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SIX SIGMA PROJECTS

A. Chapter Objectives
B. Six Sigma Projects
C. Characteristics of a Good Six
Sigma Project
D. Project Selection
E. Project Completion Cycle
F. Key Success Factors
G. Barriers to Team Success
H. Project Description and
Objectives
I. Project Authorization
J. Project Review
K. Determining Project Baselines

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CHAPTER OBJECTIVES
Understand the primary
sources for project selection
and the characteristics of a
good Six Sigma project.
Become familiar with the nature
of projects.
Provide an understanding of the
components of a project
including description, selection,
scope, success factors,
planning, authorization and
review.
Provide an understanding of the
different types of project
baselines and their calculations.

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SIX SIGMA PROJECTS

Projects are the means by which processes are changed they are
the bridge from PLANNING to DOING.
A Six Sigma Project is a problem scheduled for solution that has a
set of metrics that can be used to establish project goals and
objectives and monitor the projects progress.
There are many dimensions to successful Six Sigma projects
including:
selection of a good project
assigning the right Green/Black Belt
project completion on a timely manner
project support
management review
The RIGHT PROJECTS and the RIGHT PEOPLE are essential
elements for successful Six Sigma projects.

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SIX SIGMA PROJECTS

There are 2 types of problems one where the solution is known and
one where the solution is unknown.
Six Sigma is aimed at the problem where the solution is not known.
We need one or more measurements to quantify the magnitude of the
problem as well as establish projects goals and objectives.
When a problem has a known solution, the project should be
completed by:
assigning a project manager
providing the required resources
utilizing solid project management techniques
Six Sigma techniques are not necessarily needed here.
However, the project and the company will benefit from the use of Six
Sigma measurement and monitoring techniques.

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SIX SIGMA PROJECTS


Four primary sources:
Process Quality Focus (best approach):
Identify processes that are critical to customer
satisfaction and are operating at low sigma levels.
Requires effective cross-functional coordination.
Product Focus
Identify product family that is contributing most to
poor customer satisfaction.
Requires we look at a number of processes that
feed into product/service.
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SIX SIGMA PROJECTS


Project Cost Savings Focus
Important to track savings, but savings should NOT be main
focus.
Has limitations with respect to establishing new mindsets
about quality.
Problem Focus
Focuses on biggest problem/fire.
Short sighted/not very focused.

Typically, projects have some combination of all four sources.


A project might focus on a specific process, but focus initially on a
certain key product line.
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CHARACTERISTICS OF A GOOD
SIX SIGMA PROJECT
Typical characteristics of a good Six Sigma project:
The PROJECT is clearly linked to business priorities and should address
at least 1 element of the organizations key business objectives:

Quality
Cost
Lead-time Reduction
Customer Service
Flexibility/Simplification
Delivery
Cycle Time
Material / Inventory Control

The PROBLEM is of major importance it should represent a


breakthrough in terms of major improvements in both process
performance (i.e. 30% or greater) and significant cost and productivity
savings (i.e. $10,000 or greater).

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CHARACTERISTICS OF A GOOD
SIX SIGMA PROJECT
Projects should be properly scoped, enabling completion in 4 to 6
months. Organizations typically lose interest in projects that run
longer than 6 months.
KEY POINT: Projects lasting longer than 6 months
should be divided into sub-projects of shorter duration.
Projects must have the buy-in and commitment from the
Champion and process owners.
KEY POINT: People will support a project that they see
is clearly important to the organization.
Projects will, in fact, benefit from the 5 phase Breakthrough
Strategy (DMAIC).
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THE NATURE OF A
SIX SIGMA PROJECT
The Nature of a Six Sigma Project

CTQ

Other areas
of potential
opportunity

CTQ
CTC
CTD

Maximum Leverage of Quality/Cost/Delivery

Project goals should be SMART (Specific, Measurable, Achievable,


Realistic, Time Bounded).
Focused on Faster, Higher and Stronger.
Priority should be given to projects that address Critical To Quality
opportunities (CTQs) simultaneously to maximize leverage and impact
revenue, expenses and/or capital.

