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Project selection is one of the most critical and challenging activities faced by Six Sigma companies. Most organizations
are able to identify a host of project opportunities, but the difficulty arises in sizing and packaging those opportunities to
create meaningful projects. To be successful, the project selection process must be well defined and disciplined. One
process that has proven successful incorporates a three-step approach.
7. Will success
significantly improve
customer
satisfaction?
8. Is the process
currently measured?
9. Is the process
measurable?
10. Is it likely that the
solution will be highly
leverageable?
11. Is the scope of
the proposed project
appropriate?
12. Does it appear
that Six Sigma DMAIC
is the right problemsolving approach?
13. Is success likely?
Totals
9
483
3
321
Whether or not the project is a candidate for the DMAIC methodology is a key question to answer during the workshop.
Lean, value stream mapping or Design for Six Sigma may provide a more suitable methodology for some of the projects.
At the end of this process, Black Belt resources are assigned to projects based on the prioritization list.
This project selection process provides a straightforward way to gather the appropriate data from all areas of the
business, segregate by improvement categories and apply a rating for prioritization. The goal of any project selection
process is to create a clear path to implementing process improvements that benefit the business as a whole.
Arun Hariharan
Published: 07/31/2013
During the past dozen years, companies I have worked with have, between them,
completed more than 1,000 lean Six Sigma (LSS) projects. Based on this experience,
Ive found that improvement projects can be broadly categorized into three types:
quality-improvement, revenue-enhancing, and cost-saving.
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A brief description of the three types of improvement projects, and the strategy that
these businesses followed, are given below.
Quality-improvement projects
The quality-improvement project is the quintessential LSS project. About 60 percent
of our projects were of this type. A quality-improvement project typically attacks a
defect or customer complaint, and seeks to reduce, eliminate and, ideally, prevent the
defect. Relevant data are usually available for such projects. The heart of such a
project is data analysis to find out the root cause of the defects. Once discovered, the
root cause is eliminated by a change or improvement in the process, so that the
problem doesnt recur. This process-change is often some form of poka-yoke or
mistake-proofing.
I also include turnaround-time (TAT) reduction projects in this category, to the extent
that the TAT reduction is primarily aimed at streamlining the process and improving
the customers experience. We found value stream mapping (VSM) to be a useful tool
to identify bottlenecks in the process.
Revenue-enhancing projects
We were pleasantly surprised to find that LSS projects were extremely effective not
only for reducing defects or improving quality for customers, but also for directly
increasing revenue. Examples of such projects are activating inactive distributors,
getting repeat business from existing customers or increasing first-time-right (FTR)
sales. Our experience with revenue-enhancing projects was that they usually need
only the most basic lean or Six Sigma tools. However, they often involve a change in
behavior and mindsets. For companies that are up to this challenge, these projects can
yield very positive business results. We found that such projects typically involve
putting some basic process discipline in place where none existed before, and putting
some simple in-process measurements in place where previously, only the end output
(e.g., sales or revenue numbers) were being measured.
For example, one company that sells through distributors realized that a large number
of distributors were inactivethat is, they hadnt sold anything for the past several
months. Although the company knew it had a problem, it was unable to get a handle
on it. The company tried to solve the problem through traditional methods (such as
senior sales managers yelling at junior salespeople, and junior salespeople yelling at
distributors), but without any results.
When all else failed, the CEO decided that he had nothing to lose if he threw the
problem as a challenge to the LSS team. When the same problem was taken up as an
LSS project, the focus shifted from people (as in whom to blame) to the issue. Three
things were done differently. First, the team put in place a standard definition of what
exactly the company meant by inactive distributor. This may sound basic, but the
fact was that several companies had no standard definition, and inactive meant
different things to different people within the same company. Second, a simple
process was put in place that would begin the day a distributor became inactive
according to the companys standard definition. The process itself was nothing
revolutionaryit typically would involve two or three simple steps, such as a
company salesperson contacting the distributor with a standard script, inquiring if
there was any problem that the company could help the distributor with (as opposed
to the earlier practice of yelling matches), and a joint visit to a prospective client by
the distributor and the companys salesperson. Third, in-process measurement began.
