8/12/2019 36_monroe

1/5

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 ForumFebruary 21, 2004Orlando, Florida

Why Six Sigma Project Selection is Important

A Six Sigma initiative (and its resulting SixSigma projects) is the methodology for an organization toaddress problems without known solutions that affect theorganizations financial and customer satisfaction success,Six Sigma project selection is important to assure the

success of the organizations Six Sigma initiative and toassure the success of the specific Six Sigma projects.

Six Sigma initiatives are not a panacea and arenot a strategy. Six Sigma initiatives enable and improveupon the execution of a strategy. In fact, the organizationmust have its strategy identified to qualify to implement aSix Sigma initiative.

Six Sigma project selections are particularlyimportant for the first several projects because these firstprojects:

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 orrepeating hear say or anecdotes to one of makingdecisions based upon relevant data;

Set the Organizations tone, reputation, andenthusiasm for the whole Six Sigma Initiative; and

Drive Managements enthusiasm for the Six SigmaInitiative based on the projects Return on Investment(ROI).

Therefore, the first projects set the tone, level of

expectations and enthusiasm for all future Six SigmaInitiative projects.

Successful project selection will enhance thecareers of those involved in Project Selection and ProjectExecution (such as Champions and Process Owners) whileleveraging the operational and financial results of theOrganization and motivating all members of the

Organization who are aware of the Organizationsperformance.

Six Sigma Methodology Quick Overview

Six Sigma methodologies include threecomponents:

Process, Product and Services ImprovementMethodology (DMAIC)

Business Process Management (BPM), and

Design or Redesign Methodology (DFSS)

Six Sigma projects are most effective whenaligned with the Organizations strategy meaning theprojects are focused on the Organizations core, significantand most strategic operations.

Figure 1. Six Sigma Methodology Components

Projects are the core center of Six Sigma effortsbecause they drive improvements in Customer Value aswell as operational and financial improvements.

8/12/2019 36_monroe

2/5

Necessary conditions for a successful Six Sigmaproject are:

the project is in alignment with the Organizationsstrategy,

the project produces significant financial results, and

Management of the Organization supports the SixSigma project.

The DMAIC methodology defines Six Sigmaprojects and includes these steps or phases:

Definesets project goals and boundaries

Measureidentifies the process which is the source ofproblems, defects or waste and measuring it.

Analyzeidentifies and confirms root causes ofproblems, defects or wastes.

Improvedevelops, implements and evaluatessolutions to the root causes.

Controlimplements oversight processes that assurethe 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 toQuality (CTQ).

Enable Revenue growth and/or

Enable Cost reductions and/or

EnableTime reductions.

Can be completed in 3 to 5 months time. Projectsrequiring more than three to five months can usuallybe broken down into phases with each phase beingstandalone 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 theresources required.

Have the ability to be staffed appropriately withskilled and motivated team members.

Project Selection Process and Techniques

The Project Selection Process is a set of iterativesteps taken in sequence. First identify the opportunities tocreate Value (and Customers Critical to Quality issues.Usually the management team has a list of these issuesthey wish pursued. They tend to fall into the categories ofStrategic, Financial, Operational and Customer issues.These issues are the beginning of the potential projectinventory. Identify and prioritize these issues.

Second, these Value Opportunities should beanalyzed and brainstormed better analyze and rank them.Related opportunities can be grouped together to create thenucleus of a project. Value can be estimated in terms ofleveraging revenue, cost reductions or improvingCustomers Critical to Quality issues. Some organizationsadopt a minimum threshold Net Present Value (NPV) for aproject. In cases where a project falls below the minimumNPV, the project will only be approved if it is an enablingproject that must be done to enable a really big money-maker of money-saving project.

Third, screen the initial list of Opportunities forProjects against a criterion of the Effort to implement theProject and the Impactbased on the Return-On-Investment of the completed Project.

Fourth, scope and define the Projects based on acommon Project Definition form so the Projects will becompared against a common sizing process.

Fifth, prioritize the projects based on theirpositive benefit relative to effort (ROI), the projectsability to have its resulting learnings transferred to follow-

on projects, and the risk of the project not succeeding.

Define the Project &

ID the Process

Analyz

eth

eProc

ess

Improv

etheProcess

ControltheProcess

MeasuretheProcess

D

M

AI

C

Define the Project &

ID the Process

Analyz

eth

eProc

ess

Improv

etheProcess

ControltheProcess

MeasuretheProcess

D

M

AI

C

Figure 1. Six Sigma DMAIC Process

8/12/2019 36_monroe

3/5

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 asappropriate resources are available. The lowest rankedprojects are in the lower right quadrant (projects #4 and#5) and should not be attempted as a first project in a newSix Sigma initiative and only attempted in an existing SixSigma initiative if all other projects have been completedor are under way. The projects in the top right and lowerleft quadrants (projects #2, #8, #3 and #7) are ranked in themiddle and should be attempted after projects in the topright quadrant are completed or under way.

As the organizations Six Sigma initiativematures and the number of project opportunities increases,the Theory of Constraints problem arises. The limitingfactor in the number of simultaneous projects anorganization may sustain is the number of available BlackBelts and Green Belts to facilitate the problem solvingteams.

A project selection process does not interfere withManagements prerogative to select projects. To thecontrary, a project selection process enables Managementto identify and prioritize projects based on Managementscriteria to achieve the organizations goals of achievingfinancial and customer service goals.

