Selection Criteria for Six Sigma Projects


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Introduction

The purpose of this short essay is to create a panoramic understanding of what it takes to successfully select Six Sigma projects.  Generally speaking, the concepts and guidelines discussed herein are relevant for large-scale to mid-sized organizations, regardless of product type or geographic consideration.

By no means should the reader consider the discussion provided herein as being exhaustive in scope and depth.  Certainly, to provide a full description of the subject could fill a book or two.  Rather, the intent is to provide a key-hole view into the nature of Six Sigma projects and some of the key selection considerations.

Nature of Six Sigma Projects

Six Sigma improvement projects must be value-centric and business focused, plain and simple.  A valid on-the-job project must yield some form of tangible value for the sponsoring organization.  For example, hard cost savings, yield improvement, defect reduction, cycle time reduction, inventory reduction, headcount reduction, increased customer satisfaction, and so on.  Figure 1.0 lists some of the more common reasons for designing and executing a Six Sigma project.  Of course, all such value-centric improvements can and should be translated into the language of business – money and time.

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Figure 1.0. Reasons for Six Sigma Projects

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Where Six Sigma is concerned, any true improvement that results from a project, no matter how large or small, must be viable, visible and verifiable in terms of money.  After all, money is what business is all about.  If a Six Sigma practitioner cannot translate his or her efforts and outcomes into some form of economic benefit, then one would have to necessarily question the relative worth of that project.  If this vital monetary translation cannot be made, it would be doubtful that the “improvement” was truly tangible or real.

Any claimed value that is generated from so called “soft projects” is usually perceptual in nature.  As one might suspect, the added value usually takes the form of some type of deferred benefit, cost avoidance, or good will.  Generally speaking, such projects should not be selected for consideration and subsequent execution.  The reason for this is quite elementary.

Comments on Hard Projects

When defects are permanently eliminated (by design or process control), one would expect to see an increase in process capacity.  Of natural course, an improvement in process capacity directly translates to lower operating costs.

To illustrate this point, let’s start with a simple understanding about process yield.  As can be mathematically demonstrated, the first-pass yield (Y) of any process can be approximated by the relation: Y = e^(-DPU), where DPU is the average defects-per-unit.  For example, let’s say that DPU = .30.  Given this, the first-pass process yield would be computed as: Y = e^(-.30) = 74%.  Expressed differently, this is to say there is a 74% chance that any given unit can be fully processed defect-free.  On the flip-side, there’s a 26% chance that any given unit will have been assigned one or more defects during the course of processing.

We must also recognize that the capacity of a process (C) can be expressed as C = 1 + 1 – Y.  For our example, we would compute: C = 1 + 1 – .74 = 1.26.  This says that the equivalent of 1.26 units of product (or service) must be started to deliver 1 good unit (defect free).  Of course, this assumes that all D are repairable.  For non-repairable case, the actual process capacity would be computed as C = 1 / Y.

To further explore this connection, let’s say the minimum cycle-time of the process is 10 minutes.  Running the numbers (for the repairable case) reveals that the actual process cycle time would be 12 minutes.  As may be easily reasoned from this example, a permanent reduction in the rate of defects would necessarily result in a lower process cycle-time; thereby, generating a cash savings.

Comments on Soft Projects

Let’s now consider another example; however, in this case we’ll say its related to a soft project.  For purposes of discussion, let’s say the project aim was to improve “customer good-will.”  So what does this mean?  What is the scale of measure?  What is the baseline performance?  How would you know the project goal has been met?  Well, if you say that good-will translates to sales, then sales volume would be the metric.  Of course, sales volume translates to money.  However, without a hard scale of measure, determining how much good-will might be increased would be like determining how many fairies can fit on a pin head.

In an average enterprise, there are usually a great many hard improvement opportunities that can bring cash to the bottom line.  So why fool around with fuzzy projects that cannot be verified by accounting?  Why consume precious resources to produce a suspicious and ambiguous improvement.  If you were responsible for running the business, what would you say should be done?  What would your shareholders say to do?  Naturally, they want to put cash in their pockets — now, not latter.  Certainly, they want real dollars, not future redeemable dollars or monopoly money.

While soft projects may hold forms of seductive value other than cash, just remember the overriding purpose of a business enterprise — make money, lots of it, as fast as possible.  In the dog-eat-dog world of capitalism, the canine with the most food wins, every time.  Granted, you can sit around and grumble about the savagery of this economic principle, but it is what is.

Owing to this line of tough business-minded reasoning, Six Sigma projects have traditionally been focused on high-impact, value-centric problems and issues that are financially traceable and verifiable.  More specifically, Six Sigma projects must be concerned with creating measurable value for both the customer and provider – in every aspect of the business relationship.

