6 Sigma Overviewyolotli.inaoep.mx/portalfiles/6Sigma_INAOE2_Define.pdf · PPMO 3.4 233 6,210 66,807...

6 Sigma Overview

Alvaro Maury, PhD

INAOE, Nov. 25, 2013

Alvaro Maury

• PhD in Experimental Solid State Physics, Temple University, USA.

• ASQ-certified 6 Sigma Black Belt • PMI-certified PMP (Project Management

Professional) • 20+ years career at AT&T Bell Labs, Lucent, &

Agere Microelectronics • Last 9 years at Silterra Malaysia: Manager of CMP (Chemical Mechanical Polishing)

group Manager of CI (Continuous Improvement) group.

What is 6 Sigma?

• Six Sigma is a set of strategies, techniques, and tools for process improvement.

• It was developed by Motorola in 1986.

• Six Sigma became famous when Jack Welch made it central to his successful business strategy at General Electric in 1995.

• Today, it is used in many industrial sectors.

Course Outline

• Day 1: Define Phase

• Day 2: Measure Phase

• Day 3: Analyze Phase

• Day 4: Improve Phase

• Day 5: Control Phase

Define Phase What is Six Sigma?

Definitions

History

Strategy

Problem Solving

Roles & Responsibilities

Six Sigma Fundamentals

Selecting Projects

Elements of Waste

Wrap Up & Action Items

Understanding Six Sigma

What is Six Sigma…as a Symbol?

σ, sigma, is a letter of the Greek alphabet.

– Mathematicians use this symbol to signify Standard Deviation, an important measure of variation.

– Variation designates the distribution or spread about the average of any process.

The variation in a process refers to how tightly all the various outcomes are clustered around the average. No process will produce the EXACT same output each time.

Wide Variation Narrow Variation

What is Six Sigma…as a Value?

Sigma is a measure of deviation. The mathematical calculation

for the Standard Deviation of a population is:

Sigma can be used interchangeably

with the statistical term

Standard Deviation.

Standard Deviation is the average

distance of data points away from

the Mean in a distribution.

By definition, the Standard Deviation

is the distance between the Mean

and the point of inflection on the

Normal curve.

Point of Inflection

The probability of creating a defect can be estimated and

translated into a “Sigma” level.

What is Six Sigma…as a Measure?

*LSL – Lower Spec Limit

*USL – Upper Spec Limit

The higher the sigma level, the better the performance. Six Sigma refers to a process having 6 Standard Deviations between the average of the process center and the closest

specification limit or service level.

+6 -1 -3 -4 -5 -6 -2 +4 +3 +2 +1 +5

Measure

“Sigma Level” is:

– A statistic used to describe the performance of a process

relative to the specification limits

– The number of Standard Deviations from the Mean to the

closest specification limit of the process

The likelihood of a defect decreases as the number of Standard Deviations that can be fit between the Mean and the nearest spec limit increases.

USL

6 Sigma

5 Sigma

4 Sigma

3 Sigma

2 Sigma

1 Sigma

Magnitude of Difference Between Sigma Levels

Example

• A manufacturer produces a part targetted to measure 10.0000 cm, with the USL=10.0423 cm, and LSL=9.9527 cm.

• A sample of 8 parts produces the following results: 10.0253, 10.0132, 9.9980, 10.0015, 9.9970, 9.9963, 10.0247, 9.9870

• At what sigma level is this process running?

Example

13

What is Six Sigma…as a Benchmark?

Source: Journal for Quality and Participation, Strategy and Planning Analysis

Yield

99.9997%

99.976%

99.4%

93%

65%

50%

PPMO

3.4

233

6,210

66,807

308,537

500,000

World Class Benchmarks

10% GAP

Industry Average

10% GAP

Non Competitive

COPQ

<10%

10-15%

15-20%

20-30%

30-40%

>40%

Sigma

6

5

4

3

2

1

What does 20 - 40% of Sales represent to your Organization?

