Six Sigma Session

SIX SIGMA
Project Benefit Calculation
Prepared by: Ward Lee
Date: Feb. 3 2004

1
 Instruction

Topics:

1. The two forms for benefit calculation

2. Forms filling instructions

3. How to catch the savings in efficiency

and inventory turns improvement

2
 1. When will need the forms

1~5
1 Year
Months

Project Project One year tracing

Start close (Update Monthly)

Closure Realization
Signoff Signoff

Prepared by Updated by
Project Leader Project Owner
3
 Closure Signoff

Instruction:
1. Only fill in the white area Six Sigma Project Annual Saving Estimation
Project Title: Drill Inventory Reduction
2. Must describe the detail item BB/GB:
Closure Date:
Ward Lee
February Year 2004 91.7%
Current Process Throughput '000Sqft/Month

3. Insert comment for the data if COST ITEMS Description

Baseline
($/'000Sqft)

necessary Manufacturing Expense

Direct Labor Cost
Indirect Labor Cost
Overtime

4. Cost items are base on the Outside Services *

Quality Cost

Throughput (per Kft2) Scrap

Rework Cost
Compensation

5. Working Capital is base on Material

Direct Material
Indirect Material
relative consumption Engineering/IT
Outside Services *
Tools
Maintenance Cost

Operations Expense
Electricity/Diesel Oil/Water
Waste Treatment
Logistic/Transportation
Other

TOTAL COST ITEMS

EXPENDITURES
Investment Description
Equipment or Tools (Capital)
Operations Expense
Travel
Contract Services
TOTAL EXPENDITURES

NET SAVINGS
TOTAL SAVINGS:
TOTAL EXPENDITURES:
TOTAL NET SAVINGS:

WORKING CAPITAL
Current Consumption 356 $'000s/Month Description Baseline
Inventory (Turns/Month) * Drill Inventory Turns (D3 & D9) 8
Other
TOTAL WORKING CAPITAL:

4
 Realization Signoff

Instruction:
1. Only fill in the white area Six Sigma Project Saving Yield
Project Title: Drill Inventory Reduction
Process Owner: John Wong
2. Must describe the detail item BB/GB: Ward Lee
Benefit gain start date January 2004
Key Indices
3. Insert comment for the data if Dirll consumption 356
Baseline January February March April May June July

Drill inventory 528

necessary Turns (current month)
Turns (accumulative) 8.09

Cost Items (USD ,000)

4. BB/GB prepared the baseline Manufacturing Expense
Direct Labor Cost
Indirect Labor Cost
data Overtime
Outside Services *
Quality Cost
Scrap
5. Project owner update monthly Rework Cost
Compensation
Material
for Finance Dept. review Direct Material
Indirect Material
Engineering/IT
Outside Services *
6. The document is saved on Tools
Maintenance Cost
Operations Expense
public folder Electricity/Diesel Oil/Water
Waste Treatment
Logistic/Transportation
Other
7. Paper signoff after one year TOTAL SAVINGS 0 0 0 0 0 0 0

Expenditures
tracing Equipment or Tools (Capital)
Operations Expense
Travel
Contract Services
TOTAL EXPENDITURES 0 0 0 0 0 0 0

Net Savings
TOTAL SAVINGS:
TOTAL EXPENDITURES:
TOTAL NET SAVINGS (YTD):

Working Capital
Inventory Reduction ($'000s)
Other ($'000s)
MONTHLY WORKING CAPITAL SAVINGS 0 0 0 0 0 0 0
AVERAGE WORKING CAPITAL SAVING

5
 Catch savings

Efficiency improvement result in the reduction of

cost/Kft2
Catch cost savings in:
1. Labor cost items
– Direct Labour
– Employee benefit
– Retirement Allowance
2. Difference between Sub-contract and in-home made
– Baseline >= Full capacity
– Sub-contract avoidance must match current output

6
 Catch savings (con.)

3. Electricity & water

4. Supplies – indirect material
– Filter?

5. Factory supply

7
 Catch savings (con.)

Inventory Turns
Baseline: (3month~1year)

Average monthly consumption

Turns = X 12
Average monthly Inventory

Current month