Six Sigma Project Selection Criteria

Naturally, to achieve such business oriented aims, a live on-the-job Six Sigma project must be properly scaled.  In other words, the project must have the right scope and depth and confidently fit the skill set of the assigned Black Belt.  To meet these needs, requirements and guidelines, a Six Sigma project should only be declared, activated and executed if it meets certain prerequisite selection criteria Generally speaking, an appropriate set of project selection criteria will be highly consistent with one or more of the following statements:

1) The project has the proper mix of scope, depth and timing;

2) The project necessitates using the DMAIC improvement process to realize its projected benefits; and

3) The targeted performance characteristics and projected benefits can be clearly defined and are rationally measurable. 

Generally speaking, a project should only be considered “viable” and “feasible” when these three criteria can be reasonably satisfied (in both spirit and intent).  Only then should that project be assigned to a qualified Six Sigma practitioner, such as a Black Belt or Green Belt.  Figure 2.0 graphically illustrates an example project selection tool.

Figure 2.0. Six Sigma Project Selection Criteria

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The reader’s attention is called to the 5 point rating scale that resides to the left of each selection criteria (see Figure 2.0).  This scale should used for two purposes.  First, to score the overall viability of a particular project.  Second, to ensure that only the most viable projects make it into the “project hopper” and remain at the top until selected.  Of course, a weighting scheme can be developed to prioritize certain criteria over other criteria.  Usually, this can only be done by the organization that is sponsoring the Six Sigma projects.

Project Charter Guidelines

The project charter is often drafted by the Project Champion or Master Black Belt and then refined by the Black Belt or Green Belt, as the case may be.  Naturally, the charter must be approved by the leadership team. It is not uncommon for the charter to be revised several times as the focus and locus of the project is better understood and data becomes available.  Figure 3.0 provides the typical elements that often comprise a Six Sigma project charter.

Figure 3.0. Elements of a Six Sigma Project Charter

At the onset of the Measure Phase, the original charter might need to be refined or otherwise modified to account for new knowledge about the problem or process under investigation.  In other words, it may be necessary to amend the general scope or depth of work to accomplish the intended aims. In addition, a clear process definition is essential.  This helps the X-Belt see where the work will focus and what needs to be accomplished.

Generally speaking, the scope and depth of a Black Belt Lean Six Sigma project should be clear and attainable in a four to six month period; otherwise, the project should be reclassified and elevated to a higher level (i.e., Master Black Belt or team of Black Belts).  Furthermore, close attention should also be paid to the selection of process metrics.  Such measures focus the X-Belt on the aspects of process performance that must be improved.  Moreover, the process metrics are often used to calculate the financial impact of the project.

The baseline, goal, and entitlement values associated with each of the key process metrics is also important to document, as well as the overall business impact of the project.  In general, the project team should be small and not have more than four to six members (identified by name within in the charter).  Yet another key element of the charter is the work schedule.  It is very important to employ and use well accepted project management methods and practices.

Project Execution Guidelines

Project Activation: By conventional practice, a Proficiency Certified Black Belt (or Green Belt) must have completed at least one live Lean Six Sigma DMAIC project as a part of his or her professional development.  Of course, such projects are primarily intended to reinforce certain aspects of the X-Belt’s training program, but at the same time, the project must also provide one or more benefits.  In this context, the training project is very similar to post-training projects.  Regardless of the project’s nature, the scope and depth of a Lean Six Sigma project should always be consistent with the X-Belt’s rank.  Furthermore, it is recommended that the X-Belt prepare a Lean Six Sigma project charter, receive management approval and then execute the project in accordance to the defined plan.  In this manner, the overall system of improvement remains measurable, manageable, and accountable.

Project Charter: Generally speaking, a project charter is the cornerstone of successful execution.  More to the point, approval of a charter signals the activation of a Lean Six Sigma project.  Once a project charter has been created and sanctioned by the sponsoring organization, the key elements of execution must then be identified, prioritized, and committed to a timeline.  In this sense, the project charter is a management tool and should be carefully and judiciously prepared.  This is not a simple “check the box” kind of activity – it is the first point where project responsibility and accountability are formally declared; therefore, judicious attention must be given to its formulation and use.

Project Execution:  Holistically speaking, each Lean Six Sigma project will follow the DMAIC improvement strategy to realize its aims.  The planning and execution of this strategy can involve up to 15 independent milestones that are usually interrelated in a progressive and interactive manner.

