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How To Use Value Stream Mapping To Select Lean Six Sigma Projects

admin — Thu, 27 May 2010 09:51:57 +0000

Value Stream Mapping (VSM) is a common tool used by Lean Practitioners to identify waste within a value stream. It is usually carried out in two stages: Current state – the ‘as is’ map of the process Future state – the vision for the future including all the Lean Improvements. A value stream map contains all flows of information and materials utilised within an enterprise from raw material right through to the customer. It typically contains: Information management e. g. Order processing, purchasing etc, Physical transformation e. g. Materials, logistics and production Intellectual property e. g. Improvement ideas, designs, project management etc.

Whenever there is a product, service or process for a customer there is a value stream in operation and lean practitioners can work on it to take out waste and improve effectiveness and efficiency.

What’s not commonly understood however, is that Value Stream Mapping, if carried out at a high level (typically at a business unit or for a product group), can prove to be a valuable tool to identify Lean Six Sigma projects. It is particularly useful because it helps provide Lean Six Sigma projects which are: Strategically Aligned Focussed on the key blockages (Theory of Constraints) Grouped into Powerful Clusters With a good balance between Lean and Six Sigma events

The event is usually facilitated by a Six Sigma Master Black Belt or experienced Six Sigma Black Belt and involves a mixture of line management, technical and process level participation. With good preparation it can usually be carried out in three or four days and provides a project blue print which can keep a local Lean Six Sigma Deployment going for six months or more. The high level process is shown below where it can be seen that the process begins with a review of high level business strategy. It then involves the executive team identifying and prioritising the value or revenue streams within the organisation. This is done by looking at volumes, revenues and profit information together with market and strategic inputs. This activity is followed by the actual value stream mapping event (current state and future state), the output of which is a detailed list of projects and events.

About SigmaPro. SigmaPro was set up in December 2000 in the USA as a management consulting firm specialising in the integration of Six Sigma, Design for Six Sigma, and Lean Improvement to optimise Shareholder Value. SigmaPro was founded by Dr. Douglas Mader, one of the leading visionaries and technologists in the Six Sigma field and personally involved in the development of Six Sigma at Motorola during the 1980’s. Dr Mader later worked for SSRI, and as a lead consultant for the American Society for Quality helped establish the way Six Sigma is practiced today throughout the world.

Since then, SigmaPro has grown to become a truly global player with offices in many parts of the world. Our collaborative approach allows us to share valuable insights and experiences across the SigmaPro network, whilst the independence of each area ensures localised products and services can be provided to our clients.

This combination ensures references unmatched by our competitors. SigmaPro’s fundamental business objective is to help organisations maximize shareholder value through the successful deployment of Six Sigma, Design for Six Sigma (DfSS) and the Lean approach. We have created a comprehensive portfolio of products and services, designed to enable rapid deployment of organisation-wide improvement efforts that generate a return on investment for your organisation.

We understand that improvement comes from the people involved in the process, and our approach to training and consulting enables you to create sustainable improvements, rather than us “fixing it for you”. We are 100% committed to providing you with the support, tools and methods necessary to stay ahead of the competition and maximise the effectiveness of your operations. Quite simply, we put your needs first

Mike is a highly experienced MBB and has worked in both manufacturing and financial services industries. Mike gives Six Sigma Consulting including :- Six Sigma Yellow Belt and Six Sigma Green Belt with SigmaPro UK

Thanks to http://businessprocess.ideasm8.com/how-to-use-value-stream-mapping-to-select-lean-six-sigma-projects/

Six Sigma iPhone App Downloads

admin — Wed, 26 May 2010 09:56:11 +0000

Fellow green belt and black belts! I found a website (non-itunes.com believe it or not) that offers ASQ exam prep for black belts for $4.99.

This app contains a targeted curriculum of 150 questions written by certified experts addressing key topics for this important certification test from the American Society for Quality (ASQ).
Each question is paired a key takeaway designed to help the learner master the most important point of the question.