What is Six Sigma…as a Method?

Define - the business opportunity

Measure - the process current state

Analyze - determine Root Cause or Y= f (x)

Improve - eliminate waste and variation

Control - evidence of sustained results

DMAIC provides the method for applying the Six Sigma philosophy in order to improve processes.

What is Six Sigma…as a Tool?

What is Six Sigma…as a Goal?

Sweet Fruit Design for Six Sigma

Bulk of Fruit Process Characterization and Optimization

Low Hanging Fruit Basic Tools of Problem Solving

Ground Fruit Simplify and Standardize

1 - 2 Sigma

3 Sigma

3 - 5 Sigma

5+ Sigma

What is Six Sigma…as a Philosophy?

Honeywell: Six Sigma refers to our overall strategy to improve growth and

productivity as well as a measurement of quality. As a strategy, Six Sigma is a way for

us to achieve performance breakthroughs. It applies to every function in our company,

not just those on the factory floor. That means Marketing, Finance, Product Development,

Business Services, Engineering and all the other functions in our businesses are

included.

Lockheed Martin: We’ve just begun to scratch the surface with the cost-saving

initiative called Six Sigma and already we’ve generated $64 million in savings with just

the first 40 projects. Six Sigma uses data gathering and statistical analysis to pinpoint

sources of error in the organization or products and determines precise ways to reduce

the error.

General Electric: First, what it is not. It is not a secret society, a slogan or a cliché.

Six Sigma is a highly disciplined process that helps us focus on developing and

delivering near-perfect products and services. The central idea behind Six Sigma is

that if you can measure how many "defects" you have in a process, you can

systematically figure out how to eliminate them and get as close to "zero defects" as

possible. Six Sigma has changed the DNA of GE — it is now the way we work — in

everything we do and in every product we design.

Conventional Strategy

Conventional definitions of quality focused on conformance to standards.

Conventional strategy was to create a product or service that met certain specifications.

• Assumed that if products and services were of good quality. then their performance standards were correct.

• Rework was required to ensure final quality.

• Efforts were overlooked and unquantified (time, money, equipment usage, etc).

Requirement

or

LSL

Requirement

or

USL

Bad Bad

Target

Good

Problem Solving Strategy

The Problem Solving Methodology focuses on: • Understanding the relationship between independent variables and the

dependent variable. • Identifying the vital few independent variables that effect the dependent

variable. • Optimizing the independent variables so as to control our dependent

variable(s). • Monitoring the optimized independent variable(s).

There are many examples to describe dependent and independent relationships. • We describe this concept in terms of the equation:

• This equation is also commonly referred to as a transfer function

Y=f (Xi)

This simply states that Y is a function of the

X’s. In other words Y is dictated by the X’s.

Example

If we are so good at the X’s why are we

constantly testing and inspecting the Y?

Which process variables (causes) have critical impact on the output (effect)?

Y=f (Xi)

Crusher Yield

Time to Close

= f ( )

= f ( ) Xn

Trial

Balance

Correct

Accounts

Applied

Sub

Accounts

Credit

Memos Entry

Mistakes , , , , ,

Feed Material

Type

Tool

Wear Lubricant , , , Speed

Y=f(X) Exercise

Exercise: Consider establishing a Y = f(X)

equation for a simple everyday activity such as

producing a cup of espresso. In this case our

output, or Y, is espresso.

Espresso = f ( ) X1 , , , , X2 X3 X4 Xn

Six Sigma Strategy

(X1)

(X7)

(X6)

(X5) (X3)

(X2)

(X4)

(X8)

(X10)

(X9)

We use a variety of Six Sigma

tools to help separate the “vital

few” variables effecting our Y from

the “trivial many.”

Some processes contain many,

many variables. However, our Y is

not effected equally by all of them.

By focusing on the vital few we

instantly gain leverage.

