulcrum on which to place it and I shall move the world.”
Archimedes not shown actual size!
Breakthrough Strategy
By utilizing the DMAIC problem solving methodology to identify and optimize the vital few variables we will realize sustainable breakthrough performance as opposed to incremental improvements or, even worse, temporary and non-sustainable improvement.
VOC, VOB, VOE
The foundation of Six Sigma requires Focus on the voices of the Customer, the Business and the Employee which provides:
– Awareness of the needs that are Critical to the Quality (CTQ) of our products and
services
– Identification of the gaps between “what is” and “what should be”
– Identification of the process defects that contribute to the “gap”
– Knowledge of which processes are “most broken”
– Enlightenment as to the unacceptable Costs of Poor Quality (COPQ)
VOC is Customer Driven
VOB is Profit Driven
VOE is Process Driven
The Life of a Six Sigma Belt
Training as a Six Sigma Belt can be one of the
most rewarding undertakings of your career and
one of the most difficult.
• You can expect to experience:
– Hard work (becoming a Six Sigma Belt is not easy)
– Long hours of training
– Be a change agent for your organization
– Work effectively as a team leader
– Prepare and present reports on progress
– Receive mentoring from your Master Black Belt
– Perform mentoring for your team members
– ACHIEVE RESULTS!
You’re going places!
Black & Green Belt Certification
To achieve certification, Belts typically must:
• Complete all course work:
– Be familiar with tools and their application – Practice using tools in theoretical situations – Discuss how tools will apply to actual projects
• Demonstrate application of learning to training project: – Use the tools to effect a financially measurable and significant
business impact through their projects – Show ability to use tools beyond the training environment
• Must complete two projects within one year from beginning of training
• Achieve results and make a difference
• Submit a final report which documents tool understanding and application as well as process changes and financial impact for each project
Six Sigma Fundamentals
Voice of the Customer
Cost of Poor Quality
Process Maps
Process Metrics
Six Sigma Fundamentals
Selecting Projects
Elements of Waste
Understanding Six Sigma
Wrap Up & Action Items
What is a Process?
Why have a process focus? – So we can understand how and why work gets done
– To characterize customer & supplier relationships
– To manage for maximum customer satisfaction while utilizing
minimum resources
– To see the process from start to finish as it is currently being
performed
– Blame the process, not the people
proc•ess (pros′es) n. – A repetitive and systematic
series of steps or activities where inputs are
modified to achieve a value-added output
Examples of Processes
• Injection molding
• Decanting solutions
• Filling vial/bottles
• Crushing ore
• Refining oil
• Turning screws
• Building custom homes
• Paving roads
• Changing a tire
• Recruiting staff
• Processing invoices
• Conducting research
• Opening accounts
• Reconciling accounts
• Filling out a timesheet
• Distributing mail
• Backing up files
• Issuing purchase orders
We go through processes everyday. Below are some examples of those
processes. Can you think of other processes within your daily
environment?
High Level Process Map
One of the deliverables from the Define Phase is a high level Process Map which at a minimum must include:
– Start and stop points
– All process steps
– All decision points
– Directional flow
– Value categories as defined below
• Value Added:
– Physically transforms the “thing” going through the process
– Must be done right the first time
– Meaningful from the customer’s perspective (is the customer willing to pay for it?)
• Value Enabling:
– Satisfies requirements of non-paying external stakeholders (government regulations)
• Non-Value Added
– Everything else
Process Map Example
Process Map for a Call Center -
START
LOGON TO PC &
APPLICATIONS
SCHEDULED
PHONE TIME?
LOGON
TO PHONE
CALL or
WALK-IN?
PHONE DATA
CAPTURE BEGINS
DETERMINE WHO
IS INQUIRING
ACCESS CASE TOOL
CASE TOOL
RECORD?
Y
N
A
Z
CALL
WALK-IN
DETERMINE NATURE
OF CALL & CONFIRM
UNDERSTANDING
Y
N C
B
D PHONE
TIME
Y
N
Z
B
C
REVIEW CASE
TOOL HISTORY &
TAKE NOTES
PUT ON HOLD,
REFER TO
REFERENCES
IMMEDIATE
RESPONSE
AVAILABLE?
