Six Sigma Awareness Training

Course Objectives
The objectives of this workshop are:
To explain the purpose of Six Sigma
and the Six Sigma approach.
To discuss Six Sigma implementation.
To discuss the process for setting up
projects and deploying project teams.
 Course Contents
• Six Sigma Overviews
• The DMAIC Process Steps and Tools
• Six Sigma Implementation
• Collective Decision Making
• Define: Set Up Projects and Deploy Teams
 Section 1
Six Sigma Overview
 Six Sigma: What & Why

Effective Approach + Proper Deployment

RESULTS
Six Sigma Approach — Key Components

Problem Solving Process

Define—Measure—Analyze—Improve—Control
Improvement Tools
Comprehensive and Integrated Set of Effective
Improvement Tools
Quality Principles
A Set of Sound Underlying Concepts
 Results-Examples
Allied Signal
• Turn around from weak financial position in late 80’s.
• US$3.2B cost savings during 1996 and 1997.
General Electric
• Achieve 40% increase in operating margin.
• Develop a better leadership for today’s more competitive
world.
Fort Wayne City
• Saved or avoided the need to spend nearly $3 million.
• Has made numerous changes that have meant better service
for city residents.
 Evolution of Quality Practices
DFSS, Lean Six Sigma
2000’s Six Sigma
Lean Manufacturing
Business Process Reengineering
1980’s ISO9000
Total Quality Management
Just In Time (JIT)
1960’s
TQC (Total Quality Control)
SQC (Statistical Quality Control)
1930’s Testing and Inspection
 The Origin of Six Sigma
1979
“ The Real Problem At Motorola Is That
Our Quality Stinks ! ”
Art Sundry
(Formerly Motorola’s Senior Executive)
 1981

“ Tenfold Improvement Over

A Five Year Period ”
Robert Galvin
(Formerly Motorola’s President)
 1980’s
• Bill Smith discovered the correlation between market failures
rate and manufacturing defects rate.
• At Government Electronics Group, under the leadership of
Mikel Harry, experiments with problem solving through
statistical analysis showed dramatic results.
• Mikel Harry began to formulate a methodology for applying
statistical tools for problem solving. His work culminated in a
paper titled “The Strategic Vision for Accelerating Six Sigma
Within Motorola.”
 1990

• Robert Galvin asked Mikel Harry to start up and lead

Motorola’s Six Sigma Research Institute.

• The mission was to develop Six Sigma implementation

strategies, deployment guidelines, and advanced statistical
tools that would work in a variety of companies and
industries.
 Adoption of Six Sigma
- Seagate
- Caterpillar
- 3M
- Dupont
- Citibank
- Bank One
General Electric - Fort Wayne City
- Sony
AlliedSignal - Toshiba
Motorola - Shimano
- Matsushita

1987 1992 1995 2000

Adaptation of Six Sigma: Purpose and Approach
• 1987 Motorola - Defect reduction
- Manufacturing processes

• 1992 AlliedSignal - Operational excellence

- Include non-manufacturing processes
• 1995 General - Financial results

Electric - Design for Six Sigma (DFSS)

- Leadership development
• 2000 Sony - Management Quality
Six Sigma As Improvement Management System
Mindset Business Goals Skill Set
Define
Performance Measures
Champions Data
Dashboard Measure +
Analysis
Process Improvement
Black Belts (projects) M-A-I-C Tools
& Green Belts Financial Benefit
Bottom Line
Improvement
 Performance Measure -
Examples
Motorola
• Sigma Capability / Defect Per Million Opportunities (DPMO)
AlliedSignal Laminate System
• Capacity Utilization
• Cost of Poor Quality (COPQ) Reduction
• Process Yield

General Electric Aircraft Engine Services

• Project Financial Benefits
• Order To Remittance
• Inventory Turns
• Span / On Time Delivery
Drill Down Process To Identify Projects
Business Objective Deployment Approach:
Sub – CTQ 1 Project 1
CTQ 1
Business Goal

Objective Sub – CTQ 2 Project 2

A Sub – CTQ 3 Project 3
CTQ 2
Objective Sub – CTQ 4 Project 4

B
Role & Responsibility:
Executive Team Champion
Black Belts
Green Belts
Example : CTQ Tree Sales Orders Sales Lead Time
On Time Delivery
Order Fulfillment
Customer Complaints
Increase Sales Production Output Process Yield
Down Time
Process Efficiency
New Products Time to Market
Market Success Rate
Design Changes

Profitability Manage Cost Material Cost Material Price

Material Usage Rate

Failure Cost Lot Reject Rate

WIP Rejects
Material Rejects
Utility Cost Electricity
Improve Water
Working Account Receivable Gas
Capital
Inventory
 Teamwork

Coming Together Is A Beginning

Keeping Together Is Progress
Working Together Is Success

Henry Ford
 Six Sigma Benefits
GE Capital’s railcar-leasing business achieved 62% reduction in
turnaround time at its repair shops.

Customer who once found themselves able to talk with a GE

Capital Mortgage associate only 76% of the time now have a 99%
chance of success on the first try.

GE Plastics added 300 million pounds of new capacity through

rigorous Six Sigma process work.

Citibank’s Regional Cash Product Management Unit in Asia Pacific

improved the defect rate of its fund transfer process to 4.95 sigma
level.
Six Sigma As Problem Solving Process
Phases Key Tasks Responsibility
• Identify Performance Measures
DEFINE • Create Projects
Champion
• Establish Data Collection Plan
MEASURE • Understand Current Performance

