1. Lean Six Sigma Executive Overview

2. “Descriptive Project Title”
Customer Profile – 28,000 Retail Business
Process Capability
– Before
Business Problem & Impact
Average speed to answer (ASA) was 1 minute. As call volumes increased 30% with a recent acquisition, end user downtime was costing the company US$500K annually. The target average speed to answer was under 30 seconds.
Measure & Analyze
Data Collection: Speed to answer on all calls was measured. The existing process sigma was 2.4.
Root Causes: Nature of problem and time of call were identified as root causes.
Process Capability – After
Improve & Control
Cross-training on call types was performed and staffing was arranged around peak call times. Metrics are reviewed weekly and posted to an IT dashboard.
Project Completion Date: 06/2010
Project Owner Name & Phone: Sandy Jones,
Black Belt Name & Phone: Joe Smith,
Results/Benefits
After the 3 month project, the customer saved US$150K, or 30%, as a result of reduced end user downtime.
A Savings of US $150k in 2011
International Standards for Lean Six Sigma

3. Project “Storyboard” – Example
Has a story board been developed
May want to provide a “sample”
Each Storyboard should:
Show the current project status
Support the oral presentation and “tell a story”
Follow the DMAIC process to structure and organize the tools used
Be readable; summarize and condense exhibits where necessary
Use arrows, call out boxes, and balloons to highlight questions, key leanings, risks & issues, etc.
Display data supporting findings and conclusions

4. Backup Slides

5. Project Charter Problem/Goal Statement Financial Impact Team
State financial impact of project
Expenses
Investments (inventory, capital, A/R)
Revenues
Separate “hard” from “soft” dollars
State financial impact of leverage opportunities (future projects)
Problem: Describe problem in non-technical terms
Statement should explain why project is important; why working on it is a priority
Goal: Goals communicate “before” and “after” conditions
Shift mean, variance, or both?
Should impact cost, time, quality dimensions
Express goals using SMART criteria
Specific, Measurable, Attainable, Resource Requirements, Time Boundaries
Explain leverage and strategic implications (if any)
Team
Tollgate Review Schedule
PES Name Project Executive Sponsor (if different from PS)
PS Name Project Sponsor/Process Owner
DC Name Deployment Champion
GB/BB Name Green Belt/Black Belt
MBB Name Master Black Belt
Core Team Role % Contrib. LSS Training
Team Member 1 SME XX YB
Team Member 2 TM XX GB
Team Member 3 SME XX PS
Extended Team
Team Member 1 BFM XX Not Trained
Team Member 2 IT XX Not Trained
Tollgate Scheduled Revised Complete
Define: XX/XX/XX - XX/XX/XX
Measure: XX/XX/XX XX/XX/XX XX/XX/XX
Analyze: XX/XX/XX XX/XX/XX XX/XX/XX
Improve: XX/XX/XX XX/XX/XX XX/XX/XX
Control: XX/XX/XX XX/XX/XX XX/XX/XX
Readiness Checklist – Measure
Project Charter – Confirm that the project will make a significant impact on the Business.
How have you confirmed the key customers, the CCR's and KPOVs?
What are the revised Business Benefits?
Does Business strategy still drive the project?
Review high-level schedule milestones here:
Phase Completions
Tollgate Reviews
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International Standards for Lean Six Sigma

6. Enter Key Slide Take Away (Key Point) Here
Measure Overview
Process Capability
Graphical Analysis
CTQ: ?
Unit (d) or Mean (c): ?
Defect (d) or St. Dev. (c): ?
PCE%: ?
DPMO (d): ?
Sigma (Short Term): ?
Sigma (Long Term):?
MSA Results: show the percentage result of the GR&R, AR&R or other MSA carried out in the project
Root Cause / Quick Win
Tools Used
Root cause:
Quick Win #1
Quick Win #2
Quick Win #3
Detailed process mapping
MSA
Value Stream Mapping
Data Collection Planning
Basic Statistics
Process Capability
Histograms
Time Series Plot
Probability Plot
Pareto Analysis
Operational Def. 5s
Pull
Control Charts
Measurement System Analysis
Confirm that the Measurement process will remain good enough to guide process improvement efforts and to meet customer needs.
How do you know that the Measurement System of the KPOVs is still acceptable?
Narrowing the list of Potential Root Causes –
What was the process for identifying Potential Root Causes, ex. Brainstorming, data analysis, etc.?
