1. Project Selection Process
Launch
Define
Recognize
We are here today to take a giant leap forward in improving our business. In essence, we are going to Recognize multiple areas of opportunity for improvement, Define the opportunities and create a Launch plan to achieve those improvements. We have a lot of work to do but it really is as easy as
This Project Selection Process provides an efficient and effective means of Six Sigmas Project identification, Selection and Prioritization.
Following this process will allow any business unit manager, from Department Manager through Chief Executive Officer, to identify ALL opportunities for improvement throughout the business unit. The opportunities identified may relate to any and all of the corporate strategies – they needn’t be solely financial savings in nature.
Six Sigma Executive Series

2. The Project Roadmap
Management
“Belt”
Project Identification
and Launch (support given from “Belt”).
Solution to the problem
and a Final Report (support given from a Champion).
Implement solution and maintain ongoing benefits (support given from “Belt”).
Realize
Control
Improve
Analyze
Measure
Define
Recognize
Finding the solution of Y = f(X)
Management owns 80% of the responsibility here.
We are the management of this company. It is our responsibility to determine the direction of our company, establish priorities and allocate resources where they will have the greatest impact on our company’s performance.
Our burden, or privilege if you wish, is to Recognize Opportunities and Define how they are to be pursued and achieved. We are known as the Champions of the implementation. That is, it is we who champion the cause and see it to successful conclusion. The Champion in a Six Sigma implementation has the responsibility to identify, prioritize, define and track performance of projects. The project Champion is typically the owner of the process being improved. That is, this person is typically the manager responsible for the department in which the process being improved resides.
We have or will develop a number of skill sets in our employees such that they can pull the wagon to our destiny – we have to establish where we’re going. Once the opportunities are defined, our “Belts” will follow the disciplines of Six Sigma to arrive at solutions to our problems and/or our opportunities.
Then we pick up the responsibility again to sustain the gains through managing to the Realization of the goals.
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3. Finding the solution of Y = f(X) + e
The Six Sigma Project
Results
Practical
Solution
Control
Plan
Statistical
Problem
Six Sigma
Project
Generally a systemic or chronic problem which is impacting the success of a process or function.
A well defined effort that states the problem in quantifiable terms with known expectations.
Data oriented problem that is addressed with facts and data analysis methods.
Data driven solution with known confidence/risk levels versus an “I think” solution.
A method of assuring the long-term sustainability of the fix to the problem.
The solution is not complex, expensive or irrational and is readily implement-able.
Finding the solution of Y = f(X) + e
Tangible results measurable in metrics with quantifiable financial or strategic value.
Characteristics of a
Has a financial impact to Earnings or a significant strategic value
The problem is not easily or quickly solvable using traditional methods
It is targeted to reduce the problem by >70% over existing performance levels
Focus is to solve a business problem that is:
Affecting the success of the organization
Affecting costs
Affecting employee satisfaction
Impacting a Customer (external and/or internal)
Read the slide and explain each step.
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4. Management or Market Caused Difficulty and Cost of Problems
Project Difficulty Distribution
Solving
“Fruit on the Ground,”
“Logic & Intuition”
Type Problems – Yellow and Green Belt.
Solving
“Process Optimization”
“Complex Interaction”
“Process Entitlement”
Black and Master Black Belt Projects.
Solving “World Hunger,”
“Boil the Ocean”
Type Problems.
Quantity of Problems
Our ability to properly define projects such that they can be successfully implemented and taken to a successful conclusion will determine the outcome of our Business Process Improvement initiative. The task becomes more ominous beyond the initial projects. We all are aware of the daily challenges we face and are typically devoting a significant amount of our mind share to a few highly visible, highly challenging situations. As our first few projects tackle those issues we must apply a defined process to ferreting out those opportunities that will take us to the next level of performance.
That is the objectives of our efforts in this undertaking. The events of our efforts here will yield a mind boggling number of opportunities for improvement to our business. We will then go through a drill to prioritize those opportunities and create a plan for pursuing them.
As we progress through our Business Process Improvement initiative, we will repeat today’s activities to generate even more opportunities. As a reoccurring process this will put us on a path to continuous improvement.