Green Belt
Black Belt
• Brainstorm Possible Causes
ANALYZE • Verify Root Causes
• Identify Improvement Solutions
IMPROVE • Validate Effectiveness
• Establish Control System
CONTROL • Share Lessons Learned
 The DMAIC Toolkit
Define Measure Analyze Improve Control
 Process Map  Data Collection  Pareto diagram  Creativity  Control plan
 Brainstorming plan  Brainstorming Techniques  Documentation
 Dashboard  Histogram  Nominal group  Selection matrix system
 CTQ Drill  Distribution technique  Design Of  Control charts
  Scatter plot Experiments  On the job
Down Measurement
 Box plot  Force field training
 Cause & Effect System
 analysis  Story board
analysis Analysis Stratification
 Potential risks
 Pareto diagram  Descriptive  FMEA
assessments
 Selection Matrix Statistics  Process C&E
 Stakeholder
 Project Charter  Run charts matrix analysis
 Control Charts  Interval Estimate  Process
 Process  Hypothesis Test Capability
Capability  Process mapping
and analysis
A] Soft Tools (Team Problem Solving)
— Brainstorming
— Affinity Diagram
— Nominal Group Technique
— Decision Matrix
— Effectiveness / Practicality Matrix
— Quality Function Deployment
— Failure Mode and Effect Analysis
— Force Field Analysis
B] Hard Tools (Quantitative Data Analysis)
— Graphical Tools
— Process Capability Study
— Measurement System Analysis
— Hypothesis Testing
— Design Of Experiments
— Control Charts
C] Work Process Redesign
— Process Mapping
— Non-value Add Analysis
— 7 Principles of Process Redesign
— Technology Enabler
— Process Streamlining
— “ Should Be ” Process Map
Input Process Output
D] LEAN
— Value Stream Mapping
— Seven Major Wastes
— Flow-based Processing
— Kan ban System
— Set-up Reduction
— Mistake Proofing
— Visual Management
— Take Time
— Total Productive Maintenance
 Six Sigma Key Features

• Top down approach Goals Alignment

• Logical and systematic process Consistency
• Rigorous problem solving method Effective
• Data driven and fact based decision Scientific
• Question conventions Breakthrough Results
• Financial benefits oriented Bottom Line Focus
 What is “Sigma”?
 Sigma (Greek letter Ơ) is a symbol for statistical unit of measurement

called standard deviation that measure the variability of data from the
mean.
 In Six Sigma program, Sigma is an index for measuring the capability

of process to produce “defect free” products or services. A “defect” is

any mistake that results in customer dissatisfaction.

 The higher the sigma level, the less likely a process will produce
defects. As sigma increases, costs go down, cycle time goes down,
and customer satisfaction goes up.
 Process Variation
Input Process Output

• All businesses are a system of interconnected processes.

• Variations exist in all processes.
• Variations in processes result in process outputs variability.
• Understanding and reducing process variability is the key to
improving the capability of a process to produce “defect free”
products or services.
 Process Output Variability
Cycle time for taking X-ray at a hospital

0 10 20 30 40 50 60 (minutes)
Process Variability &Process Capability
Process Output Customer Customer
Variability Requirements Requirements

Defects

• Less variability means less defects will be produced.

• Less defects means better capability in meeting customer
requirements.
 Process Capability:Sigma
Process Defect Per Percent Competitiveness
Sigma Million Good
2 308,538 69.2% Noncompetitive
3 66,807 93.3% Companies
Average
4 6,210 99.4% Companies
5 233 99.98%
World Class
6 3.4 99.9997%
Companies
Is Three Sigma Performance Acceptable?
Example: GE Plastics before Six Sigma implementation
• 95% compounded product first pass yield
=>3 million pounds of rework week.
• 90% on-time delivery…
=>1 missed shipment every 30 minutes.
• 98% billing accuracy….
=> 1 billing error every 3 hours.
• 98% capacity utilization…
=> 20 million pounds of lost opportunity.
• 95% meetings star on time(5%with a 10-minute delay)
=> 1,000 work-hours lost each day.
Variability and Cost of Poor Quality (COPQ)
The Costs of Not Doing Things Right the First Time

Activity 1 Activity 2 Activity 3

Re-do Re-do Re-do

Re-check Re-check Re-check

Re-Scheduling Service Recovery Lost Customer

Corrective Actions Additional Goodwill
Ad-hoc Meetings Handling
COPQ of an Average organization
Direct Loss
4 – 8% • Re-do
Of Sales • Re-check

Indirect Loss
20 – 25% • Expediting Costs
• Ad-hoc meetings
Of Sales
• Service Recovery
• Corrective Actions
Opportunity For Increasing
Profit Margin • Lost Customer Goodwill
• Longer Cycle Time
 Process Variability and COPQ
Correlation between an organization’s COPQ and variability
of its key processes
COPQ (% of Sales)

40

30

20

10

2 3 4 5 6 Sigma Level
(308538dpmo) (66807dpmo) (6210dpmo) (233dpmo) (3.4dpmo)
 Why Six Sigma?
Q: Is the goal of Six Sigma to achieve six sigma level of
quality?

Contrary to what some believe, the goal of Six Sigma is

not to achieve six sigma levels of quality. Six Sigma is
about improving profitability, although improved quality
and efficiency are immediate by-product of Six Sigma .
“Six Sigma”, Mikel Harry and Richard Schroeder
 Six Sigma and Other Improvement Approaches

Design for Six Sigma
High Hanging Fruits
(DFSS) 
(~ 6 Sigma)

Six Sigma Approach
Bulk of Fruits (DMAIC) 
(~ 5 Sigma)

 Low Hanging Fruits QCC & 7 Basic Tools 
  (~ 4 Sigma)

 Ground Fruits Common Sense &
(~ 3 Sigma) Intuition
 What Is Six Sigma - Summary
A management approach aiming at improving processes to
achieve excellent performance level.

It provides a comprehensive methodology and tools on how to

effectively achieve sustainable breakthrough improvements.

Through Six Sigma management:

- makes known the intention to achieve excellence,
- provides the enabling skills and knowledge,
- creates the supporting infrastructures and mindset, and
makes breakthrough improvement possible.
 Section 2
The DMAIC Process
Steps and Tools
The DMAIC Process Steps (1)
Phase Step Task
1 Identify Focus Areas / Key Performance
Measures
DEFINE Set Up Project and Deploy Team
2

3 Define Key Process Output Variable

MEASURE Develop Data Collection Plan

4

5 Determine Process Current Performance

 The DMAIC Process Steps (2)
Phase Step Task
6 Brainstorm All Possible Causes
ANALYZE 7 Shortlist Major Suspected Causes
8 Verify Root Causes
9 Identify and Evaluate Possible Improvement
Solutions
IMPROVE
10 Confirm Improvement Solutions
11 Standardize Improvement Plan
CONTROL
12 Close The Project
 Step 1: Identify Focus Areas / Key
Performance Measures
Purpose: Focus limited resources on important areas.
• This usually entails a working session participated by the
management team (the champions) where they examine
the various possible areas that impact the business results
and then, using a structured collective decision making
process, decide the critical areas to focus the improvement
efforts.
• Examples of focus areas include line reject rate, on-time
shipment, capacity utilization, inventory turns, response
time and warranty costs / customer complaints.
A tool that is commonly
used for this purpose is Sales Orders Sales Lead Time
On Time Delivery
the Tree Diagram Order Fulfillment
Customer Complaints
Increase Sales Production Output Process Yield
Down Time
Process Efficiency
New Products Time to Market
Market Success Rate
Design Changes

Profitability Manage Cost Material Cost Material Price

Material Usage Rate

Failure Cost Lot Reject Rate

WIP Rejects
Material Rejects
Utility Cost Electricity
Improve Water
Working Account Receivable Gas
Capital
Inventory
Alternatively, the SIPOC diagram is used. SIPOC is more suitable
for non-profit organization or supporting departments.

