Executive Summit Meeting. 2 Executive Summit Agenda Opening Remarks Demystifying Six Sigma...

Executive Summit Meeting

2

Executive Summit Agenda

• Opening Remarks

• Demystifying Six Sigma

• Deployment Structure

• Timeline and Milestone Review

• Functional Roles

- Finance Strategy

- Human Resources Strategy

- Communications Strategy

Opening Remarks

4

Opening Remarks

• Knowledge…• Transfer Six Sigma DNA into COMPANY• Deliver Right Tools and Technique to Solve Business Problems… for the Last Timefor the Last Time• Train With, and Leave Behind Best-in-Class Intellectual Property as Reference

Material

• Self-Sustaining Organization

• Create Master Black Belt Trainers, Champions, Infrastructure• Build and Leave Proven COMPANY Deployment Strategy in Place• Establish Foundation of Black Belts for Project Execution & Mentoring

• Culture of Excellence…• Shape a Data-Driven Employee Base…Every Discussion, Meeting, Decision• Produce a Process-Focus Mentality…Everything is a Process• Institute a Common Language…

• p-value• “Statistically Significant”• Standard Deviation• CTQ…Critical to Quality

• Results…Results…Results

• Defect• VOC…Voice of the Customer• MSA…Measurement System Analysis• Control Plan

Demystifying Six SigmaIntegrated Methodologies

6

Demystifying Six Sigma

Provide a basic understanding of key Six Sigma concepts and terms

Describe the major disciplines of the Six Sigma® Breakthrough Strategy:

• Process for Six Sigma (DMAIC with LEAN principles)• Design for Six Sigma (DFSS)

Offer an overview of some of the Critical Concepts related to implementing Six Sigma principles and techniques

7

Six Sigma Defined

Term is used interchangeably to represent: • Vision, Management Philosophy, Management Strategy, Performance

Metric, Benchmark, Statistical Tool Suite, Measure of Variation and a Goal

In its most basic form, Six Sigma is a metric• Represents 3.4 defects per million opportunities for defects• A defect can be any missed target or nonconformance to standard• This perspective is related to a single opportunity for defect, or a single

“critical to quality” characteristic (CTQ)

In its most elevated form, Six Sigma is a management strategy

• A strategic and tactical system for managing the total business enterprise using customer data

• Enables an organization to improve to the highest possible level of quality

8

Why Six Sigma Is Different

IT IS NOT: Just a “quality” program

IT IS: A common improvement methodology to effect the business as a whole A business process improvement methodology that enables

breakthrough improvements Focused on strategic business priorities Fact-based decision making Focused on minimizing waste and variation Dedicated resources with clear accountability Narrowly scoped projects Quantified project benefits (>$250K) Demonstrated track record of success across industries

9

The Goal: Breakthrough

Time

De

fect

s a

nd U

nn

ece

ssar

y S

tep

s Six SigmaBreakthrough

Current State

Future State

Improvement Period

10

The Roles

• Provides executive oversight for all Six Sigma activities

• Controls resources within the functional group

• Drives the Six Sigma initiative

• Owns the Six Sigma Project• Leads Project Team• Reports progress to Project

Champion

• 3-5 Process Experts

• Time commitment as needed

• Supplemental on the ground project resources

• Deployment Support• DMAIC Instruction• DMAIC Mentoring

• Owns project cluster• Breaks down barriers that

prevent project progress• Review projects• Drives projects to

completion

Functional

Champion

Functional

ChampionTeam

Members

Team Members

Project Champion

Project Champion PSMGPSMG

BlackBelt

BlackBelt

11

Customer Centric: View all products, processes and services from customer’s perspective rather than operational efficiency.

COPQ: Total direct and indirect costs of all issues or problems associated with a process.

Critical To Quality (CTQ): Customer performance requirement for product or service.

Defect: Anything that fails to satisfy a customer requirement or internal standard.

Defect Opportunity: Measurable event that may not meet customer expectation or meet internal standard.

Six Sigma Terminology

“When you can measure what you are speaking about, and express it in numbers, you know something about it; but when you cannot measure it,

when you cannot express it in numbers, your knowledge is of a meager and unsatisfactory kind ….”

Lord Kelvin, British Physicist

Hidden Office: Ad hoc systems that are set up to correct errors made at steps in a process.

Minimize Variance: Reduce variations in process quality.

Process: Group of activities that take inputs, add value and provide an output to customers.

Rolled Throughput Yield: The product of the defect free yield percentage across all steps in a process.

Yield: The percentage of defect free units at single step in a process.

Voice Of Customer: Any feedback received, via formal or informal means, from customers regarding company processes.

12

Cost of Poor Quality & Sigma

Cost of Poor Quality PPM Sigma Level

30-40% revenue 308,537 2σ

20-30% revenue 66,807 3σ

15-20% revenue 6,210 4σ

10-15% revenue 233 5σ

less than 10% revenue 3.4 6σ

Non-competitive

Industry average

World class

13

Quality Changes Behaviors

3 4 5 6

Sigma Scale of Measure

Restaurant BillsDoctor Prescription WritingPayroll Processing

Order Write-up

Wire TransfersAirline Baggage Handling

IRS - Tax Advice (phone-in)

(140,000 PPM)

Best-in-Class

Average Company

Industry Six Sigma Levels

14

If you played 100 rounds of golf per year, and played at:

2 sigma - you'd miss 6 putts per round 3 sigma - you'd miss 1 putt per round 4 sigma - you'd miss 1 putt every 9 rounds 5 sigma - you'd miss 1 putt every 2.33 years 6 sigma - you'd miss 1 putt every 163 years!