Thanks to http://www.androidzoom.com/android_applications/reference/six-sigma-black-belt-prep_harj.html

Genpact Recognized Among Top 100 Global Supply Chain Service Providers

admin — Tue, 25 May 2010 16:22:04 +0000

End-to-End Innovative and Smart Enterprise Processes (SEP(SM)) Approach to Optimizing Clients’ Supply Chains Cited As a Key Differentiator

NEW YORK, May 25, 2010 (BUSINESS WIRE) — Genpact Limited (G 15.52, -0.31, -1.96%), a global leader in business process and technology management, was included on the 2010 Supply & Demand Chain Executive (SDCE) 100 list of leading supply chain solution and service providers. Genpact joins a select group of providers named as leading supply and demand chain innovators who are helping their clients transform their supply chain operations and prepare for future economic recovery-driven growth.

Genpact has been helping to ensure supply chain excellence for its clients around the world for more than 10 years through its comprehensive and holistic methodology. Genpact’s clients — including global multi-billion dollar companies in industries such as aviation, security, insurance, energy, healthcare, logistics, and engineering — have realized increased cash flows, optimized working capital, improved customer service and faster time to market for their products.

“In today’s economy, companies can no longer afford a ‘quick-fix’ approach to mending broken processes that produce short-term gains,” noted Andrew K. Reese, editor of Supply & Demand Chain Executive. “Genpact’s focus on root causes and holistic, end-to-end approach to improving the supply chain based on Six Sigma and Lean, and its Smart Enterprise Processes (SEP(SM)) methodology for managing business processes, helps ensure ‘one-time’ fixes that improve the effectiveness as well as the efficiency of the supply chain. Based on the results Genpact has achieved with its clients, we are pleased to include them in this year’s Supply & Demand Chain Executive 100.”

Genpact boasts an experienced workforce of supply chain and procurement services professionals across the globe that collectively hold domain expertise in more than 10 vertical markets. These experts combine Lean and Six Sigma methodologies with strong process execution, analytics, reengineering, and both proprietary and third-party technologies to help client organizations significantly improve supply chain performance and effectiveness. Genpact’s supply chain services manage over $2 billion in inventory and forecasting for over 500,000 stock-keeping units (SKUs) across industries, more than $15 billion in spend implemented over 12,000 supplier contracts, and more than 2.5 million purchasing transactions and 8 million invoices.

“Many organizations have been struggling with inaccurate demand forecasts, huge inventory build-ups, high material acquisition and logistics costs and customer dissatisfaction. These supply chain inefficiencies have a significant effect on the organizations’ cash flow, and ultimately their competitiveness and profitability,” said Navanit Samaiyar, senior vice president, Procurement and Supply Chain Operations, Genpact and a thought leader in SDCEs 2010 ‘Provider Pros to Know’. “Genpact takes an enterprise-wide view of supply chain improvements rather than a narrow view of individual functions to bring in 2-5x higher business impact to our clients. We are honored to be recognized as a supply chain services innovator based on our commitment to our clients’ supply chain effectiveness,” he added.

About Genpact

Genpact is a global leader in business process and technology management, offering a broad portfolio of enterprise and industry-specific services. The company manages over 3,000 processes for more than 400 clients worldwide. Putting process in the forefront, Genpact couples its deep process knowledge and insights with focused IT capabilities, targeted analytics and pragmatic reengineering to deliver comprehensive solutions for clients. Lean and Six Sigma are an integral part of Genpact’s culture and Genpact views the management of business processes as a science. Genpact has developed Smart Enterprise Processes (SEP(SM)), a groundbreaking, rigorously scientific methodology for managing business processes, which focuses on optimizing process effectiveness in addition to efficiency to deliver superior business outcomes. Services are seamlessly delivered from a global network of centers to meet a client’s business objectives, cultural and language needs and cost reduction goals. Learn more at www.genpact.com.