SIPOC Diagram
[ Supplier — Inputs — Process — Outputs — Customers ]

Inputs Process Outputs

Suppliers Customers
 Step 2: Set Up Project and Deploy Team
Purpose: To clarify the issue faced within the focus area and deploy
suitable team to tackle the issue.
• Here, the champion (usually with the help of his / her people) defines
the problem statement, decide the improvement goal, and select the
project team members.
• This helps to make sure that due thoughts are given to make sure
that the project is a valid one.
• The project should be scoped at she process level where specific
actions can be taken to realize the improvement in business results.
• The outcome of this step is an approved project charter.
 Project Selection Process-Overview
Project Ideas Sources Performance Voice of Cost Reduction
Gap Customer Initiative
Competitive Issues of
Pressure Concern
Project Ideas Sources

Project Ideas Sources

Project
Project Ideas Sources Charters
 Project Charter
• Project charter is a document created at the outset of a project
to assign the project to the team.
• It is an important tool for building committed project team.
• A Team Charter should specify the followings:
- Project title.
- The process involved.
- The business case and problem statement.
- The goal statement.
- Estimated financial benefits.
- Name of Champion.
- Team leader and members.
- Project time line.
The 4 ‘Rights’ of Successful Project

• Right project
• Right team composition
• Right team process

Right Result
Notes on forming a team :

• There should be a management member (champion) appointed as the project

sponsor.
• Team members are to be selected based on the problem statement and the
process to be improved.
• Team members must have good working knowledge on the process to be
improved.
• Rule of thumb for the number of people in a team is 5 to 7 persons.
• The team leader should be trained on:
- Problem solving process steps
- Team facilitation skills
- Process improvement tools
Step 3 : Define Key Process Output Variable
Purpose : Define a measure for key process output variable.
Input Process Output

Why is it necessary to measure the process output?

• To quantify the current performance level.
• To objectively evaluate the gap.
• To aid in the analysis of key input factors.
• To verify the effectiveness of the improvement
solutions..
Examples of Key Process Output Variables:

• Proportion defective / Proportion resubmission

• Defect per unit / Error per unit / Callback per unit
• Process capability ratio (Cpk, Ppk)
• Cycle time / Turn around time / Service response
time / Queue time
• On time delivery / Span
• Proportion of value adding activities
• Availability of personnel / material / facility
 Step 4: Develop Data Collection Plan
Purpose : To make sure the data accurately describes
the process output variation.

Components of Data Collection Plan:

- Definition of data to be collected (from step 3)
- Measurement method
- Sampling timeframe
- Sample size
- Sampling method
- Recording sheet
 Measurement System Analysis
When instrument or visual inspectors are involved to collect the
data, make sure the measurement system is OK.

Important aspects of a measurement system:

• Accuracy Calibration System

• Precision Gage Repeatability and Reproducibility Study
• Linearity Regression Analysis
• Stability Control Charts
 Step 5: Determine Process Current
Performance
Purpose: Determine objectively how well the process is
performing now.

• Gather process output data according to data collection plan.

• Translate the raw data into useful process information:
- Use histogram to show the variation in process output variable
- Estimate the process average and process variation using
descriptive statistics
- Evaluate current process capability
- Evaluate process stability using a run chart or a control chart
Case Study 1 : Invoicing process

Problem Statement :
About 30% of payments are received later than 60 days after
invoices were issued.

Goal Statement :
To reduce the percentage of late payments to less than 5%.

Financial Benefit :
Successful completion of this project will result in an estimated
financial benefit of US$50,000.
Data Collection Plan
Critical To Quality: Payment received on time
Measure: Cycle time from date of invoice issued to date of
payment received (days)
Specification: Not more than 60 days
Process output unit: An invoice
Data source: Account department
Data collection method: Pre-exist data
Sample frame: Three months period from January to March
Sampling method: Random sampling
Number of samples: 60
 And Then…

Minitab
A powerful data-analyzing software
which can help us have a good
knowledge of current performance
Step 6: Brainstorm All Possible Causes
Purpose: List all possible factors causing the process
performance gap.

• Team leader to facilitate the brainstorming process.

• Leverage collective experiences of the team members.
• Search thoroughly, do not leave out any possible cause.
• Depending on the situation, choose the most suitable
tool for this purpose. ( Cause and Effect diagram, Process

FMEA, Process Mapping, Process C&E Matrix )

Identify possible causes using brainstorming and organize
the information using cause and effect diagram

Customer Related Invoice Related

Customer Money Amount
Payment Policy
In Invoice
Customer Location Errors In Invoice
Customer Financial Don’t Match P.O.
Position
Customer Acct Wrong Address
Payable Process Wrong Amount Why are
Customers Late in
Need for Currency Product Quality Problem Paying Invoices?
Exchange
No Follow Up On
Past Dues
Payment Method
Relationship With
Frequency of Customers
Invoicing Customer Type

Invoicing Method Others

Step 7: Shortlist Major Suspected Causes
Purpose: Identify key suspects.

• Use structured discussion and team’s collective knowledge to

narrow the possible causes down to a few most probable causes.

• Team leader to facilitate this narrowing process. It is important

for the team to gain a common understanding on the possible
causes before starting the narrowing process.

• Choose the most suitable tool for this purpose. ( Multi-voting,

nominal group technique, selection matrix )
 Step 8: Verify Root Causes
Purpose: Confirm the key suspects are actually root causes.

• Make sure the key suspect are actually root causes.

• Discuss and decide how to confirm the key suspects.
• The methods commonly used for this purpose are:
- Historical data analysis.
- Design of Experiments.
- Process observation and tracking.
 Step 9: Identify and Evaluate
Improvement Solutions
Purpose: Identify various possible solutions and evaluate their
strengths and weaknesses.