Understanding the Differences

15

The Breakthrough Strategy

Executives

Managers

Employees

Improve market share, Improve market share, increase profitability, and increase profitability, and ensure the corporation’s ensure the corporation’s

long-term viabilitylong-term viability

Improve yield, eliminate Improve yield, eliminate rework, and reduce labor rework, and reduce labor

and technology costsand technology costs

Create Vision,Create Vision,Strategy andStrategy andCommitment Commitment

Reduce waste, Reduce waste, defects, variation and defects, variation and improve capabilitiesimprove capabilities

Prioritization - Focus - Accountability - Reward

Metrics developed to Metrics developed to manage key drivers manage key drivers

of the businessof the business

Empower A-Players Empower A-Players to “get the job done”to “get the job done”

Voice of the Customer Voice of the Customer

16

Six Sigma – Integration

EliminateUnnecessary

Steps

ReduceVariability

Design Variability

Out

• Operational Excellence

• Cost Management• Increased

Profitability• Superior

Customer Service• Growth

Results

Design to Customer

Requirements

DMAIC(with LEAN Principles)

Design For Six Sigma

(IDOV Methodology)

Voice Of The Customer (VOC) Data Is Fundamental To The Six Sigma Methodology

17

DMAIC – Lean Principles

Identifying Waste And Making It Visible Is The First Step

DMAIC/Lean techniques are used to reduce unnecessary steps, eliminate rework, save time, save cost and extend capacity of valuable resources

Elimination of Unnecessary Steps

18

DMAIC – Lean Principles

• Specify the value of the process

• Identify the value stream for each process

• Allow value to flow without interruptions

• Let the customer pull value from the process

• Continuously pursue perfection

19

DMAIC – Variation Reduction

Typically A Few Process Input Variables Have An Extraordinary Influence On The Process Output

The basic premise of variation reduction is that sources of variation can be:

• Identified

• Quantified

• Eliminated or controlled

Managing Process Inputs …

20

DMAIC – Variation Example

• Example 1: Average time to approve is 45, with high variation resulting in most policies approved between 35 and 55 days

• Example 2: Average time to approve is 45, with little variation resulting in policies approved in no more than 47 days

Average Tells Little About The Customer Experience

Output Variation

Application Approval Process Example

30 45 60

Mean

Example #1

Example #2

Days

* Represents fabricated example* Represents fabricated example

**

21

DMAIC – Process Entitlement

• Shift overall performance to Entitlement, driving dramatic short-term improvements in cost and quality with minimal investment

• Only after the Entitlement is achieved should investment be made to redesign the process

MeanEntitlementPerformance

Shift

Upper Specification Limit

Output Variation 30 45 60

Days

* * Represents fabricated exampleRepresents fabricated example* * Represents fabricated exampleRepresents fabricated example

Application Approval Process Example**

22

DMAIC Methodology

Obtain customer requirements Clearly scoped projects (aligned to

business strategy)Define

Mistake proof the solution Standardize process

Control

Validate the solution design Validate and pilot solution Implement improvement plan

Improve

Identify and quantify root causes Establish improvement targets

Analyze

Quantify process performance Calculate sigma level Measurement Systems Analysis

Measure

ANALYZE

MEASURE

DEFINE

CONTROL

IMPROVE

IDENTIFIED PROJECTS

STANDARDIZE / INSTITUTIONALIZE

DMAIC: Define, Measure, Analyze, Improve & Control

23

When DMAIC Becomes DFSS

AnalyzeMeasure Improve ControlDefine

DESIGN FOR SIX SIGMA

Doesprocess/ product exist?

No

Yes

No

Will entitlement accomplish

Customer goals?

Yes

Yes

Is improvemen

t a new process?

No

Transition Points …

24

Design For Six Sigma - Growth

Integrate Customer And Business Needs And Wants Before Launching Products And Services

• Approach for understanding and translating customer requirements for new products and services

• Customer is involved at each stage

• Avoid developing services with no market

Goal – design products, services, and processes that satisfy both customer and business needs at the highest level of quality possible

Design For Six Sigma …

25

DFSS Methodology

Identify• Obtain customers’ requirements• Conduct competitive benchmarking

Design• Define the functional requirements• Define the design requirements

• Confirm customers’ requirements are met• Implement new designValidate

• Develop detailed design• Predict design performance, Y=ƒ(x)Optimize

Demystifying Six SigmaCritical Concepts

27

Six Sigma Concepts

Six Sigma Alignment Approach

Measurement Systems

Problem Solving with Statistics

Instituting Process Controls

Six Sigma Alignment Approach

29

Alignment Approach

1. Confirm Strategic Goals

2. Determine Project Clusters (Key Drivers of Goals)

3. Define Y=f(x) Relationships

4. Cascade Relationship to a Project Level

5. Conduct Six Sigma Projects

6. Realize Project Results

7. Roll-up Process Metrics to Management Dashboards

8. Manage Business based on Dashboards

30


Revenue Growth

Operating Income

Cash

Customer Satisfaction

31

2. Determine Project Clusters

Project Clusters are large-scale issues within the organization that have:• Levels of complexity which allow the issue to be broken

into smaller pieces• A measurable financial impact• Potential for long-term customer and company benefit• Metrics which can roll up into dashboard-level measures

of process performance

32

3. Define Y=f(x) Relationships

Identify the key drivers of obtaining desired performance within the Project Cluster

Depict as Y=f(X)

Y=f(X1, X2, X3 … Xn)

Measurable Output

Key Performance Drivers

33

4. Cascade Relationships

Y= f(X1, X2, X3,...Xn)

y= f(x1, x2, x3,...xn)

y= f(x1, x2, x3,...xn)