Reasons Not to Select a Six Sigma Project

A problem that already has an identified andcredible solution which just requires implementation in anexisting process should not be considered for a Six Sigmaproject for several reasons. First, a Six Sigma project

typically takes more resources and time than does a typicalprocess improvement project with a known fix. There isno reason to incur the extra expense and time to use theSix Sigma methodology when cause and cure are alreadyknown. Second, using a Six Sigma approach toimplement a known solution will discredit the Six Sigmainitiative and dishearten those assigned to the Quick FixSix 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 initiativeshould be selected with care since they set the expectationsand create the momentum for the new initiative. The firstSix Sigma projects should be selected based on theirability to quickly perform with little risk of successfulexecution and the high possibility of follow-on projects inthe same arena enabling the knowledge and tools

developed to be used and leveraged on the follow-onprojects.

Benefits of Successful Project Selection

Successful project selection will addressCustomer CTQ issues, create Customer Value, createadditional value for the shareholders and stakeholders ofthe organization, improve the processes at the center of theproject with respect to quality, waste, costs, and time, andempower and motivate the contributors to the Six Sigmaproject.

In addition to the above, the first Six Sigmaproject in a new Six Sigma initiative will createmomentum and enthusiasm for the new Six Sigmainitiative, establish credibility for Six Sigma projects tocreate value and generate more revenue and save costs andtime while improving quality, and embolden andencourage other staff to participate in follow-on Six Sigmaprojects.

Four Types of Six Sigma Projects

A mature program will have a mix of up to four types ofprojects, all of which may be running at the same time:

1. From Scratch (initial) projects which include:a. Process performance improvement

projectsb. Problem solving projects to restore

previous levels of performance.2. Follow-on projects which come out of From

Scratch project discoveries. These may be

Impac

t(ROI)

Effort (Resources & Costs)

12

34

5

6

7

8

Impac

t(ROI)

Effort (Resources & Costs)

12

34

5

6

7

8

Figure 1. Six Sigma Project Selection Ranking

8/12/2019 36_monroe

4/5

simple projects lead by Green Belts to complexprojects 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, withoutslowing the project.

The above list of projects starts with those projects thatrequire the largest investment of resources before thebenefits start to flow, down to those that require the leastresources.

Why Six Sigma Projects Fail

The seven most common reasons why Six Sigma projectsfail are:

1. Executive Management (CEO, direct reports,Division Managers) are not engaged anddisplaying their commitment to the Six Sigmainitiative.

2. A strong and respected Deployment Champion isnot in place and driving, guiding and assuringresources for the Six Sigma initiative.

3. The P & L owners are not being held accountablefor Six Sigma project results.

4. A critical mass of effective, full-time, mutuallysupportive Black Belt and Champion resourcesdoes not exist.

5. There is not a project selection process in placebased 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, ande) Resources available (Black Belts).

6. Scope Creep which occurs when Managementencourages a Six Sigma Team to expand its scopeof work beyond a narrow focus of what can beaccomplished within a three to five months.(Scope Shift is something that happens when theSix Sigma Team determines it needs to shift its

focus to upstream or downstream processes tosolve the identified problem. Scope Shift is notnecessarily bad. Scope Creep is by definition badsince it defocuses the Team and delays results.

7. Results are not rigorously identified and trackedand certified by appropriate third-parties (usuallythe Finance Department)

Summary

The project is the core of Six Sigma activity. TheSix Sigma methodology includes guidelines for successfulselection of Six Sigma projects. If these selectionguidelines are followed and the standard Six Sigma projectprocess is followed, it is highly likely the Six Sigma

project will be a success.

Creation, adoption and use of the project selectionguidelines is most important in selecting the first SixSigma project in a new Six Sigma initiative. The firstprojects success will create the financial and operationssuccess which will create the reputation and momentumfor the Six Sigma initiative within the organization.

Biographical Sketches

Charles M. Monroe, President, PegasusOrganization, Inc. Master Black Belt, Certified Black Belt

(ASQ), Certified Management Consultant (Institute ofManagement Consultants). Education: MBA, BabsonCollege, MA, BS Electrical Engineering, University ofHouston, Post-Graduate studies in Computer Science atWorcester Polytechnic, MA. Mr. Monroe is currentlyworking as a Master Black Belt training on Six Sigma andleading Six Sigma projects.

Mr. Monroes experience includes PrincipalConsultant, Pegasus Organization, Inc.; VP Sales &Marketing, ASA Solutions, Inc.; Interim ExecutiveDirector, 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 MBAProgram, Tempe, Arizona

Phoenix College, Phoenix Arizona

General Electric: Instructor and team facilitator forSix Sigma program courses for Green Belts

Charles A. Cox, Master Black Belt, CertifiedBlack Belt, Certified Quality Engineer and Senior Member(ASQ), Certified Management Consultant (Institute ofManagement Consultants). Education: MBA from

Colorado State University, BS Industrial Engineering fromPurdue University. Provisional ISO 9000 Auditor andPast Senior Examiner, Arizona State Quality Award(Baldrige Criteria). Currently training and Coaching BlackBelts in Fortune 1000 companies.

8/12/2019 36_monroe

5/5

Mr. Coxs experience includes Quality ProgramManager, George Group Consulting LLC; Director ofTQM, Bull Worldwide Info Systems; Senior Consultant,Coopers & Lybrands TQM/JIT Practice; Director ofQuality Assurance, TRW Safety Systems;Manufacturing/Quality Engineer, General Motors.

Mr. Cox teaching experience includes:

Adjunct Faculty for San Jose State University, SanJose

University of California Berkeley

Arizona State University, Tempe, AZ National Graduate School for Quality Management,

Falmouth, MA;

AlliedSignal: Total Quality Leadership programfaculty;

General Electric: Instructor and team facilitator forSix Sigma program courses for Black and GreenBelts.