© 2001, 2003 six sigma academy executive workshop project pathways workshops

© 2001, 2003 Six Sigma Academy

Executive WorkshopProject Pathways Workshops

Pg 2© 2001, 2003 Six Sigma Academy

Project Pathways Workshops

• The intent of these workshops is to:

- Facilitate the identification of Project Clusters and projects to fill the pipeline for potential Black Belt projects

- Begin at the Executive level of the organization and align these projects to the balanced scorecard/strategic goals of the organization

- Take the results of the workshops at the Executive level and use them as the foundation for the same workshops at the next level in the organization, and so on until actionable Black Belt projects are identified

- Ensure that we have not missed an opportunity to identify a project that can benefit both internal and external customers


Five Project Pathways

1. Balanced Scorecard/Strategic goals Flow Down

2. Operational assessment

3. Financial analysis

4. Performance to budget

5. Organically bubble up ideas


Pathway #1 Balanced Scorecard/Strategic Goal Flow Down

• Beginning with the Executive Strategic goals this workshop identifies those factors that, based on data, drive these goals

• We then take each of these factors and determine those factors that impact and then flows down to each level in the organization. This process is similar to a series of cascading y = f(x…) equations as shown below


Pathway #1Alignment Process

1.Strategic Goals

2.Determine Project Clusters (Key drivers of Goals)

3.Define Y=f(x) relationships

4.Cascade relationship to a project level

5.Conduct Six Sigma projects

6.Realize project results

7.Roll-up process metrics to Management Dashboards

8.Manage Business based on Dashboards


Deployment And The Data Stream

Project Champion/Leaders Workshop

Executive Summit

Black Belt Training

Strategic Alignment

Project Clusters

Project Charters

Completed Projects

Amount of data required to complete


1. Strategic Goals

• Financial targets

- Rev, OI, NI, FCF, DEPS

• People development

- PMP, TRP

• Compliance

- cGMP, SOX,

• Growth

- Pipeline (filings and launches), Customer service

• Process improvements

- Safety, Six Sigma, Lean, SIOP, Yields


• Project Clusters are large-scale issues within the organization that have:

- Levels of complexity which allow the issue to be broken into smaller pieces

- A measurable financial impact

- Potential for long-term customer and company benefit

- Metrics which can roll up into dashboard-level measures of process performance

2. Determine Project Clusters


3. Define Y=f(x) Relationships

• Identify the key drivers of obtaining desired performance within the Project Cluster

• Depict as Y=f(x)

Y=f(x1, x2, x3 … xn)

Measurable Output

Key Performance Drivers


4. Cascade RelationshipsProject Example

Prod

uctio

n

Cyc

le T

ime

Prod

uctio

n

Fore

cast

Acc

urac

y

Dem

and

Fore

cast

Acc

urac

y

Does “Inventory Reduction” align?• Revenue and OI Growth – Yes

(reduce wastage)• Cost Saving – Yes (reduce holding

cost and external warehouse space requirements)

• Customer Service – Yes (increased responsiveness)

Y = f(x, x, x,)

Inventory

Value

Black Belt Project 1

RM

Pur

chas

ed

for P

oten

tial

Opp

ortu

nitie

s

Oth

ers

RM

Con

sum

ptio

n

Plan

ning

Y = f(x, x, x,)RM waiting for use

4 days =8%

17 days =40%

43 days =25%

17 days =15%

Y = f( x, x, x, x)Production Cycle Time 23 days

=21%

FP T

estin

g

RM

Tes

t

Man

ufac

turin

g

RM

Wai

ting

for U

se

14 days =12%

24 days =21%

113 days =75%

22 days =52%

43 days =38%

Data suggests:• Black Belt project improvements will

produce benefits that represent a portion of the overall opportunity

• Project benefits will be approximated as part of the initial Project Charter and validated with greater specificity as project progresses

2.1 Turns

Black Belt Project 2


Pathway #1Working Session

Instructions:

1. Break-out into designated teams

2. Select a team leader and person to report out the results

3. Beginning with your Goals work with your team leader to fill out the y = f(x) template

4. List potential data sources in your organizations, list functional champion(s), and key personnel

5. The teams will have 60 minutes for the exercise

6. Prepare a 10 minute summary to report out to the entire group

60 Minutes


Y=f(x)

Y = f(x1, x2, x3, x4, x5)

Y = f(x1, x2, x3, x4, x5)

Y = f(x1, x2, x3)

Y = __________________

x1 = x2 = x3 = x4 = x5 =

Y = ___________________

x1 = x2 =

x3 =

x4 =

x5 =

Y = ___________________

x1 = x2 = x3 =

% %

100% $

$ $

% $

% $

% $

%

%

%

100% $

$$

$

% %

%

100% $

$ $

$


Y=f(x) – Details

Potential Data Sources:

1.

2.

3.

4.

5.

Project Champion(s):

1.

2.

Key Personnel:

1.

2.


