3.4 PER MILLION
How to Identify and Select Lean Six Sigma Projects
by Douglas P. Mader
Lean Six Sigma is a powerful method for improving existing products, processes and services. Six Sigma was developed by Motorola in 1987. Motorola’s Six Sigma yielded significant financial results and became popular with many other companies, even though Six Sigma was practiced without the benefit of the define, measure, analyze, improve and control (DMAIC) strategy, Black Belts (BBs), or a defined project selection process.
In the mid-1990s, consultants introduced the method to Allied Signal and General Electric (GE), tying improvement to bottom-line financial performance. GE and other organizations refined the Six Sigma method and focused on identifying and selecting key projects, as well as adapting operations-based Six Sigma to service and transactional processes.
One way to improve the deployment of lean Six Sigma is to improve how lean Six Sigma projects are identified and selected. The typical approach to lean Six Sigma project identification and selection is heavy on selection techniques but light on identification techniques. There are four prerequisites to a well executed lean Six Sigma project identification and selection process.
Prerequisite One: Understand The Strategic Plan
The first step in understanding how to identify and select lean Six Sigma projects is to ensure you are completely familiar with your organization’s strategic plan. A typical strategic planning process will involve the following steps:
- Planning to plan: Create a roadmap to accomplish the strategic plan.
- Values scan: Assess the interests of the stakeholders.
- Mission formulation: Use the stakeholders’ input to formulate a mission statement.
- Business modeling: Create a viable business model, including cultural considerations and funding related to the restructuring or divestiture of existing business lines, as well as the addition of new business lines.
- Performance audit: Perform an assessment of the organization in terms of capabilities and financial strength.
- Gap analysis: Compare the current performance with the desired state to create a list of gaps.
- Integrating action plans: Create and implement a detailed plan to accomplish the strategies of the organization and close any gaps.
- Contingency planning: Develop contingency plans to account for potential market changes, competitive pressures and other scenarios that might affect the strategic plan and the organization’s ability to execute it.
- Implementation: Deploy the plan throughout the organization via cascaded goals, quantifiable performance measures and clearly identified owners and timeframes.
As part of action planning, organizations should launch strategic thrusts to close perceived gaps. Typically, strategic thrusts are initiatives with clear charters and budgets, led by senior executives and involve clear accountability. Strategic thrusts might be broad or specific, depending on the perceived gaps. Lean Six Sigma, Six Sigma, design for Six Sigma and their various permutations are all strategic thrusts.
Prerequisite Two: Align, Improve Efforts With Strategy
The second step is to understand how improvement activities should be aligned with the action plans found in the strategic plan. As part of business modeling in the strategic planning step, an analysis likely will have identified where the line of business (LOB) falls with respect to market growth and competitive position. The intent is to determine an effective strategy for a particular LOB based on the rate of market growth and the competitive position for the LOB.
For example, if a particular LOB has a strong competitive position in a fast growing market, the management team for the LOB might emphasize product development over operations improvement. On the other hand, a particular LOB with a weak competitive position in a slow market might require extensive focus on improving the cost structure through lean Six Sigma. For other scenarios, the im-provement strategy should be suited to the optimization of each specific LOB relative to its strategic goals.
Prerequisite Three: Understand The Policy Deployment System
The third step is to integrate the action plans into the policy deployment system. Policy deployment is a general reference to goal based plans cascaded throughout the various levels of the organization. Hoshin planning, management by objective and other terms are varied implementations of policy deployment.
Successful implementation of policy deployment involves:
- Setting high-level goals, targets, timeframes and owners based on the action plans from the strategic plan.
- Setting functional and departmental goals, targets, timeframes and owners based on cascading the high-level goals to the local level.
- Integrating the local goals into performance plans for individuals and teams.
- Doing regular performance re-views for high-level and local goal achievement.
- Integrating performance to goals in the bonus structure for management.
Prerequisite Four: Understand Core Business Processes
Every organization operates in some form as a system that converts inputs (transactions, information or raw materials) into outputs desired by customers (a product or service). The organization will attempt to define processes to create the desired outcome for customers and ostensibly document those processes.