Top Paying Jobs in Six Sigma

admin — Tue, 18 May 2010 09:51:07 +0000

I came across a job entitled Six Sigma. I had only seen this one other time when I was looking at government jobs on CPOL. It perked up my interest into exactly what is Six Sigma? What is Six Sigma’s history? My research found out it is a way for corporations to save huge amounts of money. General Electric is using Six Sigma effectively saving billions of dollars, as well, as many other corporations such as its inventor Motorola.

Six Sigma is also a career that pays very well. Top Six Sigma employees make well over $100,000k. Since I was looking at government jobs, I think they could use a multitude of Six Sigma experts to cut the waste from government spending.

In the 1920’s the word “sigma’ came about from mathematicians and engineers for a unit of measurement in product quality variation. In the mid 1980’s engineers at Motorola Inc used Six Sigma as an informal name for reducing defects in production processes.
In the late-1980’s following the success of the above initiative, Motorola extended the Six Sigma methods to its critical business processes, and significantly Six Sigma became a formalized in-house branded name for a performance improvement methodology.

Motorola was at the time a struggling company looking for a market share to Capulet it into huge profits. The advent of the Six Sigma concept allowed Motorola to save 17 billion dollars between the years 1986 through 2008. That’s a B as in billion.

Motorola did not go out and bring in a team of outside management and training consultants. No, what they did was nothing less than develop a new way of training staff and of manufacturing their products, a method which saw their profits rise and had such profound effects on the success of the company that everyone else wanted to know how they had managed it. The secret was Six Sigma.

Six Sigma is also a registered trade mark of Motorola, allowing it to profit every time someone sells their own Six Sigma training program. Motorola’s own University is one of the many places conducting classes in Six Sigma.

Six Sigma at many organizations simply means a measure of quality that strives for near perfection. Six Sigma is a disciplined, data-driven approach and methodology for eliminating defects (driving toward six standard deviations between the mean and the nearest specification limit) in any process — from manufacturing to transactional and from product to service.
D – Define opportunity

M – Measure performance

A – Analyze opportunity

I – Improve performance

C – Control performance, and optionally:

T – Transfer best practice (to spread the learning to other areas of the organization)

Six Sigma team leaders (Black Belts) work with their teams (team members will normally be people trained up to ‘Green Belt’ accreditation) to analyze and measure the performance of the identified critical processes. Measurement is typically focused on highly technical interpretations of percentage defects (by a which a ’sigma’ measurement is arrived at

Six Sigma training encourages individuals to stop what they are doing, examine how well they have done it, and then implement improvements to iron out defects. Most organizations focus only on the operational aspects of their business, seldom stopping to ask themselves, “What went wrong?” Six Sigma forces people to continually evaluate critical processes. Every day, companies like Microsoft and Pfizer trust us with their future goals, trust us today with yours!

How Does Six Sigma Work

Six Sigma has both management components and technical components. Using this dual approach allows for everyone to have a role in making the Six Sigma plan a success.

The management side focuses on using the management system to line up the right projects and match them with the right individuals. Management also focuses on getting the right goals and process metrics to ensure that projects are successfully completed and that these gains can be sustained over time.

The technical side focuses on enhancing process performance using process data, statistical thinking, and methods. This focused process improvement methodology has five key stages: Define, Measure, Analyze, Improve and Control. Define is to define process improvement goals that are consistent with customer demands and company strategy. Next measure the key aspects of the current processes that your company is using and collect relevant data about these processes and current results. Then analyze the data to verify cause and affect relationships, be sure to consider all possible factors involved. Then improve or optimize the process based upon data analysis using techniques like Design of Experiments or observational study. The last step is to control to ensure that any deviations are corrected before they result in defects. During this step you will also set up pilot runs to establish process capability and will continuously monitor the process.

All tools statistical or not are linked and sequenced in a unique way that makes 6 Sigma both easy and effective to use. The basic approach focuses on the identification of the key process drivers (variables that have the largest effect on output) and relies on software such as Minitab for statistical calculations.