Y
N
TRANSFER
APPROPRIATE?
Y
N
TRANSFER
CALL
ANSWER? Y
N
QUERY INTERNAL
HRSC SME(S)
ANSWER? Y
N
OFF HOLD AND
ARRANGE CALL
BACK PHONE DATA
ENDS
PROVIDE
RESPONSE
PHONE&
NOTE
DATA ENDS
D
ADD TO
RESEARCH
LIST
Z
LOGOFF PHONE, CHECK
MAIL,E-MAIL,VOICE MAIL
SCHEDULED
PHONE TIME?
N
Y A
E
EXAMINE NEXT NOTE
OR RESEARCH ITEM
ACCESS CASE TOOL
ENTER APPROPRIATE
SSAN (#,9s,0s)
IF EMP DATA NOT
POPULATED, ENTER
OLD
CASE
Y
N
UPDATE ENTRIES
INCL OPEN DATE/TIME
CREATE A CASE
INCL CASE TYPE
DATE/TIME, &
NEEDED BY
AUTO
ROUTE
Y ROUTE
CASE
CLOSED
N
Y
N
CLOSE CASE
W/
DATE/TIME E
TAKE ACTION
or
DO RESEARCH
F
GO TO
F or E
DEPENDING ON
CASE F
E NEXT
Process Map Exercise
Exercise objective: Create a Process Map of going
to work everyday
1. Create a high level Process Map, use enough
detail to make it useful.
• It is helpful to use rectangular post-it’s for
process steps and square ones turned to a
diamond for decision points.
2. Color code the value added (green) and non-value
added (red) steps.
3. Be prepared to discuss this with your mentor.
Do you know your Customer?
Knowing your customer is more than just a handshake. It is necessary to
clearly understand their needs. In Six Sigma we call this “understanding
the CTQ ’s” or critical to customer characteristics.
Voice Of the Customer Critical to Customer
Characteristics
What is a CTQ?
Critical to Quality (CTQ ’s) are measures that we use to capture VOC
properly. (also referred to in some literature as CTC’s – Critical to Customer)
CTQ ’s can be vague and difficult to define.
– The customer may identify a requirement that is difficult to measure
directly so it will be necessary to break down what is meant by the
customer into identifiable and measurable terms
Product:
• Performance
• Features
• Conformance
• Timeliness
• Reliability
• Serviceability
• Durability
• Aesthetics
• Reputation
• Completeness
Service:
• Competence
• Reliability
• Accuracy
• Timeliness
• Responsiveness
• Access
• Courtesy
• Communication
• Credibility
• Security
• Understanding
Developing CTQ’s
Step 1
Step 2
Step 3
Capture VOC
• Review existing performance
• Determine gaps in what you need to know
• Select tools that provide data on gaps
• Collect data on the gaps
Validate CTQ’s
• Translate VOC to CTQ’s
• Prioritize the CTQ’s
• Set Specified Requirements
• Confirm CTQ’s with customer
Identify Customers
• Listing
• Segmentation
• Prioritization
Cost of Poor Quality (COPQ)
• COPQ stands for Cost of Poor Quality
• As a Six Sigma Belt, one of your tasks will be to estimate COPQ for your
process
• Through your process exploration and project definition work you will
develop a refined estimate of the COPQ in your project
• This project COPQ represents the financial opportunity of your team’s
improvement effort (VOB)
• Calculating COPQ is iterative and will change as you learn more about the
process
Remember: Cost of Poor Quality!
The Essence of COPQ
• The concepts of traditional Quality Cost are the foundation for
COPQ.
– External, Internal, Prevention, Appraisal
• A significant portion of COPQ from any defect comes from effects
that are difficult to quantify and must be estimated.
• COPQ helps us understand the financial impact of problems created
by defects.
