How to Identify and Select Lean Six Sigma Projects

Lean Six Sigma is a powerful method for improving existing products, processes and services. Six Sigma was developed by Motorola in 1987. Motorola’s Six Sigma yielded significant financial results and became popular with many other companies, even though Six Sigma was practiced without the benefit of the define, measure, analyze, improve and control (DMAIC) strategy, Black Belts (BBs), or a defined project selection process.

In the mid-1990s, consultants introduced the method to Allied Signal and General Electric (GE), tying improvement to bottom-line financial performance. GE and other organizations refined the Six Sigma method and focused on identifying and selecting key projects, as well as adapting operations-based Six Sigma to service and transactional processes. One way to improve the deployment of lean Six Sigma is to improve how lean Six Sigma projects are identified and selected. The typical approach to lean Six Sigma project identification and selection is heavy on selection techniques but light on identification techniques. There are four prerequisites to a
well executed lean Six Sigma project identification and selection process.

Prerequisite One: Understand The Strategic Plan

The first step in understanding how to identify and select lean Six Sigma projects is to ensure you are completely familiar with your organization’s strategic plan. A typical strategic planning process will involve the following steps:

• Planning to plan: Create a roadmap to accomplish the strategic plan.
• Values scan: Assess the interests of the stakeholders
• Mission formulation: Use the stakeholders’ input to formulate a mission statement.
• Business modeling: Create a viable business model, including cultural considerations and funding related to the restructuring or divestiture of existing business lines, as well as the addition of new business lines.
• Performance audit: Perform an assessment of the organization in terms of capabilities and financial strength. Success is often based on completing four prerequisites.
• Gap analysis: Compare the current performance with the desired state to create a list of gaps.
• Integrating action plans: Create and implement a detailed plan to accomplish the strategies of the organization and close any gaps.
• Contingency planning: Develop contingency plans to account for potential market changes, competitive pressures and other scenarios that might affect the strategic plan and the organization’s ability to execute it.
• Implementation: Deploy the plan throughout the organization via cascaded goals, quantifiable performance measures and clearly identified owners and timeframes. As part of action planning, organizations should launch strategic thrusts to close perceived gaps. Typically, strategic thrusts are initiatives with clear charters and budgets, led by senior executives and involve clear account-
  ability. Strategic thrusts might be broad or specific, depending on the perceived gaps. Lean Six Sigma, Six Sigma, design for Six Sigma and their various permutations are all strategic thrusts.

Prerequisite Two: Align, Improve Efforts With Strategy

The second step is to understand how improvement activities should be aligned with the action plans found in the strategic plan. As part of business modeling in the strategic planning step, an analysis likely will have identified where the line of business (LOB) falls with respect to market growth and competitive position. The intent is to determine an effective strategy for a particular LOB based on the rate of market growth and the competitive position for the LOB. For example, if a particular LOB has a strong competitive position in a fast growing market, the management team for the LOB might emphasize product development over operations
improvement. On the other hand, a particular LOB with a weak competitive position in a slow market might require extensive focus on improving the cost structure through lean Six Sigma. For other scenarios, the improvement strategy should be suited to the optimization of each specific LOB relative to its strategic goals.

Prerequisite Three: Understand The Policy Deployment System

The third step is to integrate the action plans into the policy deployment system. Policy deployment is a general reference to goal based plans cascaded throughout the various levels of the organization. Hoshin planning, management by objective and
other terms are varied implementations of policy deployment. Successful implementation of policy deployment involves:

• Setting high-level goals, targets, timeframes and owners based on the action plans from the strategic plan.
• Setting functional and departmental goals, targets, timeframes and owners based on cascading the high-level goals to the local level.
• Integrating the local goals into performance plans for individuals and teams.
• Doing regular performance reviews for high-level and local goal achievement.
• Integrating performance to goals in the bonus structure for management.

Prerequisite Four: Understand Core Business Processes

Every organization operates in some form as a system that converts inputs (transactions, information or raw materials) into outputs desired by customers (a product or service). The organization will attempt to define processes to create the desired out-
come for customers and ostensibly document those processes. To clarify how to look at process performance for opportunities for improvement, the following terms apply:

• Level one (L1) process: A core business process that corresponds to a business function and has accounting traceability.
• Level two (L2) process: A subprocess of an L1 process that involves a distinctly related sequence of process steps.
• Work steps: A logical work unit of an L2 process that involves a sequence of work tasks and is performed by a person or a small team.
• Figure 1 shows an example of the use of the terms. The typical approach to identifying opportunities for improvement is to first understand what the key L1 processes are within the organization.

Then the key L1 processes will be broken down so key L2 processes can be identified. A typical lean Six Sigma
project then will address a sequence of work steps within one or more L2 processes. Project Identification and Selection Process
Champions, Master Black Belts (MBBs) and Black Belts can and should follow a structured method for identifying, prioritizing and selecting lean Six Sigma projects. Initially, the responsibility of a Champion in the project identification and selection process is to assist a trained MBB to execute the following steps:

• Review the strategic plan.
• Understand the high-level goals and targets for the organization.
• Compare desired performance with actual performance for the organization.
• Understand the local or depart mental goals and targets for all business functions.
• Compare the desired performance with the actual performance for each business function.
• Identify key L1 processes based on risk/return/goal analysis.
• Understand key L2 processes based on risk/return/goal analysis.
• Brainstorm all potential improvement opportunities.
• Rank and prioritize all potential improvement opportunities based on risk/return/goals.
• Communicate the results of the ranking activity and seek consensus.
• Launch lean Six Sigma projects based on the priorities. After becoming familiar with the process, the Champion is expected to lead these steps for the organization on a regular basis. Champion’s Role Is Integral. The role of a lean Six Sigma Cham-
  pion is varied and diverse depending on the size of the organization and the scope of the lean Six Sigma deployment. The DMAIC method does not come without the risk of failure, but it is a very successful and proven approach to solving problems and optimizing process performance. The success of lean Six Sigma projects often hinges on the Champion’s ability to resolve organizational issues and manage risks to the project, including:
• Funding
• Time.
• Staffing.
• Customer relations
• Project size and complexity
• Overall structure 
• External factors
• Dependencies among projects

Most of these risks can be addressedand possibly alleviated—by having a well-run project identification process,
communicating the priorities of the organization, communicating the potential lean Six Sigma projects, and building consensus among the key stakeholders

Champion responsibilities do not end after projects have been selected. The Champion is also responsible for ensuring that each lean Six Sigma project has a solid plan, buy-in for the required resources, and effective management. The Champion is also responsible for running effective project reviews at the end of each phase of the DMAIC process. Project reviews should not only look back at preceding activities, but also look ahead for the successful execution of upcoming phases. A well-trained MBB should assist the
Champion before and during the project reviews. The BB will be well versed in the technical tools, but it is the responsibility of the Champion to enable sufficient resources and remove organizational roadblocks that might stall the project.

Author Bigraphy

DOUGLAS P. MADER is an international speaker, seminar leader and certified master instructor for Six Sigma and design for Six Sigma. He is the founder and president of SigmaPro Inc., a consulting firm in Fort Collins, CO, that specializes in integrated deployment of Six Sigma, design for Six Sigma and lean systems. Mader earned a doctorate in mechanical engineering from Colorado State University and is a senior member of ASQ and the Institute for Industrial Engineers.

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.