Project Scoping
How Do You Find Six Sigma
Projects ?
April 12, 2002
Six Sigma Project Sources
Strategic Plan Improved
Customer
Satisfaction &
CTS Inputs Shareholder
Projects
Value
Performance
Metrics $
Process Quality Increased Sales
COPQ Focus
Increased
Problem Focus Margins
Product Focus Proportionally
Sweet to Low Project Cost Fewer Capital
Assets
Hanging Fruit Savings Focus
Project Filter
Problem focuses on a process
Complete in 3-4 months/$250K min
Confidence that data exists and can be
addressed in 3-4 mo cycle time
Biased toward cost $250K hard dollar
benefits
No negative impact on Customer
Within our sphere of Control
70% defect reduction
Project Prioritization
Cost Benefit Value
Leveragability
Balance projects with resources
Supports future improvement / enables
infrastructure for future projects
Ease / Speed of improvement
Key Characteristics of a
Good Six Sigma Project
Yes
Repeatable Process/Event
Identifiable Defect
Can be expressed as a Math Problem (aim to
reduce variability and/or shift the mean)
Key data readily available or can be collected
quickly
Focused problemcan be defined in bite size
chunks which deliver $250 M
Doesnt rely on capital to fix the problem
Macro Problem Statement
Complete but SUCCINCT description of the problem
Quantified with a metric that includes units
Identifies gap in performance
States current state (baseline)
Best in class
Contains no solutions or causes
Does not include financial measures
Includes time period measured
Key Questions
What are the largest customer complaints?
What processes are currently causing the
largest number of defects?
How is my product or service compared to
the competition?
What are the constraints that limit
maximizing the capability of the business?
What areas are causing the most pain?
Manufacturing Example
Problem Statement
Assembly defects on line 1 on all products have been averaging 121,000
PPM for the last 4 months. Best in class benchmark is 20,000 PPM
Objective
Reduce PPM on Line 1 for all products from an average of 121,000
PPM to 36,000 PPM, a reductions of 70%, by July 1, 2000
Metric
Defects as measured in PPM on line 1 for all products
Projected Benefits
Material Savings: Reducing defects from 121,000 PPM to 36,000 PPM
will save $306,000 annually (121,000 - 36,000 = 85,000 @
$3.60/defect)
Overtime Savings: Reducing defects will reduce overtime by 10 hrs/wk
resulting in an $8,160 savings annually
(10 hrs/wk x $17/hr x 48 wks)
Total Savings: $314,160 (Material Savings + Overtime Savings)
Business Process Example
Problem Statement
Invoicing errors on region 1 on all products have been averaging
121,000 PPM for the last 4 months. Best in class benchmark is
20,000 PPM
Objective
Reduce PPM on Region 1 for all products from an average of 121,000
PPM to 36,000 PPM, a reductions of 70%, by July 1, 2000
Metric
Errors (defects) as measured in PPM on Region 1 for all products
Projected Benefits
Rework Savings: Reducing defects from 121,000 PPM to 36,000 PPM
will save $306,000 annually (121,000 - 36,000 = 85,000 @
$3.60/defect)
Overtime Savings: Reducing defects will reduce overtime by 10 hrs/wk
resulting in an $8,160 savings annually
(10 hrs/wk x $17/hr x 48 wks)
Total Savings: $314,160 (Rework Savings + Overtime Savings)