• COPQ is a symptom, not a defect
– Projects fix defects with the intent of improving symptoms.
COPQ - Categories
External COPQ
•Warranty
•Customer Complaint Related Travel
•Customer Charge Back Costs
•Etc…
Prevention
•Error Proofing Devices
•Supplier Certification
•Design for Six Sigma
•Etc…
Detection
•Supplier Audits
•Sorting Incoming Parts
•Repaired Material
•Etc…
Internal COPQ
•Quality Control Department
•Inspection
•Quarantined Inventory
•Etc…
COPQ - Iceberg
Rework
Inspection Warranty
Rejects
Lost sales
Late delivery
Engineering change orders
Long cycle times
Expediting costs
Excess inventory
Hidden Costs
Visible Costs
Lost Customer Loyalty
More Set-ups
Time value of money
Working Capital allocations
Excessive Material
Orders/Planning
Recode
(less obvious)
COPQ – Hard and Soft Savings
• Labor Savings
• Cycle Time Improvements
• Scrap Reductions
• Hidden Factory Costs
• Inventory Carrying Cost
COPQ – Soft Savings
• Gaining Lost Sales
• Missed Opportunities
• Customer Loyalty
• Strategic Savings
• Preventing Regulatory Fines
COPQ – Hard Savings
While hard savings are always more desirable because
they are easier to quantify, it is also necessary to think
about soft savings.
COPQ Exercise
Exercise objective: Identify current COPQ
opportunities in your direct area.
1. Brainstorm a list of COPQ opportunities.
2. Categorize the top 3 sources of COPQ for the four
classifications:
• Internal
• External
• Prevention
• Detection
The Basic Six Sigma Metrics
• Better: DPU, DPMO, RTY (there are others, but they derive from
these basic three)
• Faster: Cycle Time
• Cheaper: COPQ
In any process improvement endeavor, the ultimate
objective is to make the process:
If you make the process better by eliminating defects you will make it faster.
If you choose to make the process faster, you will have to eliminate defects to
be as fast as you can be.
If you make the process better or faster, you will necessarily make it cheaper.
The metrics for all Six Sigma projects fall into one of
these three categories.
Cycle Time Defined
Think of Cycle Time in terms of your product or transaction in the eyes of the customer of the process:
– It is the time required for the product or transaction to go through the
entire process, from beginning to end
– It is not simply the “touch time” of the value-added portion of the process
What is the cycle time of the process you mapped?
Is there any variation in the cycle time? Why?
Defects Per Unit (DPU)
Six Sigma methods quantify individual defects and not just defectives ~
– Defects account for all errors on a unit
• A unit may have multiple defects
• An incorrect invoice may have the wrong amount due and the wrong due
date
– Defectives simply classifies the unit bad
• Doesn’t matter how many defects there are
• The invoice is wrong, causes are unknown
– A unit:
• Is the measure of volume of output from your area.
• Is observable and countable. It has a discrete start and stop point.
• It is an individual measurement and not an average of measurements.
Two Defects One Defective
First Time Yield
FTY is the traditional quality metric for yield
– Unfortunately, it does not account for any necessary rework
FTY = Total Units Passed
Total Units Tested
Units in = 100
Units Out = 100
Units in = 100
Units Out = 100
Units in = 100
Units Out = 100 Units Passed = 50
Units Tested = 50
FTY = 100 %
Process A (Grips) Process B (Shafts) Process C (Club Heads) Final Product (Set of Irons)
Defects Repaired
40
Defects Repaired
30
Defects Repaired
20
*None of the data used herein is associated with the products shown herein. Pictures are no more than illustration to make a point to teach the concept.
Rolled Throughput Yield
RTY is a more appropriate metric for problem solving
– It accounts for losses due to rework steps
RTY = X1 * X2 * X3
Units in = 100
Units W/O Rework = 60
RTY = 0.6
Units in = 100
Units W/O Rework = 70
RTY = 0.7
Units in = 100
Units W/O Rework = 80
RTY = 0.8
Units Passed = 34
Units Tested = 100
RTY = 33.6 %
Process A (Grips) Process B (Shafts) Process C (Club Heads) Final Product (Set of Irons)
Defects Repaired
40
Defects Repaired
30
Defects Repaired
20
*None of the data used herein is associated with the products shown herein. Pictures are no more than illustration to make a point to teach the concept.
