Six Sigma: How to Use Resources Wisely
To choose the right projects for a Six Sigma team, senior leadership needs to determine which goals are most important. Additionally, senior leadership has the ability to allocate appropriate resources and designate responsibilities. That being said, the right projects still need to be selected.
Projects can be focused on customer value, which means that the overall goal is to create an increase in the customers' awareness of the increase in value that the product or service provides. Customer demands can also generate Six Sigma projects as the organization attempts to remain responsive to customer needs. Customer value can be determined through direct customer contact in the form of focus groups, interviews, and surveys.
Six Sigma projects can also be focused on shareholder value, which are usually based on increasing revenue and increasing efficiency. Revenues can be increased by raising prices for a superior product or increasing market share. Efficiency is improved by eliminating waste, reducing waiting times, and reducing poor quality.
Other projects can focus on other goals, such as improving employee relations and effectiveness, meeting regulatory compliance, and addressing environmental concerns.
Since projects take time, money, and other resources to function properly, not every possible project can start, at least immediately. In selecting projects, those with a high probability for success and are highly important to the organization as a whole, should receive top priority.
One method for analyzing potential projects is to conduct a cost-benefit analysis. This involves quantifying cost savings (with the help of the accounting or finance department) and making viable predictions of the benefits expected.
Another method is to use a highly quantifiable system for analyzing potential benefits. While some of the evaluation is subjective, this method tries to inject objectivity by assigning scores to project scope and potential benefits and then assigning weights to those scores.
Pareto analysis is an additional method of selecting projects. It looks for the few processes that make up a small portion of the entire organization but cause the greatest disruptions and problems. In theory, choosing projects in this way will create a larger impact.
However projects are selected, it's important that management schedules them in such a way that individual resources are only allocated to one project at a time to avoid multitasking and a drain on resources. This doesn't mean that projects can't be scheduled at the same time, but care is given to ensure that they pull from different resources.
While higher priority projects are initially chosen to start first, with secondary priority projects following, this is continually evaluated as new data becomes available so that those projects with the potentially largest impact always take priority over others.
Once projects are chosen, management's involvement doesn't end. In fact, it is management's responsibility to continue its support to keep the project on track, to remove roadblocks, to monitor progress, and to evaluate the results to help implement the right kind of change.
Roadblocks that work against change often come from within the organization itself. Management structures and organizational rules, by their very nature, often paralyze any kind of change efforts. Similarly, organizations that focus heavily on written rules and procedures may find it difficult to maneuver past them to make any kind of improvements. Union work rules also can get in the way of allowing changes in workforce assignments when change for the better may require it. Furthermore, organizations that require approvals from layers of individuals and committees often slow down the change process, and the valuable time that the organization needs to move forward is lost.
Roadblocks to change exist outside the organization as well. Government regulations must be complied with and are often difficult to understand. Ethical and legal considerations may also need external review and support as well. These seemingly difficult roadblocks can often prompt an organization to be fearful to adopt change.
Personal roadblocks, however, are often the strongest. These are when individuals in the organization resist change. Resistance to change is a natural reaction for self-preservation. Change threatens what is known and comfortable.
Effective management is needed to help work through these roadblocks. However, there are plenty of ineffective management strategies to avoid. One is to command people to act in a certain way. Not only is that disempowering and demoralizing, but people will still act as they decide. Another ineffective management technique is to change rules on a whim. This prevents people from understanding a framework to work within. Conversely, allowing projects to break current rules also develops contempt for the project and devalues a rule system as a whole. Finally, removing resources from one area to fund a project, rather than to plan ahead for appropriate funding, can also create animosity.
Instead, management can employ effective techniques to help make improvements. First, and probably most important, is creating a culture that removes roadblocks. This doesn't happen overnight but it is the result of careful and deliberate leadership. A culture that values change will be most responsive and flexible. Mentors can also help project managers navigate the organization as they help remove roadblocks. Using and enlisting informal leaders for support also helps. These people may not have official positions of authority, but their opinions matter to the organization or to management. Finally, effective leaders also know how to think creatively to bypass cumbersome and unnecessary steps and procedures if necessary.
An important role of management during a Six Sigma project is to facilitate inter-departmental collaboration. Most projects require cooperation among several departments to ensure success; therefore, employees from these departments will most likely serve on the team. Because of this, these employees may have several supervisors, and so a clear communication and a cooperative environment are necessary to reduce conflicts. Additionally, it must be clear that the communication plan is for project status updates. This tone and planning must be set by management.
What separates Six Sigma projects from most other change projects is the emphasis on data and data analysis. These data are what can be shown as clear results of a Six Sigma project and helps determine a project's success, budget, return on investment, goal setting, performance appraisals, and responses to skeptics.
Several types of results are tracked. Financial results must be agreed upon by both members and leaders of the Six Sigma team and the accounting or finance department representatives. Additionally, members of the project team and the team as a whole need performance evaluations. Individuals are assessed on tangible qualities, such as service, turnover, quality, productivity, and attendance, as well as intangible qualities, such as attitude and customer feedback. The team is evaluated on projects completed, improvements in the workplace, financial savings, and more. Positive employee and team contributions should also be recognized publically to communicate appreciation and the company's values to the organization as a whole.