• With the root causes identified, brainstorm all possible

improvement solution. The first solution is usually not the
best solution.
• Without any constraints, generate a list of possible solutions.
Choose the most suitable creativity techniques for this
purpose.
• Evaluate and select the best improvement solution.
Challenging conventional thinking / assumptions:

Do not think Think

- It can’t be done.
- It will not work.
- They’ll never buy it.
- We’ve always done it this
way.
- We’ve never try this before.
- How to get it done.
- Try and make it works.
- We can convince them.
- Let’s see if there is a better way.
- If we don’t try, we don’t know.
Examples of tools for idea generation,
evaluation and selection:
• Creative thinking techniques
• Brainstorming
• Effectiveness — Practicality Matrix
• Lateral Field Analysis
• Selection Matrix
Use Effectiveness – Practicality Matrix to evaluate each idea

Effectiveness

G C

F D
A
Practicality
B
E
Using Force Field Analysis to evaluate in detail the idea of
giving rebate if customers pay on time for those invoices with
high dollar values.

Driving Forces + - Restraining Forces

• Increased cash flow
of about $ xx.
• Contribute $ xx to
financial benefits.
• An estimated $ xx will
be incurred as rebates.
• An estimated xx hrs of
administrative efforts.
• An estimated total
costs of $ xx will be
incurred by the
company
Step 10 : Confirm Improvement Solutions
Purpose: Make sure solutions are effective before standardization.

• Decide and develop an action plan to check solution

effectiveness
• Collect initial data to make sure the solutions are effective:
- Check data distribution,compute the descriptive statistics,
calculate new process capability.
• Perform Potential risk assessment and stakeholder analysis to
anticipate and address possible problems when implementing
the solutions.
Implementation Action Plan
Improvement Responsible Completion
Action Person Date

Error proof the invoicing Irene

process. 18May

Make arrangements with

customer to use payment Peter 30May
method other than cheque.

Develop and implement a Adeline 30May

rebate scheme
 Step 11 : Standardize Improvement Plan

Purpose: Incorporate improvement solutions into process

control system.

• Transfer the solutions from the team to the process owners.

• Revise process control system / documents ( control plan,

procedure, work instruction, etc. )
• Train / brief staff on the revised process control system.

• Implement a continual monitoring system.

 Step 12 : Close the project
• Get Champion’s approval to close the project.

• Project can be closed when:

- The project phases have been completed.
- Project documentations have been completed.
- Improvement plan documented.

• Share the lessons learned and knowledge gained

with other related processes / areas.
Case Study 2: Orders Fulfillment
Define
Problem Statement

The time taken from the moment production is completed

to delivery is 2 days. Some urgent orders require
products to be delivered in 1 day.

Goal Statement :
To reduce the turn-around-time time to 1 day.

The process :
Orders fulfillment process
Measure
Map Current Process

• Make the process visible by creating the process maps.

• Common process mapping methods:

- Linear flowchart
- Cross functional map
- Relationship map

• Validate the maps created by walking-through the process

and collect the necessary data.
Analyze
Examine Current Process
• Look for flaws in current process.

• Examples of process flaws:

- Waiting
- Duplication
- Nom-value adding activities
- Unnecessary check / approval
- Errors
- Re-do
Analysis Summary
A] Waiting
- Visual inspection does not start until laboratory tests have

been completed.
- Store supervisor waits for the test certificates before he
can prepare the shipments.
B] Duplications
- Packers record product names,lot numbers and quantities
and send these information to store.Store supervisor key
in the same information into the finished goods inventory
system.
C] Non-value Adding Activities
- Unnecessary movements involved in sending information
or documents around.
Improve
Identify Improvement Solutions

A] Reduce waiting
- Laboratory tests and visual inspections to be performed
concurrently.
- Store supervisor prints test certificates from computerized
workflow system.

B] Reduce non-value adding activities & duplications

- Packers key in product information into finished goods
inventory system.
- Reduce document movements by installing a computerized

workflow systems.
- Empower QA technicians to decide lots acceptance based
on the specification.
 Transaction Project Examples
Sales and Marketing
• Motorola employed Six Sigma methodology to improve its prospect
success rate. The company tracked prospects and monitored marketing
activities received (emails, website, etc.). By keeping a database of
activities for each prospect, Motorola calculated the types of marking
efforts generating the best customer responses.

• 3M’s Marine and Recreational Vehicle business applied Six Sigma

within the sales organization to accelerate the conversion of sales.
Managers and directors rank the sales representatives in 25 areas
including product knowledge and combine this data with each sales
rep’s conversion of accounts and growth in market share. Through data
analysis, the company determines about 10 attributes that most impacted
the conversion of sales and design a training program based on these
attributes.
• A business unit in Johnson & Johnson employed Six Sigma to resolve a distribution
channel problem and create an improved data management system for sales reporting
process. Prior to redesign the process, the company estimated that sales reps spent
approximately 15% of their time on reporting activities, diverting their attention from
selling. After completing the project, the company cut the time spent by sales reps on
reporting activities in half.

Source: Corporate Executive Board

• A home appliance company was facing a high number of “no-fault found” problem.
This occurs when a repair technician is send to look into a fault reported by a customer
and found out that it is not a real fault.After collecting the data to understand the
problem, an effective solution was found. The solution is to get the receptionists to filter
out the “non-fault” problems. Thos involves training the receptionists to clarify the type
of faults reported by the customers and be able to explain to customers on how to
operate the appliance correctly over the phone.
Banking and Finance

• Copeland Companies,which are distributors and record keepers of finance

service products, use Cross Functional Mapping and Process Redesign methods to
improve the accuracy and timeliness of statements (28 days to 15 days).

• Global Equipment Finance,which provides global financing and leasing services,

improved all steps’ cycle times from a customer places an order to product delivery.
The group also reduced the credit decision cycle by 67 percent, from3 days to 1 day.

• Private Bank – Western Hemisphere, which served wealthy individuals reduced

internal call backs by 80%,external call backs by 85% and credit process time by 50%

Source : baldrigeplus.com
Finance, Purchasing and Logistics

• A company in OEM business faced problems in paying its suppliers on time.