Has the list potential root causes been reduced?
What was the process used to narrow the list of potential root causes?
What were the results?
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International Standards for Lean Six Sigma

7. Enter Key Slide Take Away (Key Point) Here
Analyze Overview
Hypothesis Tests
Value-Add Analysis
Root Cause / Effect
Tools Used
Root cause:
Effect
Data Analysis
What potential KPIVs were identified?
Show the key statistical and graphical tools which narrowed the potential KPIVs.
Show regression models developed. How good is the model?
Show ANOVA results.
Show Hypothesis Test results. What have you learned?
Do you see any important interactions between various parameters?
Were there any special causes in the data? What did you do?
Standard Deviation
What effect would a lot of variation in the population have on our estimate of the population mean from a sample?
How would this affect our ability to draw conclusions about the mean?
What if there is very little variation in the population?
Statistical Inferences and Confidence
How much confidence do we have in our estimates?
How close do you think the true mean, m, is to our estimate of the mean, x-bar?
How certain do we want/need to be about conclusions we make from our estimates?
If we want to be more confident about our sample estimate (i.e., we want a lower risk of being wrong), then we must relax our statement of how close we are to the true value.
Three Factors drive Sample Sizes
Three concepts affect the conclusions drawn from a single sample data set of (n) items:
Variation in the underlying population (sigma)
Risk of drawing the wrong conclusions (alpha, beta)
How small a Difference is significant (delta)
These 3 factors work together. Each affects the others.
Variation: When there’s greater variation, a larger sample is needed to have the same level of confidence that the test will be valid. More variation diminishes our confidence level.
Risk: If we want to be more confident that we are not going to make a decision error or miss a significant event, we must increase the sample size.
Difference: If we want to be confident that we can identify a smaller difference between two test samples, the sample size must increase
Process Balancing
“Process Balancing” is a procedure whereby a set of process steps are “equalized” in terms of time required to accomplish them (note “effort” may not be the same!).
Process balancing tools are used where the process is contained in a defined area. Examples include:
Order Entry Department
Mortgage Application Process
Key tools used in process balancing are the time study and takt time chart, but other tools such as skill matrix, etc., may play a significant role in the analysis.
The Process Balancing techniques are not exclusive to “one-piece flow” – small batches may be necessary between certain steps – but use of the process balancing tools is meant to drive the process to one-piece flow.
Primary Issues in Typical Transactional Environments
Excess “stuff in process”
Poor space utilization
Low employee efficiency
Long/erratic cycle times
Poor balance of labor content across process steps
Conveyance, standby and motion waste
Disorganized workspace and component/supply storage
High variability of demand on multiple processing centers – e.g., call centers/customer arrivals
High variability of task content (non-standard work/procedures)
Define: What is the Goal of balancing the process?
Capacity improvement without adding resources
Productivity improvement without sacrificing quality
Space reduction
Day-to-Day scheduling
Long-term resource planning
Measure: What tools will be used to gather, present, and analyze data?
Time Study and Task Times (breakdown of NVA, BVA, CVA)
Historical: Exits, Productivity, Customer Demand, Staffing, etc.
Layout and spaghetti flow
Analyze:
Task Time Chart with breakdown of NVA, BVA, CVA
Time Traps and Constraints (if any)
Variability of Demand
Improve: What steps will be taken and in what order?
1. Reduce NVA of Constraints and Time Traps to meet Customer Demand
General Rule is that Max Task Time (incl. NVA+BVA+CVA) of Time Trap should be no more than 90% of Takt Time for low variability
2. Reduce NVA of non-Time Traps
General Rule is that Max Task Time of all other non-Time Traps should no more than 90% of Takt Time (customer demand) for highly predictable environments OR 80% of Takt Time for processes with variability
3. Reorder/Re-sort tasks to balance work content, alter staffing
4. Modify Layout to accommodate new staffing
Implement work controls (generic pull)
5. Iterate on reducing NVA, then BVA, then CVA and rebalancing/re-staffing until goals are achieved.
Cost targets, capacity requirements, etc.
Control: Implement visual control tools to sustain the improvements
Takt Boards for the Time Trap and overall process
5S & Issue Boards for problem resolution and process control
Customer Value Add: A task or activity for which the customer would be willing to pay.
