Six Sigma project selection is important to ensure the success of an organization's Six Sigma initiative and specific projects. The first projects set the tone and expectations for future projects. They provide learning opportunities and help shift the organization's culture to one based on data-driven decision making. Proper project selection involves screening projects based on their alignment with strategy, potential return on investment, and feasibility of completion within 3-5 months. The first project, in particular, should have a low risk of failure and set the stage for additional follow-up projects.
Six Sigma project selection is important to ensure the success of an organization's Six Sigma initiative and specific projects. The first projects set the tone and expectations for future projects. They provide learning opportunities and help shift the organization's culture to one based on data-driven decision making. Proper project selection involves screening projects based on their alignment with strategy, potential return on investment, and feasibility of completion within 3-5 months. The first project, in particular, should have a low risk of failure and set the stage for additional follow-up projects.
Six Sigma project selection is important to ensure the success of an organization's Six Sigma initiative and specific projects. The first projects set the tone and expectations for future projects. They provide learning opportunities and help shift the organization's culture to one based on data-driven decision making. Proper project selection involves screening projects based on their alignment with strategy, potential return on investment, and feasibility of completion within 3-5 months. The first project, in particular, should have a low risk of failure and set the stage for additional follow-up projects.
HOW PROJECT SELECTION IMPACTS QUICK RESULTS IN SIX SIGMA
PERFORMANCE IMPROVEMENT PROGRAMS
By Charles M. Monroe CMC SSBB & Charles A. Cox CMC SSBB
SHS Management Engineering Forum February 21, 2004 Orlando, Florida
Why Six Sigma Project Selection is Important
A Six Sigma initiative (and its resulting Six Sigma projects) is the methodology for an organization to address problems without known solutions that affect the organizations financial and customer satisfaction success, Six Sigma project selection is important to assure the success of the organizations Six Sigma initiative and to assure the success of the specific Six Sigma projects.
Six Sigma initiatives are not a panacea and are not a strategy. Six Sigma initiatives enable and improve upon the execution of a strategy. In fact, the organization must have its strategy identified to qualify to implement a Six Sigma initiative.
Six Sigma project selections are particularly important for the first several projects because these first projects: Provide the learning opportunities for new Six Sigma team members (including Subject Matter Experts (SMEs), Process Owners, Champions and Black, Green and Yellow Belts; Convert the Organizations culture from one or repeating hear say or anecdotes to one of making decisions based upon relevant data; Set the Organizations tone, reputation, and enthusiasm for the whole Six Sigma Initiative; and Drive Managements enthusiasm for the Six Sigma Initiative based on the projects Return on Investment (ROI).
Therefore, the first projects set the tone, level of expectations and enthusiasm for all future Six Sigma Initiative projects.
Successful project selection will enhance the careers of those involved in Project Selection and Project Execution (such as Champions and Process Owners) while leveraging the operational and financial results of the Organization and motivating all members of the Organization who are aware of the Organizations performance.
Six Sigma Methodology Quick Overview
Six Sigma methodologies include three components: Process, Product and Services Improvement Methodology (DMAIC) Business Process Management (BPM), and Design or Redesign Methodology (DFSS)
Six Sigma projects are most effective when aligned with the Organizations strategy meaning the projects are focused on the Organizations core, significant and most strategic operations.
Figure 1. Six Sigma Methodology Components
Projects are the core center of Six Sigma efforts because they drive improvements in Customer Value as well as operational and financial improvements.
Necessary conditions for a successful Six Sigma project are: the project is in alignment with the Organizations strategy, the project produces significant financial results, and Management of the Organization supports the Six Sigma project.
The DMAIC methodology defines Six Sigma projects and includes these steps or phases: Define sets project goals and boundaries Measure identifies the process which is the source of problems, defects or waste and measuring it. Analyze identifies and confirms root causes of problems, defects or wastes. Improve develops, implements and evaluates solutions to the root causes. Control implements oversight processes that assure the new level of performance is maintained.
Principle Parameters of Project Selection
Projects are selected to insure that they: Align with the Organizations core strategies Relate to the Organizations core processes. Address issues the Customers see as Critical to Quality (CTQ). Enable Revenue growth and/or Enable Cost reductions and/or EnableTime reductions. Can be completed in 3 to 5 months time. Projects requiring more than three to five months can usually be broken down into phases with each phase being standalone and requiring three to five months. Provide value creation potential in the range of $150,000 to $250,000+ Annual Operating Profit. Be properly defined and scoped through the Charter. Have the highest potential benefit relative to the resources required. Have the ability to be staffed appropriately with skilled and motivated team members.
