SIX SIGMA GREENBELT PROGRAM

1. SIX SIGMA GREENBELT PROGRAM D M A I C - Moving towards defect free processes

2. DAY 1 • Voice of the Customer • CTQ Drilldown • Project Selection Basics • Project Charter and Team Charter • Process Mapping - Basics • Exercises • Project Discussions

3. Kano Model • Model to study customer requirements and different perspectives of the same • Simple model without a quantitative conversion capability

4. Q.1 • Understanding the Voice of the Customer (VOC)

5. Quality Function Deployment Translating customer requirements into system requirements throughout the entire development process

6. Purpose of QFD • Improve customer satisfaction • Reduce development time • Improve internal communication • Better document key issues • Improve morale and efficiency • Reduction in design changes • Increased competitiveness • High market acceptance

7. QFD Approach Customer Requirements Functional Measures Parts Characteristic Manufacturing Process Production Requirements

8. QFD Approach 1. Customer Requirements 3 2. Technical Requirements 2 3. Correlation Matrix 4. Relationship Matrix 5. Planning Matrix 1 4 5 6. Total Rank 7. Priority Setting 6 7

9. QFD Approach

10. Q.2

11. Approaches to Project Selection Things that clearly occur on a repetitive basis and present problems in delivering our service(s) or product(s). There are three basic approaches to Project Selection… “Blatantly Obvious” Identifies projects based on individual’s “experience” and “tribal knowledge” of areas that may be creating problems in delivering our service(s) / product(s) and hopefully tie to bottom-line business impact. “Structured Approach” Identifies projects based on organizational data, provides a direct plan to effect core business metrics that have bottom-line impact. All three ways work…the Structured Approach is the most desirable. “Brainstorming Approach”

12. Project Selection – Core Components Business Case – The Business Case is a high level articulation of the area of concern. This case answers two primary questions; one, what is the business motivation for considering the project and two, what is our general area of focus for the improvement effort? Project Charter – The Project Charter is a more detailed version of the Business Case. This document further focuses the improvement effort. It can be characterized by two primary sections, one, basic project information and simple project performance metrics. Benefits Analysis – The Benefits Analysis is a comprehensive financial evaluation of the project. This analysis is concerned with the detail of the benefits in regard to cost & revenue impact that we are expecting to realize as a result of the project.

13. Project Selection - Governance

14. A Structured Approach – A Starting Point • The Starting Point is defined by the Champion or Process Owner and the Business Case is the output. • These are some examples of business metrics or Key Performance Indicators commonly referred to as KPI’s. • The tree diagram is used to facilitate the process of breaking down the metric of interest. • EBIT • Cycle time • Defects • Cost • Revenue • Complaints • Compliance • Safety Level 2 Level 2 Level 1 Level 2 Level 2

15. A Structured Approach - Snapshot The KPI’s need to broken down into actionable levels. Level 2 Level 3 Activities Processes Level 1 Level 4 Level 2 Activities Processes Business Measures Key Performance Indicators (KPIs) Actionable Level

16. Business Case Components – Level 1 • Primary Business Measure or Key Performance Indicator (KPI) • Focus on one primary business measure or KPI. • Primary business measure should bear a direct line of site with the organizations strategic objective. • As the Champion narrows in on the greatest opportunity for improvement, this provides a clear focus for how the success will be measured. Level 2 Level 3 Activities Processes Level 1 Level 4 Level 2 Activities Processes

17. Business Case Components – Business Measures Post business measures (product/service) of the primary business measure are lower level metrics and must focus on the end product to avoid internal optimization at expense of total optimization. Business Measure Business Measure Activities Processes Primary Business Measure Business Measure Business Measure Activities Processes

18. Business Case Components - Activities Y = f (x1, x2, x3…xn ) Business Measure Business Measure Activities Processes 1st Call Resolution = f (Calls, Operators, Resolutions…xn ) Primary Business Measure Business Measure Business Measure Activities Processes Black Box Testing = f (Specifications, Simulation, Engineering…xn)

19. Business Case Components - Processes Business Measure Business Measure Activities Processes Primary Business Measure Business Measure Business Measure Activities Processes Y = f (x1, x2, x3…xn ) Resolutions = f(New Customers, Existing Customers, Defective Products…xn ) Simulation = f (Design, Data, modeling…xn )

20. What is a Business Case? • The Business Case communicates the need for the project in terms of meeting business objectives. • The components are: • Output unit (product/service) for external customer • Primary business measure of output unit for project • Baseline performance of primary business measure • Gap in baseline performance of primary business measure from business objective Let’s get down to business!

21. Business Case • Business Case Development • The business case describes the benefit for undertaking a project. The business case addresses the following questions: • Does this project align with other business initiative? • What is the focus for the project team? • What impacts will this project have on other business units and employees? • What benefits will be derived from this project? • Has the value of the benefits been qualified?

