Posts Tagged ‘general electric’

Selecting Six Sigma Projects

Thursday, August 6th, 2009

Sometimes just determining which projects to undertake isn’t enough.

Six Sigma is project-intensive. Large firms, such as General Electric, report completing as many as 7,000 Six Sigma projects in a single year. Even much smaller companies can complete several hundred projects per year. But this should come as no surprise, as projects are the means by which Six Sigma converts knowledge into bottom-line results.

However, not all Six Sigma projects produce bottom-line benefits; many produce only local improvements. In my June column I described how to use the theory of constraints (TOC) to decide where in the process to conduct Six Sigma projects. But we need to go even further. In addition to telling us where to conduct Six Sigma projects, knowing the process constraints also helps us determine what the focus of the project should be.

Six Sigma projects address three different areas of potential improvement: quality, cost and schedule. Critical characteristics in the product, process or service are identified using CTx notation: Critical-to-quality characteristics are designated CTQ; critical-to-cost, CTC; and critical-to-schedule, CTS. This classification scheme, combined with the TOC, can help focus Six Sigma projects by defining project deliverables in terms of their impact on one or more CTx characteristics.

Figure 1: A Simple Process with a Constraint

Consider the simple process in Figure 1. The process is producing a product for which there is a market demand of 20 units per week. However, the best this process can deliver is seven units per week because that’s the best step C can do.

Applying the TOC strategy described in another post, we know that Six Sigma projects that affect step C should be given priority, those affecting steps D and E second priority, and those affecting A and B third priority. This tells us where to focus our efforts. The CTx information can help us determine what to focus on.

Assume that you have three Six Sigma candidate projects all focusing on process step C, the constraint. The area addressed is correct, but which project should you pursue first? Assume that one project will improve quality, another cost, and another schedule. Does this new information help? Definitely! Table 1 shows how this information can be used.

Table 1: Throughput Priority of CTx Projects That Affect the Constraint

Projects in the same priority group are ranked according to their impact on throughput. The same thought process can be applied to process steps before and after the constraint. The results are shown in Table 2. (Note that Table 2 assumes that projects before the constraint don’t result in problems at the constraint.) Remember, impact should be measured in terms of throughput.

Knowing the project’s throughput priority will help you make better project selections among project candidates. Of course, the throughput priority is just one input into the project selection process; other factors–for example, integration with other projects, a regulatory requirement or a better payoff in the long-term–may lead to a different decision.

Table 2: Project Throughput Priority vs. Project Focus

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Six Sigma mystique takes beating in downturn – Really?

Wednesday, May 13th, 2009

Business Feed Article | Business | guardian.co.uk.

James B. Kelleher believes that Six Sigma is to blame for the recent drops in profits at companies like General Electric, Motorola and Caterpillar. He quotes John Bogle, author of the book “Enough”,

“With Six Sigma, you’re counting just about everything that can be counted. And my problem is that process triumphs over judgment.”

Hmmm. I’ve consulted with a lot of companies and written a book some consider to be the standard reference for Six Sigma, and I don’t remember ever advising my clients or readers to count just about everything that can be counted. Quite the contrary, I advise them to focus on the very few critical to quality metrics that drive key process outcomes. In fact, I normally find that companies that aren’t using Six Sigma are guilty of counting and tracking too many metrics. Without the guidelines for identifying what’s important and what’s not, the leaders of the non-Six Sigma companies drown in data and metrics, unable to separate the vital few from the trivial many. They cut costs blindly and watch value and customers disappear.

The article goes on to quote another business school professor, James Schrager, a professor at the Booth Graduate School of Business at the University of Chicago

“Six Sigma, with its focus on metrics and certainty, can lure companies into believing they have better visibility than they really do, Schrager and others argue. This leaves companies vulnerable to getting blindsided by events.”

Yikes! Now Six Sigma not only has people measuring everything they see, it is promising certainty! Again, I’ve not seen this in any of my client companies and I’ve not read this from any reputable authority on Six Sigma. Frankly, I don’t know where these perceptions are coming from. Six Sigma simply asks business leaders to identify their goals and the processes that need to perform well to achieve the goals, then show them how to make these processes perform well. It uses facts and data to help people better understand what is happening, but it does not advocate mindlessly replacing judgment with data analysis and it most definitely does not promise philosophical certitude.

If one looks deeper it is possible to discern the true motive of writers like Kelleher, namely a hatred of Six Sigma. “The name [Six Sigma]” writes Kelleher, “is a statistical term, meaningless to lay ears and yet vaguely sinister, perhaps conjuring thoughts of a certain medical procedure involving the lower colon and a semi-rigid probe. The association…is not inapt.”

Six Sigma had nothing to do with the current economic downturn. The assertion is blatantly absurd. But companies faced with declining sales can and should look to Six Sigma to help them weather this storm. The Six Sigma approach provides a superb set of tools for identifying waste and inefficiency, targets for the inescapable cost-cutting that is necessary for economic survival. If leaders listen to the Six Sigma-hating wags they are likely to overlook the most important tool they have for making it through these difficult times.

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Introduction to Six Sigma
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What is Six Sigma?

By Thomas Pyzdek, Author of The Six Sigma Handbook

For Motorola, the originator of Six Sigma, the answer to the question "Why Six Sigma?" was simple: survival. Motorola came to Six Sigma because it was being consistently beaten in the competitive marketplace by foreign firms that were able to produce higher quality products at a lower cost. When a Japanese firm took over a Motorola factory that manufactured Quasar television sets in the United States in the 1970s, they promptly set about making drastic changes in the way the factory operated. Under Japanese management, the factory was soon producing TV sets with 1/20th the number of defects they had produced under Motorola management. They did this using the same workforce, technology, and designs, making it clear that the problem was Motorola's management. Eventually, even Motorola's own executives had to admit "our quality stinks." Read More...

 
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