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2001 ConceptFlow 1
Defining Values and Client Relationships
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2001 ConceptFlow 2
Module Objectives
By the end of this module, the participant will be able to:
Discuss how values drive a companys behavior
Understand how the relationship between client values andcompany values plays a key role in six sigma
Translate client needs and wants into specifications andmeasures for six sigma projects
Translate specifications and measures into functionalprocess requirements
Create a CT Tree to define CTSs in terms of clients needs
and wants
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2001 ConceptFlow 3
Values And Behavior
Behavior is a function of Values
BehaviorValues
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2001 ConceptFlow 4
Developing and Reinforcing Values
Cycle ofRefinement
VALUES
BEHAVIOR
ATTITUDESCULTURE
What gets measured, gets done!
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2001 ConceptFlow 5
Exploring Our Values Exercise - Part I
Describe and rank what you think is really valued by your company
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2001 ConceptFlow 6
Six Sigma Values
These are the values that Six Sigma Academy helps you support Improving business performance by consistently meeting or
exceeding client expectations for quality and value
Measuring inputs, not just outputs - focusing on the reduction ofvariation and elimination of waste
Reducing defects by improving both processes and products to helpachieve business objectives
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What Do We Measure Today?
What numbers get the most attention?What quality and performance measurements do we use?
Do we have a client focus?
Do we have a quality focus?
Do we have an input/output focus?
Do we have a focus on waste elimination?
How do we use these measures?
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Values Exercise - Part II
Return to values chart How are values measured?
Is organization measuring things that are valued?
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New Measures Arise When New QuestionsAre Asked
Do questions trigger actions? If we ask questions about outputs not inputs, we get a lot of focus and
measures on outputs
If we ask questions about budgets, we measure budgets
How many of our questions are focused on process and product
quality? How many of our questions are focused on causes and inputs versus
results and outputs?
New measures, and new behaviors, require that we ask new questions
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Black Belts To Define New Values AndMeasures
NewQuestions
NewValues
NewMeasures
Considering New IdeasBlack Belts
NewBehaviors
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Values Exercise - Part III
Go back to the values/measurements chart and add a column forAccountability
What is the accountability method for each of the values?
Are they really values if they do not contain all 4 elements?
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The Six Sigma Scorecard Must
Add value! Drive the proper behaviour
Communicate actual cost, schedule and quality status
Stimulate action
Integrate into existing management reporting and be actively reviewed
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2001 ConceptFlow 13
Scorecards: The Need for Balance
BalancedOperation
Quality / Performance
These three factors must be balanced acrossthe entire business operation
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2001 ConceptFlow 14
The Right Measures Drive Desired Behaviors- Financial Metrics
Some Examples: Net Present Value
Internal Rate of Return
Return on Capital Employed
Revenue Growth
Gross Margin
Marginal Production Cost
Cost of Sales
Overhead Rates
Working Capital Available Working Capital Turns
Inventory Costs
Cash Flow
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2001 ConceptFlow 16
The Right Measures Drive Desired Behaviors- Quality/Performance Metrics
Some Examples: Successful New Product / Service Launches
Client Returns per Period
Defect Rates (ppms)
Process Variability Measures
Client Satisfaction Ratings
Quantity of Rework
Warranty Costs
Performance Test Data
Process Capability Data
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2001 ConceptFlow 17
Values Summary
Behaviors are a function of Values What gets measured gets done
Drive and discipline are key elements of a successful deployment
Change must be supported and driven from the top
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2001 ConceptFlow 18
Value Defined By The Client
For something to add value:
It must change the product or service
Value-added
It must be done right the first time
Quality
It must be on-time
Delivery
It must be something the client will pay for
Cost
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2001 ConceptFlow 19
Who Is Your Client?
Define products or services provided to client Identify related process
External clients pay our bills
Internal clients use our outputs as their inputs to achieve our businessobjectives and ultimately satisfy external clients
Client
External Internal
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2001 ConceptFlow 20
Maximizing Client Value
ClientSupplier
Delivery
Price
Quality
Need
Do
(CTD) Cycle Time
(CTC) Cost
(CTQ) Defects
Maximizing client value = close the Need/Do gap
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2001 ConceptFlow 21
What is Critical to Satisfaction (CTS)?