22. Business Case Example During FY 2005, the 1st Time Call Resolution Efficiency for New Customer Hardware Setup was 89% . This represents a gap of 8% from the industry standard of 93% that amounts to US $2,000,000 of annualized cost impact.

23. The Business Case Template Fill in the Blanks for Your Project: During ___________________________________ , the ____________________ for (Period of time for baseline performance) (Primary business measure) ________________________ was _________________ . (A key business process) (Baseline performance) This gap of ____________________________ (Business objective target vs. baseline) from ___________________ represents ____________________ of cost impact. (Business objective) (Cost impact of gap)

24. Q.3 • Exercise objective: To understand how to create a “strong” business case and select the right project • During ________________________ , the ____________________ for • (Period of time for baseline performance) (Primary business measure) • _______________________ was ___________________ . • (A key business process) (Baseline performance) • This gap of __________________________ • (Business objective target vs. baseline) • from __________________ represents ____________ of cost impact. • (Business objective) (Cost impact of gap)

25. Project Charter

26. What is a Project Charter? The Project Charter expands on the Business Case, it clarifies the projects focus and measures of project performance and is completed by the Six Sigma Belt. Components: • The Problem • Project Scope • Project Metrics • Primary & Secondary • Graphical Display of Project Metrics • Primary & Secondary • Standard project information • Project, Belt & Process Owner names • Start date & desired End date • Division or Business Unit • Supporting Master Black Belt (Mentor) • Team Members

27. Project Charter - Definitions Problem Statement - Articulates the pain of the defect or error in the process. Objective Statement – States how much of an improvement is desired from the project. Scope – Articulates the boundaries of the project. Primary Metric – The actual measure of the defect or error in the process. Secondary Metric(s) – Measures of potential consequences (+ / -) as a result of changes in the process. Charts – Graphical displays of the Primary and Secondary Metrics over a period of time.

28. Project Charter - Problem Statement Migrate the Business Case into Problem Statement…

29. Problem Statement • Description Of The “Pain” • What Is Wrong Or Not Meeting Our Customer’s Needs? • Who is the customer of the process? • What is the process? When And Where Do The Problems Occur? How Big Is The Problem? • What’s The Impact Of The Problem? • If I let be what will happen? • If I reduce it what will happen? • If I increase it what will happen?

30. Problem Statement Example Poor Example: Weak Problem statement Our Fatal accuracy score is at 80% against the client target of 95% and we Need to improve it Improved Example: Fatal accuracy score (what) this quarter (when) has been observed to be at 80% for the last 4 months (extent) against the client target 95% which has significant impact on customer satisfaction. (impact)

31. Problem Statement • Key Considerations/Potential Pitfalls • Is The Problem Based On Observation (Fact) 0r Assumption (Guess)? • Does The Problem Statement Prejudge A Root Cause? • Can Data Be Collected By The team To Verify and Analyze The Problem? • Is The Problem Statement Too Narrowly or Broadly Defined? • Is A Solution Included In The Statement? • Would Customers Be Happy If They Knew We Were Working On This?

32. Project Charter – Objective & Scope Consider the following for constructing your Objective & Scope What represents a significant improvement? X amount of an increase in yield X amount of defect reduction Use Framing Tools to establish the initial scope

33. Project Scope • What Process Will The Team Focus On? • What Are The Boundaries Of The Process We Are To Improve? Start Point? Stop Point? • What Resources Are Available To The Team? • What (If Anything) Is Out Of Bounds For The Team? • What (If Any) Constraints Must Te Team Work Under? • What Is The Time Commitment Expected Of Team Members? What Will Happen To Our “Regular Jobs” While We Are Doing The Project?

34. 8 Steps to Scope a Project • Identify the customer • Who receives the process output? • May be an internal or external customer • 2. Define customer’s expectations and needs • Ask the customer • Think like the customer • Rank or prioritize the expectations • 3. Clearly specify your deliverables tied to those expectations • What are the process outputs? • Tangible and intangible deliverables • Rank or prioritize the deliverables • Rank your confidence in meeting each deliverable • 4. Identify CTQ’s for those deliverables • What are the specific, measurables attributes that are most critical in the deliverables • Select those that have the greatest impact on customer satisfaction

35. 8 Steps to Scope a Project • 5. Map your process • The process of producing the deliverables • The process as it is working prior to the project • If you are delivering something, there is a process, even if it has not been formularized • 6. Determine where in the process the CTQ’s can be most seriously affected • Use detailed flowchart • Estimate which steps contain the most variability • 7. Evaluate which CTQ’s have the greatest opportunity for improvement • Consider available resources • Compare variation in the processes with the various CTQ’s • Emphasize process steps which are under the control of the team conducting the project • 8. Define the project to improve the CTQ’s you have selected • Define the defect to be attacked

36. Importance of Scoping • Poor/improper scoping may result in following: • Team loses interest in the project • Project becomes difficult to implementation • Even after implementation, the desired/significant benefits are not seen • Team focuses on trivial pain areas, and missing out the vital ones • Process selected is too broad to handle or too small to realize breakthrough improvements

37. The Goal Statement • Project Objective • Definition of The Improvement The Team Is Seeking To Accomplish • Starts With … Reduce, Eliminate, Control, Increase. • Tends To Start Broadly – Eventually Should Include Measurable Target And Completion Date • Must Not Assign Blame, Presume cause, Or Prescribe Solution!

