1. Problem Statement1. Problem Statement2. Problem Objective2. Problem Objective3. Primary Metric 3. Primary Metric 4. ‘BACK STOP’ Metric4. ‘BACK STOP’ Metric

1. Problem Statement1. Problem Statement2. Problem Objective2. Problem Objective3. Primary Metric 3. Primary Metric 4. ‘BACK STOP’ Metric4. ‘BACK STOP’ Metric

Six Sigma FoundationsContinuous Improvement Training

www.freesixsigmasite.com

Six Sigma FoundationsContinuous Improvement Training

www.freesixsigmasite.com

Problem Statement and ObjectiveProblem Statement and ObjectiveProblem Statement and ObjectiveProblem Statement and Objective

The problem statement and objective should be The problem statement and objective should be S.M.A.R.T.S.M.A.R.T. SSpecific---Focuses on a particular process, pecific---Focuses on a particular process,

process characteristic or areaprocess characteristic or area MMeasurable---Can be measured to establish easurable---Can be measured to establish

justification for project and validate improvementjustification for project and validate improvement AAttainable---Narrow scope to allow successful ttainable---Narrow scope to allow successful

completion in a specified period of timecompletion in a specified period of time RRelevant---Directly tied to business and corporate elevant---Directly tied to business and corporate

imperativesimperatives TTime Bound---Specifies a realistic period of time ime Bound---Specifies a realistic period of time

(usually 3-5 months)(usually 3-5 months)

The problem statement and objective should be The problem statement and objective should be S.M.A.R.T.S.M.A.R.T. SSpecific---Focuses on a particular process, pecific---Focuses on a particular process,

process characteristic or areaprocess characteristic or area MMeasurable---Can be measured to establish easurable---Can be measured to establish

justification for project and validate improvementjustification for project and validate improvement AAttainable---Narrow scope to allow successful ttainable---Narrow scope to allow successful

completion in a specified period of timecompletion in a specified period of time RRelevant---Directly tied to business and corporate elevant---Directly tied to business and corporate

imperativesimperatives TTime Bound---Specifies a realistic period of time ime Bound---Specifies a realistic period of time

(usually 3-5 months)(usually 3-5 months)

Problem Statement (Description)Problem Statement (Description)Problem Statement (Description)Problem Statement (Description)

There are two purposes of the problem statement: To focus the team on a process deficiency To communicate the significance to others

The problem statement does NOT include any guess as to the cause of the deficiency, or what actions will be taken

There are two purposes of the problem statement: To focus the team on a process deficiency To communicate the significance to others

The problem statement does NOT include any guess as to the cause of the deficiency, or what actions will be taken

A poor problem statement

R&A costs are too high due to product defects and will be reduced by analyzing first and second level pareto charts.

A good problem statement

From Jan – Dec 2009, the average R&A costs are 7% of sales with a range of 1% to 12%, resulting in a loss of $10M.

Problem StatementProblem StatementProblem StatementProblem Statement

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1994 1995 1996 1997 1998

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Warranty Returns

What if no data exists?

Data

Preliminary Problem Statement:During X length of time, the “Primary Metric” (the issue) was X, which resulted in a loss of $X.Specific data will be defined via data collection and analysis.

Specific data will have to be collected to justify giving the project priority.

Problem StatementProblem StatementProblem StatementProblem Statement

050

100150200250300350400450500

1994 1995 1996 1997 1998

050

100150200250300350400450500

1994 1995 1996 1997 1998

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100150200250300350400450

ProductA

ProductC

ProductE

Returns by Product Group # of Returns for Product A

Problem Statement After Data Collection: From 1994 to 1998, Product A returns are 5% of sales with a range of 2% to 12%, resulting in a profit impact of $5M.

A poor objective

Reduce R & A costs by implementing individual performance measures and objectives.

A good objective

Reduce R & A costs (Product A)from 5% to 2.5% of sales by year end XXXX, which will result in a savings of $2.5M.

ObjectiveObjectiveObjectiveObjective

The objective states the goal of the project. It must: Address the issue described in the problem statement Quantify the expected performance improvement Identify the expected timing

Like the problem statement, the objective does not state the cause of the deficiency or what actions will be taken

The objective states the goal of the project. It must: Address the issue described in the problem statement Quantify the expected performance improvement Identify the expected timing

Like the problem statement, the objective does not state the cause of the deficiency or what actions will be taken

Primary MetricPrimary MetricPrimary MetricPrimary Metric

The primary metric is the yardstick that will be used to measure your success. It must: Be consistent with the problem statement and

objective Include 3 series of data, plotted as a function

of time: baseline performance (average over the past 12

months, if possible) actual performance Objective / goal

The primary metric is the yardstick that will be used to measure your success. It must: Be consistent with the problem statement and

objective Include 3 series of data, plotted as a function

of time: baseline performance (average over the past 12

months, if possible) actual performance Objective / goal

Primary Metric Primary Metric – training sample for Product A – training sample for Product A

Primary Metric Primary Metric – training sample for Product A – training sample for Product A

Product Returns

0%

1%

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7%Aug-96

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Ret

urn

$ a

s a

pct

of

Sal

es $

BaselineActualObjective

Secondary MetricSecondary Metric(BACK STOP)(BACK STOP)

Secondary MetricSecondary Metric(BACK STOP)(BACK STOP)

The secondary metric is the conscience that will “keep you honest” Tracks potential negative consequences More than one may be required Examples: cycle time, cost, customer

satisfaction

The secondary metric is the conscience that will “keep you honest” Tracks potential negative consequences More than one may be required Examples: cycle time, cost, customer

satisfaction

Sample Secondary MetricSample Secondary MetricSample Secondary MetricSample Secondary Metric

Pct of Orders Shipped within 24 hours

90%91%92%93%94%95%96%97%98%99%

100%Aug-96

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Sample “BACK STOP” MetricsSample “BACK STOP” MetricsSample “BACK STOP” MetricsSample “BACK STOP” Metrics

Primary Metric: Lead Time Potential Secondary Metric: Quality, OT

Costs, Costs

Primary Metric: Quality (Defects) Potential Secondary Metric: Lead Time, OT

Costs, Costs

Primary Metric: Lead Time Potential Secondary Metric: Quality, OT

Costs, Costs

Primary Metric: Quality (Defects) Potential Secondary Metric: Lead Time, OT

Costs, Costs

Standard WorkStandard WorkStandard WorkStandard Work

This format becomes the standard for all improvement project types …

5S / Safety area activity (1-day) Workplace Kaizen (2-day) Cross-functional team Kaizen (5-day) *BB/LB/Gb type project (3 - 6 months) *Capital projects / Inventory (6 -12 months) * requires GM, Finance, Manufacturing, CI approvals

This format becomes the standard for all improvement project types …

5S / Safety area activity (1-day) Workplace Kaizen (2-day) Cross-functional team Kaizen (5-day) *BB/LB/Gb type project (3 - 6 months) *Capital projects / Inventory (6 -12 months) * requires GM, Finance, Manufacturing, CI approvals