Copyright © 2006 Six Sigma Academy International, LLC All rights reserved; for use only in compliance with SSA license. Financial Training Update Module ObjectivesApproach Finance 101 – 1 Day SSA Staff & Client Staff requiring general Finance introduction Understanding of how Business Decisions impact Company Financials Basics of Cost Accounting, Accruals, Accounting principles, Cash Flow understanding, Basic Financial Metrics Financial Statement Understanding New Effort Simulation – group exercise - classroom Finance 201 – 1 Day SSA Staff & Client Staff who need to understand financial impact of LSS Understanding of how and to what magnitude 6 Sigma projects impact a company’s financial performance & financial statements New Development Extension of Simulation from Finance 101 Group exercise - classroom Finance Project Chartering – 4-6 Hrs. SSA Staff & Client staff – writing good charters – financial benefits calculations Ability to write a well scoped charter to include benefit calculation MCs improve ability to charter, form, scope projects with clients Update Lecture/Workshop Exercises/Examples – classroom Finance Valuation, Prioritization & Selection – 3-4 Hrs. SSA staff & client staff – focus on project valuation considerations. Understand Project Valuation by Financial Categories Understanding of business and accounting problems around valuation Creating a framework for prioritization New Development Lecture/Workshop Exercises/Examples – classroom Finance Policy & Processes (Finance Champion Workshop) – multiple meetings Client Finance Champion Educate Client on the intricacies of the Financial 6Sigma Processes Establish the rules of engagement aka the Finance Handbook Update Workshop with FC – series of meetings over time Fin Analyst Support Role – 1 Day Client Financial Analysts Introduction to Six Sigma & Orientation FA Role FA Responsibilities Project Workshop Update Lecture/Workshop Exercises/Examples - classroom

Copyright © 2006 Six Sigma Academy International, LLC All rights reserved; for use only in compliance with SSA license. Finance Day - Agenda Introduction to Financial Statements -Income Statement -Balance Sheet -Cash Flow -Key Metrics -FASB & GAAP Simulation – Set-up Company -Balance Sheet initialization Assets, Liabilities & Equity sections Introduction to A/P & Fixed Assets Introduction to inventory -Income Statement initialization P&L drill-down: COGS, SG&A, EBIT, Op. Inc.,PBT, NI, EPS, P/E P&L Mechanics (formulas) Introduction to Depreciation (matching principal, Accrual- based accounting) -Initial Cash Flow: Mechanics of Cash Flow Statement Operating Cash Flow definition Net Change in Cash Position Simulation – Operating The Company -First Month - Together The Plant Standard Costing Factory Overhead COGS Remainder of P&L Balance Sheet Cash Flow – reconciling Cash Key Metrics -Second Month – In Teams Production Planning Financial Results -Third Month Unexpected Events Production Planning Financial Results Future Enhancements: -Bad Debts (reserve accounting) -A/R Aging -Accrual Accounting (e.g. Tax) -Transactional Model -Industry Specific Models

Copyright © 2006 Six Sigma Academy International, LLC All rights reserved; for use only in compliance with SSA license. December 2004 – Start Company 1. 12/6/04 Invest $1,000 to start company.2. 12/31/04 Borrow $20K at 7%APR over 5 years. Need to update screen shots

Copyright © 2006 Six Sigma Academy International, LLC All rights reserved; for use only in compliance with SSA license. Manufacturing Process Raw Mat’l Fill Lamp W/Liquids Lamps Install Bulb & Assemble Assembled Lamps Shipping 12/Hr (for shift) Labor = $1.67 Ea. Setup=30Min 5.33/Hr (for shift) Labor = $3.75 Ea. Setup=20Min 27/Hr (for shift) Setup=10Min WIP value = $ % $7/Ea Labor = $20/Hr. FG value = $ :00 – 8:30 Set-up 8:30 – 10:30 Produce 30 Lamps 10: :40 Break 10:40 – 11:00 Set-up 11:00 – 12:00 Assemble 6 Lamps 12:00 – 1:00 Lunch 1:00 – 4:00 Assemble 18 Lamps 4:00 – 4:10 Break 4:10 – 4:20 Set-up 4:20 – 5:00 Ship 27 Lamps Supplier A Supplier B 3% 5% Customer A Customer B

Copyright © 2006 Six Sigma Academy International, LLC All rights reserved; for use only in compliance with SSA license. Production Planning Worksheet STEP 1: Fill Lamp W/Liquids STEP 2: Install Bulb & Assemble 9.6 Units/Hr. Std. Labor = $2.08 Ea Units/Hr. Labor = $3.75 Ea. 27/Hr (for shift) 10% Standard Labor = $20/Hr. Over Time = $30/Hr. 20 Work Days/Month Can not exceed 160 Regular Time Hours/Month per employee Can not exceed 80 OT Hours/Month per employee Using Temp costs 8 Hrs training per month Supplier A Supplier B 3%5% Customer A Customer B Team: Month: ________________________ # Of Units Ordered For Delivery Next Month # Of Units Ordered For Delivery Next Month Units Scrap Units Filled Units Assembled # Of Units Ordered For Delivery Next Month # Of Units Ordered For Delivery Next Month Units Scrap Hours (integers) FT E Te mp Tot al Regul ar Time Over Time Total Prod. Capac ity (# Units) Units Delivered Units Received Units In Beginning # Units + Units In - Units Out Ending # Units Ending Value $7/Ea. Raw Material Beginning # Units + Units In - Units Out Ending # Units Ending Value $9.08/Ea. LAMPS (WIP) Assembled Lamps (FG) Beginning # Units + Units In - Units Out Ending # Units Ending Value $12.83/Ea. Hours (integers) FT E Te mp Tot al Regul ar Time Over Time Total Prod. Capac ity (# Units) Hours (integers) FT E Te mp Tot al Regul ar Time Over Time Total Prod. Capac ity (# Units) Shipping Make sure you do not exceed maximum hours.

Copyright © 2006 Six Sigma Academy International, LLC All rights reserved; for use only in compliance with SSA license. Manufacturing Process Receiving Raw Mat’l Fill Lamp W/Liquids Lamps Install Bulb & Assemble Assembled Lamps Shipping 500 units ≈1 Month 10% 12/Hr Labor = $1.67 Ea. Setup=30Min 5.33/Hr (for shift) Labor = $3.75 Ea. Setup=20Min 27/Hr (for shift) Setup=10Min Shipping Cost $20/Hr. WIP value = $8.67/Ea. $7/Ea Labor = $20/Hr. FG value = $12.42/Ea. 8:00 – 8:30 Set-up 8:30 – 10:30 Produce 30 Lamps 10: :40 Break 10:40 – 11:00 Set-up 11:00 – 12:00 Assemble 6 Lamps 12:00 – 1:00 Lunch 1:00 – 4:00 Assemble 18 Lamps 4:00 – 4:10 Break 4:10 – 4:20 Set-up 4:20 – 5:00 Ship 27 Lamps Manufacturing 30 $ $ $ $ $ $ $ $ $ $3, $3, $37.26 Cost Analysis Cost In: Material 30 units X $7 Ea. = $210 Labor 7 Hrs. X $20/Hr = $140 Total $350

Copyright © 2006 Six Sigma Academy International, LLC All rights reserved; for use only in compliance with SSA license. Charter Exercise Within the Packaging Department at Feel Good Natural Foods, there are multiple packaging lines each performing two types of packaging set-up changeovers. “A” packaging set-up changeovers are performed when the team is packaging the same product in a different size. “B” changeovers are performed before the team begins to package a new product. Below is data gathered for this project: EXERCISE EXAMPLE IN CHARTERING MODULE