Six Sigma Projects
Too Hard -
Are Usually
Management or Market Caused
Too
Easy
Difficulty and Cost of Problems
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5. The Following People Typically Identify Potential Projects:
Project Originators
The Following People Typically Identify Potential Projects:
Champions
“Belts”
Process Leaders
Functional Managers/Process Owners
Any Employee Can Suggest a Project and Should Be Encouraged To Do So……However, It Should Be Considered and Sponsored by One of the Above People
Aside from the efforts we put in today, we must always kept an ear to the ground for other sources of opportunities. As we become more aware of the power of Six Sigma, we must be vigilant in our efforts to find areas for its application. Our Communication Plan will not only give visibility to the Six Sigma Implementation but it will also bring an awareness to our organization such that all employees can contribute to our project identification process.
We will/have developed a process whereby suggestions can be gathered, categorized and assessed as to value to the company. The onus will remain with us as management to prioritize the undertakings and allocate resources to the solution.
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6. Common Mistakes in Defining Projects
The most common mistakes in defining a potential project are:
Scope is too broad (solving world hunger or boiling the ocean).
Symptoms include: too many output Y’s, multiple goals, numerous Process Owners, multiple departments.
Solution: Divide problem into several projects.
Problem is too easy.
Problem solution is known.
It is a “just do it”; no problem analysis required.
Problem is a management or market issue – not a good “Belt” project.
Long term research or development project, not a problem to be solved with Six Sigma tools.
With the burden of prioritization and resource allocation on us, we must become highly competent at choosing and defining a project to increase the likelihood of its success.
Here are some of the things that can contribute to us doing a less than acceptable job of carrying out that responsibility.
Read the slide.
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7. Importance of Selection Process
Facts about Project Selection:
Project Recognition & Definition are critical activities to the success of any project and to the Six Sigma improvement effort.
Project Recognition & Definition are among the more important tasks a Champion performs.
“When I seek a project, it usually stinks. But when the projects find me, they’re usually very good projects.”
Six Sigma Black Belt
International Truck & Engine
Read the slide.
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8. Finding Areas Needing Improvement “Writing the Business Case”
RECOGNIZE PHASE
Finding Areas Needing Improvement
“Writing the Business Case”
Recognize
In this section we will examine the steps appropriate to identifying , or Recognizing, the opportunities.

9. Opportunity Definition
Strategic
Step 1
Opportunity
Definition
Enabling Processes
Core Processes
Structure of the Business Case
As a company, our
__________
performance for the
___________
area is not meeting
__________.
Overall this is
causing
____________
problems which are costing us a
much as
$_______
per
______.
Examples
As a company, our
accounts receivables
finance invoicing
the goal of 47 DSO .
Overall this is causing
cash flow and budget
problems which
are costing us as much as
$4M
year
area
is not meeting
. Overall
this is causing
problems which are costing us as much as
Receivables
Warranty
Cycle time
Defects •
Identification
Issues and Problems
Matrix
Scope
Statement of Work
Prioritized Business
Improvement Plan
Finding Problematic Areas of
the Business
Creating Logical Grouping
Using Affinity Diagramming
Objective Statement
Reduce the overall personnel recruiting time from an average
of 155 days to 75 days, with an upper limit of 110 days. This
will meet the current maximum goal of 100 days greater
than 95% of the time. The new goal which will be achieved
by June 1, 2002, will support our Employer of Choice goal
and achieve a savings of $145,000.
Problem Statement
Recruiting time for Production Planners is missing the goa
l 81% of
the time. The average time to fill a request is 155 days in the
Human Resources employee recruitment process over the past 15
months. This is costing us $145,000 per year of additional labor
and
rework costs.
Priority
Business Case
Owner
Financial
Impact
Sponsor 1
As a company, our accounts receivables performance
for the finance invoicing area is not meeting the goal of
47 DSO. Overall this is causing cash flow and budget
problems which are costing us as much as $4M per
year.
Bob Smith
Ellen West 2
As a company our product recall performance for the
ice cream market area is not meeting the budget of
1.5%. Overall this is causing logistics, materials and
cost problems which are costing us as much as $2M per
Mary Jones
$2M
Bill Jones 3
As a company our final process yield performance for
the culture area is not meeting the targeted 88% yield.
Overall this is causing Floor space, shipment and
resource problems which are costing us as much as
$900K per year.