Example: Electronic funds transfer via credit card
Business Value Add: A task that is required to support the business but for which the customer is not willing to pay
Example: Financial Services employee writing customer credit history on a credit application
Non-Value Add: A task that is not required and should be eliminated because it is wasteful
Example: Financial Services employee having to look for missing information needed to complete credit history
Review Sources of Waste
Transportation (moving items from one place to another)
Inventory (items/paperwork/information waiting to be processed)
Motion (excess movement and/or poor ergonomics)
Waiting (delays caused by shortages, approvals, downtime)
Overprocessing (adding more value than the customer is paying for)
Overproduction
Defects (rework & scrap – doing the same job more than once)
Another waste is: People (untapped and/or misused resources)
Hypothesis Testing:
Allows us to determine statistically whether or not a value is cause for alarm (or is simply due to random variation)
Tells us whether or not two sets of data are different
Tells us whether or not a statistical parameter (mean, standard deviation, etc.) is statistically different from a test value of interest
Allows us to assess the “strength” of our conclusion (our probability of being correct or wrong)
Hypothesis Testing Enables Us to:
Handle uncertainty using a commonly accepted approach
Be more objective (2 persons will use the same techniques and come to similar conclusions almost all of the time)
Confirm or disprove assumptions
Control our risk of making wrong decisions or coming to wrong conclusions
The null hypothesis is a statement you are testing in order to determine whether or not that statement is true.
We assume the null hypothesis is true unless we have enough evidence to prove otherwise.
If we can prove otherwise, then we reject the null hypothesis.
The alternative hypothesis is a statement that represents reality if there is enough evidence to reject Ho.
If we reject the null hypothesis then we accept the alternative hypothesis.
This is analogous to being found “guilty” in a court of law.
Assumptions
- The Hypothesis Tests we have discussed make certain assumptions:
Independence between and within samples
Random samples
Normally distributed data
Unknown Variance
In our example, we did not assume equal variances. This is the safe choice. However, if we had reason to believe equal variances, then we could have checked the “Assume equal variances” box in the dialogue box.
Type I Error - I’ve discovered something that really isn’t here!
Alpha Risk
Producer Risk
The risk of rejecting the null, and taking action, when none was necessary
Type II Error - I’ve missed a significant effect
Beta Risk
Consumer Risk
The risk of accepting the null when you should have rejected it.
No action is taken when there should have been action.
The Type I Error is determined up front.
It is the alpha value you choose.
The confidence level is one minus the alpha level.
The Type II Error is determined from the circumstances of the situation.
If alpha is made very small, then beta increases (all else being equal).
Requiring overwhelming evidence to reject the null increases the chances of a type II error.
To minimize beta, while holding alpha constant, requires increased sample sizes.
One minus beta is the probability of rejecting the null hypothesis when it is false. This is referred to as the Power of the test.
The p-Value
If we reject the null hypothesis, the p-value is the probability of being wrong.
In other words, if we reject the null hypothesis, the p-value is the probability of making a Type I error.
It is the critical alpha value at which the null hypothesis is rejected.
If we don’t want alpha to be more than 0.05, then we simply reject the null hypothesis when the p-value is 0.05 or less.
Beta, Power, and Sample Size
If two populations truly have different means, but only by a very small amount, then you are more likely to conclude they are the same. This means that the beta risk is greater.
Beta only comes into play if the null hypothesis truly is false. The “more” false it is, the greater your chances of detecting it, and the lower your beta risk.
The power of a hypothesis test is its ability to detect an effect of a given magnitude.
Minitab will calculate beta for us for a given sample size, but first let’s show it graphically….
We have concentrated on 2-sided hypothesis tests.
2-Sided tests determine whether or not two items are equal or whether a parameter is equal to some value.
Whether an item is less than or greater than another item or a value is not sought up front. A 2-sided test is a less specific test.
The alternative hypothesis is “Not Equal”.
Everything we have learned also applies to 1-sided tests.
1-Sided tests determine whether or not an item is less than (<) or greater than (>) another item or value.
The alternative hypothesis is either (<) or (>).
This makes for a more powerful test (lower beta at a given alpha and sample size).