A small list of some of the Fortune 500 companies using Six Sigma

3M
AB Dick
Adolph Coors
Advanced Micro Devices
Allied Signal
Alcoa
Aeropspace Corp
Abbotts Labs
Apple Computer
Bank of USA
Beatrice Foods
Bell Helicopter
Boeing
Bristol Myers Squibb
City of Dallas
Campbell Soup
Chevron
Citicorp
Clorox
Danon
Dow
Fidelity
Intel
Ford
General Dynmics
GE
HP
Honeywell
Kaiser Aluminium

Kraft General Foods

Lear Astronics
Lockheed martin
McDonnell Douglas
Microsoft
Motorola
NASA
Northrop Corp
Pentagon
Parkview Hospital
Rockwell Int
Rohm and Haas

Seagate

Sony
Star Quality
Texaco
Texas Instruments
TRW
US Army
US Air Force
United Technologies
UPS
Xerox

Six Sigma roles, according to the belt ratings and other terminology.

Yellow Belt

Green Belt

Black Belt

Master Black Belt

Executive Leadership

-Including the CEO and other top managements of the firm, these individuals work on the overall vision behind Six Sigma implementation, giving the resources and encouragement to the other ranks in improving the rankings and finding breakthroughs. - Masters guide black belts and green belts, acting as workplace coaches. They work to ensure constant use of Six Sigma methods.
Champion – Drawn from the upper management, Six Sigma “champions” work to integrate and implement the method throughout the organization. Champions act as mentors to individual black belts. - Devoting 100 percent of their time to Six Sigma, these individuals apply the method to specific projects for the corporation. While those over them identify projects to be worked on, the black belts are focused specifically on execution of the Six Sigma principles. - Six Sigma implementation becomes part of the job responsibilities, usually under the guidance of a black belt. - These people are trained in basic Six Sigma management techniques. They work with the black belts in basic applications of Six Sigma, and are closest of the implementers to the work itself.

Education

Six Sigma training can be accredited with online courses from some top universities.

Boston College, Villanova. Purdue, Bowling Green, Stanford, George Mason, North Carolina, Texas are a few offering online classes in Six Sigma.