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PROJECT SELECTION
Projects must have strategic relevance and be linked to core
business issues.
Best Approach 30,000 ft. VIEW of key operational indices.
Traditional 30,000 ft. indices include:

Internal Defect Rates


Cycle-time
Customer Satisfaction
On-time Delivery

No. of days from Promise


Date
Time to Market
Inventory
Capacity

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30,000 FT. VIEW


KPOV
Bottom-line benefit is
the translation of
these differences
into money.

Frequency of
Non-conformance

DEFINE

MEASURE

ANALYZE

IMPROVE

CONTROL

Metrics should be measured on a monthly basis to capture the


Voice of the Process. VOP will indicate WHERE and WHEN to
initiate a project.
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PROJECT SELECTION
Projects should be
prioritized based
on business
benefits.
Opportunities are
identified at Senior
Management and
Site levels.

SENIOR MGT LEVEL

SITE LEVEL

Major Business Issues

Operational Needs

CTQ
Relevant Process
Prioritize Projects from
Pool

Project Approval and


Initialization

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PROJECT SELECTION
Think BIG, then narrow down.
Focus on the big picture, select and implement
the project, then go back to the big picture.
Keep repeating and focus on customer needs at
each big picture review.

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KEYS TO PROJECT
SELECTION SUCCESS
Select projects that are manageable dont try to boil the
ocean.
Select projects that are achievable.
Minimize reliance on other sites.
Select projects with significant impact on cost savings and
quality.
Select projects with historical data.

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Create the VISION


(Management)

Identify Primary Business Objectives (PBO)


Link PBO with site Functional Objectives (FO)

PROJECT SELECTION
PROCESS

Link FO to department objectives and


performance measurements
Identify CTQs and improvement targets
Identify Opportunities
(Champion, RBB, BB)

Select Projects
(Champion, RBB, BB)

Identify sources of waste and inefficiencies at


the process level using yield, cycle time,
DPMO, sigma levels, etc.

Estimate time to completion.


Determine resources required.
Determine risks.

Validate Key Projects


(Champion, Process
Owners)

Communicate necessity (justification)


Solicit support
Assign ownership
Develop scope

PROJECT LAUNCH

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PROJECT SELECTION

Generic criteria for selection of Six Sigma Projects:


Reduce Internal Defects and related operating expenses
associated with scrap, rejects, rework, etc.
Projects where you avoid incremental costs that have not
been incurred but would have if the project was not conducted
Cost Avoidance of purchasing additional material,
equipment, etc.
Efficiency/Capacity opportunities where the process is
operating below the standard making less product than
expected, utilizing overtime to meet demand, operating with
excessive downtime, etc.

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PROJECT SELECTION
Generic criteria for selection of Six Sigma Projects:
High volume production lines, where small improvements in volume
will have a large impact on savings. The focus would be on scrap and
rework reduction, increase in cycle time and reduction of missed
opportunities.
Products with a low profit margin where reducing product cost will
result in higher profits and/or increased volume.
Areas where productivity increases will result in reduced manpower.
Areas where revised workflow will result in lowered inventories.
Improve availability, efficiency and effectiveness of machines and
equipment (Productive Maintenance).
Efficient use of raw material, by means of product and tooling design,
reduction of engineering scrap and process optimization.
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IDENTIFYING SIX SIGMA


PROJECTS
Cool !!

A list of project selection


ideas, by function, is
located in GBData
Identifying Six Sigma
Projects.doc.
Review the file and
familiarize yourself with
its contents.
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PROJECT COMPLETION CYCLE


Guidelines for project completion are as follows:
Full-time = 4 months (3 project per year)
Part-time = 6 months (1 project per year)
New projects should be pulled into an active
status only when a resource is available.
This can be accomplished utilizing the project
completion cycle.