Value Add Analysis
One-Way ANOVA
Two-Way ANOVA
Pareto Plots
Simple Linear Regression
Multiple Regression
Test for Equal Variance
Scatter Plots
C&E Matrix
Complexity
Cause & Effect Diagram
Kaizen/Quick Wins
FMEA
Control/Impact Chart
T-Test
Other
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International Standards for Lean Six Sigma

8. Improve Summary Enter Key Slide Take Away (Key Point) Here
Solution Selection Criteria
Pilot and Implementation Plan
Choose solutions that will impact the root cause's) heavily, which will in turn reduce your problem. You do not want to implement a dozen solutions, each of which makes only a small difference in the bottom line.
Note: Benefits realization will begin upon improvement implementation, unless approved by Financial Representatives
Solution:
What are the solutions for implementation?
What solutions were considered in the Solution Selection Matrix?
What were the criteria?
What were the results of the Pugh matrix, if used?
Has the process owner been involved in the review of recommended actions?
What changes are recommended?
What techniques were used to evaluate the risk of the chosen solutions? What changes were made?
What efforts were made to optimize the solution and what were the results?
What are the initial thoughts on a Control Plan?
- Identify all opportunities for continuous improvement
Reduction of effort
Reduction of time
Reduction of space
Reduction of cost
Reduction of mistakes
Increasing customer satisfaction
- Improve the process through a variety of Lean tools/techniques:
Value Stream Mapping
Time Trap Identification
Heijunka/Leveling/Stability (S&OP)
Kaizen/Continuous Improvement
Kaikaku/Innovation
Jidoka/Autonomation
Kanban/Just In Time
5S Organization
Stocking Strategy
Generic & Replenishment Pull Systems
MRP/Pull System integration
Single Minute Exchange of Die (SMED)
Visual Tools, Visual Processes
Cellular Layouts & Line Balancing
Standardized Work
Total Productive Maintenance (TPM)
Make vs Buy, Distribution Mgmt, Vert Integ
Strategic Sourcing, Tactical Purchasing
Faster feedback on process performance (increased learning cycles)
Improved first pass yield (results in improved productivity)
Improved process stability (results in improved throughput)
Uncovers process deficiencies (forces problem resolution)
Less in-process and buffer inventories (reduced risk)
Improved customer satisfaction (flexibility and responsiveness)
Check for the Ripple Effect and Unintended Consequences
Even a small change in a business process can affect many other processes. During a pilot, the team may need to double-check for this “ripple” effect.
Impact on Other Processes
Make sure the new design has not somehow caused problems for your internal supplier and customer processes.
People working in such support areas as planning, customer service, operations, and quality control need to know that you are doing things differently so they can adjust their work where necessary.
Check administrative processes such as personnel, finance, or accounting. If one of your solutions, for example, is to cross-train people in several skills, the human resources department may need to revise job descriptions.
The pilot plan should be designed to include steps to analyze the results. Root causes of performance gaps may need to be analyzed or redesigned.
Summarizing Pilot Conclusions
Once all the pilot data has been collected and the results verified, the team can determine the next steps toward solution implementation. Only after an objective and comprehensive assessment of the pilot can responsible “next step” decisions be made.
Some questions a team should ask upon the completion of a pilot to help guide them toward identification of the proper next steps are:
Did pilot have anticipated results?
Was the plan for conducting the pilot effective?
What improvements can we make to the solution?
Can the solution be implemented “as-is”? Should it be?
Can the solution remain in place at the pilot location?
What lessons learned and best practices can we apply during solution implementation?
Did the solution achieve the required design goals?
Don’t skip the pilot!
Define successful criteria before testing the pilot
Agree on a list of critical parameters to continue
Document all test results and control procedures
Train all process participants
How the solution was determined:
What was the solution selection tool used?
What project management tools were used?
Cost/benefit analysis?
Include any other tools or methods used ?
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International Standards for Lean Six Sigma

9. Control Summary Enter Key Slide Take Away (Key Point) Here
Control/Response Plan Highlights
Benefits of Project ? ?
Summarize benefits to the internal/external customers here.
Start tracking benefits from date of implementation of Improve Phase Improvements.
Include text here to explain highlights of the plan to monitor and respond to variation in y’s and x’s
Baseline Improved
Units ? ?
Defects ? ?
DPMO ? ?
Mean* ? ?
PCE% ? ?
Std. Deviation* ? ?
Sigma (ST) ? ?
Sigma (LT) ? ?
Sigma Levels/Improvements
Communication & Translation
Documentation
Provide any necessary training
Translation project within/ outside of region/function:
Any resulting spin-off projects initiated
Any Replication in other locations?