What You’ll Study

The Beginning of Six Sigma

What is Six Sigma

The History of Six Sigma and the Prominent People in Six Sigma

DMAIC Methodology Overview

The Project Charter

Data Collection Plans

The Project Scope of a Team and Team Dynamics

Teams – Paradigm Shifts

Determining Customer Needs and Requirements

Quality Function Deployment and the House of Quality

Critical to Quality Tree and Kano Model

Process Mapping and SIPOC

Data Collection Plans Part I, II,III

Calculating the Baseline Sigma

Quincunx Process Analysis

Types of Data

Root Cause Analysis

Basic Data Analysis and Basic Process Analysis

The Big Picture

Root Cause Analysis and Hypothesis Testing

Introduction to Lean

Prominent Figures of Lean

Lean is Not Only for Manufacturing

Value Add and Waste

Waste Walks and Spaghetti Charts

Hoshin Planning

Project Management

Introduction to Project Management

Projects – Initiation

Projects – Planning

Projects – Execution

Projects – Controlling

Projects – Closing

Visualizing and Improving the Process

Value Stream Mapping for Manufacturing

Value Stream Mapping for Services, Part I,II,III

Kaizen Events – the 5S’s

Poka Yoke

Total Productive Maintenance

Foundations of Kaizen

Leadership

Calculating the Cost of Poor Quality

Project Identification and Prioritization

Change Management Leadership Skills

Organizational Structures for Deployment of Six Sigma

Competitive Intelligence and Industry Benchmarks

Transitioning Goals/Objectives into Actionable Projects

Overcoming Organizational Resistance

Using Financial Measures to Analyze Performance

Design for Six Sigma

Pilot Testing New Products/Services

Advanced FMEA

DFSS – Overview of DMADV and DMADOV

DMADV – Define Phase

DMADV – Measure Phase

DMADV – Analyze Phase

DMADV – Design Phase

DMADV – Verify Phase

Optimizing Process Efficiency

Applied Value Stream Mapping

Kaizen

Applied TRIZ

Advanced Identification of Capacity Constraints

The Basics of Theory of Constraints

Analyze

Force Field Analysis

Multivariate Control Charts

GAP Analysis

Statistical Normality Tests

Control Charting Continuous Data

Advanced Interpretation of Control Charts

Developing a Process Control Plan

Advanced Inferential Statistics

Hypothesis Testing for Proportions

Multiple Regression

Review of Other Advanced Distributions

Confidence Intervals and Point Interval Estimates

Mann-Whitney Test

Mood’s Median Test

First seen on http://sixsigmaz.com/wp-content/uploads/2009/08/six-sigma-black-belt.png

Six Sigma and Small Business – A Winning Combination

admin — Tue, 18 May 2010 09:26:46 +0000

Mention Six Sigma to me and what comes to mind almost immediately is a method to control big business to implement. But even smaller companies are not prone to costly errors in time and asset management, customer service and accounting errors? So what’s the problem?

The cost is the biggest obstacle in the decision to implement Six Sigma process into a small business entity. Unfortunately, most consultants try a one-size-fits-all mentality when it comes to the implementation and the associated costs.

Fortunately, there are opportunities for small businesses the benefits of six sigma process to participate and reap the same revenue benefits increased.

Small Scale Focus

Small and medium-sized enterprises must try either consultants or consulting firms with the knowledge and know-how to implement the process in a cost effective way for the smaller unit. Many small businesses are family owned, trained, and would benefit most from one or two people in the 6 Sigma process and then they keep their certification current level of training.

Part of their work load is found to implement the necessary changes during the Six Sigma process and will ensure that all employees and be used effectively.

Selective Auditing

Another possibility is avenue Six Sigma trained and certified consultants come in an annual or biannual basis set to target the weaker or less productive areas of the retail audit company. Obviously, the stronger and more productive operation in as much need of six-sigma system and therefore the consultant may, on the business areas in which revenue generation is missing or is not to focus existent.

The certified consultants can then explain the necessary changes to the business owners and employees in order to ensure an effective transition.

Every company, large or small, can be of great benefit and improve their stroke by adopting and implementing the Six Sigma process. The scope and breadth of the system can be individually designed or any business unit, space and should not be discarded because of the higher price of across-the-board implementation costs.

The beauty of the Six Sigma system is its adaptability and flexibility, and this transfer in its actual implementation in each company’s business model. The small or medium business operators must find a Six Sigma consulting firm with the vision and insight to this application employ persistent on a small scale.

first seen on http://www.newbusinesssite.info/2010/05/six-sigma-and-small-business-a-winning-combination.html

Understanding the Role of Communication in the Process of Six Sigma Certification

admin — Mon, 17 May 2010 16:28:52 +0000

Communication is the key when it comes to successful Six Sigma projects going. to make the level of success and the ability of Six Sigma, what needs depend largely on the commitment and support of all concerned. Make sure everyone is aware of what is happening and that all on board for the project is crucial. Change is scary for any company and especially for those who are more detached from the Six Sigma process to create change, that is. Akeep everyone knows what is happening and will continue their efforts for a better success with Six Sigma, the communication can not be ignored or neglected.

Six Sigma Certification teaches the importance of communication in the principles of change management. The goal of changemanagement is all about to board and let people understand what will happen. This way they can be considered to be greater acceptance of change, and roadblocks along theWay to Six Sigma projects. Without the ability to communicate and adequate support is available, Six Sigma fail quickly, before there is more chance of success. So one of the first and most important of all Six Sigma projects requires communication is possible at every level.