Project Selection Process and Techniques
The Project Selection Process is a set of iterative steps taken in sequence. First identify the opportunities to create Value (and Customers Critical to Quality issues. Usually the management team has a list of these issues they wish pursued. They tend to fall into the categories of Strategic, Financial, Operational and Customer issues. These issues are the beginning of the potential project inventory. Identify and prioritize these issues.
Second, these Value Opportunities should be analyzed and brainstormed better analyze and rank them. Related opportunities can be grouped together to create the nucleus of a project. Value can be estimated in terms of leveraging revenue, cost reductions or improving Customers Critical to Quality issues. Some organizations adopt a minimum threshold Net Present Value (NPV) for a project. In cases where a project falls below the minimum NPV, the project will only be approved if it is an enabling project that must be done to enable a really big money- maker of money-saving project.
Third, screen the initial list of Opportunities for Projects against a criterion of the Effort to implement the Project and the Impact based on the Return-On- Investment of the completed Project.
Fourth, scope and define the Projects based on a common Project Definition form so the Projects will be compared against a common sizing process.
Fifth, prioritize the projects based on their positive benefit relative to effort (ROI), the projects ability to have its resulting learnings transferred to follow- on projects, and the risk of the project not succeeding. Define the Project & ID the Process A n a l y z e
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P r o c e s s D M A I C Define the Project & ID the Process A n a l y z e
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Figure 1. Six Sigma DMAIC Process
Launch the highest prioritized project for which the appropriate staff is immediately available. In Figure 3, the highest ranked projects are in the top left quadrant (projects #1 and #6) and should be launched as quickly as appropriate resources are available. The lowest ranked projects are in the lower right quadrant (projects #4 and #5) and should not be attempted as a first project in a new Six Sigma initiative and only attempted in an existing Six Sigma initiative if all other projects have been completed or are under way. The projects in the top right and lower left quadrants (projects #2, #8, #3 and #7) are ranked in the middle and should be attempted after projects in the top right quadrant are completed or under way.
As the organizations Six Sigma initiative matures and the number of project opportunities increases, the Theory of Constraints problem arises. The limiting factor in the number of simultaneous projects an organization may sustain is the number of available Black Belts and Green Belts to facilitate the problem solving teams.
A project selection process does not interfere with Managements prerogative to select projects. To the contrary, a project selection process enables Management to identify and prioritize projects based on Managements criteria to achieve the organizations goals of achieving financial and customer service goals.
Reasons Not to Select a Six Sigma Project
A problem that already has an identified and credible solution which just requires implementation in an existing process should not be considered for a Six Sigma project for several reasons. First, a Six Sigma project typically takes more resources and time than does a typical process improvement project with a known fix. There is no reason to incur the extra expense and time to use the Six Sigma methodology when cause and cure are already known. Second, using a Six Sigma approach to implement a known solution will discredit the Six Sigma initiative and dishearten those assigned to the Quick Fix Six Sigma project.
Additional Concerns for Selecting the First Six Sigma Project in a New Six Sigma Initiative
The first Six Sigma project in a new Six Sigma initiative should be selected with care since they set the expectations and create the momentum for the new initiative. The first Six Sigma projects should be selected based on their ability to quickly perform with little risk of successful execution and the high possibility of follow-on projects in the same arena enabling the knowledge and tools developed to be used and leveraged on the follow-on projects.
Benefits of Successful Project Selection
Successful project selection will address Customer CTQ issues, create Customer Value, create additional value for the shareholders and stakeholders of the organization, improve the processes at the center of the project with respect to quality, waste, costs, and time, and empower and motivate the contributors to the Six Sigma project.
In addition to the above, the first Six Sigma project in a new Six Sigma initiative will create momentum and enthusiasm for the new Six Sigma initiative, establish credibility for Six Sigma projects to create value and generate more revenue and save costs and time while improving quality, and embolden and encourage other staff to participate in follow-on Six Sigma projects.