Project Reviews: It is firmly suggested that the X-Belt’s sponsoring organization manage their Lean Six Sigma projects through a formalized set of management tollgates.  A tollgate is simply a set of success criteria that must be fully satisfied before a project is allowed to continue on the next scheduled phase of execution.  Normally, a management tollgate review will coincide with the completion of each phase of the DMAIC improvement process.  However, in some cases, it may be necessary to incorporate In-Phase reviews (i.e., management and technical) so as to ensure adequate oversight and governance.  In this case, the presiding Master Black Belt would assume responsibility for the planned technical reviews, while the Champion (and perhaps process owner) would have responsibility for the planned management reviews.  It is also recommended that one or more of the organization’s executive management team join in on the management reviews.  This should be done periodically so as to provide senior leadership visibility and encouragement.

Project Tollgates:  As many are aware, tollgates ensure the timely and proper planning, approval, execution, review, verification, and closure of Lean Six Sigma projects.  Naturally, the X-Belt’s sponsoring organization would seek to establish the success criteria associated with each tollgate – before the fact.  Prevailing business needs, management philosophy, operational requirements and organizational policies can often influence the identification and adoption of certain success criteria.  As one might expect, such criteria will vary from organization-to-organization, depending on a host of business variables and constraining circumstances.  Owing to the business-centric nature of such criteria, only the sponsoring organization’s management can definitively say what constitutes project success.  Thus, the management would be concerned with the Quality of Business, not the Business of Quality.

Project Closure Guidelines

Project Conclusion:  After an X-Belt has successfully completed a Lean Six Sigma DMAIC project, that project must pass through a final management review before it can be officially closed.  In other words, the project activities and resulting benefits must be validated before it is formally closed.  Of course, the criteria for closure will vary organization-to-organization, but will normally revolve around satisfying one or more of the following needs: a) sustainable benefits; b) accounting verification; c) management approval; and d) technical validity, not necessarily in this order of priority.  Generally speaking, a project can only be closed once the X-Belt’s sponsoring organization has officially declared that the success criteria have been reasonably satisfied.

Project Documentation:  For purposes of organizational leadership, the sponsoring organization should want to provide the X-Belt with some type of document that confirms the successful completion and closure of a Lean Six Sigma project.  Such a document can take the form of a formal letter, internal memorandum, or official certificate.

Personal Recognition:  Generally speaking, a project completion document does not reveal specific details about the project (in the interests of business confidentiality), but does acknowledge the X-Belt’s contribution and accomplishments.  Needless to say, such “artifacts of success” are quite important to the individual X-Belt.  Almost without saying, such credentials can greatly facilitate management’s efforts to provide meaningful recognition, job motivation and can even serve to support employee retention.  They are also meaningful for the sponsoring organization when used to facilitate annual personnel reviews.

Authenticating Agent:  Most normally, a successful project can only be authenticated or otherwise formally certified by a recognized member of the sponsoring organization’s management team.  For example, such an individual might be the X-Belt’s immediate manager, the related process owner, or one of the organization’s senior Lean Six Sigma leaders (e.g., Champion or Master Black Belt).  Only at this point can the X-Belt legitimately declare a successful project – in a verifiable way.  It should go without saying than an external consultancy or professional institution is not meaningfully positioned to authenticate, validate or otherwise certify the successful closure of an X-Belt project – for a wide array of business reasons.  Such tasks are incumbent upon the sponsoring organization.  Essentially, these matters are of a business nature and should only be decided by the management of that enterprise.

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About Mikel Harry

Dr. Harry has been widely recognized in many of today's notable publications as the Co-Creator of Six Sigma and the world's leading authority within this field. His book entitled Six Sigma: The Breakthrough Management Strategy Revolutionizing the World’s Top Corporations has been on the best seller list of the Wall Street Journal, New York Times, Business Week, and Amazon.com. He has been a consultant to many of the world’s top senior executives, such as Jack Welch, former CEO and Chairman of General Electric Corporation. Dr. Harry has also been a featured guest on popular television programs, such as the premier NBC show "Power Lunch." He is often quoted in newspapers like USA Today and interviewed by the media, such as The Economic Times. In addition, Dr. Harry has received many distinguished awards in recognition of his contributions to industry and society. At the present time, Dr. Harry is Chairman of the Six Sigma Management Institute and CEO of The Great Discovery, LLC.
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3 Responses to Selection Criteria for Six Sigma Projects

  1. Dr. Harry your explanation on the Capacity of a Process is excellent. How many times do we actually here in a management meeting that it is taking us 1.26 units to produce 1 good defect free unit. Not very often, because I think often times we live under the social workplace acceptance of “If it isn’t broke don’t fix it”.

    Many managers would benefit greatly to start speaking in our Sigma terminology for their responsibilities for the organization.

    Additionally I agree with you that at a higher level Soft Saves, should never be traded for Hard Save results.

    It appears the need for Six Sigma business and opportunities are stronger then they have been in the past, and the need is now.

  2. Excellent knowledge sharing,thought I know but this article proved me otherwise.

  3. Ch Ramesh says:

    Great guidance…
    Thanks,
    Ramesh

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