Ken Parks
$900K
Kathy Shank 4
As a company our shipping logistics performance for the
Smith’s market segment is not meeting the scheduling
and cost requirements. Overall this is causing delivery
issues and customer dissatisfaction problems which are
costing us as much as $3M in lost revenues and $1.5M
in expenses per year.
Jill Williams
$1.5M
Earl Johnson
Business Opportunity Analysis Summary
This is a high level view of the process we are going to follow to achieve our objects.
At a point later in the Process, each participant will complete as many Problem Statements, Problematic Areas of the Business, as can be conceived. The group will then place all the Problem Statements on a wall and begin to group them as to topic. Each member of the group should work independently and continue to move Problem Statements as long as necessary.
Once this activity is complete, the moderator will facilitate the group deciding who owns the processes related to each of the Problem Statements and will write the owner’s name on each Problem Statement.
After the session, someone is to be tasked with putting each of the Problem Statements into an excel spreadsheet (Opportunity Analysis Summary; Opportunity Analysis.xls). The Business Unit Manager then reviews this summary to determine the order in which Six Sigma Projects will be undertaken. Once a priority is given to each Project, the Business Unit Manager meets with the Process Owners individually and develops an Improvement Plan. The Improvement Plan consists of a Problem Statement (Problem Statement.doc) and an Objective Statement (Objective Statement.doc).
Let’s begin the journey!!
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10. Finding Areas Needing Improvement
RECOGNIZE Starts With the Highest Level View and Moves Downward Into More Specifics to Formulate Six Sigma Projects
Start by assessing the higher level needs of the company; using any knowledge obtained from the Voice of the Customer (VOC) and/or the Voice of the Business (VOB).
Identify gaps in achieving the higher level needs of the company, the critical success factors or key goals and objectives of the company.
Achieving these goals should deliver customer satisfaction and business results
Business areas or processes which are impacting your goals are identified
Six Sigma projects are then selected with the goal of substantially improving these key processes
Select those areas or functions of the business related to the gaps which are performing poorly based on expectations, competitive knowledge or known deficiencies in performance.
Problems at this level usually are related to quality, cost or delivery
Read the slide.
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11. Finding Areas Needing Improvement
Problem “themes” will then become visible, such as:
Product returns/warranty costs
Customer complaints
Accounts receivable and invoicing issues
Cycle time/responsiveness
Inefficiencies of defective services
Yield and subsequent rework or scrap
Capacity constraints
Inventory levels
Read the slide.
You have now recognized where problems exist which need to be resolved in order to achieve our objectives.
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12. Finding Areas Needing Improvement
Writing a Business Case identifies the problem area, a description/characterization of the high level problem and an estimate of the financial benefit if solved to expectations.
When doing this the intent is not to define a Six Sigma project but to identify a problematic area.
The description of the high level business problem does not have to be very detailed. The details come when defining the project(s) to resolve the Business Case. It can be as simple as:
Warranty returns are excessive
Accounts receivables are higher than target
Product test yield and cost is not competitive
Sales order responsiveness is causing customer complaints
The potential financial benefit is our current best estimate given the data/knowledge we have. “Just get the number in the ballpark.”
Please read the slide.
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13. Opportunity Analysis Summary
At the corporate level, the Opportunity Analysis Summary becomes a high-level road map for the Business Process Improvement Program.
It identifies, with some specificity, which areas of the business and which metrics are to be improved and what impact such improvement will have.
It serves, then, as a tool to assure subsequent project selection criteria remain focused on issues pertinent to the corporate objectives.
As management, you want projects to improve metrics relevant to the corporate strategy. Using the Opportunity Analysis Summary as a first-level qualifier for project selection keeps the program focused on that which is important to the business.
For those just beginning a Six Sigma or Business Improvement Program, it is also used to develop a training program.
The complexity of the issues identified dictates the training mix of Champion, Black, Green and Yellow Belts. The time frame in which the issues will be addressed as desired by Management dictates the quantity of each.
Please read the slide.
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14. Please read the slide. Finding Problematic Areas of the Business
It begins by writing a Problem Statement which identifies:
A problem area.
A description/characterization summary.
An estimate of the financial benefit if solved to expectations.