It is defined by our clients standards for Delivery, Price, Quality, etc. It drives the companys generic CTSs
Critical to Quality CTQ
Critical to Delivery CTD
Critical to Cost CTC
CTX etc.
CTX is referred to generically as CTQThereby encompassing all of the companys CTXs
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2001 ConceptFlow 22
Client Focus
Business survival is based on how well we satisfy the client Client Satisfaction is a function of cost, quality and delivery
Cost, quality and promptness of delivery are dependent uponprocess capability
Customer
Satisfaction
Product Focus
Breakthrough
Improvement
Continuous
Improvement
Process Focus
People
Involvement
People Focus
Customer Focus
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2001 ConceptFlow 23
CTQ Flow Down
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2001 ConceptFlow 24
Critical to Satisfaction (CTS)
Defined by clients standards for Delivery, Price, Quality, etc.Drives the companys generic CTSs
Critical to Quality CTQ
Critical to Delivery CTD
Critical to Cost CTC
CTX etc.
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2001 ConceptFlow 25
Cost Quality Delivery
Process
X1
X2Y
(VOP)
Correct
Xn
X3
Process InputVariables
(PIV)
Process OutputVariables
(POV)
ClientsNeeds &
Expectations(VOC)
Critical To Satisfaction(CTS)
Manage the INPUTS so OUTPUTS willsatisfy the clients
Process Focus of Six Sigma
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2001 ConceptFlow 26
Determine/Identify the Business Drivers
The Business Drivers for USPC: Service
Growth
Eliminate Redundancies
Develop Talent
All Projects Must have Line of Sight to the Business Drivers
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2001 ConceptFlow 27
CTQ Flow Down
Critical to Satisfaction
CTCCTQ
CTD
CTD
CTD
CostCTC
QualityCTQ
DeliveryCTD
CTQ CTQ CTC CTC
SatisfactionDrivers
BusinessDriver
DrillDown
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2001 ConceptFlow 28
CTQ Flow Down Client Service
Profitable client growthQuality/Accuracy ofPortfolio Review
Accuracy of GuidanceExecution of GuidanceTimely Review
CostCTC
QualityCTQ
DeliveryCTD
SatisfactionDrivers
BusinessDrivers
DrillDown
ProjectClusters
Scheduling Process Cycle Time for Review Prep Document Availability Etc
Growth Client
Service
Eliminate
Redundancies
Develop
Talent
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2001 ConceptFlow 29
Building the Business Driver Flow Down
Initialize flow down with business drivers
Identify satisfaction drivers of business drivers
Select most important satisfaction driver of each business driver
Identify components of most important satisfaction driver
Select component with most impact on satisfaction driver
Identify project clusters with greatest influence
Select and scope projects for execution
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2001 ConceptFlow 30
Project Selection
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2001 ConceptFlow 31
What Makes a Good Six Sigma Project
Project is supportive of key business objective
Project is focused on an ongoing process
Process has a measurable outcome
Process is creating defects
Project is linked to client satisfaction
70% reduction in defects is required
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2001 ConceptFlow 32
Evaluating Potential Projects
Is process not meeting client or business requirements?
Are projected savings greater than or equal to $350K per year?
Can project be completed in 4-6 months?
Is the project linked to business objectives?
Have defect/defect opportunities been identified?
Is there process owner and Champion agreement on project?
What are the constraints that limit achieving the goals of the project?