Six Sigma certification will tell you how to effectively manage communication and change management job, when they arrive Business Six Sigma projects. Under thetime to promote positive communication can have many negative reactions to the events that will take place and create an environment without removing the resistance or refusal. Thus, Six Sigma projects to be carried on, with the certainty that everyone is on board and the results are much better at the end. The reason you get better results from Six Sigma projects with the full support, is that after the project is complete, people do not support the conceptnot understand how to use continuous improvement or new projects that have been created, the process works.

The best way Six Sigma and ineffective in almost all situations in which communication is not offer full support and complicated. For a good majority of companies that have had success with Six Sigma projects, there was usually a communication error or gaining the support of every party has invested that caused the program to fail.

First seen http://businessmanagementprinciples.blognows.com/2010/05/15/six-sigma-certification-understand-the-role-of-communication-in-the-process-of/

Managing Six Sigma Teams

admin — Mon, 17 May 2010 16:25:14 +0000

Manage a team of Six Sigma is a great responsibility. can SechsSigma is a team process and requires cooperation on many Ebenen.Niemand a Six Sigma on their own administration. Nurwie it organization that benefits from Six Sigma, the organization that manages really ESDI Six Sigma. But management must ONLY be run by specially trained individuals.

Success in the management of Six Sigma team begins with the point of disorganization. to provide management teams dieRessourcen and authority to apply Six Sigma concepts ihrertäglichen activities. You must also ensure that the organisatorischenZiele with Six Sigma projects aligned and jedeStraßensperren Six Sigma deployment are removed.

The selection and training of Six Sigma is Teamleiterauch critical because they directly responsible for habenGeschäftsführer team of Six Sigma. A Six Sigma Black Belt is the team leader and the key agent of change in Six Sigma. Derroll Black Belt Six Sigma is the introduction to erleichternals part of the culture. They lead and manage Six Sigma Teams and sustain significant bottom line results. Black Belts are the perfect man, the already known in the best teams in the Cross funktionalenProzessverbesserung action, which has trained wurdenSix Sigma methodology. The Six Sigma Black Belt team management solltedemonstrieren, understand team dynamics, undTeammitglied assign roles and responsibilities.

Manage a team of Six Sigma it depends on two important aspects: leading and mentoring. Team leaders must be involved with a black Beltdirekt the project team. This is a könnenVerbesserungen crucial role as they cut into the company and implemented quickly and efficiently. Six Sigma involves Werkzeugeund practices that replace reactive habits with a dynamic response, proactive approach to management. As the team leader, the black belt must be prepared to accept the circumstances anpasseneinschließlich the need – and manage – Rückschläge.Dazu occasionally involves the processing of conflict and members of the group “problem” undMinimierung meetings out of control and interaction personal.

The black belt is also a mentor to someone on the team and werdenEntwicklung a mentoring process. They must ensure that angemesseneLeitlinien given for the new candidate of their training immediately. This will ensure that the corrections made and the projects reviewed werdenregelmäßig get completed on time. Six Sigmaschafft a true team environment and unterstütztBelt black can go a long way so that positive and produktiveTeamumgebung. During the project, the structure solltekontinuierlich Black Belt team and increase its efforts to better nutzenDie differences in knowledge and techniques of project team members Mitgliederund morality. However, the black Beltsollte in all circumstances as an opportunity to help and improve sucheninstruieren members of the team and dieOrganisation whole. This is what Six Sigma is all about

First seen on http://www.6sixma.com/managing-teams-and-six-sigma/

Why Meaningful Relevant Data is Critical to Six Sigma

admin — Mon, 17 May 2010 16:13:51 +0000

Before being introduced to Six Sigma, many managers consider it a mysterious approach to process efficiency that cannot be properly measured. Indeed, there are plenty of business management strategies that emerge and are successful for awhile based upon fad rather than delivering practical results. By contrast, this methodology is firmly grounded in data and statistical analysis.

The foundation of this approach is built upon the collection and evaluation of numbers. Every step of the deployment, from the identification of the initiative’s objective to long term performance tracking, relies upon numbers. Below, I’ll explain how data is used throughout a Six Sigma assignment.

