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How to identify and select a Six Sigma project.

There is usually no shortage of projects to work on in an organisation, in fact there are nearly always too many. However these can be conflicting in both objectives and resources used to carry out these projects.

For example a sales department may be under pressure to convert more business through its sales pipeline, whereas the operations department is struggling to cope with the variety of work. The two departments are not strategically aligned thus creating tension in the business.

So how do you choose the right projects to spend your valuable time and resources on? This article seeks to lay down some general guidelines when selecting Six Sigma projects.

All too often projects are selected based on the immediate pressing need of the organisation - a reactive strategy. This generally deteriorates into a fire fighting downward spiral with most of the time spent sorting out problems and very little time spent managing the strategic direction of the business.

In the same way that strategy should and must drive the selection of projects and programs in an organisation’s portfolio, Six Sigma projects must also be derived from organisational strategy.

Identifying Projects for a Strategic Plan

So, what ways are there to identify projects to set within a strategic plan? The Six Sigma toolbox provides a number of methods such as:

• Value Stream Mapping
• CTS Flow Down
• Cost of Quality

Value Stream Mapping

Value Stream Mapping, or VSM as it is called, when carried out at the enterprise level will help an organisation identify critical areas within the organisation that do not flow, occupy too many resources or take too long to complete. A value stream is any flow of material, information or ideas through an organisation to meet a customer’s need.

This current state map can then be converted into a future state map by redesigning the process to reflect what the organisation really wants it to be. The gap between current state and future state then becomes a series of projects to deploy through the organisation for resolution.

VSM is an extremely powerful technique when undertaken correctly and serves to align projects across departments to meet the needs of the value stream and therefore the customer.

CTS Flow Down

CTS is an acronym for Critical To Satisfaction and asks the question what is critical to the satisfaction of the customer, internal or external? CTS can be broken down in to areas such as quality, cost and delivery and is usually carried out in a cascaded organogram style format.

Identifying what is critical to customer satisfaction can be achieved through a number of, what is called, VOC or Voice Of Customer techniques such as focus groups or customer journey methods. Strategies can then be put in place to satisfy the customers’ requirements.

Cost Of Quality

Cost of quality refers to identifying the cost to the organisation of the wider cost of poor quality delivered to the customer. It not only takes into account the obvious costs such as scrap, overtime, rework and returns but also the less visible costs such as lost sales, additional administration, lost customer loyalty etc. The cost of quality can be as high as 40% of total costs. Identifying and prioritising these costs can lead to clear strategic goals for an organisation.

Selecting Six Sigma Projects

Given a number of projects identified within the strategic plan, how do the drivers that are at work in an organisation result in some projects being Six Sigma projects, and others not?

There are three types of metrics that influence project type or the approach.

• Business Metrics - typically measure financial performance aspects
• Operations metrics - measure various aspects of the operations for the enterprise at a macro level
• Process Metrics - provide detailed information about the processes employed in the day to day operations

All of these metrics support one another, and ultimately the organisational strategy. But Six Sigma uniquely supports the detailed process level activities, and thus any projects that will ultimately be measured by process metrics are candidates for Six Sigma projects.

A number of criteria can be used to select Six Sigma projects:

• A project should have identifiable process inputs and outputs.
• A good project should never have a pre-determined solution. If you already know the answer, then just go fix it!
• For projects that have operator or operator training as an input, focus on ways to reduce operator variation, thereby making your process more robust to different or untrained operators.
• All projects need to be approached from the perspective of understanding the variation in process inputs, controlling them, and eliminating the defects.

Prioritising projects can be based on financial benefit to the organisation, required timescales, resources available or other business needs.

To avoid the business damaging fire fighting spiral, projects must be selected from within a strategic framework and deployed throughout the organisation.

Techniques such as Value Stream Mapping, Critical To Satisfaction and Cost Of Quality techniques may be used to turn customer needs and requirements into discrete measurable goals. Projects can then be organised to achieve the goals identified within the strategic plan. The use of Six Sigma is especially effective where achievement of improved process metrics is the goal.

SigmaPro work with all kinds of organisations to identify, select and run Six Sigma projects and support the alignment of projects to a strategic deployment process. Call us now for help in organising and managing your business critical projects.