FINANCIAL ESSAY

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Dr. JAM

Meeting II

D

D

E

F

I

N

E

P H A S E

OBJECTIVE: DETERMINE THE SELECTION, SCOPE, GOALS, TEAM OF THE PROJECT .

SIX SIGMA

Selection of the project:

The selection of the project has to be in accordance to:

  • Voice of Customer.

(Three steps should be followed prior defining the project:

1. Define Customer

2. Obtain customer wants, needs and desires.

3. Ensure project address customer needs.

  • Corporate and plant goals alignment.

(To get continuous support from decisional makers with the required resources)

  • Financial Justification.

(To justify the resources allocation in the project development.)

*

Dr. JAM

Meeting II

SIX SIGMA

D

Defining a project:

Stock Holders

Board of Directors

Corporate Goals

Manufacturing Goals

Strategic Plans

Potential Improvement Areas

Potential Projects

Project Selection

BUSINESS STRATEGY

*

Dr. JAM

Meeting II

SIX SIGMA

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Determine potential project:

Manufacturing Goals

Manufacturing Cost per Department

Manufacturing cost per Process

Potential Projects

  • Product M Yield Improvement
  • X Line Output rate improvement
  • Q Line Downtime reduction
  • Materials Yield/Consistency Improvement
  • Manufacturing procedure consistency
  • Others

*

Dr. JAM

Meeting II

SIX SIGMA

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Determine KPOVs of the projects:

BASELINE METRICS

  • Actions taken to improve profits
  • Out of stock items
  • Actions taken to achieve goal
  • Amount of WIP
  • Amount of internal rework
  • Inspection procedures
  • Process temperature

  • Profits
  • Customer Satisfaction
  • Strategic Goal
  • Expense
  • Production cycle time
  • Defect rate
  • Critical dimension on a part

INPUT

PROCESS

OUTPUTS

Xs

or

Key Process Input Variables

Ys

or

Key Process Output Variables

Manufacturing Process

*

Dr. JAM

Meeting II

SIX SIGMA

D

Using the potential projects already aligned with business goals or strategies, then the Cost of Poor Quality, Cost of Quality or Defect Cost can be define to any cost associated with the reject, scrap, rework or repair of any material, equipment or employee.

Each potential project prepared the process map or flow diagram showing each step and associated cost,

Determine the manufacturing cost and COPQ.

Start

Process

steps

Decision

Delay

Storage

Waste

*

Dr. JAM

Meeting II

SIX SIGMA

D

Determine the manufacturing cost and COPQ.

Start

Process

steps

Decision

Delay

Storage

Waste

PRIMARY

METRICS

SECONDARY

METRICS

*

Dr. JAM

Meeting II

SIX SIGMA

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Determine the COPQ:

  • The baseline should be based on engineering standards, and budgeted figures.
  • The methodology of estimating the COPQ should be consistent.
  • The estimates should include all four main resources in the evaluation.
  • Materials
  • Labor
  • Equipment
  • Money (Overhead)
  • Based on the potential contribution of the project, make a preliminary selections of the improvement areas.

*

Dr. JAM

Meeting II

SIX SIGMA

D

Project Identification:

Start

Determine metrics

and goals of the

project

Determine

Baseline and

Estimate

Benefits of

Project.

One time Task

Select project

with higher

financial

impact

End

Apply traditional Project Management

Project Ideas

Database

Process

Will be

Evaluated

Apply Six

Sigma Project

Design

Financial or

Cust. Sat.

BIG

LOW

No

Yes

No

Yes

Dr. JAM

Meeting II

SIX SIGMA

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Project Description:

Based on preliminary areas of improvement, describe the projects the following tools:

  • Develop problem statement related to the causes.

  • Develop a gap analysis of what the process is delivering and what the customer is expecting.

  • Develop project goals with KPOV that are measurable.

  • Develop the project relationship between the suppliers and the customers. (Specs in both directions)

  • Develop project matrix from the project map or process flow to the cost analysis per project tasks.

  • Verify the linkage between the project and the corporate goals.

Dr. JAM

Meeting II

SIX SIGMA

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Develop the Project Charter:

  • The team need to be established

based on the roles and goals.

  • Roles and goals need to be clear to members and management.
  • Members has to agreed on the details of the charter and commit to them.
  • Project charter should provide a clear scope of steps to be done.

Dr. JAM

Meeting II

SIX SIGMA

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PROJECT CHARTER

Project Name and Statement

Project Kick-off date and completion date

Identify KPOVs that will be used for the process metrics

Cost Of Poor Quality Indicators, Process Capability

Control Charts, Defects per Million, others

Describe improvement goals for these metrics

Sponsor, champion, MBB, process owner, financial analysts

Black Belt, team members and roles

Project Description

Start and Completion Date

Baseline Metrics

Secondary Metrics

Goals

Team Support

Team Members

Primary Metrics

Develop the Project Charter:

Define phase deliverables and report out date

Plan project and metrics phase deliverables and report out date.

