1. Problem Statement 2. Problem Objective 3. Primary Metric 4. ‘BACK STOP’ Metric

1. 1. Problem Statement2. Problem Objective3. Primary Metric 4. ‘BACK STOP’ Metric Six Sigma Foundations Continuous Improvement Training www.freesixsigmasite.com

2. Problem Statement and Objective • The problem statement and objective should be S.M.A.R.T. • Specific---Focuses on a particular process, process characteristic or area • Measurable---Can be measured to establish justification for project and validate improvement • Attainable---Narrow scope to allow successful completion in a specified period of time • Relevant---Directly tied to business and corporate imperatives • Time Bound---Specifies a realistic period of time (usually 3-5 months)

3. Problem Statement (Description) • There are two purposes of the problem statement: • To focus the team on a process deficiency • To communicate the significance to others • The problem statement does NOT include any guess as to the cause of the deficiency, or what actions will be taken A poor problem statement R&A costs are too high due to product defects and will be reduced by analyzing first and second level pareto charts. A good problem statement From Jan – Dec 2009, the average R&A costs are 7% of sales with a range of 1% to 12%, resulting in a loss of $10M.

4. Problem Statement What if no data exists? Preliminary Problem Statement: During X length of time, the “Primary Metric” (the issue) was X, which resulted in a loss of $X. Specific data will be defined via data collection and analysis. Warranty Returns Specific data will have to be collected to justify giving the project priority. Data

5. Problem Statement Problem Statement After Data Collection: From 1994 to 1998, Product A returns are 5% of sales with a range of 2% to 12%, resulting in a profit impact of $5M. # of Returns for Product A Returns by Product Group

6. Objective • The objective states the goal of the project. It must: • Address the issue described in the problem statement • Quantify the expected performance improvement • Identify the expected timing • Like the problem statement, the objective does not state the cause of the deficiency or what actions will be taken A poor objective Reduce R & A costs by implementing individual performance measures and objectives. A good objective Reduce R & A costs (Product A)from 5% to 2.5% of sales by year end XXXX, which will result in a savings of $2.5M.

7. Primary Metric • The primary metric is the yardstick that will be used to measure your success. It must: • Be consistent with the problem statement and objective • Include 3 series of data, plotted as a function of time: • baseline performance (average over the past 12 months, if possible) • actual performance • Objective / goal

8. Primary Metric – training sample for Product A

9. Secondary Metric(BACK STOP) • The secondary metric is the conscience that will “keep you honest” • Tracks potential negative consequences • More than one may be required • Examples: cycle time, cost, customer satisfaction

10. Sample Secondary Metric

11. Sample “BACK STOP” Metrics • Primary Metric: Lead Time • Potential Secondary Metric: Quality, OT Costs, Costs • Primary Metric: Quality (Defects) • Potential Secondary Metric: Lead Time, OT Costs, Costs

12. Standard Work This format becomes the standard for all improvement project types … • 5S / Safety area activity (1-day) • Workplace Kaizen (2-day) • Cross-functional team Kaizen (5-day) • *BB/LB/Gb type project (3 - 6 months) • *Capital projects / Inventory (6 -12 months) * requires GM, Finance, Manufacturing, CI approvals