When doing this, your intent is not to define a project, but to identify a problematic area which may later become an improvement project.
The description of the business problem does not have to be overly detailed at this stage. The details come when defining the project(s) to resolve it.
The potential financial benefit is your current best estimate given the data/knowledge you have. “Just get the number in the ballpark.”
Please read the slide.
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15. Six Sigma Business Assessment Writer
Instructions:
Capture Business Cases for the entire business – not just your area.
Complete each Business Case with your best estimate of the data.
Continue writing Business Cases until you have exhausted all known problematic areas.
Cut each Business Case into a separate paper strip.
Tape each cut Business Case to the designated area of the wall.
After all students have completed the Business Case writer, the instructor will provide directions to perform an Affinity Diagram.
In a moment I will be handing out sheets of paper as shown on this slide. I have hundreds of them and we are going to write as many Problem Statements as we can think of. Once this drill begins please work independently completing as many Problem Statements as you can.
We are going to examine first how to properly write a Problem Statement to capture the information necessary to move to the Define Phase.
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16. Writing the Problem Statement
Structure of the Problem Statement
As a company, we are experiencing a problem with: The area where this problem is occurring is: The problem has existed for at least: The magnitude of the problem is: and the expected performance is: The effect this problem is having on our business is: . This is costing us a much as $ per
As you review these statements remember the following format of what needs to be in a Problem Statement: WHAT is wrong, WHERE and WHEN is it occurring, what is the BASELINE magnitude at which it is occurring and what is it COSTING me?
You must take caution to avoid under-writing a Problem Statement. Your natural tendency is to write too simplistically because you are already familiar with the problem. You must remember that if you are to enlist support and resources to solve your problem, others will have to understand the context and the significance in order to support you.
The Problem Statement cannot include any speculation about the cause of the problem or what actions will be taken to solve the problem. It’s important that you don’t attempt to solve the problem or bias the solution at this stage. The data and the Six Sigma methodology will find the true causes and solutions to the problem.
You now know where you are coming from. You have determined that you have a viable problem, one worthy of being worked and you have the ability to convince others that you have a problem worthy of attacking. You know specifically what must be improved to make life better for you and others. Now the question is: how much improvement do you need and/or how much improvement can you make? You are ready to create the objective statement for the project so that you know where you are going. Before you learn how to write an Objective Statement, we are going to practice writing a Problem Statement for your key process.
After we review some examples of both good and bad Problem Statements, we will distribute blank forms for each participant to complete – as many as you can.
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17. Writing the Problem Statement
Good Problem Statement Examples
As a company, we are experiencing a problem with: Employee Turnover. The area where this problem is occurring is: All Stores. The problem has existed for at least: 2 years. The magnitude of the problem is: currently 88%, and the expected performance is: < 85%. The effect this problem is having on our business is: increased hiring and training costs and a lower than desired level of customer service. This is costing us a much as $400K in costs and $500K in Revenue per Year.
As a company, we are experiencing a problem with: Credit Processing Equipment Uptime. The area where this problem is occurring is: All Stores. The problem has existed for at least: one year. The magnitude of the problem is: Uptime at 91%, and the expected performance is: >95% Uptime. The effect this problem is having on our business is: Service Turnaround Time and Lost Sales. This is costing us a much as $300K per Year .
Please read the slide.
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18. Writing the Problem Statement
Good Problem Statement Examples
As a company, we are experiencing a problem with: Merchandise Shortages. The area where this problem is occurring is: Various Stores. The problem has existed for at least: 180 days. The magnitude of the problem is: unknown, and the expected performance is: No Shortages. The effect this problem is having on our business is: Lost Sales & Expedited Delivery Costs This is costing us a much as $25K per Month.
As a company, we are experiencing a problem with: Open Maintenance Calls. The area where this problem is occurring is: Companywide. The problem has existed for at least: 2 Years. The magnitude of the problem is: average of 1.6 OMC per store, the expected performance is: <1.2 OPC per store. The effect this problem is having on our business is: systems inoperative causing lost sales. This is costing us a much as $35K and per Month.
Please read the slide.