“X’s” Become “Y’s” at the Next Level of Specificity

Project Clusters

Black Belt Projects

34

5. Conduct Six Sigma Projects

DMAIC – Improving Process Performance

Off-Target Variation

On-Target

CenterProcess

Reduce Spread

XX

XXXXX

XXX

XX X

X

X

X

XX

X

X

XXX

X

XXXXX

XXXXX

XXX

35

6. Realize Project Results

Closed Projects

Validated performance of process improvement

Control mechanisms in place for sustaining process improvements

Process Owners are accountable for controlling and sustaining process improvements

36

7. Roll-up Process Metrics

Performance metrics• Number of inaccuracies (defects)• Cycle time• Amount of re-work

Financial metrics• Hard savings • Soft savings • Revenue enhancements

37

8. Manage by Dashboards

Performance of all key sub-level processes are aligned to Project Clusters and rolled up to show performance against business goals

Process performance metrics are maintained and tracked continuously

Dashboards provide the managers of high performing companies line-of-sight visibility to performance against business goals, and the capability to drill down to process level performance as needed

Executives

Managers

Employees

Improve market share, Improve market share, increase profitability, and increase profitability, and ensure the corporationensure the corporation’’s s

longlong--term viabilityterm viability








Empower AEmpower A--Players Players to to ““get the job doneget the job done””


Executives

Managers

Employees

Improve market share, Improve market share, increase profitability, and increase profitability, and ensure the corporationensure the corporation’’s s

longlong--term viabilityterm viability








Empower AEmpower A--Players Players to to ““get the job doneget the job done””


Measurement Systems

39

Measurement Systems

+Actual(Par t)2

=

Process Variability(Actual variability)

Meas. System2

Observed(Total)

2

Process A

Process B

Total Variability(Observed variability)

MeasurementVariability

Observed process variation is made up of:• Variation in the process• Variation in the measurement system

40

Measurement Systems

Measurement data is flawed when:

• The right things are not being measured

• The right things are not being measured correctly

OR

41

Measurement Systems

How organizations typically view measurement systems:

• Our data does not show us the real picture― We measure “days outstanding” by invoice, but not by customer― We know how many people are in the process, but we don’t know

how the level of productivity― We know who is not paying their invoices, but we don’t know why

they are not paying

• We do not have confidence in the data we have― Order to delivery data does not account for the fours days that the

order sits in the sales person’s briefcase― Defect data shows customer complaints, but not the number of

times we fix the order before it reaches the customer― Call center data shows average wait time, but does not include time

spent on hold after a representative has answered the call

42

Measurement Systems

Applying Six Sigma to measurement systems:

• Getting the real picture― Ensuring measurements reflect Voice Of the Customer ― Measuring the Xs and monitoring the Ys― Aligning measurements to key business objectives― Establishing measurement systems to fill gaps in the data

• Validating the measurement data― Conducting a Measurement System Analysis

Ensuring a common definition of the defect Validating that measurements are taken the same way every time Determining the acceptable level of measurement system variation

― Establishing a process to maintain the measurement system over time

Problem Solving With Statistics

44

Problem Solving w/ Statistics

How organizations typically view problem solving:

• If we hire smart people and allow them institute some changes, our problems will be solved

• Every time we solve one problem a new one pops up and we are never able to get the whole thing right

• It seems like we solve the same problem every few years, but we never are able to sustain the improvement

• We have spent a fair amount over the years implementing one great idea after another and none have ever met their original expectations

45

Problem Solving w/ Statistics

Six Sigma techniques:

• Determine key drivers of process output at a task level

― Y=f(X1, X2, X3 …Xn) where the Xs are measurable process input and the Y is a measurable process output

• Develop and/or validate performance measurements for the key drivers of process output

• Use statistical tools to understand which of the drivers have a statistically significant impact on the process

• Optimize the performance of statistically significant drivers

• Apply process controls to ensure that performance remains at the optimal level

46

Project Example


For the current fiscal year, senior management has indicated the following goals:• Organic revenue growth

• Reduced costs

• Increased customer satisfaction

Interviews with functional leaders in the organization suggest the following as potential barriers to achieving corporate goals:• Sales closing ratios

• Equipment delivery times

• Back office inefficiencies

47

Project Example

2. Determine Project Clusters

Project Cluster = Late Deliveries

Description of Project Cluster Issue

• Customer feedback indicates that the amount of time it takes from ordering a piece of equipment until the equipment is installed in not acceptable.

• Available data suggests equipment deliver times are averaging 15 days from order to installation

• Management experience and intuition suggests that 15 days is not a good representation of true delivery times

48

Project Example

3. Define Y=f(X) Relationship

Late Deliveries Y= f(X, X , X,)

Sale

s O

rder

Del

ays

Fina

l Ass

embl

y

Del

ays

Ship

ping

Del

ays

Approximate annual costs associated with late deliveries:• Cancelled orders = $2.3mm• Expedited shipping = $0.8mm• Additional labor = $ ?

49

Project Example

3. Define Y=f(X) Relationship

Late Deliveries Y= f(X, X , X,)

Sale

s O

rder

Del

ays

Fina

l Ass

embl

y

Del

ays

Ship

ping

Del

ays

Does “Late Deliveries” align? Revenue Growth – Yes (constraint removal) Cost Saving – Yes ($3.1mm opportunity) Customer Satisfaction – Yes (significant dis-satisfier)

3 days = 20%

Order management data indicates: On average, final assembly begins 3 days after date on customer order On average, shipping is scheduled 5 days after final assembly begins On average, date on customer delivery receipt is 7 days after shipping is scheduled

5 days = 33%

7 days = 47%

50

Project Example

4. Cascade Relationships

Financial data suggests:• Black Belt project improvements

will produce benefits that represent a portion of the overall opportunity

• Project benefits will be approximated as part of the initial Project Charter and validated with greater specificity as project progresses