Delays in payment result in the suppliers holding back shipments causing the
company to re-schedule production, suffer line down and miss delivery dates
to its customers.
• A cross functional team consisting members from logistics, account, finance,
production planning and purchasing was form to solve the problem. The champion
was the finance director.
• The team created the cross functional process map, identified and verified key
issues in the process that result in delays. These issues include (1) incomplete /
delay
in purchasing and shipping documents, (2) information that do not tally, (3)
disconnects in the process flow.
• The team identified and recommended the countermeasures needed to overcome
these issues. With strong backing from the champion,the team implemented the
countermeasures and achieved the project goal.
Human Resource
• A business unit in Johnson and Johnson identified sales force turnover as a
significant threat to sales productivity. Therefore it used Six Sigma method
to track and analyze the rate and demographics of turnover in the current
budget year compared to both the current year estimates, previous years’
turnover and data from other Johnson and Johnson companies to determine
factors causing sales rep to leave the company.
Source: Corporate Executive Board
• A large MNC with multiple manufacturing sites was having problem with
high level of medical leaves consumed by its employees. It was believed that
a high proportion of the medical leaves taken was not really necessary. This
issue results in lost labor hours and higher medical expenses. From the data
collected, it was found that a certain group of employees has a significantly
higher count of medical leaves taken. Based on this information, some solutions
(such as incentive-scheme and company approved clinics) was tried out. When
the solutions were found to be effective,they were standardized by revising the
medical leave policy.
• An MNC set stretch goals on project financial benefits company wide
and this includes the Human Resources dept. A team in HR examined the
expenses in HR and Administration and discovered that one of the vital
few high expense items was traveling expenses. Most of the traveling
expenses incurred was air fares. There are about 50 engineers in the
company who travel frequently to the company headquarter in the USA.
The engineers traveled in business class. The team proposed giving an
option to the engineers:While they can still travel in business class,
alternatively they can opt for traveling in the economy class and receive an

additional travel allowance of US$500. The team performed stakeholder

analysis and potential risks assessment before they proposed this idea to
the management. The idea was implemented and many engineers chose the

second options resulting a saving of about US$50,000 annually.

 Public Service
• A government authority reviews and approves applications from the businesses.
A high proportion of applications were suspended and the applicants need to
resubmit the application. A suspended application means the time spent to review the
application is a waste (cost of not going things right the first time), Some applications
went through as high as 5 resubmissions before they are approved. A team was formed
to measure the problem, analyze the reasons for suspensions and recommend
countermeasures. As a result, the number of suspensions per application reduced
significantly and the labor cost saving was about $35,000 annually.

• A hospital form a team to improve the patients discharge process. Many patients
called back the hospital to clarify information on medication, follow-up appointment,
etc. Each time a patient called,the nurses need to spent a substantial amount of time to
retrieve the file, review the files and answer the enquiries. If the patient discharge
process is done right the first time,the patients should not need to call back. Using Six
Sigma methodology, the team reduced the number of call backs.
 Section 3
Six Sigma Implementation
 The Six Sigma Leap

• A vision that excellence

performance is possible and
Most is essential to success. Culture
Companies • New paradigms, outlook, Change
mindset.
• New skills, tools and data.

2 3 4 5 6
Sigma Sigma Sigma Sigma Sigma
Six Sigma Implementation Stages
Executive Briefing & Initial Assessment
Alignment

CTQs & Project Selection

Improvement Priority

Black Belts & Green Belts Training

Improvement Skills Development
The Six Sigma Implementation Roadmap
10. Cont. With Next Projects
9. 1st. Wave Projects Completed
8. Black Belts & Green Belts Trained
7. Projects Identified ( 1st. Wave )
6. Performance Measures (CTQ) Identified
5. Champions Trained
4. Deployment Plan Developed
3. Six Sigma Deployment Committee Formed
2. Six Sigma’s Objective Ascertained
1. Executive Briefing
 Six Sigma Roles - Overview
Set direction and provide
Senior Executives
resources
Plan and lead organization-wide
Deployment Committee implementation
Set up projects and deploy
Champions teams
Master Black Belts and
Coach and support team leaders
Black Belts
Black Belts, Green Belts
Execute projects
And Project Teams
 Typical GE Six Sigma Organization Structure
Managing Director

Finance Rep. Six Sigma Dept.

Master Black Belt

Division Division Division Division

Manager Manager Manager Manager
(Champion) (Champion) (Champion) (Champion)

Black Belt – Full Time Black Belt – Full Time

Engineer Engineer Officer Officer

( Green Belt ) ( Green Belt ) ( Green Belt ) ( Green Belt )
 Senior Executives’ Role
• Understand what Six sigma is and how Six Sigma helps
accomplish business objectives.
• Give directive for Six Sigma implementation.

• Provide the necessary resources.

• Be seen as an advocate and supporter.

• Follow – up on:
- results
- effectiveness of the approach
- extent of deployment
 AlliedSignal
Our Vision
We will be one of the world’s premier companies,
distinctive and successful in everything we do.

Our Commitment
We will become a Total Quality Company by
continuously improving all our work processes
to satisfy our internal and external customers.
 Iomega
How did we decide on Six Sigma?
We recognize the need for a change in the way we pursue operational
excellence.

Why change the way we do it now?

• To deal with a world of declining product prices.
• To compete successfully with the best companies in the world.
• To establish standard language and approaches across functions and
across businesses.
• To develop the next generation of leaders.

To Increase Our Rate of Quality and Productivity

Improvement Faster than Our Competitors!
 General Electric
… quality at GE will be taken to world-leading levels,
providing us with yet another competitive differentiator.
Our openness to learning……as well as the generosity of
Motorola and others in sharing their techniques with us, will
bring GE to a whole new level of quality in a fraction of the
time it would have taken to climb the learning curve on our
own.

GE’s 1996 Annual Report

Guideline Principle for Leading Change

VISION

PASSION

ACTION
Guiding Principle for New Work Habit
• Want To Do.
- appreciate the purpose
- understand ‘what is in it for me’
• What To Do.
- approach framework / model
- role and responsibility
• How To Do.
- process
- tools
Six Sigma Deployment Committee
• Tasked by Senior Executives to implement
Six Sigma in the organization.

• Responsibilities:
- promoting - monitoring
- planning - evaluating
- coordinating - reporting
- controlling - recommending
 Master Black Belts
Role
• Lead Six Sigma implementation committee.
• Adviser to senior executives team and champions.
• Instructor of Six Sigma training courses.
• Coach for Black Belts and Green Belts.

Profile
• Business / technical degree, management experience.
• Respected member of management.
• Master of Six Sigma principles and practices.
 Champions’ Role
• Lead the implementation of Six Sigma in their areas.

• Determine and track key performance measures (CTQs).

• Select and prepare Black Belt and Green Belt candidates.

• Identify, set up and support projects.