Archimedes said: “ Give me a lever big enough and

fulcrum on which to place it and I shall move the world.”

Archimedes not shown actual size!

Breakthrough Strategy

By utilizing the DMAIC problem solving methodology to identify and optimize the vital few variables we will realize sustainable breakthrough performance as opposed to incremental improvements or, even worse, temporary and non-sustainable improvement.

VOC, VOB, VOE

The foundation of Six Sigma requires Focus on the voices of the Customer, the Business and the Employee which provides:

– Awareness of the needs that are Critical to the Quality (CTQ) of our products and

services

– Identification of the gaps between “what is” and “what should be”

– Identification of the process defects that contribute to the “gap”

– Knowledge of which processes are “most broken”

– Enlightenment as to the unacceptable Costs of Poor Quality (COPQ)

VOC is Customer Driven

VOB is Profit Driven

VOE is Process Driven

The Life of a Six Sigma Belt

Training as a Six Sigma Belt can be one of the

most rewarding undertakings of your career and

one of the most difficult.

• You can expect to experience:

– Hard work (becoming a Six Sigma Belt is not easy)

– Long hours of training

– Be a change agent for your organization

– Work effectively as a team leader

– Prepare and present reports on progress

– Receive mentoring from your Master Black Belt

– Perform mentoring for your team members

– ACHIEVE RESULTS!

You’re going places!

Black & Green Belt Certification

To achieve certification, Belts typically must:

• Complete all course work:

– Be familiar with tools and their application – Practice using tools in theoretical situations – Discuss how tools will apply to actual projects

• Demonstrate application of learning to training project: – Use the tools to effect a financially measurable and significant

business impact through their projects – Show ability to use tools beyond the training environment

• Must complete two projects within one year from beginning of training

• Achieve results and make a difference

• Submit a final report which documents tool understanding and application as well as process changes and financial impact for each project


Voice of the Customer

Cost of Poor Quality

Process Maps

Process Metrics


Selecting Projects

Elements of Waste



What is a Process?

Why have a process focus? – So we can understand how and why work gets done

– To characterize customer & supplier relationships

– To manage for maximum customer satisfaction while utilizing

minimum resources

– To see the process from start to finish as it is currently being

performed

– Blame the process, not the people

proc•ess (pros′es) n. – A repetitive and systematic

series of steps or activities where inputs are

modified to achieve a value-added output

Examples of Processes

• Injection molding

• Decanting solutions

• Filling vial/bottles

• Crushing ore

• Refining oil

• Turning screws

• Building custom homes

• Paving roads

• Changing a tire

• Recruiting staff

• Processing invoices

• Conducting research

• Opening accounts

• Reconciling accounts

• Filling out a timesheet

• Distributing mail

• Backing up files

• Issuing purchase orders

We go through processes everyday. Below are some examples of those

processes. Can you think of other processes within your daily

environment?

High Level Process Map

One of the deliverables from the Define Phase is a high level Process Map which at a minimum must include:

– Start and stop points

– All process steps

– All decision points

– Directional flow

– Value categories as defined below

• Value Added:

– Physically transforms the “thing” going through the process

– Must be done right the first time

– Meaningful from the customer’s perspective (is the customer willing to pay for it?)

• Value Enabling:

– Satisfies requirements of non-paying external stakeholders (government regulations)

• Non-Value Added

– Everything else

Process Map Example

Process Map for a Call Center -

START

LOGON TO PC &

APPLICATIONS

SCHEDULED

PHONE TIME?

LOGON

TO PHONE

CALL or

WALK-IN?

PHONE DATA

CAPTURE BEGINS

DETERMINE WHO

IS INQUIRING

ACCESS CASE TOOL

CASE TOOL

RECORD?