Fina

l Ass

embl

y

Del

ays

Ship

ping

Del

ays

Sale

s O

rder

Del

ays

Y = f(X, X , X,)Late Deliveries

Sele

ctin

g &

Sch

edul

ing

Logi

stic

s

Y = f(X, X , X,)Shipping Delays

3rd

Part

y

Logi

stic

s

Cus

tom

er

Ava

ilabi

lity

Pick

-up

Y = f(X, X , X,)3rd Party Logistics

Proc

essi

ngD

eliv

ery

Black Belt Project

½ day = 7%

½ day = 7%

6 days = 86%

1 day = 16%

1 day = 16%

4 days = 68%

3 days = 20%

7 days = 47%

5 days = 33%

51

Conduct Six Sigma Projects

Proj. No:

Name:

Problem Statement:

Project Objective:

Project Benefits:

Project Metric "Y":

Defect Definition:

Project Start Date (Signed-Off)

[email protected]

The average time for a 3rd Party Logistics Provider to process outbound shipments to customers is four days. This contributes to an overall average time from order to installation of 15 days. The average of 15 days from order to installation is not meeting customer expectations which leads to expedited shipping cost, and cancelled orders. The total annual cost of Late Deliveries is estimated at $3.1mm.

To reduce 3rd Party Logisitics Provider's average processing time by 2.8 days from and average of 4 days to an average of 1.2 days without incurring additional costs.

Wednesday, June 11, 2003

Project Completion Date (Signed-Off)

Information Technology T. McKinney

Team Makeupe-Mail:

[email protected]. Vu

1) Estimated $840,000 in cancelled orders and expedited shipping costs; 2) Improved customer satisfaction

[email protected] Analyst

[email protected]

R. Stevenson

123-565-7714

Project Information Worksheet

Charter Creation Date

June 5,2003

Division / Loc./ Cost Ctr.:

Project Name: 0306-J-0037

Role:

111-555-1237D. DanfordMaster Black Belt

Phone:

Strategic Goals = Improved Customer Satisfaction, Reduced Costs; Big "Y" = Late Deliveries; 2nd Level "Y" = Shipping Delays; 3rd Level "Y" = 3rd Party Logistics

123-565-7801

123-565-7734

V. Lopez

[email protected] Belt

Six Sigma Project Charter

3rd Party Logistics - Processing

Process Owner

123-565-7721 [email protected]

3rd Party Logistics processing times in excess of 1.2 days.

Project Champion E. W. Strauss

X-ampleX-ampleX-ample

To begin the project the Black Belt needs an approved Project Charter

Proj. No./Name

ProjectBaseline Forecast Actual Forecast Actual

Baseline Period (Year, Qtr. Etc.) Jun-02

Cost Of Goods Sold:- Material - - - - - Direct Labor - - - - - Product Overhead - - - - Total COGS - - - - -

Salary & Benefits - Other than Direct Labor (detail):- Full-time Staff (#) - - - - - Full-time Staff ($) - - - - - Temporary Staff (#) - - - - - Temporary Staff ($) - - - - - Part-Time Staff Cost (#) - - - - - Part-Time Staff Cost ($) - - - - Total Salaries & Benefits - - - - -

Other Cost Categories: Project

Baseline Forecast Actual Forecast Actual- Scrap - - - - - Re-Work - - - - - Warranty - - - - - Freight/Shipping 240 168 - 168 - - Other COPQ - - - - Other Cost Category (List): - - - -

- - - - - - - - - - - - - -

Total Other Cost 240 168 - 168 -

Total Productivity Cost Savings 240 168 - 168 -

Project

Revenue Baseline Forecast Actual Forecast Actual- Increase from Volume 600 420 - 420 - - Increase from Price - - - - Total Revenue Increase 600 420 - 420 -

Profit (EBIT) Margin % 12% 0 - 0 - EBIT Impact 72 50 - 50 -

Project

Cash Flow Benefits Baseline Forecast Actual Forecast Actual- Accounts Receivable - - - - - Accounts Payable - - - - - Inventory - - - - - Payroll - - - - - Other (List):- ______________________ - - - - - ______________________ - - - - Total Cash Flow Increase - - - - - % EBIT Impact of Cash Flow 0% 0% 0% 0% 0%EBIT Impact (WACC) - - - - -

Year 1 Year 2

$(000's)

Year 1 Year 2

$(000's)

Year 1 Year 2

Cash Flow Benefits

Six Sigma Project Charter

$(000's)

Revenue Benefits

Year 1 Year 2

Productivity Benefits

0306-J-0037 / 3rd Party Logistics - Processing

X-ampleX-ampleX-ample

52

Conduct Six Sigma Projects

Tools & Techniques include:• Define

― Process Mapping, Cause & Effect Matrix, Cause & Effect Diagram

• Measure― Baseline Capability, Graphical Analysis Tools, Data Collection Tools

• Analyze― Hypothesis Testing Tools

• Improve― Design of Experiments, Process Simulation

• Control― Mistake Proofing, Visual Displays, Statistical Process Controls

53

Black Belt Project Example

Using Six Sigma

Tools


55


Process Control Methods ensure that

• What gets fixed stays fixed

• The opportunity for error is removed or controlled

• When process performance trends toward an out of control condition actions are taken at the process level to move performance back into control