RTY Estimate
• In many organizations the long term data required to
calculate RTY is not available, we can however estimate
RTY using a known DPU as long as certain conditions
are met.
• The Poisson distribution generally holds true for the
random distribution of defects in a unit of product and is
the basis for the estimation.
– The best estimate of the proportion of units containing
no defects, or RTY is:
RTY = e-dpu
The mathematical constant e is the base of the natural logarithm. e ≈ 2.71828 18284 59045 23536 02874 7135
Deriving RTY from DPU
The Binomial distribution is the true model for defect data, but the Poisson is the convenient model for defect data. The Poisson does a good job of predicting when the defect rates are low.
n = number of units
r = number of predicted defects
p = probability of a defect occurrence
q = 1 - p
Poisson VS Binomial (r=0,n=1)
0%
20%
40%
60%
80%
100%
120%
0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0
Probability of a defect
Yie
ld (
RT
Y)
Yield (Binomial)
Yield (Poisson)
For low defect rates (p < 0.1), the Poisson approximates the Binomial fairly well.
Binomial
Poisson
Probability
of a defect
Yield
(Binomial)
Yield
(Poisson)
% Over
Estimated
0.0 100% 100% 0%
0.1 90% 90% 0%
0.2 80% 82% 2%
0.3 70% 74% 4%
0.4 60% 67% 7%
0.5 50% 61% 11%
0.6 40% 55% 15%
0.7 30% 50% 20%
0.8 20% 45% 25%
0.9 10% 41% 31%
1.0 0% 37% 37%
• For the unit shown above the following data was gathered:
– 60 defects observed
– 60 units processed
• What is the DPU?
• What is probability that any given opportunity will be a defect?
• What is the probability that any given opportunity will NOT be a defect is:
• The probability that all 10 opportunities on single unit will be defect-free is:
RTY for DPU = 1
0.348
0.352
0.356
0.36
0.364
0.368
10 100 1000 10000 100000 1000000
Chances Per Unit
Yie
ld
Basic Question: What is the likelihood of producing a unit with zero defects?
Unit
Opportunity
Opportunities P(defect) P(no defect) RTY (Prob defect free unit)
10 0.1 0.9 0.34867844
100 0.01 0.99 0.366032341
1000 0.001 0.999 0.367695425
10000 0.0001 0.9999 0.367861046
100000 0.00001 0.99999 0.367877602
1000000 0.000001 0.999999 0.367879257
If we extend the concept to an infinite number of opportunities, all at a DPU of 1.0, we will approach the value of 0.368.
Six Sigma Metrics – Calculating DPU
The DPU for a given operation can be calculated by dividing the number of
defects found in the operation by the number of units entering the operational
step.
If the process had only 5 process steps with the same yield the process.
RTY would be: 0.98 * 0.98 * 0.98 * 0.98 * 0.98 = 0.903921 or 90.39%. Since our metric of
primary concern is the COPQ of this process, we can say that in less than 9% of the time
we will be spending dollars in excess of the pre-determined standard or value added
amount to which this process is entitled.
RTY1=0.98
dpu = .02
RTY2=0.98
dpu = .02
RTY3=0.98
dpu = .02
RTY4=0.98
dpu = .02
RTY5=0.98
dpu = .02
RTYTOT=0.904
dpuTOT = .1
100 parts built
2 defects identified and corrected
dpu = 0.02
So RTY for this step would be e-.02 (.980199) or 98.02%.
Note: RTY’s must be multiplied across a process,
DPU’s are added across a process.
Focusing our Effort – FTY vs. RTY
Assume we are creating two products in our organization
that use similar processes.
FTY = 80%
FTY = 80%
How do you know what to work on?