Y

N

A

Z

CALL

WALK-IN

DETERMINE NATURE

OF CALL & CONFIRM

UNDERSTANDING

Y

N C

B

D PHONE

TIME

Y

N

Z

B

C

REVIEW CASE

TOOL HISTORY &

TAKE NOTES

PUT ON HOLD,

REFER TO

REFERENCES

IMMEDIATE

RESPONSE

AVAILABLE?

Y

N

TRANSFER

APPROPRIATE?

Y

N

TRANSFER

CALL

ANSWER? Y

N

QUERY INTERNAL

HRSC SME(S)

ANSWER? Y

N

OFF HOLD AND

ARRANGE CALL

BACK PHONE DATA

ENDS

PROVIDE

RESPONSE

PHONE&

NOTE

DATA ENDS

D

ADD TO

RESEARCH

LIST

Z

LOGOFF PHONE, CHECK

MAIL,E-MAIL,VOICE MAIL

SCHEDULED

PHONE TIME?

N

Y A

E

EXAMINE NEXT NOTE

OR RESEARCH ITEM

ACCESS CASE TOOL

ENTER APPROPRIATE

SSAN (#,9s,0s)

IF EMP DATA NOT

POPULATED, ENTER

OLD

CASE

Y

N

UPDATE ENTRIES

INCL OPEN DATE/TIME

CREATE A CASE

INCL CASE TYPE

DATE/TIME, &

NEEDED BY

AUTO

ROUTE

Y ROUTE

CASE

CLOSED

N

Y

N

CLOSE CASE

W/

DATE/TIME E

TAKE ACTION

or

DO RESEARCH

F

GO TO

F or E

DEPENDING ON

CASE F

E NEXT

Process Map Exercise

Exercise objective: Create a Process Map of going

to work everyday

1. Create a high level Process Map, use enough

detail to make it useful.

• It is helpful to use rectangular post-it’s for

process steps and square ones turned to a

diamond for decision points.

2. Color code the value added (green) and non-value

added (red) steps.

3. Be prepared to discuss this with your mentor.

Do you know your Customer?

Knowing your customer is more than just a handshake. It is necessary to

clearly understand their needs. In Six Sigma we call this “understanding

the CTQ ’s” or critical to customer characteristics.

Voice Of the Customer Critical to Customer

Characteristics

What is a CTQ?

Critical to Quality (CTQ ’s) are measures that we use to capture VOC

properly. (also referred to in some literature as CTC’s – Critical to Customer)

CTQ ’s can be vague and difficult to define.

– The customer may identify a requirement that is difficult to measure

directly so it will be necessary to break down what is meant by the

customer into identifiable and measurable terms

Product:

• Performance

• Features

• Conformance

• Timeliness

• Reliability

• Serviceability

• Durability

• Aesthetics

• Reputation

• Completeness

Service:

• Competence

• Reliability

• Accuracy

• Timeliness

• Responsiveness

• Access

• Courtesy

• Communication

• Credibility

• Security

• Understanding

Developing CTQ’s

Step 1

Step 2

Step 3

Capture VOC

• Review existing performance

• Determine gaps in what you need to know

• Select tools that provide data on gaps

• Collect data on the gaps

Validate CTQ’s

• Translate VOC to CTQ’s

• Prioritize the CTQ’s

• Set Specified Requirements

• Confirm CTQ’s with customer

Identify Customers

• Listing

• Segmentation

• Prioritization

Cost of Poor Quality (COPQ)

• COPQ stands for Cost of Poor Quality

• As a Six Sigma Belt, one of your tasks will be to estimate COPQ for your

process

• Through your process exploration and project definition work you will

develop a refined estimate of the COPQ in your project

• This project COPQ represents the financial opportunity of your team’s

improvement effort (VOB)

• Calculating COPQ is iterative and will change as you learn more about the

process

Remember: Cost of Poor Quality!

The Essence of COPQ

• The concepts of traditional Quality Cost are the foundation for

COPQ.

– External, Internal, Prevention, Appraisal

• A significant portion of COPQ from any defect comes from effects

that are difficult to quantify and must be estimated.