• The Xs are controlled so that the Ys can be monitored

56

Rolling Up Process Controls

Ship

ping

Del

ays

Fina

l Ass

embl

y

Del

ays

Sale

s O

rder

Del

ays

Y = f(X, X , X,)Late Deliveries

Sele

ctin

g &

Sch

edul

ing

Logi

stic

s

Y = f(X, X , X,)Shipping Delays

3rd

Part

y

Logi

stic

s

Cus

tom

er

Ava

ilabi

lity

Pick

-up

Y = f(X, X , X,)3rd Party Logistics

Proc

essi

ngD

eliv

ery

Deployment Structure

Andrew TwadelleVice President, Six Sigma

58

COMPANY’s Six Sigma

Development of the Infrastructure

59

Deployment Infrastructure

Six Sigma Deployment

Leader

Six Sigma Deployment

Leader

Finance• Establishing and

tracking project financials

Finance• Establishing and

tracking project financials

Communications• COMPANY-wide support

Communications• COMPANY-wide support

Human Resources• Black Belt Profile• Black Belt Career

Development & Tracking• Training support

Human Resources• Black Belt Profile• Black Belt Career

Development & Tracking• Training support

Support infrastructurefor Six Sigma Initiative byproviding:• Initiative structure,

alignment, & support• Establish project selection

criteria• Project governance &

tracking process• Removing organizational

barriers• Financial measures &

tracking process• Channels for

communication• Training infrastructure• Black Belt profile and career

development plan• Establish Black Belt

selection criteria• Software support• Data support process• Vendor contract support

Information Technology• Software support• Data Mining Process• Project Retention

Information Technology• Software support• Data Mining Process• Project Retention

Initial Outside Provider• Ramp up• Training

Initial Outside Provider• Ramp up• Training

Law• Vendor contract support

Law• Vendor contract support

60

Finance

Members – NAMES HERE Role:

• Develop Six Sigma Policy for minimum project net savings threshold

• Define project financial measures that COMPANY values

• Establish mechanics and templates on how projects will be financially measured/stewarded

• Define specific phases in projects that financial measures will be validated

• Align Planning & Analysis Financial Analysts with each function to support the validation of Six Sigma project financial measures

• Support tracking of Six Sigma realized savings company-wide

61

Human Resources

Member: NAMES HERE

Role:• Develop Master Black Belt and Black Belt profile/competencies

• Establish Master Black Belt and Black Belt position― i.e. Grade-level, tenure, compensation

• Develop Master Black Belt and Black Belt certification program

• Establish guidelines for Master Black Belt and Black Belt selection process

• Develop reward and recognition program for Six Sigma efforts

• Establish expectations of a Black Belt career path at COMPANY

• Develop infrastructure to support Six Sigma training at COMPANY for

― Mgt, Master Black Belts, Black Belts, Green Belts, awareness― Materials and content that align with COMPANY values

62

Information Technology

Member: NAMES HERE Role:

• Development of data mining support process for Six Sigma projects ― i.e. Requests, reports, tracking, etc.

• Development of data discovery process to capture & report on data in COMPANY whether Oracle or legacy (OMD, BASS, etc.) environment

• Identifying Six Sigma software support & procurement, if necessary― i.e. Project tracking and management, flowcharting, statistical

calculating, spreadsheet analysis, presentations, etc.

• Develop for completed projects a documentation storage and access process

• Develop interface process with e-COMPANY initiative to ensure consistent alignment with any potential Six Sigma projects and recommended process changes.

63

PSMG

Members: Role:

• Support deployment and development of COMPANY Six Sigma infrastructure based on their experience

• Participate in initial project selection to ensure quality projects

• Participate in selection of initial Black Belts and future Master Black Belt candidates to ensure quality candidates

• Train Black Belts and future Master Black Belts in Six Sigma methodology

• Play a role in quality assurance governance structure regarding― Projects― Black Belt performance― Initiative governance activities

64


Ongoing Governance Structure

65

Ongoing Governance Structure

Senior Management Oversight CommitteeNAMES HERE

Senior Management Oversight CommitteeNAMES HERE

Six Sigma Steering Committee-NAMES HERE

Six Sigma Steering Committee-NAMES HERE

• Organizational alignment with goals and objectives

• Overall Six Sigma governance• Organizational support and

accountability• Initiative leadership

• Ensure proper project selection • Project governance, tracking, &

support• Remove organizational barriers• Project financial meas & tracking• Ensure proper Black Belt selection• Support Black Belt training• Monitor Black Belt career

development

• Identify potential projects & Black Belts

• Develop Black Belt career plan• Support projects and Black Belts• Support replication of project results• Sustain project benefits

Function’sSix Sigma Projects








Six Sigma governance structure to ensure strong project selection and benefit measures



66

Senior Management Oversight Committee

Members – NAMES HERE Role

• Ensure Six Sigma projects are aligned with COMPANY’s goals and objectives

• Breakdown any organizational barriers• Support project prioritization, as needed• Ensure functional project accountability• Review project measures and financial returns• Ensure Black Belt profile and career opportunities are

achieved• Ensure Black Belt projects are reviewed at Functional Ops

reviews• Ensure project benefits are controlled and sustained

67

Steering Committee

Members NAMES HERE Role

• Support Senior Staff Oversight Committee responsibilities• Interface and communicate with Functions as needed• Ensure quality projects are selected & meet project selection criteria• Monitor projects on an ongoing basis from an objective, quality, and

financial measurement viewpoint• Ensure quality Black Belt candidates are selected• Monitor Black Belt performance and provide feedback • Monitor and support Black Belt career opportunities after Black Belt

assignment completed• Track overall Six Sigma initiative relative to

― Projects, Black Belt performance, financial benefits & sustainability

68

Functional Management and Projects

Members – All Functional Leaders Role

• Work with Process Owners & Black Belts to identify quality projects

• Identify high potential candidates to become Black Belts

• Support and champion Black Belts efforts in working projects

• Leverage/replicate project results across organization, as appropriate

• Utilize project improvement metrics to sustain project benefits

• Utilize Ops reviews to review Black Belt projects and ensure― Project support― Project improvements are sustained

• Be a Six Sigma Champion― “Talk the talk” and― “Walk the talk”

69


Deployment

70

Deployment

Identify clusters of opportunities for initial deployment

Goal – spread Six Sigma throughout COMPANY so felt by all

Work with individual functions to breakdown applicable clusters into specific projects

Identify functional Black Belt candidates for assignment to projects

Establish Black Belt training waves• Wave equals training a new Black Belt on an identified project

Training waves will occur every two months• One wave equals 20-25 projects or 20-25 new Black Belts

being trained

71

Deployment

Goal is to have 300 Black Belts trained throughout COMPANY by the end of year 2

• Benchmark companies target 1%-3% of employees trained as Black Belts

Some Black Belts will eventually be trained as Master Black Belts (trainers of Black Belts)

After 12 months targeting to train Functional employees in DMAIC process at Green Belt level

• Master Black Belts and Black Belts will train employees to Green Belt capability

Working with COMPANY training organization:• To establish standard COMPANY training material

• To deliver training

• To track training effectiveness and progress

72

Six Sigma Deployment – Critical Success Factor

Leadership…….