The Core Of Process Improvement

The purpose of the methodology is to improve business processes. In order to do that, the project team must identify variances and study their individual and collective impacts on waste. The only reliable way to make those improvements is by collecting data and measuring it against existing baselines.

The dedication of Six Sigma initiatives to a quantitative approach not only helps to ensure improvements, but it also sets the stage for ongoing measurement. Every process has a tendency to accrue waste over time. By establishing baselines and measuring future results by them, that waste can be kept at bay. Ultimately, that improves product cycle times, deliverability, and revenue while lowering operational expenses.

Identifying And Eliminating Waste

A Six Sigma project begins with identifying opportunities for an organization to limit waste and variances that exist in a given process. Part of that procedure includes isolating inputs and outputs. Those variables are isolated in order that the project team can collect metrics that might lead to future improvements.

During the assignment, the metrics collected from the inputs and outputs are compared to predefined benchmarks. At this point, the project team has two responsibilities. First, they must identify the presence of defects and errors within the process. Second, they must review the gathered metrics and determine each variable’s impact on Critical To Quality (CTQ) factors.

Note how the metrics are vital to the success of the entire initiative. Without them, the organization’s current performance and the errors and defects which may exist within cannot be properly analyzed.

Designing Solutions

The next phase of a Six Sigma initiative relies heavily on the data collected from the previous steps. The project team will develop solutions which, when implemented, will hopefully lead to process related improvements. These solutions are not designed in a vacuum; they rely upon the gathered metrics.

The project team will review each of the key variables to determine the effects of making changes to them. While there is some experimentation involved, designing solutions which can eliminate waste and variances depends upon rigorous statistical analysis.

Measuring Results

Once the Six Sigma team’s solutions have been implemented, they must be monitored in order to track their success. Data will be collected from each of the inputs and outputs identified earlier in the project to determine whether the solutions are having the intended effect.

It is possible that the project team’s changes will lead to improvements in the process, yet not completely eliminate errors, defects, and waste. This is the reason data is so important to success. The process metrics must be reviewed and analyzed until waste has been eliminated. Then, once that has been accomplished, they must be perpetually monitored to ensure waste does not creep in again.

Those who are familiar with the Six Sigma methodology will not be surprised to hear that data is essential to the success of a project. It both guides the initiative and provides a platform on which to objectively measure results.

First seen on http://pete.lawnygolf.com/2010/05/15/why-data-is-critical-to-six-sigma/

Get Your Finance Team in Early on Your Six Sigma Project

admin — Mon, 17 May 2010 16:10:52 +0000

By involving the finance department from the early stages of the project, you can have appropriate data at all stages to ensure that the project is on the right track.

Involvement of Finance
Throughout the project phases, the finance department works with the various teams to identify the benefits of the project. Teams benefit from the additional input by the finance expert’s participation. They agree upon the calculation of benefits upon implementation of the project. Before transferring the ownership of the solution to the process owner, a second review of the expected benefits is done using the gathered data.

The Belts do not have to take care of this function, which would be done by the finance personnel. After the project is executed, a final review is done to verify if the expected benefits are being achieved. If there is a deviation, it is discussed with the process owner, the reason for its failure identified, and areas of improvement marked. 12 months after the implementation, the company finds and reports the benefits. After that, a baseline is calculated using the improved key performance indicator (KPI).

Only those benefits beyond that baseline are reported. If there seems to be any improvements needed, a new Six Sigma project is generated. Some benefits are also achieved during the DMAIC process. All benefits, as well as key performance indicators, are reported every month in a prescribed format.

The KPIs that need to be improved are then taken care of. A comparison of both with the target set is done to find any improvements.

Here are some of the advantages of full involvement of the finance department:

Reliability

The finance department will be calculating the benefits honestly. There will be no misrepresentation of the data for the sake of records. Rather, they will report correctly, as savings and cost reductions are a matter of importance for them.

With the finance department involved in finance activities, the responsible team would be free to concentrate on improvements expected of them.