Where earlier only the end output of sales or revenue numbers was measured, now,
the company started measuring the number of distributors that fell into the inactive
funnel each week, and how many of the inactive distributors went through the
reactivation process that was now in place. It was mandatory to measure and report
on these figures each week.
Our experience with every business that did such projects has been that the discipline
a process brings, along with a focus on the right enablers, results in significant and
sustained improvement in revenue. In fact, the revenue results from several such
projects were so significant that we couldnt believe it ourselves at first. Some of us
wondered whether this would have happened regardless of the LSS project. So we
did a little experiment. In one company, 29 percent of the previously inactive
distributors became active after they went through the LSS process. We compared
this with another control group of inactive distributors that had not yet been through
the LSS process. There was no other difference between the two groups. At the end of
the same period, the percent of distributors from the group that did not go through the
LSS process, and that became active, was 0.8 percent. Compare that with 29 percent
for the LSS groupand imagine what this can do for revenue.
Another kind of revenue-enhancing project is to increase FTR sales, which is simply
ensuring that during the sale, the company collects 100-percent complete and
accurate requirements from the customer the first time, and that the customer is not
pestered repeatedly because the company failed to collect or understand some
requirement. One company noticed that only about 20 percent of the sales orders
brought by its salespeople were FTR. In other words, for 80 percent of the sales
orders, the company had to go back to the customer more than once to complete some
requirement that was missed the first time. What was really worrisome was that
nearly half of the 80 percent of customers had changed their mind when the company
went back to them, and were no longer interested in buying.
The company took this up as an LSS project. In a few months, its efforts started
paying off. The percent of FTR orders to total sales orders sourced went from 20
percent to more than 90 percent. A year later, the CEO acknowledged that the
companys revenue for the year was 35-percent higher than what it would have been
otherwise, solely because of the increase in FTR sales. The effect on profit was even
more spectacular. The company estimated that its profit for the year was about 50percent higher than what it would have otherwise been, given that, now, nearly all
sales orders were FTR. Compare this to the situation a year ago, when 80 percent of
the orders were incorrect or incomplete, calling for additional cost of rework. Even
after incurring this cost, half of the non-FTR orders never got converted into actual
sales. The additional revenue and profits were achieved with the same number of
customers and sales orders, at no additional cost and no additional sales effort (in
fact, with significantly less effort because the effort that was earlier made on rework
was now almost entirely eliminated).
Cost-saving projects
These projects typically are concerned with eliminating waste. We found that after
training employees on simple lean concepts such as the various types of waste and
value stream mapping, they are able to go back and look at their own work processes
to identify possible wastes and eliminate them. We also found useful the practice of
systematically looking at top expense items on the companys financial statements to
see if one or more of the types of waste had crept in and could be removed. Here
again, an organizational culture of accountability and waste-consciousness, with
senior management walking the talk and setting personal examples, can go a long
way.
It is important to remember that waste-elimination and cost-cutting are as different as
chalk and cheese. Waste identification and elimination is a continuous, never-ending
activity, but cost-cutting is often a one-time activity. Another big difference is that the
benefits of waste elimination can happen in difficult as well as good times. Perhaps
the biggest difference is that waste elimination doesnt come at the cost of customers
or employees. How can anything that hurts customers or employees be good for your
business in the long run?
A summary of the three types of improvement projects and the suggested approach
for each is given in the table below.
Type of improvement project Most appropriate approach
Quality improvement
Revenue-enhancing
Cost-saving
I havent covered design for Six Sigma (DFSS) here, which is a methodology for
process generation in contrast with process improvement. Instead, I've focused on
more common and universally applicable improvement projectsoften called definemeasure-analyze-improve-control (DMAIC) projects.
In the companies weve dealt with, we try to ensure that, at any given time, we have a
healthy mix of all three types of the improvement projects described here. This
practice has proven useful because the businesses derived comprehensive benefits
from LSS. They achieved short-term results, while not losing focus on what was
important for the long term. You may want to try these strategies in your company.