- Ensure the projects are properly set up.
- Follow up on the projects’ progress.
- Help teams to remove barriers.
Six Sigma Skill Levels and “Belts”
~95%
Opportunity To Apply
( Cumulative )

~75%

~50%

Black Belt
Green Belt
Yellow Belt

Basic Intermediate Advanced Level

Level Level

Efforts Needed To Acquire The Tools

 Black Belts
Role
Serve as an expert who has in-depth knowledge of Sis Sigma
methodology and tools.
• Lead Six Sigma projects.
• Coach green belts on their projects.
• Trainers of certain Six Sigma tools.
Profile
• University education, 5 years working experience.
• Respected by peer and management.
• Good interpersonal and analytical skills.
 Green Belts
Role
• Serve as a trained personnel who is able to lead Six Sigma
projects.
• Participate effectively in Black Belt’s project as team
member.
Profile
• Higher education level.
• 3 years working experience.
• Respected by peer.
 Typical Training Duration
Executive 1 Day

Champion 2-3 Days

Green Belt 8-10 Days

(spread over 2 months period)

Black Belt 16-20 Days

(spread over 4 months period)
 Training Approach
Explain Describe / explain the techniques.

Practise the techniques in class exercises.

Practise

Apply the techniques in actual work

Apply
environment through project.

Review Review the effectiveness of applications.

 Finance Representative
Role
• Provides financial data for financial
benefits calculation.

• Provides guidelines for calculating

financial benefits.

• Verify actual financial benefits.

 Human Resource
Role
Review and suggest appropriate incentive system
for Six Sigma :
• Career advancement opportunity
• Recognition of efforts and contributions
• Monetary reward for achievements
Policies / Guidelines

• Personnel Selection.
• Project Selection.
• Financial Benefits Calculation.
• Project Tracking System.
• Black Belt Certification.
• Incentive Scheme.
 Projects Tracking System
Information to be tracked:
• Total number of projects.
• The numbers of completed projects and
on-going projects.
• The status of each on-going project.
• Targeted financial benefits and actual
financial benefits to date.
 Projects Review
Objectives:
2. Ensure projects proceed as plan.
3. Present the findings of each phase.
4. Make sure the vigor of Six Sigma
approach is maintained.
6. Discuss the barriers faced.
7. Check correct applications of tools.
Six Sigma Critical Success Factors
• The link of Six Sigma to business strategy is clear.
• Recognize and manage Six Sigma as a change
initiative.
• Understand that Six Sigma is a management
approach, not just a problem solving tool.
• Identifying the right focus areas for Improvement.
• Selection of key personnel.
• Diligent and disciplined use methodology, fact and
data.
 Section 4
Collective Decision Making
Why Make Decision Collectively?
• A good decision has two basic components: quality and
commitment.
• A quality decision takes into account all of the facts and
viewpoints, and makes good use of that information.
• When decision is made4 on a collective basis, it pulls
together the skills, knowledge, experience, and opinions
of several people. This produces a decision that is usually
better than the decisions made by individuals.
• Knowing how to make collective decision effectively is an
important skill to an organization.
Benefits of Collective Decision Making

• Fresh and diverse ideas.

• Minimize misunderstandings and biases.
• Increased learning and personal growth.
• Better ownership.
• Increased understanding of the big picture – better
buy-in.
• Better decision – quality and commitment.
Collective Decision Making Process
• Collective decision making is a process where a
group of people bring up, share, and discuss
different ideas and viewpoints, and to select and
agree on the best ideas.
• Effective collective decision making process is
not something that will happen by nature.
• There are a set of tools that are developed to make
the process more effective. Knowing these tools
and the ability to apply them effectively is an
important skill.
Collective Decision Making – General Steps
• Define and clarify topic / objective.
• Surface / generate ideas by stimulating discussion,
using open questions, and brainstorming creatively.
• Record all inputs on charts in full view.
• Get everyone to understand each other’s ideas by
reviewing inputs on the chart.
• Group, combine, map or evaluate all inputs.
• Make consensus decision by summarizing,
eliminating, narrowing, or win-win negotiation to
arrive at an agreement / consensus.
Collective Decision Making - Tools
Less Complex :
- Brainstorming
- Multi-voting
- Nominal Group Technique
- Selection Matrix (or Decision Matrix)
- Cause and Effective Diagram
More Complex :
- Quality Function Deployment (QFD)
- Failure Modes & Effects Analysis (FMEA)
Collective Decision Making - Notes
• The chance of everyone having exactly the same
idea or viewpoint about an issue are very slim.
• Letting the most powerful person make the decision
or by mean of majority rules are not effective
approaches.
• Good decisions require the team to pool information,

consider different viewpoints and arrive at an

agreement or consensus.
 Consensus (1)
A better decision will be made if…
• People with good knowledge and experience on the
subject matter participate in the process.
• Everyone’s opinions and thoughts are sought, clarified
and considered.
• There is a structured process that enables the team to
listen to each other and discuss their ideas.
• Consensus and buy-in from all participants are ensured.
 Consensus (2)
Is:
• A search for the best decision through the exploration of
everyone’s viewpoints.
• Everyone has had an opportunity to be heard.
• A decision that reflects the collective thinking of a team
and that all the team members understand fully, can live
with, and will actively support, and believe is workable.
Is Not:
• A unanimous decision.
• Having everyone completely satisfied with the outcome.
• Necessarily everyone’s first choice.
Collective Decision Making Process - Tips
• Have enough time, do not speed up the process.
• Balance power.
• Listen carefully. Check for understanding.
• Be open to different ideas, but avoid playing
‘nice guy’ to avoid disagreement.
• Encourage differences of opinions. Have
someone plays devil advocate role.
 Brainstorming
• A tool for creating a wide range of options
in an environment free of criticism.
• Brainstorming if useful when you want to
generate a large numbers of ideas about
- Issues to tackle.
- Possible causes of a problem.
- Corrective measures to take.
Brainstorming Ground Rules
• Active participation by all.
• No criticism, suspend judgment.
• Ideas build on ideas.
• Record all ideas.
• Set a time limit.
 Brainstorming Steps
• Review the rules.
• Set a time limit.
• Assign a time keeper and idea recorder.
• State the topic.
• Collect ideas.
• Record ideas.
• Clarify each idea (after all ideas are recorded).
• Eliminate duplications.
 Brainstorming Methods
A. Freewheeling
- Share ideas simultaneously.
- List all ideas as they are”shouted out”.