• COPQ helps us understand the financial impact of problems created

by defects.

• COPQ is a symptom, not a defect

– Projects fix defects with the intent of improving symptoms.

COPQ - Categories

External COPQ

•Warranty

•Customer Complaint Related Travel

•Customer Charge Back Costs

•Etc…

Prevention

•Error Proofing Devices

•Supplier Certification

•Design for Six Sigma

•Etc…

Detection

•Supplier Audits

•Sorting Incoming Parts

•Repaired Material

•Etc…

Internal COPQ

•Quality Control Department

•Inspection

•Quarantined Inventory

•Etc…

COPQ - Iceberg

Rework

Inspection Warranty

Rejects

Lost sales

Late delivery

Engineering change orders

Long cycle times

Expediting costs

Excess inventory

Hidden Costs

Visible Costs

Lost Customer Loyalty

More Set-ups

Time value of money

Working Capital allocations

Excessive Material

Orders/Planning

Recode

(less obvious)

COPQ – Hard and Soft Savings

• Labor Savings

• Cycle Time Improvements

• Scrap Reductions

• Hidden Factory Costs

• Inventory Carrying Cost

COPQ – Soft Savings

• Gaining Lost Sales

• Missed Opportunities

• Customer Loyalty

• Strategic Savings

• Preventing Regulatory Fines

COPQ – Hard Savings

While hard savings are always more desirable because

they are easier to quantify, it is also necessary to think

about soft savings.

COPQ Exercise

Exercise objective: Identify current COPQ

opportunities in your direct area.

1. Brainstorm a list of COPQ opportunities.

2. Categorize the top 3 sources of COPQ for the four

classifications:

• Internal

• External

• Prevention

• Detection

The Basic Six Sigma Metrics

• Better: DPU, DPMO, RTY (there are others, but they derive from

these basic three)

• Faster: Cycle Time

• Cheaper: COPQ

In any process improvement endeavor, the ultimate

objective is to make the process:

If you make the process better by eliminating defects you will make it faster.

If you choose to make the process faster, you will have to eliminate defects to

be as fast as you can be.

If you make the process better or faster, you will necessarily make it cheaper.

The metrics for all Six Sigma projects fall into one of

these three categories.

Cycle Time Defined

Think of Cycle Time in terms of your product or transaction in the eyes of the customer of the process:

– It is the time required for the product or transaction to go through the

entire process, from beginning to end

– It is not simply the “touch time” of the value-added portion of the process

What is the cycle time of the process you mapped?

Is there any variation in the cycle time? Why?

Defects Per Unit (DPU)

Six Sigma methods quantify individual defects and not just defectives ~

– Defects account for all errors on a unit

• A unit may have multiple defects

• An incorrect invoice may have the wrong amount due and the wrong due

date

– Defectives simply classifies the unit bad

• Doesn’t matter how many defects there are

• The invoice is wrong, causes are unknown

– A unit:

• Is the measure of volume of output from your area.

• Is observable and countable. It has a discrete start and stop point.

• It is an individual measurement and not an average of measurements.

Two Defects One Defective

First Time Yield

FTY is the traditional quality metric for yield

– Unfortunately, it does not account for any necessary rework

FTY = Total Units Passed

Total Units Tested

Units in = 100

Units Out = 100

Units in = 100

Units Out = 100

Units in = 100

Units Out = 100 Units Passed = 50

Units Tested = 50

FTY = 100 %

Process A (Grips) Process B (Shafts) Process C (Club Heads) Final Product (Set of Irons)

Defects Repaired

40

Defects Repaired

30

Defects Repaired

20

*None of the data used herein is associated with the products shown herein. Pictures are no more than illustration to make a point to teach the concept.