Communication
Communicate project results with customer
Communicate results with the business
Part of “Managing By Fact” in many organizations, is to consistently review key indices or dashboards regarding critical core and enabling processes.
- Identify process owner(s)
- Develop initial process management charts
- Set up regular, on-going review cycle
- Determine criteria for process dashboards
- Establish mechanism for ensuring performance to business goals
- Update measures to meet customer requirements
- Ensure process stability through “quick response”
- Institutionalize
Control Plan – How will you ensure that the Process benefit will be retained?
Control Planning
Have you completed your final FMEA with revised ratings?
Is there a control plan in place for each KPIV?
How was it developed? Has it been approved?
How does this control plan insure that the process will perform at the improved level?
Who owns the responsibility to ensure continued performance?
Procedures
What key procedures are required to maintain control?
hat are the corrective action procedures (Reaction Plan)?
Have you updated SOPs, if applicable?
Were ISO methods followed?
Who owns the process instruction manual?
Training
Has personnel training been performed and documented?
Has the process owner been properly trained to support long term performance?
How was the process knowledge transferred to area and support personnel?
How will new personnel be trained in process operation and reliability?
Is there a method in place to ensure proper training?
Control Chart Monitoring
What specifically is to be controlled?
What precisely are the Input Variables specifications?
Who is responsible for control for each variable and why is control needed?
What type of control chart is used for monitoring?
Who interprets the chart(s) and takes action?
Visual Process
What visual controls are included in the control plan (5S, SOP, safety, special instruction)?
Are the area personnel involved with placement and implementation of the visual controls?
Automated Process Control
Are there KPIVs or KPOVs that could benefit from automated process control?
If yes, what type of control? How much reduction in variation were you able to get?
How much reduction in process variation would you expect by automating the control?
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International Standards for Lean Six Sigma

10. Enter Key Slide Take Away (Key Point) Here
Business Impact
State financial impact of future project leverage opportunities
Separate “hard or Type 1” from “soft Type 2 or 3” dollars
Annual Estimate
Replicated Estimate
Revenue Enhancement
Type 1: ?
Type 2: ?
Type 3: ?
Expenses Reduction
Loss Reduction
Cost Avoidance
Total Savings
Lean 6 Sigma Project Documentation
General Guidance
The project charter templates provided will document both the functional and financial goals to be realized. When the Project Charter portion of the project is documented sufficiently for a Black Belt to begin work, a copy of the documentation can be placed in the Project Hopper.
When a Black Belt begins work on a particular project, that project’s Project Charter should be removed from the Project Hopper as it is no longer available to be worked.
The financial portion of the Project Charter should initially be completed by the Project Sponsor and the Financial Representative to show projected savings. This portion should also be updated as the project progresses to clearly show true savings achieved. When the project is completed, the Financial Representative should validate that the project savings were achieved as recorded. The financial portion (now validated savings) should then be forwarded to Deployment Champion.
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State financial impact of project
Expenses
Investments (inventory, capital, A/R)
Budget
Separate “hard” from “soft” dollars
State financial impact of future project leverage opportunities
Benefits – Will the project make a significant impact on the Business?
Is the project driven by the Business strategy?
What are the expected Business Benefits of the project?
What are the critical assumptions in the benefit analysis?
Does the Financial Manager endorse the Benefit calculation?
Definitions
Growth = Percentage Increase in Revenue
Return on Invested Capital: If a shareholder invests a dollar, how much will be earned each year?
Return = Profit After Tax (Net Operating Profit After Tax, NOPAT)
Invested Capital = Working Capital + Plant, Property & Equip. (PP&E)
Return on Invested Capital = Profit After Tax/Invested Capital
Cost of Capital = How Much a Company Pays for Its Capital ~ 12%
Compare the Cost of Capital to the Internal Rate of Return (IRR) of a project’s cash flows (more on this later)
Finding the Financial Impact
We must be able to satisfactorily demonstrate the impact of our improvement project activities
Typically, there are at least four categories of impact:
“Green” dollars positive dollars that exit or enter the organization, that appear on the profit and loss (P&L) statement (Measurable)
Redeployment of resources – people or equipment no P&L impact, versus a baseline, but reduces cost needed to support business growth, realized immediately upon redeployment (Can be difficult to measure)
Cost avoidance, reduces the need to add cost to support business growth, ex. capacity improvement. Realized when the business grows (Can be difficult to measure with certainty)
Strategic. May be no “hard” financial impact, but the right thing to do in terms of the future of the business. (Very difficult to measure the true impact)
Examples of Potential Revenue Enhancement:
New sales of existing or new products
Increased retention of profitable customers
Examples of Potential Cost Reduction:
Price increases
Labor Cost – Reduced number of hand-offs
Servicing Cost – Decreased number of quality related service calls
Rework – Less defective work due to improving quality at the source of the defect
Examples of Potential Capital Reduction
Supplies – Decreased volume of inventory due to process improvements
Cost of Capital – Decreased time of service to customer payment
Occupancy – Decreased storage area due to quicker shipping times
Direct Costs – These are costs that can be traced directly to providing a service. For example direct labor charges to include wage and benefit costs. Also, any cost associated with materials or service maintenance .