Going Forward

• ½-Day One-on-One Functional Champion Sessions

- Concur on Project Clusters

- Verify Level One and Level Two cascade

• Percentage impact

• Financial impact

• 3.5-Day Project Champion/Leadership Training/Workshops

- Flow cascade to Black Belt Project Level (L3, L4, …Ln)

- Develop individual Black Belt Project Charters


Project Charter

Proj. No:

Name:

Problem Statement:

Project Objective:

Project Benefits:

Project Metric "Y":

Defect Definition:

Project Champion

Six Sigma Project Charter

Process Owner

Black Belt

Role:

Master Black Belt

Phone:

Project Information Worksheet

Charter Creation Date

Division / Loc./ Cost Ctr.:

Project Name:

Financial Analyst

Project Completion Date (Signed-Off)

Information Technology

Team Makeupe-Mail:

Project Start Date (Signed-Off)

Proj. No./Name

ProjectBaseline Forecast Actual Forecast Actual

Baseline Period (Year, Qtr. Etc.)

Cost Of Goods Sold:- Material - - - - - Direct Labor - - - - - Product Overhead - - - - Total COGS - - - - -

Salary & Benefits - Other than Direct Labor (detail):- Full-time Staff (#) - - - - - Full-time Staff ($) - - - - - Temporary Staff (#) - - - - - Temporary Staff ($) - - - - - Part-Time Staff Cost (#) - - - - - Part-Time Staff Cost ($) - - - - Total Salaries & Benefits - - - - -

Other Cost Categories: Project

Baseline Forecast Actual Forecast Actual- Scrap - - - - - Re-Work - - - - - Warranty - - - - - Freight/Shipping - - - - - Other COPQ - - - - Other Cost Category (List): - - - -

- - - - - - - - - - - - - - -

Total Other Cost - - - - -

Total Productivity Cost Savings - - - - -

Project

Revenue Baseline Forecast Actual Forecast Actual- Increase from Volume - - - - - Increase from Price - - - - Total Revenue Increase - - - - -

Profit (EBIT) Margin % - - - - EBIT Impact - - - - -

Project

Cash Flow Benefits Baseline Forecast Actual Forecast Actual- Accounts Receivable - - - - - Accounts Payable - - - - - Inventory - - - - - Payroll - - - - - Other (List):- ______________________ - - - - - ______________________ - - - - Total Cash Flow Increase - - - - - % EBIT Impact of Cash Flow 10% 0% 0% 0% 0%EBIT Impact (WACC) - - - - -

Six Sigma Project Charter

$(000's)

Revenue Benefits

Year 1 Year 2

Productivity Benefits

$(000's)

Year 1 Year 2

$(000's)

Year 1 Year 2

Cash Flow Benefits

Year 1 Year 2


Pathway #2Operational Assessment

• An Operational Assessment of the Elizabeth facility is going to be conducted the week of January 12th, 2004

• A Team of Six Sigma Academy Master Consultants will work with Elizabeth plant leadership to prepare and conduct this Assessment

• As an entire facility cannot be assessed in one week, through the use of data analysis and Cause & Effect Matrices, the scope of the assessment will focus on those products/processes that most significantly impact Alpharma’s strategic goals


Pathway #2Operational Assessment

• Opportunities to be identified will be:

- Cycle time reduction

- Inventory reduction

- Walking time reduction

- Lead time reduction

- Factory floor space recovery

- Standard operation set-up

- Set-up time reduction

- Scrap reduction

- Variability of a particular operation

- Design of a new product (DFSS)

- Yield improvement through design of experiment


Pathway #2Operational Assessment Working Session

Since at this Summit we cannot perform an Operational Assessment, we are still interested in your thoughts regarding priority opportunities at the various Alpharma facilities that would focus the Lean Six Sigma effort against your strategic goals

Instructions:

1. Break-out into designated teams

2. Select a team leader and person to report out the results

3. Identify an Alpharma facility

4. List the potential opportunities at that facility, what data supports that it might be an opportunity, what Strategic Goal would this be tied back to, and who would the person at that facility to contact about that opportunity

5. The teams will have 20 minutes for the exercise

6. Prepare a 5 minute summary to report out to the entire group


Pathway #2Working Session

Name of the Alpharma Facility:_____________________

Description of the Opportunity

Data source(s) that tells you it’s an opportunity (or

your suspicion)

Strategic Goal

Impacted

Contact Your name


Pathway #3Performance To Plan – Facilitation

• Historical Budgets are reviewed and the performance to plan for these budgets are analyzed

• Identify ongoing Program/Project performance to plan discrepancies

• Areas showing large gaps in performance are opportunities to identify project clusters and projects

• When executing this pathway, to prevent chasing false opportunities need to understand whether:

- The budgeted targets are to far of a stretch

- How do your budgeted targets compare to your industry


Pathway #4Financial Analysis – Facilitation

• The financial data of the Company is analyzed to determine whether your financial measures are inline with your industry, for example:

- Inventory turns

- DSO

- Accounts Receivables

- Accounts Payable

- Etc.

