August 15, 2015

Six Sigma Project Overview

Project stakeholder and stockholders Important factors for Organizational performance Unsuccessful Projects Project management is concerned with doing things (the project)right. Project benefit = Project revenue –Project cost Project Accounting

Who are the stakeholder and stockholders in Six Sigma Project?

Stakeholder : One who has a share or an interest, in an enterprise

It is very important for a Six Sigma Black Belt to work across multiple processes to identify the process stakeholders, understand their requirements and process interdependencies, and improve the individual process configurations and settings to improve the overall outcome for all stakeholders.

Stockholders:

Provide money as investment, their commitment depend on short term/long term return Customers: Provide money as revenue, their commitment depend on price, quality, features, availability and service

Important factors for Organizational performance for stakeholders
•Short term and long term emphasis
•Profit Profit = revenue –cost Revenue = sales: it depends on values, features, price, quality etc Cost: it depends on how ‘lean’a company is
•Cycle time Cycle time for product development, cycle time from order received to goods delivered
•Marketplace response The ability to respond quickly to competitor quality, technology, product designs, safety features Or field service
•Resource utilization

Important success factors in Six Sigma projects

•Select and work on the most important problems and projects to the business and Customer

•Assure those projects impact customer satisfaction and financial performance

•Allocate the time to get the work done

•Have your best people work on them

•Provide those individuals with all the training, tools, and resources they need to make the performance breakthrough

•Provide Management direction, support and routine review of performance

•Require a well thought out, objective and data driven solution

•Verify the dollar savings of your efforts

•Sustain the benefits of the solution over time

Why Unsuccessful Projects

No clear Management mandate

No roadmap for the project…

not sure where we are going

No dedicated resources

No Management and performance review

No ability to measure performance and examine effectiveness…not sure if we accomplished anything

No financial

ROI during project definition and measurement at completion

No clear answer as to “why are we doing this project?”

Project management is concerned with doing things (the project)right
•Maximizing business benefits is concerned with doing the right thing (select the right project)
Projects may be selected from a broad range of areas:
•Improved process capabilities
•Customer complaints
•Reduction in internal defects
•Cost reduction opportunities
•Supplier related improvements
•Lean manufacturing principles
•Improved work flows
•Administrative/service improvements
•Cycle time reduction
•Market share growth
The projects should have specific targets, such as
•Reduced scrap costs in finishing department by 20% by the end ofthis year
•Improve market share for the hand-drill by 10% by the end of next year

Project benefit = Project revenue –Project cost
Revenue usually include in the budget:
•Income from additional sales from improved product cost, quality, features, availability to the customer
•Reduced losses for scrap, customer returns, warranty claims, cost of poor quality, low throughput, poor time to market

Cost usually included in the budget
•Manpower and labor costs
•Materials
•Equipment costs, rentals, leases etc
•Subcontracted work or fees
•Overhead or consulting charges
•Reserve or contigency funds

Six Sigma Project Accounting
Budget: The approved written plan of the total costs and cash inflows, expressed in dollar amount, for the project. The plan includes timing of the revenue and costs, and benefit-cost analysis
Forecast: The predicted total revenues and costs, adjusting the budget to include actual information at the point in the completion of the project.
Actual: Revenues and costs that have occurred, and for which the amounts are known instead of estimated.
Variance: The difference between the budget and actual revenues and costs. A positive variance denotes a favorable deviation anda negative variance denotes a unfavorable deviation. A favorable cost variance may be due to good execution, or may be the result of incomplete work or material shortage.