Standardization

Standardizing the calculation of benefits is constructive. By have consistency in the data generated for comparison, the results can be reliable and meaningful.

Incorrect Benefits
A process owner calculating the benefits may not be considering the effect that the process has outside the project. This effect has to be calculated for the overall success and profit of the organization.
Audits
Like other financial activities, the project results and benefits are also available to internal audits and other reviews of benefits.

Budgets
A successful process improvement should be included in the next financial budget. This will ensure that the improved KPIs become a permanent part of the system.

Proactive Finance
As a member of the finance department will be involved in the project, they will be in a better position to understand the business, and the factors and results influenced by the project.

The department will have a proactive approach to overall business improvement.

Accountability
The finance department is responsible for calculating and reporting the benefits of the process changes at various departments in the organization. By using their financial knowledge, they are in a position to ensure that the Six Sigma project has accomplished more than the previous year.

Six Sigma projects can be successful if implementation is linked with quantifiable financial results. By involving the finance department fully from the beginning, companies can ensure that project becomes successful financially.

First seen on http://finance.businessvn.net/2010/05/involving-finance-in-six-sigma-do-it-early-and-fully/

Six Sigma Costs and Savings

admin — Sun, 11 Apr 2010 02:09:25 +0000

Investing in Six Sigma training is good advice it seems.

To earn money, you have to spend some. The same holds true for Six Sigma projects. Only when you spend on Six Sigma online training, classroom training, organizational infrastructure and the cultural evolution, will you find the returns and savings due to reduction in defects. The financial gains are the inspiration to spend some good amounts in the various phases of the project.
Will you be able to sustain the Six Sigma initiative by hiring a Black Belt for your project? Your costs of training will reduce and the sales will increase in a specific area for a short period by hiring these Black Belts.
But when they are promoted or decide to move on for better prospects, will you be able to manage the Six Sigma project? Probably not.
Adopt the Work Culture
Unless you have properly trained your staff, the initiative and the savings of hiring a trained person will all be wasted. The work culture of Six Sigma should be adopted throughout the organization to really make an impact on the work processes and methods.
There can be no benchmarks on costs or savings. Neither can you decide the financial benefit you expect to receive. The figures of companies like Motorola, GE, Honeywell and Ford, who are the biggest, the most mature in their deployment and have shown good results from their Six Sigma initiatives, suggest a few things.
The savings as a percentage of revenue vary from 1.2% to 4.5%.
Break Even In the First Year
You cannot expect more than to break even in the first year of implementation; Six Sigma is not a “get rich quick” methodology.
A 1.2 to 4.5% of revenue is significant enough to translate from between $360,000 and $1,350,000 in the bottom line.
Monitor Costs
Companies should check the costs involved, the same way they view market expansion and revenue generation by enterprise cost reductions. The key cost areas that are of concern are the business configuration, the organizational structure and design, process complexity, the external expenses and the benefits.
Cost reduction allows the opportunity to examine all the business areas and identify savings.
Most companies tend to ignore the large and small costs incurred by the business, other than on sales. The savings on the purchase of raw material and the business trips add up to make larger amounts. This could be utilized on other promotional things.
The concern should not be only about getting a greater unit price with the buyer. It should be about giving value to the customer and earning better sustainable profits from it.
Even the purchase of raw material should be considered to ensure quality and timely availability. Savings by way of readiness and timely supply to the cost is beneficial.
Reduce Cycle Time and Increase Productivity
Six Sigma helps reduce the cycle time of production process, process steps and per-person hours. This helps increase the productivity of both the employee and the process. The cost on removal of defects is high. It helps save by eliminating non-value added activities.
The best saving is by way of improvement in quality given to the customers by reduction in defects. Productivity and efficiency is improved with the help of support activities and automation in new areas. This helps strengthen the processes and earn better revenues.
You have to decide if it is worth investing in Six Sigma. The study of the costs and savings involved for you company has to be determined by your own study and analysis of the scenario in your organization.

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