Four Types of Six Sigma Projects
A mature program will have a mix of up to four types of projects, all of which may be running at the same time:
1. From Scratch (initial) projects which include: a. Process performance improvement projects b. Problem solving projects to restore previous levels of performance. 2. Follow-on projects which come out of From Scratch project discoveries. These may be I m p a c t
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Figure 1. Six Sigma Project Selection Ranking simple projects lead by Green Belts to complex projects requiring Black Belt leadership. 3. Replication projects which include: a. As Is replication projects where no adaptation is required. b. Adaptation and replication projects where modification is required. 4. Quick Hits projects that can be done as the discovery project is proceeding, without slowing the project.
The above list of projects starts with those projects that require the largest investment of resources before the benefits start to flow, down to those that require the least resources.
Why Six Sigma Projects Fail
The seven most common reasons why Six Sigma projects fail are: 1. Executive Management (CEO, direct reports, Division Managers) are not engaged and displaying their commitment to the Six Sigma initiative. 2. A strong and respected Deployment Champion is not in place and driving, guiding and assuring resources for the Six Sigma initiative. 3. The P & L owners are not being held accountable for Six Sigma project results. 4. A critical mass of effective, full-time, mutually supportive Black Belt and Champion resources does not exist. 5. There is not a project selection process in place based on maximizing and optimizing projects by ranking projects on: a) strategic focus areas, b) Customer CTQ issues and Customer Value, c) Financial improvement, d) Return-On-Investment, and e) Resources available (Black Belts). 6. Scope Creep which occurs when Management encourages a Six Sigma Team to expand its scope of work beyond a narrow focus of what can be accomplished within a three to five months. (Scope Shift is something that happens when the Six Sigma Team determines it needs to shift its focus to upstream or downstream processes to solve the identified problem. Scope Shift is not necessarily bad. Scope Creep is by definition bad since it defocuses the Team and delays results. 7. Results are not rigorously identified and tracked and certified by appropriate third-parties (usually the Finance Department)
Summary
The project is the core of Six Sigma activity. The Six Sigma methodology includes guidelines for successful selection of Six Sigma projects. If these selection guidelines are followed and the standard Six Sigma project process is followed, it is highly likely the Six Sigma project will be a success.
Creation, adoption and use of the project selection guidelines is most important in selecting the first Six Sigma project in a new Six Sigma initiative. The first projects success will create the financial and operations success which will create the reputation and momentum for the Six Sigma initiative within the organization.
Biographical Sketches
Charles M. Monroe, President, Pegasus Organization, Inc. Master Black Belt, Certified Black Belt (ASQ), Certified Management Consultant (Institute of Management Consultants). Education: MBA, Babson College, MA, BS Electrical Engineering, University of Houston, Post-Graduate studies in Computer Science at Worcester Polytechnic, MA. Mr. Monroe is currently working as a Master Black Belt training on Six Sigma and leading Six Sigma projects.
Mr. Monroes experience includes Principal Consultant, Pegasus Organization, Inc.; VP Sales & Marketing, ASA Solutions, Inc.; Interim Executive Director, Arizona State Research Institute, Inc.; Sales & Marketing Management, Digital Equipment Corporation Product Planning, RCA; Systems Engineering, IBM.
Mr. Monroes teaching experience includes: Adjunct Faculty, Arizona State University MBA Program, Tempe, Arizona Phoenix College, Phoenix Arizona General Electric: Instructor and team facilitator for Six Sigma program courses for Green Belts
Charles A. Cox, Master Black Belt, Certified Black Belt, Certified Quality Engineer and Senior Member (ASQ), Certified Management Consultant (Institute of Management Consultants). Education: MBA from Colorado State University, BS Industrial Engineering from Purdue University. Provisional ISO 9000 Auditor and Past Senior Examiner, Arizona State Quality Award (Baldrige Criteria). Currently training and Coaching Black Belts in Fortune 1000 companies.
Mr. Coxs experience includes Quality Program Manager, George Group Consulting LLC; Director of TQM, Bull Worldwide Info Systems; Senior Consultant, Coopers & Lybrands TQM/JIT Practice; Director of Quality Assurance, TRW Safety Systems; Manufacturing/Quality Engineer, General Motors.
Mr. Cox teaching experience includes: Adjunct Faculty for San Jose State University, San Jose University of California Berkeley Arizona State University, Tempe, AZ National Graduate School for Quality Management, Falmouth, MA; AlliedSignal: Total Quality Leadership program faculty; General Electric: Instructor and team facilitator for Six Sigma program courses for Black and Green Belts.