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REDUCING PROJECT CYCLE TIME


Project cycle time must be considered when selecting and
managing projects.
Significant costs are tied to ongoing projects and extended
project life-cycles.
For example, a project that produces cost savings at a
rate of $20,000 per month leaves $80,000 on the table
when it takes 8 months versus 4 months to complete not
to mention the lost opportunities associated with the
potential for additional projects and associated cost
savings.
Prolonged project cycle times erode management and
employee motivation and commitment.

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REDUCING PROJECT CYCLE TIME


Typical project extenders include;
Lack of reliable data related to the process selected for
improvement.
Rescheduling (consistent delays) of team meetings
and reviews.
Changes to scope.
Shifting management priorities
Resistance to change.
The longer it takes to get results and the more
burdensome the involvement, the harder it becomes to
engage frontline and management personnel that are
necessary for project success.

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KEY PROJECT
SUCCESS FACTORS
Process is operating at targeted level and customers are
satisfied with performance.
Data collected in advance with a minimum number of scope
changes after launch.
Long-term process performance sustained.
Project costs contained within estimated levels.
Completed on schedule with minimum disturbance to normal
work flow.

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PRIMARY BASELINE MEASUREMENTS


Yardstick to measure success.
Links problem to the objectives.
Helps define scope of project.
Must be SPECIFIC and MEASURABLE.
Falls into one of the following categories:
Defect Reduction
Cycle Time Reduction
Consumption Reduction
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BARRIERS TO TEAM
SUCCESS
Team not supported by management.
No Champion
Champion is not meeting with Green Belt or Black Belt.
Few or poor management reviews.
Project scope is too large.
Green Belt or Black Belt and team not given adequate time to work on

project.

Project goals and objectives not important to site or company.


NO clear measures of success.
Team is too large.
Team is not trained or involved.

COMMON THEME The barriers are all MANAGEMENT related.


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PROJECT DESCRIPTION
AND OBJECTIVES
A good problem statement is the
foundation of a concise project
description and, ultimately, a
successful project.
A well defined problem statement
can significantly improve your
ability to resolve the problem.
Must establish a clear linkage
between problem statement,
problem objective and baseline
measurements.
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SUCCESS WITH PROBLEM


STATEMENTS AND OBJECTIVES
The problem statement should not be a boil the
ocean issue (too broad to have a chance of
resolution).
The problem statement and objectives must be clearly
written.
Beware of buzzwords and acronyms.
Clearly link the problem objective and the project
metrics.
Link the problem to the needs of the business with a
dollar impact.
Should be measurable (preferably through existing
metrics).
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EXAMPLES OF WELL WRITTEN PROJECT


STATEMENTS AND OBJECTIVES
Catalog 1451 Toggle Switch Project
PROJECT DESCRIPTION the purpose of this project is to
improve product quality and increase the efficiency of the
related manufacturing process. This will be accomplished by
identifying and isolating the primary cause related to the cost
of poor quality; determine root cause and implement
corrective action. On an annualized basis, there is a total of
$220,000 as a result of scrap and rework (1998 baseline).
PROJECT OBJECTIVE to reduce the cost of poor quality
by 35% from $220,000 to $143,787 to achieve $77,218
annual savings.

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EXAMPLES OF WELL WRITTEN PROJECT


STATEMENTS AND OBJECTIVES
Catalog 5050 Receptacle Line Project
PROJECT DESCRIPTION Catalog 5050 is a semiautomated line currently rated for an output of 6,500 units
per shift. Current production averages between 3,000 and
3,500 units per shift. In order to meet current production
requirements, 2 shifts are utilized. In addition, scrap (yearto-date) is $65,000 and rework (year-to-date) is $25,000.
PROJECT OBJECTIVE Increase shift output by 50%
resulting in a $75,000 annualized savings by reducing shift
work hours. Also, reduce scrap and rework by 50%
resulting in $45,000 annualized savings. Total annualized
savings goal - $120,000.