Rolled Throughput Yield

RTY is a more appropriate metric for problem solving

– It accounts for losses due to rework steps

RTY = X1 * X2 * X3

Units in = 100

Units W/O Rework = 60

RTY = 0.6

Units in = 100


RTY = 0.7

Units in = 100


RTY = 0.8

Units Passed = 34

Units Tested = 100

RTY = 33.6 %

Process A (Grips) Process B (Shafts) Process C (Club Heads) Final Product (Set of Irons)

Defects Repaired

40

Defects Repaired

30

Defects Repaired

20


RTY Estimate

• In many organizations the long term data required to

calculate RTY is not available, we can however estimate

RTY using a known DPU as long as certain conditions

are met.

• The Poisson distribution generally holds true for the

random distribution of defects in a unit of product and is

the basis for the estimation.

– The best estimate of the proportion of units containing

no defects, or RTY is:

RTY = e-dpu

The mathematical constant e is the base of the natural logarithm. e ≈ 2.71828 18284 59045 23536 02874 7135

Deriving RTY from DPU

The Binomial distribution is the true model for defect data, but the Poisson is the convenient model for defect data. The Poisson does a good job of predicting when the defect rates are low.

n = number of units

r = number of predicted defects

p = probability of a defect occurrence

q = 1 - p

Poisson VS Binomial (r=0,n=1)

0%

20%

40%

60%

80%

100%

120%

0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0

Probability of a defect

Yie

ld (

RT

Y)

Yield (Binomial)

Yield (Poisson)

For low defect rates (p < 0.1), the Poisson approximates the Binomial fairly well.

Binomial

Poisson

Probability

of a defect

Yield

(Binomial)

Yield

(Poisson)

% Over

Estimated

0.0 100% 100% 0%

0.1 90% 90% 0%

0.2 80% 82% 2%

0.3 70% 74% 4%

0.4 60% 67% 7%

0.5 50% 61% 11%

0.6 40% 55% 15%

0.7 30% 50% 20%

0.8 20% 45% 25%

0.9 10% 41% 31%

1.0 0% 37% 37%

• For the unit shown above the following data was gathered:

– 60 defects observed

– 60 units processed

• What is the DPU?

• What is probability that any given opportunity will be a defect?

• What is the probability that any given opportunity will NOT be a defect is:

• The probability that all 10 opportunities on single unit will be defect-free is:

RTY for DPU = 1

0.348

0.352

0.356

0.36

0.364

0.368

10 100 1000 10000 100000 1000000

Chances Per Unit

Yie

ld

Basic Question: What is the likelihood of producing a unit with zero defects?

Unit

Opportunity

Opportunities P(defect) P(no defect) RTY (Prob defect free unit)

10 0.1 0.9 0.34867844

100 0.01 0.99 0.366032341

1000 0.001 0.999 0.367695425

10000 0.0001 0.9999 0.367861046

100000 0.00001 0.99999 0.367877602

1000000 0.000001 0.999999 0.367879257

If we extend the concept to an infinite number of opportunities, all at a DPU of 1.0, we will approach the value of 0.368.

Six Sigma Metrics – Calculating DPU

The DPU for a given operation can be calculated by dividing the number of

defects found in the operation by the number of units entering the operational

step.

If the process had only 5 process steps with the same yield the process.

RTY would be: 0.98 * 0.98 * 0.98 * 0.98 * 0.98 = 0.903921 or 90.39%. Since our metric of

primary concern is the COPQ of this process, we can say that in less than 9% of the time

we will be spending dollars in excess of the pre-determined standard or value added

amount to which this process is entitled.

RTY1=0.98

dpu = .02

RTY2=0.98

dpu = .02

RTY3=0.98

dpu = .02

RTY4=0.98

dpu = .02

RTY5=0.98

dpu = .02

RTYTOT=0.904

dpuTOT = .1

100 parts built

2 defects identified and corrected

dpu = 0.02

So RTY for this step would be e-.02 (.980199) or 98.02%.

Note: RTY’s must be multiplied across a process,

DPU’s are added across a process.