Baseline project deliverables and report our date

Consider lean tools deliverables and report out date

Measure System Analysis deliverables and report out date

Organization Deliverables and report out date

Passive analysis deliverables and report out date.

Proactive Testing deliverables and report out date.

Control phase deliverables and report out date

Define

Plan Project and Metrics

Baseline Project

Consider Lean Tools

Measure System Analysis

Organization Expectations

Analyze

Improve

Control

Phase Milestones

Describe the impact and benefits to the final customer

Estimated financial impact to business

Describe the expected business performance improvement

Customer

Financial

Internal Productivity

Benefits

Dr. JAM

Meeting II

SIX SIGMA

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Develop an Effective Communication

Plan:

  • Review progress reports among the members to determine if the required information is included.
  • Verify that the progress reports will be visible to the expected level of the organization.
  • Determine the frequency of meetings and reports updates.

Dr. JAM

Meeting II

SIX SIGMA

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Define the Team:

Executive:

  • Motivate others toward a common vision.
  • Serve as model of Six Sigma environment.
  • Use strategic and baseline metrics.
  • Direct members in promoting Six Sigma critical thinking, tools utilization and team visibility.
  • Be involved in the development of Six Sigma teams by attending to meetings, training members and others.

Dr. JAM

Meeting II

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D

Define the Team:

Steering

Team:

  • Continues Executive roles and responsibilities.
  • Develop project selection criteria.
  • Set policies for accountability for project results.
  • Develop policies for financial evaluation of project benefits.
  • Establish internal and external communication plan.
  • Identify effective training and qualified trainers.
  • Develop human resource policies for Six Sigma roles.
  • Determine computer hardware and software standards.
  • Set policies for team reward and recognition.
  • Identify potential candidates for Six Sigma roles.

Dr. JAM

Meeting II

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D

Define the Team:

Champion:

  • Remove barriers to success.
  • Develop incentive programs with executive team.
  • Communicate and execute the Six Sigma Vision.
  • Determine project-selection criteria with executive team.
  • Identify and prioritize projects.
  • Questions methodology and project-improvement recommendations.
  • Verify completion of phase deliverables.
  • Drive and communicate results
  • Approve completed projects.
  • Leverage project results.
  • Reward and recognize team members.

Dr. JAM

Meeting II

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Meeting II

Define the Team:

Master Black

Belt:

  • Function as change agents.
  • Conduct Six Sigma Trainings.
  • Coach black belts/ green belts.
  • Leverage projects and resources.
  • Formulate project selection strategies with steering team.
  • Communicate the Six sigma vision.
  • Motivate others toward a common vision.
  • Approve completed projects.

Dr. JAM

Meeting II

SIX SIGMA

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Meeting II

Define the Team:

Black Belt:

  • Lead change.
  • Communicate the Six Sigma vision.
  • Lead the team in the effective utilization of the six Sigma methodology.
  • Select, teach, and use the most effective tools.
  • Develop a detailed project plan.
  • Schedule and lead team meetings.
  • Oversee data collection and analysis.
  • Sustain team motivation and stability.
  • Deliver project results.
  • Track and report milestones and tasks.
  • Calculate project savings.
  • Interface between finance and information management.
  • Monitor critical success factors and prepare risk management plan.
  • Prepare and present executive level presentations.
  • Complete four to six project per year.
  • Communicate the benefit of the project to all associated with the process.

Dr. JAM

Meeting II

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Meeting II

Define the Team:

Green Belt:

  • Similar to black belt but at smaller functional area.
  • Address projects that are confined to the functional areas.
  • Have less trainings than black belts.
  • Are involved with Six Sigma improvement in a part time role.

Dr. JAM

Meeting II

SIX SIGMA

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Meeting II

Define the Team:

Sponsor:

  • Function as a change agents.
  • Remove barriers to success.
  • Ensure process improvements are implemented and sustained.
  • Obtain necessary approval for any process changes.
  • Communication the six sigma vision.
  • Aid in selecting team members.
  • Maintain team motivation and accountability.

Dr. JAM

Meeting II

SIX SIGMA

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Meeting II

Define the Team:

Other

Resources:

  • Overall quality leader to deploy and monitor the six sigma business in a broad level.
  • Information management support to aid hardware and software utilization.
  • Finance support to approve monetary calculations.
  • Human resources to direct career path and establish job description.
  • Communications for internal and external information flow.
  • Training to coordinate any required educational meeting for the team or the users of the project.