B. Round-Robin
- Everyone takes a turn offering an idea.
- Anyone can pass on any turn.
- Continue until there are no more ideas.
- All ideas listed as they are offered.
 Multi-voting
• A tool for short listing key ideas.
• To reduce a long list of items to a manageable
number of items.
• Identifying the most popular or highest priority
items to a group a people.

• Also called the Delphi Technique.

Multi-voting - Steps

1. Work from a large list.

2. Assign a letter to each
item.
3. Vote individually.
4. Tally the votes.
5. Repeat where necessary.
 Multi-voting - Rule of Thumb

• Number of votes allowed = half the number of items

• Number of members Eliminate items with

5 or fewer 2 or fewer votes
6 to 15 3 or fewer votes
more than 15 4 or fewer votes
 Exercise
Use brain storming and
multi-voting to decide
what are the key reasons
for ineffective meeting
 Nominal Group Technique
• A weighted ranking method that enables a team to
generate and prioritize a large number of options
• A mechanism that
 Gives everyone an equal voice.
 Neutralizes the domination of the loudest
person.
 However, it will interactions between team
members during ideas generation.
Nominal Group Technique-Steps
1. Introduce and clarify subject.
2. Generate ideas individually (each idea on one
post-it note).
3. Collect ideas.
4. Read each idea out loud. Clarify if needed.
5. Combine similar ideas.
6. Assign a letter to each idea.
7. Rank the ideas independently.
8. Add the ranking.
9. Prioritize items according to scores.
 Selection Matrix

• A method for relating a set of ideas or

options with specific selection criteria.

• Used when the team needs to achieve a

consensus on the best idea or option.
 Selection Matrix-Steps
• List the ideas or options to be evaluated.
• Decide the criteria for selecting the best idea or option.
• Create a table to relate the ideas / options with selection
criteria.
• Determine the rating scale for the selection criteria.
• For each idea / option, all members individually decides
the score for each criteria.
• Sum up the total score for each idea or option.
• Identify the best option based on total score.
 Cause and Effect Diagram
• A tool that helps identify, sort, organize and
display possible causes of a specific problem or
quality characteristic.
• It graphically illustrates the relationship between
a given outcome and all the factors that influence
the outcome.
• Also called an ‘Ishikawa diagram’ or a ‘fishbone
diagram’.
 Cause & Effect Diagram-Steps
1. Identify and clarify the effect to be analyzed.
• Quality characteristic
• Problem
2. Identify the main causes contributing to the effect.
• 5 M’s (man, machine, method, material, mother nature)
3. For each main cause, identify other specific factors.
4. Identify increasingly more detailed levels of causes.
5. Analyze the diagram to identify causes that warrant
investigation.
 Example
Software Users

Faulty installation Lack of training

Faulty media Misuse

Faulty design Use wrong software

Machine
Down Time
Corrosion
Faulty component
Mechanical shock
Component failure
Humidity
Power fluctuation Temperature

Hardware Environment
 Section 5
Define: Set Up Projects
and Deploy Teams
 Project Selection Process-Overview
Project Ideas Sources Performance Voice of Cost Reduction
Gap Customer Initiative
Competitive Issues of
Pressure Concern
Project Ideas Sources

Project Ideas Sources

Project
Project Ideas Sources Charters
CTQ Drill Down — A General Framework
• Clarify Business Goals and identify key performance
drivers that impact the business goal.

• Define measures for key performance drivers.

• Implement the process for collecting data and

reporting the measures.

• Identify gaps between goals and current baselines

-prioritize focus areas for improvement.

• Brainstorm the causes that drive the measures.

1. Discuss the relationship between the causes (X’s)
and the effect (Y) to identify vital few factors that
drive the measures. For the vital few causes,
identify project ideas that will move the effect (Y)
to the desired level.

3. Apply project Assessment Matrix to prioritize the

project ideas.

5. Scope the project and create Project Charter.

 CTQ Drill Down-Example
Step 1: Clarify Business Goals and identify key performance
drivers that impact the business goal.

Examples of performance driver:

1. Capacity Utilization
2. Inventory Turns
3. Cost of Poor Quality
Example : CTQ Tree Sales Orders Sales Lead Time
On Time Delivery
Order Fulfillment
Customer Complaints
Increase Sales Production Output Process Yield
Down Time
Process Efficiency
New Products Time to Market
Market Success Rate
Design Changes

Profitability Manage Cost Material Cost Material Price

Material Usage Rate

Failure Cost Lot Reject Rate

WIP Rejects
Material Rejects
Utility Cost Electricity
Improve Water
Working Account Receivable Gas
Capital
Inventory
Step 2: Define Measures for Key Performance Drivers.
Examples:

Performance Driver Measure

Inventory Turns:
Inventory Monthly sales amount ( $ ) over inventory
holding costs for that month.

Fulfillment Rate:
Order Fulfillment Number of ordered items delivered on time
over total number of ordered items ( % ).

Cycle Time:
Lead Time Time interval from order received to
product / service delivery (days).
 Criteria of Good Measures
• Direct
Relate directly to the characteristic being assessed.

• Exact
Can be observed or measured.

• Detail but concise

Clear, understandable, and unambiguous.
Step 3: Implement the Process for Collecting Data and
Reporting the Measures.

• Determine data source.

• Create recording sheet / form.
• Decide reporting format.
• Develop a procedure for collecting, reporting
and review the information.
 Example on a Procedure for Collecting and Reporting
Data:

Responsibility Procedure Outline Record

— Collect Data Daily — Record Sheets
Operator — Submit by 2nd day of month
— Collate Data — Run Charts
Clerk — Update charts
— Submit by 4th day of month
— Monthly meeting to review — Meeting Minutes
Manager and officers charts and previous actions — Actions Plan
— 5th day of month
— Post charts and actions — Department
Clerk plan on dashboard Dashboard
Common Graphical Tools for Reporting Data:

• Pie Chart • Histogram

• Bar Chart • Pareto Diagram

• Run Chart • Control Chart

Common Mistakes in Reporting Data:

• Data are reported in tables rather that graphs.

• Only the most recent data are reported.

• No comparative data are presented.

Example on Data Reporting Format:
RTY Inc Measure: Inventory Turns
Logistics Div Owner: Bruce McDonald
2003 Goal

’00 ’01 ’02 J F M A M J J ……

Characteristics of a Good Feedback System:

• Important and meaningful information

• Accurate information
• Timely feedback
• Easy to understand
• Accessible
Step 4: Identify Gaps Between Goals and Current Baselines
— Prioritize Focus Areas for Improvement.