Focusing our Effort – FTY vs. RTY

Assume we are creating two products in our organization

that use similar processes.

FTY = 80%

FTY = 80%

How do you know what to work on?

Product A

Product B


Focusing our Effort – FTY vs. RTY

Let’s look at the DPU of each product assuming equal

opportunities and margin…

Product A Product B

dpu 200 / 100 = 2 dpu dpu 100 / 100 = 1 dpu

Now, can you tell which to work on?

“the product with the highest DPU?” …think again!

How much more time and/or raw material are required?

How much extra floor space do we need?

How much extra staff or hours are required to perform the rework?

How many extra shipments are we paying for from our suppliers?

How much testing have we built in to capture our defects?


Summary

At this point, you should be able to:

• Describe what is meant by “Process Focus”

• Generate a Process Map

• Describe the importance of VOC, VOB and VOE, and CTQ’s

• Explain COPQ

• Describe the Basic Six Sigma metrics

• Explain the difference between FTY and RTY

• Explain how to calculate “Defects per Unit” DPU

Define Phase Selecting Projects

Project Selection

Selecting Projects

Refining & Defining

Financial Evaluation


Selecting Projects

Elements of Waste



A Structured Approach – A Starting Point

The Starting Point is defined by the Champion or Process Owner and the

Business Case is the output.

– These are some examples of business metrics or Key Performance Indicators

commonly referred to as KPI’s.

– The tree diagram is used to facilitate the process of breaking down the metric of

interest.

Level 1

Level 2

Level 2

Level 2

Level 2

EBIT

Cycle time

Defects

Cost

Revenue

Complaints

Compliance

Safety

A Structured Approach - Snapshot

The KPI’s need to broken down into actionable levels.

Business Measures

Key Performance Indicators (KPIs) Actionable Level

Level 1

Level 2

Level 2

Level 3

Level 4

Activities Processes

Activities Processes

Business Case Example

During FY 2005, the 1st Time Call Resolution

Efficiency for New Customer Hardware Setup

was 89% .

This represents a gap of 8% from the industry

standard of 93% that amounts to US

$2,000,000 of annualized cost impact.

The Business Case Template

Fill in the Blanks for Your Project:

During ___________________________________ , the ____________________ for

(Period of time for baseline performance) (Primary business measure)

________________________ was _________________ .

(A key business process) (Baseline performance)

This gap of ____________________________

(Business objective target vs. baseline)

from ___________________ represents ____________________ of cost impact.

(Business objective) (Cost impact of gap)

What is a Project Charter?

The Project Charter expands on the Business Case, it

clarifies the projects focus and measures of project

performance and is completed by the Six Sigma Belt.

Components:

• The Problem

• Project Scope

• Project Metrics

• Primary & Secondary

• Graphical Display of Project Metrics

• Primary & Secondary

• Standard project information

• Project, Belt & Process Owner

names

• Start date & desired End date

• Division or Business Unit

• Supporting Master Black Belt

(Mentor)

• Team Members

Project Charter - Definitions

• Problem Statement - Articulates the pain of the defect or error in the

process.

• Objective Statement – States how much of an improvement is desired

from the project.

• Scope – Articulates the boundaries of the project.

• Primary Metric – The actual measure of the defect or error in the process.

• Secondary Metric(s) – Measures of potential consequences (+ / -) as a

result of changes in the process.

• Charts – Graphical displays of the Primary and Secondary Metrics over a

period of time.

Project Charter - Problem Statement

Migrate the Business Case into Problem Statement…

Pareto Analysis

Pareto Analysis:

• A bar graph used to arrange information in such a way that priorities for process improvement can be established.

• The 80-20 theory was first developed in 1906, by Italian economist, Vilfredo Pareto, who observed an unequal distribution of wealth and power in a relatively small proportion of the total population. Joseph M. Juran is credited with adapting Pareto's economic observations to business applications.

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