Which means all of us!

Timeline and Milestones

74

Timeline & MilestonesMayApr JulJun Aug Sep Oct DecNov MarFeb MayApr Jun Jul Aug SepJan Oct Nov Dec Jan Feb Mar

Pre-planning

Pre-deployment Interviews

Executive Session

Functional Champion Workshop

Project Champion Workshop

FASTART Training

Black Belt Wave 1 – Week 1








Ongoing Black Belt Training Waves

Ongoing Green Belt Training Waves

Master Black Belt Wave

75

Functional Champion Workshop

A ½-day session with each of the Functional Champions that includes• A review of project clusters identified during the pre-

deployment interviews

• Point-of need, one-on-one coaching on Six Sigma principles

• Framing of the approach for applying Six Sigma within the functional Group

• Validation of project cluster financial impact

• Next-level cascade of validated project clusters

• Identify Project Champions and Black Belts

76

Project Champion Workshop

A 3-day educational work session designed to• Transfer mid-level knowledge regarding the application of

Six Sigma principles and tools

• Validate the expectations for Project Champions

• Communicate the Human Resource, IT, Finance and Communications support

• Verifying project clusters identified to date

• Cascade the project cluster to the level of an individual Black Belt project

• Create Project Charters for enrolled Black Belts

• Communicate requirements of project reviews

77

FASTART Black Belt Training

A 2-day Training Session that focuses on

• Applying MINITAB software to Six Sigma process analysis and improvement

• Using flowcharting software to map processes and conduct process simulations

• The approach used by the organization to implement Six Sigma

• Preparation for the first week of Black Belt training

78

Black Belt Training

4 Weeks of training taking place over 4 Months that transfers critical knowledge regarding

• Six Sigma principles

• Lean principles

• The DMAIC Methodology

• Statistical Analysis Tools

• Improvement methods and tools

• Process Control Strategies

• DFSS overview

79

Key Dates

What is the appropriate pace of Six Sigma Deployment?

• Executive Session –

• Functional Champion Training –

• Project Champion Training –

• Black Belt Training –

Finance

81

Benefits Measurement

Benefits measurement is integrated into Six Sigma methodology (not an afterthought)

Benefits must be aligned with company’s goals

Focused on significant improvement opportunities

Structured to ensure hard, realized benefits

Appropriate controls implemented up-front

Benefits Measurement Is A Critical Component Of A Successful Six Sigma Initiative

82

Functional Champion

Functional Champion

FinanceFinance

Data Experts

Data Experts

Steering Committee

Steering Committee

InstructorInstructor

• Provide overall Project governance

• Provide specific project charters

• Assist in obtaining data for selection of project areas and individual projects

• Trains & Mentors Black Belts• Partner with Engagement Manager

and MBBs

• Assists Functional Deployment Leader with project strategy

• Validates financial benefits of projects

Finance – One of Many Partners

FunctionalChampion

FunctionalChampion

Team Members

Team Members

Project Champion

Project Champion

Six Sigma Academy

Six Sigma Academy

BlackBelt

BlackBelt

FunctionalChampion

FunctionalChampion

Team Members

Team Members

Project Champion

Project Champion

Six Sigma Academy

Six Sigma Academy

BlackBelt

BlackBelt

• Provides executive oversight for all Six Sigma activities • Controls resources within the functional group• Drives the Six Sigma initiative

83

Role of Finance

Define the Policies Driving Project Selection• Two Basic Selection Criteria

― Minimum $250k in Hard Savings in 1st year― Can be completed in 4 to 5 months

• Then Prioritization of Selected Projects― ROI contribution― Project Complexity

Initiative Financial Reporting• Initiative level costs and benefits• Project level data & reporting tools for Financial Analyst and

Black Belt• Utilization of a Project Charter Template for tracking each project

84

Role of Finance

During DMAIC Process:• Qualification of Project Opportunities• Review Black Belt’s Process Measurement Proposals• Validation of Projected Benefits as “Hard” Savings• Ongoing Project Financial Improvement Evaluation• Final End-of-Project Savings/Benefits validation

After Project Completion• Continual Review of Project Financial Results

Disciplined Financial Review Is Essential During And After Project Completion

85

Savings Defined

Definition of “project benefits” is grounded in P&L impact

“Hard” Savings• Must be measurable, controllable and contribute to earnings

• Sources― Margin improvements directly attributable to Six Sigma projects― Reduction of operating expenses― Lower carrying cost related to Working Capital (Inv / AR) reduction― OI contribution from revenue enhancement projects

Savings Must Be Directly Observed On The Bottom Line

86

Black Belt vs. Financial Analyst

Black Belt’s role• Data collection• Original analysis of process measurements• Project cost/benefit analysis

Financial Analyst’s Role• Provide budget information by cost center• Validate process measurements• Validate cost/benefit analysis

Financial Analyst Validates The Black Belt’sOriginal Analysis

87

DefineDefine MeasureMeasure

Black Belt/MBB

Finance

Steering

Committee

• Review assumptions,• High level estimates,• Consider

up-stream/down-stream effects

• Categorize as hard/cost benefits

• Review measurement proposals

• Identify appropriate sources & uses of financial data to measure, estimate & validate as project progresses

AnalyzeAnalyze ImproveImprove ControlControl

• Review

• Approve or re-direct

• Draft Charter

• High Level Problem statement, process definition, potential financial benefits & cost

• Engaged by Black Belt as needed to update measurements, financials

• Update Charter as necessary while progressing through project phases.