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19. Writing the Problem Statement
POOR PROBLEM STATEMENT:
As a company, we are experiencing a problem with: employee turnover. The area where this problem is occurring is: in all stores. The problem has existed for at least: always. The magnitude of the problem is: really bad, the expected performance is: no turnover. The effect this problem is having on our business is: high hiring & training costs . This is costing us a much as a lot of money per month..
A POOR Problem Statement is ambiguous and subjective. It does not quantify the metrics descriptive of the challenge. While accuracy is not expected at this point, good guess-timates are necessary.
You have seen a number of examples of Good Problem Statements – here is an example of a Poor Problem Statement. It is offered to assist you in recognizing what is not workable information.
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20. Problem Statement Instructions
Capture ideas for the entire business – not just your area.
Complete each with your best estimate of the data.
Continue writing until you’ve exhausted all known problematic areas.
Provide completed sheets of to the Facilitator.
Facilitator will tape each to the designated area of the wall.
After all participants have completed these steps, the instructor will provide directions to perform an Affinity Diagram.
Facilitator: Please hand out a stack of Problem Statement forms and let participants write as many as they can.
Facilitator: As sheets of Problem Statements are completed, cut them into individual Problem Statements and randomly tape them to the wall. When ideas are exhausted, move to the next slide.
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21. Affinity Diagrams for Opportunity Analysis
Allows an effective gathering and grouping of ideas
Allows a team to creatively generate a large number of ideas / issues and then organize and summarize natural groupings among them to understand the essence of a problem and breakthrough solutions.
Overcome “team paralysis”
Encourages creativity by everyone on the team at all phases
Gain quick team consensus
Typically has items---not unusual to generate over 100 Problem Statements
The Affinity Diagram exercise we are going to perform has the objective of grouping the Problem Statements as to area of the company or department of the company.
So, everybody, work independently in rearranging the Problem Statements as to subject matter in an attempt to get them arranged as to the issue they address. At this point do not be concerned that multiple Problem Statements may exist for the same issue. We will examine them all at the proper time.
Facilitator: Allow this exercise to take as long as is needed for the group to be satisfied the groupings are correct. Allow some chit=chat near the end as people lobby each other as to what group the Problem Statements should be in. Allowing this discussion creates “buy-in” by the group and the take-away is a form of ownership by each participant.
becomes
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22. Affinity Diagram Steps
Generate Ideas
Describe the Issue
Form a Team 1 2 3
Sort Into Groups
Tack Post-its to a Wall 4 5
We have completed Steps 1 through 5.
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23. Affinity Diagram Steps
Load into Excel
Add Additional Info
Create Header Cards 6 7 8
Take Action
Sort into a Usable Format 9 10
Let’s take our work to the next level now. As a group we will complete Steps 6 and 7.
Someone (name them if already appointed) will then take this information and load it into the Opportunity Analysis Matrix. The matrix will then be used to rank the Problem Statements (potential Six Sigma projects) as to the priority for implementation.
Step 6. Create header cards: After the sorting has completed, create header cards for each group. These header cards should concisely describe what each group represents. One way to think about this is to write a newspaper-style headline for each group. The header cards shouldn't be single-word titles, and should be able to stand alone and be meaningful without the contents of their groups.
Step 7. Create additional affinities: Responsible names can be added to each affinity group and to each item under the heading, each item can be identified to a key goal and objective, etc.
OK, start affinitying!!
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24. Organizing the Knowledge
Upon finalization of the Business Opportunity Analysis groupings, the information is entered into the Opportunity Analysis Matrix.
This becomes a high-level road map to Project Selection.
Headings:
Project No.
Function
Function Owner
Problem/Opportunity
Dept./Division
Problem Owner
Expectation
Impact
Financial Impact
Project in Process
Key Goal/Objective
Here is how this information is going to be used to create a Business Process Improvement Plan.
The opportunities for improvement identified by the Problem Statements will be grouped by subject matter on the Opportunity Analysis Matrix. The {Decision Maker; VP, President, et al} will review and prioritize the plan to execute projects related to these opportunities. He/she will work with the individual Process Owner of each Opportunity to create the plan.
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25. Opportunity Analysis Matrix
This is an example of the Opportunity Analysis Matrix upon completion. Our work today on the Recognize Phase is complete. We have identified plenty of areas where our business can be improved.
Next, we move to how our Business Process Improvement Plan will be built.
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