2003 Goal

J F M A M J J A S O N D
 Step 5: Brainstorm the Causes that Drive the Measures.
Fill the Cause and Effect Diagram with data ( if available ).

Purchasing Others

Safety Stock Central Warehouse

Policy Stock Count Accuracy (80%)

Stock Replenish Material Storage

Policy Housekeeping
Inventory
Turn
Quality (5% lot reject rate)
Forecast Accuracy
(70%) Lead Time (30 days)
Inventory On – Time (95%)
Control System
Shipment Quantity

System Supplies
 Step 6: Discuss the relationship between the causes (X’s) and the effect
(Y)
to identify vital few factors that drive the measures. For the vital
few causes. identify project ideas that will move the effect (Y) to
the desired level.
Purchasing Others

Safety Stock Central Warehouse

Policy Stock Count Accuracy (80%)

Stock Replenish Material Storage

Policy Housekeeping
Inventory
Turn
Quality (5% lot reject rate)
Forecast Accuracy
(70%) Lead Time (30 days)
Inventory On – Time (95%)
Control System
Shipment Quantity

System Supplies
Step 7: Apply Project Assessment Matrix to the Prioritize
Project Ideas.

Examples of Selection Criteria:

• Magnitude of impact

• Probability of success

• Estimated duration

• Effort Required

• Estimated cost
The 3 Conditions for a Six Sigma Project
• A gap exists between current and the desired
performance.

• The cause of the problem is not clearly

understood.

• The solution is not apparent.

Is it a problem to be solved or an action to be taken?

Step 8: Scope the Project and Create Project Charter.
Project Title
Problem Statement Business Case
Goal Statement Process

Team Leader Time Line

Members

Financial Benefit (estimate) Champion Name Sign

Date
The 4 ‘Rights’ of Successful Project

• Right project
• Right team composition
• Right team process

Right Result
 Right Project

• Well selected
- Address important business issue.

• Well scoped
- Focus on specific problem or process.

• Well defined
- Comprehensive and clear instruction, not a vague idea.
 Project Charter
• Project Charter is a document created at the outset of a project to
formally assign the project to the team.
• It is an important tool for giving clear instruction and getting
commitment from the project team.
• A Project Charter provides the following information:
- Project title.
- The process to be improved.
- The business case.
- The problem statement and goal statement.
- Estimated financial benefits.
- Name of Champion, team leader and members.
- Project time line.
 Project Title
• A brief description of the project.
• An idea on what the project is about

Examples:

• SB687 Mis-registration Reduction

• Order Fulfillment Process Cycle Time Reduction
• Loan Application Process Error Reduction
 Process
• The name of the particular process to be improved.
• Can be described using a high level process block
diagram.

Examples:
• Sales orders handling
• Multi-layer circuit board lamination
• Funds transfer transactions
• Pick and place process
 Business Case
• A broad statement on the business issue pertaining to the
project.
• Provides the rationale on why the project should be a business
priority.

Examples:

• Competitor’s better quality product has reduced our market

share.
• Lower product prices have reduced profit margin, therefore the
need to reduce costs.
• Faster response time will generate more sales.
Problem / Opportunity Statement
• A description on the symptom of the issue faced.
• More specific and focused than business case.
• Contains quantitative figure.

Examples:
• Sales for product A has fallen by 20% since last year.
• The mis-registration defect rate has increased to 7% since
last month.
• The turn-around-time of competitor A is 5 days faster than
ours.
 Goal Statement
• A description on what is to be achieved.

Examples:

• To reduce the orders confirmation cycle time 2 days.

• To reduce the mis-registration defect rate from 5% to 1%.
• To increase the inventory turns by 50%.
• To improve the forecast accuracy to 90%.
The ‘Right’ Team Composition
• Right Members.
- Those familiar with the problem, issue, work process.
- Those who are affected by related changes.
• Right Team Size
- 5 to 7 members seem to function most effectively.
• Role of Team Leader
- Clarify with champion/management on project
objective.
- Schedule and conduct team meetings.
- Get the necessary resources (time, training, equipment,
materials, people) .
Responsibility of Team Members
• Carry out team assignments (collect data,
prepare presentation materials, etc.).

• Participate actively in team discussions and

decision making.

• Share ideas and knowledge.

• Implement improvement actions.

 Team Effectiveness
• A group of individuals is not a team.

• An effective team if characterized by members who are:

- Committed to team goal.
- Collective responsibility to project success.
- Collaborate and support each other.

• Team facilitation skill is necessary to create teamwork.

 Project Set-up Guideline
• Is the project aligned with the business goal?
• Is there a specific problem to be addressed or multiple
problems?
• Is there a pre-determined solution?
• Is the project focused on specific area / process?
• Are the benefits of the project identified?
• Are the right persons in the team.
• Is the number of team members too many / few?
• Are the team members trained?
• Can the project be completed in 4 - 6 months.
Financial Benefits
• Better quality
• Lower cost
• Consistent delivery
• Shorter lead time
• More capacity
• Reduced floor space
• Improved cash flow
• Higher flexibility
The Purpose of Financial Benefit

• To quantify projects benefits financially.

• To help prioritize improvement projects.

• To evaluate the returns on investment from the

Six Sigma program and improvement solutions.
 Financial Benefit Reporting
A] Project Start Up: Rough estimate
Define based on project goal.
-------------------------------------------------------------
Measure B] Project Reviews: Revised estimated figure
based on new data where necessary.

Analyze

Improve
-------------------------------------------------------------
Control C] Project Closure: Confirm estimated figure
based on actual improvement achieved.
 Saving Items - Examples
• Cost Reduction - Direct Savings
- Material saving
- Reduced concession / warranty
- Direct labor savings
- Reduced scraps and reworks
- Expedited freight cost reduction
• Cost Reduction - Indirect Savings
- Time savings for indirect • Working Capital Reduction
employees
- Reduced administrative effort
• Cost Avoidance
- Investment avoidance as a result
of increased productivity / capacity
- Expense avoidance as a result of
preventative measures
• Incremental Revenue
- Increased sales volumes
- Contribution margin enhancement
- Inventory reduction
- Receivables reduction
Financial Benefit Guidelines
• Guidelines are necessary for:

- Calculating the financial benefits in certain

conditions

- Classify if a savings item has a direct impact to

the profit (hard saving) or has an indirect impact
(soft saving).

• Financial benefit guidelines should be determined

by the finance department.
Thank You !!!