To clarify how to look at process performance for opportunities for improvement, the following terms apply:
- Level one (L1) process: A core business process that corresponds to a business function and has accounting traceability.
- Level two (L2) process: A subprocess of an L1 process that involves a distinctly related sequence of process steps.
- Work steps: A logical work unit of an L2 process that involves a sequence of work tasks and is performed by a person or a small team.
Figure 1 shows an example of the use of the terms.
The typical approach to identifying opportunities for improvement is to first understand what the key L1 processes are within the organization. Then the key L1 processes will be broken down so key L2 processes can be identified. A typical lean Six Sigma project then will address a sequence of work steps within one or more L2 processes.
Project Identification and Selection Process
Champions, Master Black Belts (MBBs) and BBs can and should follow a structured method for identifying, prioritizing and selecting lean Six Sigma projects. Initially, the responsibility of a Champion in the project identification and selection process is to assist a trained MBB to execute the following steps:
- Review the strategic plan.
- Understand the high-level goals and targets for the organization.
- Compare desired performance with actual performance for the organization.
- Understand the local or departmental goals and targets for all business functions.
- Compare the desired performance with the actual performance for each business function.
- Identify key L1 processes based on risk/return/goal analysis.
- Understand key L2 processes based on risk/return/goal analysis.
- Brainstorm all potential improvement opportunities.
- Rank and prioritize all potential improvement opportunities based on risk/return/goals.
- Communicate the results of the ranking activity and seek consensus.
- Launch lean Six Sigma projects based on the priorities.
After becoming familiar with the process, the
Champion is expected to lead these steps for the organization on
a regular basis.
Champion’s Role Is Integral
The role of a lean Six Sigma Cham-pion is varied and diverse depending on the size of the organization and the scope of the lean Six Sigma deployment. The DMAIC method does not come without the risk of failure, but it is a very successful and proven approach to solving problems and optimizing process performance. The success of lean Six Sigma projects often hinges on the Champion’s ability to resolve organizational issues and manage risks to the project, including:
- Customer relations.
- Project size and complexity.
- Overall structure.
- External factors.
- Dependencies among projects.
Most of these risks can be addressed—and possibly alleviated—by having a well-run project identification process, communicating the priorities of the organization, communicating the potential lean Six Sigma projects, and building consensus among the key stakeholders.
Champion responsibilities do not end after projects have been selected. The Champion is also responsible for ensuring that each lean Six Sigma project has a solid plan, buy-in for the required resources, and effective management. The Champion is also re-sponsible for running effective project reviews at the end of each phase of the DMAIC process. Project reviews should not only look back at preceding activities, but also look ahead for the successful execution of upcoming phases.
A well-trained MBB should assist the Champion before and during the project reviews. The BB will be well versed in the technical tools, but it is the responsibility of the Champion to enable sufficient resources and remove organizational roadblocks that might stall the project.
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- Keyte, Beau, and Drew Locher, The Complete Lean Enterprise: Value Stream Mapping for Administrative and Office Processes, Productivity Press, 2004.
- Liker, J. K., The Toyota Way: 14 Management Principles From the World’s Greatest Manufacturer, McGraw-Hill, 2004.
- Ruffa, S.A., and M.J. Perozziello, Breaking the Cost Barrier: A Proven Approach to Managing and Implementing Lean Man-ufacturing, Wiley, 2000.
- Womack, James P., and Daniel T. Jones, Lean Solutions: How Companies and Customers Can Create Value and Wealth Together, Free Press, 2005.
DOUGLAS P. MADER is an international speaker, seminar leader and certified master instructor for Six Sigma and design for Six Sigma. He is the founder and president of SigmaPro Inc., a consulting firm in Fort Collins, CO, that specializes in integrated deployment of Six Sigma, design for Six Sigma and lean systems. Mader earned a doctorate in mechanical engineering from Colorado State University and is a senior member of ASQ and the Institute for Industrial Engineers.