• Engage Finance, Process Owner as needed.

• Request Steering Committee Approval if Method of measuring benefits OR significant change to benefits forecast is required.

• Validate actual benefits with Black Belt/MBB

• Update forecast if necessary

• Sign-off Project

• Implements Control Plan

• Validates benefits with Finance

• Presents to Steering Committee for Sign-Off

• Review

• Approve or re-direct

Finance Champion ApprovesFinance Champion Approves

Functional Champion

DMAIC Process Map – Finance

• Insert Text Here • Insert Text Here • Insert Text Here • Insert Text Here • Insert Text Here

Paul Giessler

CHANGE

88

Finance Role During DMAIC Process

Project Definition stage: high level “sanity check”• The Project Champion completes an evaluation model with

high level estimates of OI benefit.• Finance assists Black Belt in assessing and interpreting

financial data• Finance assists Black Belt in summarizing project costs and

benefits• Questions for Finance to ask

― Are these hard savings?― Are you measuring the Right factors in the business process?― Are there other possible sources of savings? Alternatives?

Additional Projects?― Does this opportunity meet the minimum savings requirements?

89


Measurement and Analysis stage: before the Process Improvement takes place

• The Black Belt reviews and updates the financial model

• Questions for Finance to ask:― How do these estimates compare with the previous estimates?

― Do these savings look realistic for the proposed improvement?

― Are there any errors in the data entry?

― How do the savings estimates compare with current budget numbers?

― Is the decision to proceed confirmed?

90


Improve and Control stage: at completion of the project

• Detailed “audit” of savings to confirm total targeted benefits― Finance works with Black Belt to validate & verify project results

• Questions to ask― Did the process improvement take place?

― Does the process improvement result in the reported level of savings?

― Are appropriate procedures in place to maintain the improvement?

Ongoing tracking of financial results• Provide support to Project Champion to monitor sustainability of

benefits

91

Long-term Tracking of Benefits

A system will be implemented to record all projects & report all project benefits:

• Track projects by Functional Area.

• Track through each of the DMAIC stages

• Forecast benefits stream and track actual (ongoing) benefits

• Report results by Function, Black Belt, Project Champion, Fiscal Periods, Benefits category, etc.

Changes to a project’s Benefits Measurement method requires Steering Committee approval

A Management Reporting Tool Will Allow Continual Results Tracking

92

Project Statement: • Hard copies of sales documents are used

for processing transactions. The “Order to Ship” process is not optimized resulting in delays in shipping product. Inefficient use of labor in making and distributing document copies.

Critical To Quality:.

Defect Definition:.

Project Objective:• Reduce labor costs. Reduce transaction

processing cycle time. Reducing “Order-to-Invoice” cycle time by 1 day will bring a one time increase in Gross Profit of 1 day’s revenue.

Timeline: • Complete initial implementation of project

in 4 months

Current/Goal/Stretch Goal________ current DPMO/DPU________ goal________ stretch goal

Target Benefits:• Reduce “Order to Book” cycle time 1 day.• This reduces the “Order-to-Invoice” cycle time

by 1 day.• Reduce document processor headcount by 30.

Progress to Date:• Existing business process defined • Completed measurement validation• New process flow being mapped• Leverage opportunities identifiedLeveraging: • Pilot process design will be replicated across

all Call Centers and Regions.

Example: Sales Document Imaging Project

93

Imaging Project Benefit Summary

Sample data ($ mm)Before After

Revenue 1,732.0 1,736.7 Cost of Goods Sold 1,160.4 1,163.6 Gross Margin 571.6 573.1

Selling Expense 138.6 138.9 General & Admin. Exp. 346.4 346.1 Total Expense 485.0 485.0

Operating Income 86.6 88.1 5.0% 5.1%

One time benefit 1.2 Recurring benefit 0.3 Total 1st Yr Benefit 1.5

AnnualizedOne Time Benefit: 1 day reduction in “Order to Bill” process resulting in one time benefit of $1.5 mm in increased GP.

Offset by one time $300k increase in Commission Expense

Recurring benefit: Reduced labor costs of $4.3mm over 5 years. Avg annual savings of $870k.

Marginal Project Expense: $2.8mm total for hardware and software. $560k Avg annual expense increase.

Project Savings Impact To P&L

94

Benefits Measurement Framework Summary

Structured Project identification & selection against Policy Standards

Clear definition of benefits established & communicated

Consistent application of Project Charter template to identify, monitor & manage project progress & benefits

“Stakeholders” involved at every stage of process

Operational & financial metrics baselined, monitored, measured and approved

95

Benefits Measurement Framework Summary

Steering Committee approval required:• To start project,

• At the end of each DMAIC phase

• At project completion (benefits must be demonstrated at Control Phase before project completed)

Process Owner continues to monitor process performance, owns Control Plan, assures benefits realization

Post-implementation benefits review/audit

Steering Committee And Stakeholder Involvement Are Key Process Controls

Human Resources

97


Black Belt

98

Black Belt Role

Black Belt profile developed, competencies identified

Remains solid line reporting to functional leadership team, matrixed to Six Sigma leadership