Product A
Product B
*None of the data used herein is associated with the products shown herein. Pictures are no more than illustration to make a point to teach the concept.
Focusing our Effort – FTY vs. RTY
Let’s look at the DPU of each product assuming equal
opportunities and margin…
Product A Product B
dpu 200 / 100 = 2 dpu dpu 100 / 100 = 1 dpu
Now, can you tell which to work on?
“the product with the highest DPU?” …think again!
How much more time and/or raw material are required?
How much extra floor space do we need?
How much extra staff or hours are required to perform the rework?
How many extra shipments are we paying for from our suppliers?
How much testing have we built in to capture our defects?
*None of the data used herein is associated with the products shown herein. Pictures are no more than illustration to make a point to teach the concept.
Summary
At this point, you should be able to:
• Describe what is meant by “Process Focus”
• Generate a Process Map
• Describe the importance of VOC, VOB and VOE, and CTQ’s
• Explain COPQ
• Describe the Basic Six Sigma metrics
• Explain the difference between FTY and RTY
• Explain how to calculate “Defects per Unit” DPU
Define Phase Selecting Projects
Project Selection
Selecting Projects
Refining & Defining
Financial Evaluation
Six Sigma Fundamentals
Selecting Projects
Elements of Waste
Understanding Six Sigma
Wrap Up & Action Items
A Structured Approach – A Starting Point
The Starting Point is defined by the Champion or Process Owner and the
Business Case is the output.
– These are some examples of business metrics or Key Performance Indicators
commonly referred to as KPI’s.
– The tree diagram is used to facilitate the process of breaking down the metric of
interest.
Level 1
Level 2
Level 2
Level 2
Level 2
EBIT
Cycle time
Defects
Cost
Revenue
Complaints
Compliance
Safety
A Structured Approach - Snapshot
The KPI’s need to broken down into actionable levels.
Business Measures
Key Performance Indicators (KPIs) Actionable Level
Level 1
Level 2
Level 2
Level 3
Level 4
Activities Processes
Activities Processes
Business Case Example
During FY 2005, the 1st Time Call Resolution
Efficiency for New Customer Hardware Setup
was 89% .
This represents a gap of 8% from the industry
standard of 93% that amounts to US
$2,000,000 of annualized cost impact.
The Business Case Template
Fill in the Blanks for Your Project:
During ___________________________________ , the ____________________ for
(Period of time for baseline performance) (Primary business measure)
________________________ was _________________ .
(A key business process) (Baseline performance)
This gap of ____________________________
(Business objective target vs. baseline)
from ___________________ represents ____________________ of cost impact.
(Business objective) (Cost impact of gap)
What is a Project Charter?
The Project Charter expands on the Business Case, it
clarifies the projects focus and measures of project
performance and is completed by the Six Sigma Belt.
Components:
• The Problem
• Project Scope
• Project Metrics
• Primary & Secondary
• Graphical Display of Project Metrics
• Primary & Secondary
• Standard project information
• Project, Belt & Process Owner
names
• Start date & desired End date
• Division or Business Unit
• Supporting Master Black Belt
(Mentor)
• Team Members
Project Charter - Definitions
• Problem Statement - Articulates the pain of the defect or error in the
process.
• Objective Statement – States how much of an improvement is desired
from the project.
• Scope – Articulates the boundaries of the project.
• Primary Metric – The actual measure of the defect or error in the process.
• Secondary Metric(s) – Measures of potential consequences (+ / -) as a
result of changes in the process.
• Charts – Graphical displays of the Primary and Secondary Metrics over a
period of time.
Project Charter - Problem Statement
Migrate the Business Case into Problem Statement…
Pareto Analysis
Pareto Analysis:
• A bar graph used to arrange information in such a way that priorities for process improvement can be established.
• The 80-20 theory was first developed in 1906, by Italian economist, Vilfredo Pareto, who observed an unequal distribution of wealth and power in a relatively small proportion of the total population. Joseph M. Juran is credited with adapting Pareto's economic observations to business applications.