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PROJECT REVIEW
KEN

GREEN BELT or BLACK BELT

ADA

Once a project has started, the Green Belt or Black Belt is


responsible to continually review the projects during each
phase of the DMAIC cycle to assure the project is on
schedule, that goals/targets are being met and that all
actions are being taken as required.
In effect, the responsible Green Belt or Black Belt is a
project manager.
These reviews are reflected by periodically updating the
Six Sigma Tracking Software.

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PROJECT REVIEW
CHAMPION
Once a project has started, a minimum of 4 project
reviews are required by the Champion.
These reviews, should occur after completion of the
Define and Measure phase, Analyze phase, Improve
phase and Control phase.
Reviews are conducted by, the responsible Green Belt or
Black Belt via the related PowerPoint presentations
prepared for each project.
Suggested/Proven approach is for Champion to conduct
monthly project review sessions for all active projects.

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DETERMINING PROJECT
BASELINES
One of the critical functions of a Black Belt or Green Belt is developing
project baselines. Your Champions role (in conjunction with your
IE/Finance function) is to assure that these costs savings are validated.
Project baselines consist of the following:

A. COST IMPROVEMENT SAVINGS


These savings are reflected in the financial bottom line figures such as
scrap reduction, elimination of rework operators or reduction of personnel.
This also includes cycle time or standard labor hour improvements where
the Bill of Material (BOM) standards are changed.
For example, if a standard is changed from 36 switches/minute to 37
switches/minute, this is considered a Cost Improvement Savings. If a
standard is not changed, it is a Productivity Improvement Savings.
Specific cost improvement categories are scrap, rework identifiable
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DETERMINING PROJECT
BASELINES
1. SCRAP
Data will come from the Scrap Report report which will establish how much scrap,
in dollars and in units/pieces, was generated during a representative period of
time.
Method To Establish A Project Baseline Measurement:
Calculate a ratio of the item's quantity being measured from the Scrap report
compared to the quantity (or equivalent dollar value) of GPMO (Good Product
Moved Out) for the same items during the same period of time.
Once a projected scrap reduction ratio is determined, the ratio will be applied
against future GMPO which can be calculated by multiplying the EAU for those
items by frozen cost of the same item.

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DETERMINING PROJECT
BASELINES
2. REWORK
Reduction of material to be salvaged will reduce
rework hours. Savings are calculated by hours
reduced multiplied by related overhead rates and
labor rates. Inventory dollars will also be reduced.
3. IDENTIFIABLE FOH EXPENSE REDUCTION
This is a savings as a result of reduction in native
expenses that could include personnel,
equipment, fixtures, tools or utilities.
4. CYCLE TIME REDUCTION
This is a cost savings as a result of surpassing
the standard. In this situation, there is an
improvement to the standard hours on the Bill of
Material (BOM). Refer to productivity
savings, when the improvement does not
surpass the Bill of Material (BOM) std.

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DETERMINING PROJECT
BASELINES
B. PRODUCTIVITY SAVINGS
Will generate two types of savings cycle time improvement (or improvement
of std. hours of production) and cost avoidance savings (i.e. not having to
purchase additional capacity due to improving productivity).

1. Improve Standard Hours of Production (Improve Cycle Time)


Will lead to reduced cost based on std. hours reduction. This can be an
improvement from the actual or surpassing the std. In all cases, current
actual hours must be established as a project baseline measurement.

2. Cost Avoidance Savings Calculation


Calculation is derived from a productivity improvement that creates a situation
of excess capacity. This excess capacity might otherwise have been
purchased as demand for the product increases.
Method of Calculation calculate how much additional volume of production
you will be able to produce and multiply this additional volume by the FOH.
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COST SAVINGS NOTE

PLEASE NOTE:
Plant I.E. (Mfg.) and or Finance (transactional) function is
responsible for deriving and verifying savings.
If savings are planned or reported as cost reduction, do not
double count/claim as Six Sigma saving or vice versa.
Capital investment should NOT be subtracted from savings
and should be paid-off within 2 years.
Six Sigma savings will be updated as the project progresses
through each phase.

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