One Time Costs – These are costs which are incurred only once. Examples include new equipment or facilities, initial training, initial software installation and configuration, etc.
On-Going Costs – These are costs which will continuously be incurred. Examples included labor, on-going training, supplies and other operating costs.
If you must prove the bottom line impact of a project, reduce the dollars that exit the organization or increase the Revenue entering the organization!
Make sure that all stakeholders agree on the project’s impact and how it will be measured in financial terms!
Regularly seek the advice and input of members of the financial community, especially on the assumptions to make and means of calculating the stream of financial benefits from an improvement project.
Each project should have a financial rep (a person from outside the team) to assist and review financial benefits calculations.
Economic Profit can be impacted in three ways:
Revenue Growth
Volume increases due to improved customer satisfaction, faster delivery, differentiated features, etc.
Cost Reduction
Purchase items and services
Waste elimination
Make vs. Buy
Labor reduction
Productivity improvements
Scrap/Rework reductions
Capital Reduction
Inventory
Accounts Receivables
Assets
While overall project benefits are frequently a combination of all three levels, it is important to understand the distinction.
Lean Six Sigma Financial Principles
Every step is taken to ensure the integrity and accuracy of the data.
Processes developed to calculate and assess benefits must be simple and not overly complex.
Benefits are measured using established financial, cost and investment methodologies/principles/practices/guidelines of the company as appropriate.
Impacts on internal controls are proactively identified and communicated.
The primary reporting metric for Lean Six Sigma projects is the impact on Economic Profit.
All benefits and costs should be reported in $US dollars using the current year plan exchange rate.
All organizations consistently define, quantify, measure and report Lean Six Sigma projects in the tracking system.
Lean Six Sigma metrics complements, but does not replace, other critical business measures and analyses.
Black Belt, Project Sponsor and Financial Representative need to form a partnership with the Financial Representative acting as a key consultant to the project team
Roles and Responsibilities
Black Belt/Project Sponsor
Define current operational process and establish baseline with metrics and data
Determine process improvement relative to baseline and metrics
Define logic for benefits
Determine type of benefits
Calculate financial benefit outlook
Support validation of benefits during realization
Ensure benefits info is included in DMS by Measure tollgate
Ensure Type 1 savings are tracked to BLI and customers are in agreement by Control
Certifies savings
Financial Representative
Review and consult on expected benefit projections at Define phase
Validate financial benefits before Control tollgate
Validate actual project benefits during realization
Expertise solicited only at critical points
Available to advise Project Sponsor if needed during tollgate reviews
Charter Benefits Review (before Launch):
Financial Representative should be consulted with on the expected Benefits identified in the Project Charter
Benefits Realization Schedule Review (before Implementation)
Financial Representative validates the Tracking Methodology and Benefit Realization Schedule (the monthly Benefit projection) prior to implementation. Financial representatives review and consult on expected benefit projections at Define phase.
BBs, ensure benefits info is included in Measure. This will be added to the measure tollgate checklist.
FR Validate financial benefits before Control tollgate.
Black/Green Belt Certification Review (after 2 months of realization)
Financial Representative reviews the Benefits calculations made to-date by the Process Owner.
PS ensure actual project benefits are identified during realization.
FR Validate actual project benefits during realization.
Project Validation Review (after 6 months of realization)
Financial Rep reviews the Benefits calculations made to-date by the Process Owner.
Realization Review (after 12 months of realization)
Financial Rep reviews the final Benefits calculations made by the Process Owner.