Qualities include:• Strong leadership and teaming capability

• Interpersonal and communication skills

• Ability to effect change across functional lines

• Strong project management and analytical skill set

• High performer, high potential

99

Black Belt Selection Process

Initial Black Belt Selection – Wave #1 High potential candidate selection using succession

planning tools• Management nomination• Meet with process owner/functional lead to generate

candidate list• Assess current staff for high performer and high potential• Leverage knowledge and insight of PSMG in selection process for

successful candidates• Make candidate selection and assign to identified project• Mobility for roles post initial Black Belt assignment – in line with

succession plan focus

Second wave identification within 2 months Consider posting for Black Belt position after 12 months

100

Black Belt Career Path

Black Belt assignment for 2 years Expectation – Black Belts emerge with increased value-

add skill set Commitment to redeployment of employees into lateral,

broader or promotional roles Should be on functional leader’s radar screen 6 months

prior to ending Black Belt assignment Evaluation opportunities for redeployment during

succession planning updates• Take advantage of succession planning to identify and add Black

Belts into projects Use COMPANY’s current processes for placement of

employees, e.g. approved openings

101

Black Belt Certification Process

Candidates successfully completes initial training program utilizing first assigned project (4-6 months)

Black Belt successfully completes 2 projects

• Evaluation of project success – COMPANY & PSMG― Utilization of Six Sigma tools, concepts, and project management

skills

• Measurable savings achieved – average of $250,000 for each of two projects

Expectation of certification within 1 year

102

Six Sigma Compensation

Black Belt compensation options:

• Enter role at their current compensation level (lateral)

• Receive $2,000 award for completion of Black Belt certification

• Incentive compensation :1. STI remains the same – Personal Achievement Factor

applies (0-120%) Recommend consideration of 50% function assigned

to, and 50% COMPANY plan

2. Use performance management and merit Consistent with COMPANY’s compensation/merit

policies, high performers should receive greater merit considerations

103

Six Sigma Recognition

Recognition needs to be a key factor of the Six Sigma Black Belt role:

• Highly visible success stories in Communicator, Six Sigma website, drive employees to want to be identified with Black Belt wins

• Certification completion dinner with senior management

• Functional recognition as well as company-wide

• May want functional lead & senior management letters of appreciation

• Award luncheons/dinners as appropriate at functional level

104


Training Logistics

105

Training Logistics for Six Sigma

Black Belt identified; assigned to curriculum via Training Server by COMPANY Training Coordinator

Pre-training packet sent to Black Belt – includes pre-reads, exercises and logistical information for training (travel, dates, etc.)

Pre-training assessments completed via Question mark and tracked in Training Server

Training progress (including assessment scores and results of required activities) tracked through Training Server

Communications

107

Role of Communications

Effective communication is critical to the success of Six Sigma

Communication must be consistent, balanced and relevant

Requires strong communications both company-wide and in each functional area

Our operating assumption: it’s better to over-communicate than leave people guessing

108

Ensuring Consistency

Standardized definition of Six Sigma at COMPANY:

“Six Sigma is a defined and disciplined business methodology to increase customer satisfaction and profitability by streamlining operations, improving quality and eliminating defects in every process company-wide.”

Alignment of Six Sigma projects to COMPANY’s goals and objectives

Six Sigma logo to establish continuitystamp of Six Sigma methodologythroughout COMPANY

109

Communication Plan

Communication Plan focus on timeline, message, audience, and channels

Initialize• Announce Six Sigma initiative• Explain and educate

Deploy• Further education• Discuss specific projects and results• Recognize Six Sigma teams and Black Belts

Sustain• Reiterate the long-term importance of Six Sigma• Continue to promote results and recognize teams

110

Senior Leaders

Senior leaders• Executive team (CEOand direct reports)• Regional VP/GMs, • European Country Presidents and Europe Staff• Functional management (Sales, Service, HR, IT, Marketing,

Finance, Operations, Legal)

Senior leaders play a critical role in the success and consistent communication around Six Sigma at COMPANY

My commitment:• Proactively keep you informed about what, where, when, and how

we are deploying Six Sigma• Provide you with the tools and information to communicate and

champion Six Sigma throughout COMPANY• Listen to your input

111

Six Sigma Community

Six Sigma community• Black Belts

• Project teams

Develop specific communications vehicles to support Six Sigma community needs• Regular Andrew communications

• Regular communication from training

• Other possibilities: Six Sigma community “message board” for support and sharing of best practices; Black Belt Best Practice Forums; etc.

112

Employees

Company-wide• Regular updates through

“Six Sigma at COMPANY” bulletins

• Update articles in NEWSLETTER

• Six Sigma website on COMPANY.COM― General information on Six Sigma― Initiative timelines and milestones― Six Sigma projects and results― Recognize Black Belt accomplishments― Senior management quotes related to Six Sigma efforts― FAQs and contact information

• Road show

113

Employees

Project-specific communications• Functional leaders work with their Black Belts and

Communications team to provide regular updates to their organization on projects

• Goal - keep employees informed, and make them a part of the process

Departmental/Region/Country/Marketplace communications• Mention Six Sigma regularly in ongoing communications to

your team

• Recognize teams and promote results

114

Your Role

Understand, endorse and promote the value of Six Sigma within your team

• Presentation for your next all-employee meeting

• Work with your Black Belts to provide ongoing updates on projects in your area

• Identify opportunities for Deployment Leader to speak with employees during scheduled employee meetings, etc.

• Provide ongoing recognition for project teams

115

Summary

Communication and leadership is key to our success

Initiative team is committed to open communications with you, the Six Sigma community, and our employees

Functional leaders play a critical role in the communication process

Consistency is key

Working together, we’ll include all COMPANY employees in the Six Sigma journey through ongoing

communication

Date post:	30-Dec-2015
Category:	Documents
Upload:	josephine-ball
View:	215 times
Download:	0 times

Executive Summit Meeting. 2 Executive Summit Agenda Opening Remarks Demystifying Six Sigma...

Documents