38. SMART Problem And Goal Statements Specific Measurable Attainable Relevant Time Bound

39. Goal Statement Example Poor Example: Put in place a Transaction monitoring evaluation system to increase the fatal accuracy. Improved Example: Increase the fatal accuracy from the existing 80% to 95% by the end of first quarter 2005

40. Project Charter – Primary Metric Establishing the Primary Metric: Quantified measure of the defect Serves as the indicator of project success Links to the KPI or Primary Business measure Only one primary metric per project The primary metric is a very important measure in the Six Sigma project, this metric is a quantified measure of the defect or primary issue of the project. We can only have One Primary metric, recall the equation y equals f of x, well, once your defect is located then Y will be your defect…your primary metric will measure it.

41. Project Charter – Secondary Metrics Establishing Secondary Metric(s): Measures positive & negative consequences as a result of changes in the process Can have multiple secondary metrics Secondary metrics are put in place to measure potential changes that may occur as a result of making changes to our Primary Metric. They will Measure ancillary changes in the process, both positive and negative.

42. Generating Charts: Displays Primary and Secondary metrics over time Should be updated regularly throughout the life of the project One for primary metric and one for each of the secondary metrics Typically Time Series Plots Project Charter – Metric Charts Primary and Secondary Metrics should be continually measured and frequently updated during the projects lifecycle. Use them as your gauge of Project Success and Status. This is where your Project’s progress will be apparent.

43. A preliminary High Level Project Plan with dates Tied to phases of DMAIC process Should be aggressive (don’t miss “window of opportunity”) Should be realistic (don’t force yourself into corrective rather than preventive solutions) Milestones

44. Take Aways – Project Charter • Key elements of a charter include: Business Case, Problem and Goal • Statements, Project Scope, Milestones and Roles. • The team charter is a vital part of the project’s overall success. It communicates the project direction to all members of the team • A Problem Statement describes what is wrong while a Goal Statement defines the improvement objective. • A charter clarifies what is expected of the project team, keep the team focused, keeps the team aligned with organizational priorities, and transfers the project from the champion to the improvement team

45. Q.4 • Exercise objective: To begin planning the Project Charter deliverable. • Complete the Project Charter template to the best of your ability. • Be prepared to present your Stakeholder Analysis to your mentor.

46. Team Charter

47. Team Charter • Team Roles Refresh • Sponsor • Review the project progress once a month • Provide/modify direction/alignment with business realities • Provide resources required from time to time • Remove Roadblocks • Black Belt/MBB • Provide content knowledge on Six Sigma tools to the team • Project Leader • Keep the team focused. Arrange logistics and team meetings and raise issues with Sponsor • Team Member (s) • Participate in meetings, collect data, do analysis using Quality tools, provide subject matter expertise related to process • Team Charter explains following: • How do you want the champion to work with the team? • Is the team’s role to implement or recommend? • When must the team go to the champion for approval? What authority does the team have to act independently? • What and how do you want to inform the champion about the team’s progress? • What is the role of the team leader and the team coach? • Are the right members on the team? Functionally? Hierarchically?

48. What is the Financial Evaluation? The financial evaluation establishes the value of the project. The components are: Impact Sustainable One-off Allocations Cost Codes / Accounting System Forecast Cash flow Realization schedule OK, let’s add it up! Typically a financial representative is responsible for evaluating the financial impact of the project. The Belt works in coordination to facilitate the proper information.

49. Benefits Capture - Calculation “Template” Whatever your organization’s protocol may be these aspects should be accounted for within any improvement project. I M P A C T Sustainable Impact “One-Off” Impact C O S T C O D E S Reduced Costs Increased Revenue Costs Implemen- tation Capital F O R E C A S T Realization Schedule (Cash Flow) By Period (i.e. Q1,Q2,Q3,Q4) There are two types of Impact, One Off & Sustainable Cost Codes allocate the impact to the appropriate area in the “Books” Forecasts allow for proper management of projects and resources

50. Benefits Capture – Basic Guidelines Benefits should be calculated on the baseline of key business process performance that relate to a business measure or KPI(s). The Project Measure (Primary Metric) has to have a direct link between the process and it KPI(s). Goals have to be defined realistically to avoid under or over setting. Benefits should be annualized. Benefits should be measured in accordance with Generally Accepted Accounting Principles (GAAP).