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International Standards for Lean Six Sigma

11. Business Impact Details
Type 1: Describe the chain of causality that shows how you determined the Type 1 savings. (tell the story with cause–effect relationships, on how the proposed change should create the desired financial result (savings) in your project )
Show the financial calculation savings and assumptions used.
Assumption #1 (i.e. source of data, clear Operational Definitions?)
Assumption #2 (i.e. hourly rate + incremental benefit cost + travel)
Type 2: Describe the chain of causality that shows how you determined the Type 2 savings. (tell the story with cause–effect relationships, on how the proposed change should create the desired financial result (savings) in your project )
Assumption #1 (i.e. Labor rate used, period of time, etc…)
Assumption #2 (i.e. contractor hrs or FTE, source of data, etc…)
Describe the Type 3 Business Impact(s) areas and how these were measured
Assumption #1 (i.e. project is driven by the Business strategy?)
Assumption #2 (i.e. Customer service rating, employee moral, etc…)
Other Questions
Stakeholders agree on the project’s impact and how it will be measured in financial terms?
What steps were taken to ensure the integrity & accuracy of the data?
Has the project tracking worksheet been updated?
Describe the chain of causality that shows how you determined the Type 1 savings. (tell the story on how you will capture these savings in your project)
Show the Type 1 financial calculation savings and assumptions used.
Assumption #1 (i.e. source of data, clear Operational Definitions?)
Assumption #2 (i.e. hourly rate + incremental benefit cost + travel)
Describe the chain of causality that shows how you determined the Type 2 savings. (tell the story on how you will capture these savings in your project)
Show the Type 2 financial calculation savings and assumptions used.
Assumption #1 (i.e. Labor rate used, period of time, etc…)
Assumption #2 (i.e. contractor hrs or FTE, source of data, etc…)
Describe the Type 3 Business Impact(s) areas and how these were measured
Assumption #1 (i.e project is driven by the Business strategy?)
Assumption #2 (i.e. Customer service rating, employee moral, etc…)
Other Questions
All stakeholders agree on the project’s impact and how it will be measured in financial terms?
What steps were taken to ensure the integrity & accuracy of the data?
Has the project tracking worksheet been updated?
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Validating financial benefit projections is one of the most important, but challenging, tasks to perform in validating the Project Charter
Often the financial benefit projections written in the “Business Impact” section of the Project Charter are notional “rough order of magnitude (ROM)” or “back of the envelope” estimates without much analytical rigor applied in the calculations
The “Future Reality Tree” is a tool we can use to analyze and document the “chain of causality” from the operationally-oriented “Goal Statement” to the financial dollar savings/benefits stated in the “Business Impact” section of the Project Charter
The Future Reality Tree is a graphical approach to map out the cause–effect relationships which form the basis of the change you intend to make.
It shows in clear, cause–effect relationships, how the proposed change should create the desired result, surfacing potential side effects along the way.
In Lean Six Sigma, we use it to:
Define the thinking behind our proposed project
Confirm the logic of the project
Assess the valuation of the project
Surface risk issues
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Identify the basic improvements desired from the proposed project (intended to produce the desired result). Avoid identifying specific solutions; rather identify the nature of the improvement desired.
Make sure that the cause–effect relationship is clear and self-evident.
Avoid making “trans-Atlantic leaps” but rather take “baby steps”.
If you find yourself thinking of effects that stretch far from the causes, insert intermediate steps
Review with one or more knowledgeable associates to ensure clarity, correctness and completeness.
Strive for clarity, correctness and completeness
Use non-offensive wording
Build shared understanding
Make sure you are satisfied that the solutions really will produce the desired results (and the financial impact!)
Welcome negative branches, then deal with them
When objections are raised, try to determine the specific logic that is being challenged.
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Valid Objections
Clarity – I don’t understand what you mean
Entity Existence – I don’t believe that “A” happens
Cause Existence – I don’t believe that “A” causes “B”
Additional Effect – But “A” also causes “D”
Cause Insufficiency – But “A” won’t cause “B” unless “C” happens too
Additional Cause – But “B” is also caused by “E”
Circular Reasoning – How can “A” cause “B” if “B” causes “A”
Comptrollers Role
Provide input regarding project viability from a financial perspective
What type of savings are expected?
What effort will be required to capture them?
Will investment be required?
Review actual project savings claims as project approaches completion
Are the savings numbers accurate?
Can we capture them in a meaningful way?
Audit actual results in the ‘Sustain’ stage
Have the actual savings been realized?