• Gaps in these areas are potential opportunities for project cluster and project identification


Pathway #5 Organic Bubble Up Ideas

• Organic project definition

- A project that may not be strategic in nature, but is a good idea and will save money or improve customer/employee satisfaction

• Brainstorming and soliciting peoples ideas are the means by which Organic Bubble Up projects are identified

• Based on the Project Selection Continuum this pathway by itself is the least desirable method


Project: Overpayment Of Taxes To U.S. Government

• Background Information

- A routine audit of purchased products showed a line item that was misclassified as “capital” instead of “expense”

• What was done

- A Black Belt project was created. Investigation showed a flaw in the purchasing process that allowed the mistake to occur repeatedly. The process was changed and misclassifications were eliminated.

• Results

- The Government returned the $10M excess payment. No further misclassifications occurred.


Project: Improve Measurement System For Precious Metal Fabrication


- A plants profit margin had deteriorated over time. Several people tried to find the root cause but they were unsuccessful.

• What was done

- A Master Black Belt project was created. The project identified a poor measurement system which incorrectly measured the amount of precious metal required for production.

• Results

- $44 M/year savings


Project: Recovery Of Customer Requested Engineering Costs


- An executive wasn’t sure if a good process existed to recover customer-driven engineering change order costs

• What was done

- A Greenbelt project was created. The project identified several holes in the process which made it difficult to charge customers for the change orders.

• Results

- $1.2 M recovery + cost are captured correctly on new change orders


Project: Standardize Printers, Copiers, Scanner And Fax Machines


- A transactional area had several types of copiers, printers, fax and scanners that were randomly dispersed in the department. Employees spent time configuring their computers to use each of the devices. Maintenance agreements were made with various companies to support the equipment.

• What was done

- A Greenbelt project was created. The project identified 4-in-1 units from one manufacturer that met the users needs. The units were placed every 50’ in the office. One purchase agreement and one maintenance agreement covered all the equipment. Each printing area had placards showing how to operate the equipment.

• Results

- Reduced purchase and maintenance cost $250K savings. Standardization reduced frustration.


Pathway #5Organic Project Pathway Exercise

Instructions:

1.In groups of 3 or 4 members use the previous concepts and apply them to your organization.

• Consider processes that were slow or produced defects at:

- Your last position

- Your current position

- What your customer wants from you (internal/external)

- What you want from your supplier

• Problems with your current position

2.Complete the table on the following page

3.Time: 30 mins.

4.Select a spokesperson to report out


Pathway #5 Organic

Description of the Opportunity

Data source(s) that tells you it’s an opportunity (or

your suspicion)

Strategic Goal

Impacted

Contact Your name


Next Steps

• The results of these exercises will be the foundation of the project

Champion/Leadership Training

• The Project Champions and Business Leaders will attempt to

further drill down to the actionable project level in order to:

- Complete Project Charters

- Further scope improvement opportunity

- Execute the Lean Six Sigma project

The availability of data will be key in identifying actionable Black Belt projects.


Project Pipeline Maintenance

• Establish feedback loop for “discovered” projects

- Black Belts to Project Champions

- Project Champions to Functional Champions

- Function Champions to Steering Committee

• Pipeline repository

- Projects in queue

- Aligned to Project Clusters

- Accounted for in Dashboard development

• Review completed projects

- Look for replication opportunities

- Re-evaluate pipeline for relevance


Next Steps After Executive Summit

• Key dates for Alpharma’s Lean Six Sigma deployment

- One-on-One Functional Champion Training Sessions – Week of December 15th

- U.S. Project Champion/Leadership Training/Workshop – Week of January 5th

- Elizabeth Operational Assessment – Week of January 12th

- European Project Champion/Leadership Training/Workshop – Week of January 26th


Closing Remarks

Final Thoughts


Trademarks And Service Marks

Six Sigma is a federally registered trademark of Motorola, Inc.

SigmaFlow is a trademark of Compass Partners, Inc.

MINITAB is a trademark of Minitab, Inc.

VarTran is a trademark of Taylor Enterprises.

The following are trademarks of Six Sigma Academy as of November 2003 (alphabetical):Breakthrough DesignBreakthrough Software DesignBreakthrough DiagnosisBreakthrough ExecutionBreakthrough LeanBreakthrough Sigma LeanBreakthrough Six SigmaBreakthrough Strategy®

Breakthrough Value ServicesFASTARTINTELLEQMETREQSigmaCALC® Weaving excellence into the fabric of business


Six Sigma Academy

www.6-sigma.com

US Tel: (480) 515-9501

US Fax: (480) 515-9507

International Tel: +44-1403-783456

International Fax: +44-1403-218788

8876 E. Pinnacle Peak Road, Suite 100

Scottsdale, AZ 85255

© 2001, 2003 six sigma academy executive workshop project pathways workshops

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