It is beneficial to the company to record results and to replicate changes where necessary. One company may see similar situations to the one just improved so that with a little customization can be replicated. This kind of replication can apply benefits of the Six Sigma program at minimal cost.
Alternatively, the "Define, Measure, Analyze, Design, Verify," or DMADV, model is used instead of the DMAIC model in certain specific instances. When a project is started to implement a completely redesigned product, or when a project has a design-intensive element to it, the DMADV model is used instead.
Formal project management methodologies such as these serve many purposes. They provide the framework for getting from the conceptual stage to implementation, and they very specifically outline the steps needed to continue on to the next phase of the project. Black Belt leaders using these methodologies will know when it is time to deem a certain portion of the project complete and they will understand the criteria used to determine when a task can be considered complete.
Attributes of an Effective Project
In very simple terms, a project helps companies get from point A to point B. Very careful planning is essential for the success of a project and, by following proper methodologies, the company's internal processes or projects will be significantly changed. Projects help turn plans into action. The attributes of an effective project include:
- Projects must be legitimate. Credibility is important in all stages of a project, but especially in the beginning, planning stages. If a project lacks legitimacy, or the official support of management and the Board of Directors, the project will never come to fruition. A legitimate budget will easily secure funding, staff, and other resources from senior management. These are essential elements to a successful project. Also, in a Six Sigma project, data is especially important, in fact, it is vital. Securing data, often confidential data, from internal company databases is made much easier if the project is legitimate and has the support of the company's leadership.
- A formal project helps to reduce the culture of blame in a company. The goal of the project is to improve a service or product and it provides the framework for a large group of people to work together in unison. It removes the tendency for small groups of people to bicker and complain about the current state of the process or product.
- A project will greatly increase the likelihood that all people involved in the project will turn their conclusions into action at the end of the project. Each project member will feel a sense of ownership and pride that they have helped to recreate a process and they will feel empowered to enact that change.
- Projects help to maintain an orderly transformation, one step at a time. When a company undergoes radical changes, and indeed, Six Sigma projects usually involve very significant changes to a company's culture, the change must be done in a carefully planned order.
- Project management will help to reduce the number of problems that radical change can sometimes bring to companies. The Black Belts in charge of the team will know the warning signs when problems are arising and they will need to act quickly to keep the project's goals and initiatives on track. An informal project that lacks management will not have the ability to overcome problems that arise.
- The objectives of each of the teams working on the project must be in concert with one another, not conflicting. One team cannot be working on revenue growth, for example, while another is working on ways to trim the company's focus to a narrow niche of customers. These are conflicting initiatives.
- Each project's team should be focused on a manageable goal. The goal should be small enough to be achievable but big enough to make a positive impact on the company's success.
- Every project should study root causes. A root cause is the underlying reason for something to occur. For example, if a service company's call center has complaints from customers about hold time, the symptoms of these problems may be an outdated phone system or lack of staff. But, on careful examination of the existing problem, it is discovered that the staff is not properly trained to address customer issues in a timely manner. So the root cause of the hold times has little or nothing to do with staff or phone systems, the problem is training.
- All of the goals in the project (which are called deliverables) should be clearly defined. It is not enough to set a deliverable such as "decrease wait time." The deliverable must be "train staff on the use of our databases so they can resolve problems faster and more efficiently."
The DMAIC Model
The DMAIC model is the framework for most Six Sigma projects, and it incorporates all of the attributes listed above into five distinct phases:
What needs to be improved? At this phase of the project, the teams are setting the goals of the project and defining the exact change that is required. At this stage, the entire project must obtain support from senior management in order to be legitimate.
In this phase, the teams will take a snapshot of the existing processes or product using data analysis. The current systems will be measured using a variety of metrics. All of the data captured will serve as a baseline with which later data will be compared.
During the project's implementation, when change is being enacted, data is collected to monitor the process. This data is analyzed to determine what exactly needs to be done to improve the existing process.
Once dramatic changes occur, new systems must be in place. New budgets must be created or new departments must be added. This is how the team controls the business environment in order to maintain the changes made. One important element of this phase is the use of advanced statistical tools to monitor the progress of the changes.
The DMADV Model
The DMADV model uses the first three elements of the DMAIC model, described above. All Six Sigma projects involve the following three phases: Define, Measure, and Analyze. But, in projects that have a strong design element, the last two phases must contain a different focus. They are the Design and Verify phases.
Here is where the new products are designed which will meet, or exceed, the customers' expectations. Small models of the new product are designed as prototypes and systems are put in place to test and record all results. This phase is about building, testing, and redesigning until the end results are realized.
Once the new design is fully implemented, the success of the new product must be verified through customer focus groups, customer surveys, and other inputs from both the community and the company's customer base.
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