If no, what is the recovery plan?
Types of Benefits
Type I: Hard savings that can be readily identified in budget terms and can be used for recapitalization
Type II: Resources that are freed up to move to value-added work
TYPE III: Intangible benefits
Type I benefits have a clear impact on the NAVSUP budget. The relationship between the project and the benefits are direct.
Type I benefits result in an adjustment to the business plan and are permanent.
Examples of Type I Benefits:
Reduction in labor costs and billets
Non-labor reductions (I.e., NMCI seats, supplies)
Space reductions that result in termination of a lease
Scrap or material reductions
Contract cost reductions
Type I reductions must be a primary goal in order for NAVSUP to deal with solvency concerns and accomplish required efficiencies
Booking Manpower Savings
Manpower savings will be booked in the fiscal year in which the savings are actually realized
The booking of manpower savings must begin no later than the fiscal year after project completion
Projects must focus on current savings; deferring manpower savings into the future defeats the purpose of Lean 6 Sigma
Type II benefits do not have an immediate impact on available funds.
Type II benefits are assets or resources that are freed up and may be re-utilized on value-added work.
Type II benefits may result in future savings
Examples of Type II Benefits:
Floor space is reduced, but building is not vacated
Allows reallocation of the space
Future resource requirements are reduced in existing budget documentation
Type III benefits are mainly intangible and cannot be captured in the budget or other documentation.
Examples of Type III Benefits:
Customer Satisfaction increases
An expenditure that was not budgeted is avoided
Employees are more satisfied
Response time is improved
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Projects requiring investments
No project requiring investment will be approved unless:
Type I and II project savings will exceed investment cost within 1 year
Projects that produce savings without requiring investment are preferred
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International Standards for Lean Six Sigma

12. Enter Key Slide Take Away (Key Point) Here
Lessons Learned ?
Every improvement effort offers a lesson.
It is what we do with these lessons that matters.
For successful projects, we want to document our efforts and conclusions to repeat the success.
If not successful, we want to document what went wrong to prevent repeating the same mistakes.
The availability of this type of information can greatly accelerate future efforts.
Enter Key Slide Take Away (Key Point) Here
International Standards for Lean Six Sigma

13. Project Ownership Team Enter Key Slide Take Away (Key Point) Here
Project Contributors
Steering Team
Support Team
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Project Ownership Team
Deployment Team
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By definition,
Critical and Essential Stakeholders MUST have representation on the CORE project team
Project Sponsors MUST come from the Critical Stakeholder group(s)
Core Team Members MUST come from the group of Critical and Essential Stakeholders (i.e. the Core Team is only made up of representatives from the Critical and Essential Stakeholders)
Non-Essential Stakeholders CANNOT be involved as Project Sponsor or Core Team Members, but may be involved as Extended Team Members
Core Team Members and Project Sponsors must come from the Critical and Essential Stakeholders group
Typically 3-5 Team Members on the Core Team for a DMAIC project, each contributing 15%-25% time commitment
Too many team members is restrictive and could also be early indicator of scope issues
Extended Team Members will be drawn from the remaining Stakeholder community
Key Team Member Activities
Participate in Writing of Project Charters
Due to their process knowledge, they may be asked to participate in the writing of potential project charters
Participate on Project Teams
Represent the organizations from which they come (the Stakeholder groups), not themselves
Communicate actively with the Stakeholder groups which they represent, to provide a ‘voice’ for the Stakeholder group on the project team
Participate in the execution of the DMAIC process, as led by a Black Belt or Green Belt
Become experts in the basic tools, such as flowcharting, fishbone diagrams and Value Analysis, and participate in their execution
Participate in Tollgate Reviews
Sustain and Extend Project Results
As key participants in the process, are responsible for implementing the changes recommended from the project and insuring their success
Look for opportunities to replicate the project results to other areas of the organization
Participate on projects part-time in their function or area of responsibility
Core Team Members – 15%-25% time commitment, during the duration of the project.
Extended Team Members – 1%-10% time commitment during the duration of the project
Often bring specific Subject Matter Expertise (called SME’s)
Represent the Essential Stakeholders in the process (not their own interests)
Responsible for communicating project status/progress with Essential Stakeholder group they represent and soliciting their involvement/feedback on solution direction.
Enter Key Slide Take Away (Key Point) Here
International Standards for Lean Six Sigma