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2001 ConceptFlow 33
Project Authorization/Contract
Project Name
Group Name Project Champion Name
Department Name Master Black Belt Name
Total FTE's Performing
Process
Process Owner Name
Total Cost of Process (000's) Team Member Names
Green Belt Name
Problem Statement Defect FTEs Cost of Defect
Complete the descripti on:
State Defect or U ndesired E vent
Exclu de solutions
Do not incl ude causes
Review with M aster Bl ack Belt
Defin e measurement source
Defin e measurement standard
I nclude Baselin e
Timeframe
Conditi ons surroundi ng problem
State the Problem/Defect
Project Objective State the Project Objective and make sure it l ink s back to the Problem Statement
Clearly define and quantif y
70% Defect Reduction Sought
Include En titlementsBest
Performance
In clude availabl e benchmark
data
1.Stakeholders
2. Problem
Statement
3. Future
State
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2001 ConceptFlow 34
Stakeholder Lessons Learned
The Purpose of the Contract is to Avoid:Projects not aligned with business drivers
Stakeholders/process owner not prepared to support the project
Lack of project team
Finance not consulted during project selection
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2001 ConceptFlow 35
Project Authorization/Contract
Project Name
Group Name Project Champion Name
Department Name Master Black Belt Name
Total FTE's Performing
Process
Process Owner Name
Total Cost of Process (000's) Team Member Names
Green Belt Name
Problem Statement Defect FTEs Cost of Defect
Compl ete the descripti on:
State Defect or Undesired Event
Exclude soluti ons
Do not include causes
Review with M aster Bl ack Belt
Defi ne measurement source
Define measurement standard
In clude Baseline
Timeframe
Conditions surrounding problem
State the Problem/Defect
Project Objective State the Project Objective and make sure it l inks back to the Problem Statement
Clearly define and quantify
70% Defect Reducti on Sought
Incl ude Entitl ementsBest
Performance
Incl ude available benchmark
data
2. ProblemStatement
3. Future
State
1.
Stakeholders
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2001 ConceptFlow 36
Problem Statement Guidelines
Clear, concise, quantified description of the problem
Identifies gap in performance
Contains no solutions or causes
Includes other than financial measures
Includes time period measured
Measured problem does not link to voice of client, not anecdotal
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2001 ConceptFlow 3737
The "4-Whats"
Problem Statement: Client Satisfaction score for the FAresponsiveness is 11 percentage points lower than Best-in-Class
Benchmark, resulting in a potential lost revenue of $9.6MM!
Client Satisfaction scores for FAresponsiveness are too low
Compared to Best-in-Class Benchmark firm(which is at 94%), Client Satisfaction is at 83%
11% relative Client Satisfaction gap representslost revenue & earnings potential
4 points of Client Satisfaction translates to 1point of Worldwide market share which equals
$3.5MM of revenue
What is too Low?
What is the impact ofthis gap?
What is the correlationbetween % ClientSatisfaction andrevenue?
What is the total lost
potential?
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2001 ConceptFlow 38
Project Authorization/Contract
Project Name
Group Name Project Champion Name
Department Name Master Black Belt Name
Total FTE's Performing
Process
Process Owner Name
Total Cost of Process (000's) Team Member Names
Green Belt Name
Problem Statement Defect FTEs Cost of Defect
Complete the descripti on:
State Defect or Undesir ed Event
Exclude solutions
Do not in clude causes
Review with M aster B lack Belt
Defin e measurement source
Defin e measurement standard
Incl ude Baseline
Timeframe
Conditions surrounding pr oblem
State the Problem/Defect
Project Objective State the Proj ect Objective and make sure it l ink s back to the Probl em Statement
Clearly define and quantify
70% Defect Reducti on Sought
In clude EntitlementsBest
Performance
In clude available benchmark
data
2. Problem
Statement
3. MetricFuture State
1.
Stakeholders
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2001 ConceptFlow 39
Defining Process Metrics
What defect is being reduced?
How will success be measured?
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2001 ConceptFlow 41
Business Impact
What is the financial impact of the project?
Requires financial approval
Includes financial calculations and formulas
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2001 ConceptFlow 42
A Simple Project Prioritization Tool
Deployment team applies matrix toselect projects using the business
drivers (an example):1. Expense Reduction (1 low, 5
high)
2. Revenue Growth (1 low, 5 high)
3. Client Satisfaction (1 low, 5large impact)
4. Employee Satisfaction (1 low, 5large impact)
5. Feasibility or Degree of Difficulty(1 difficult, 5 easy)
6. Current Measurable ProcessPerformance (1 high, 5 low)
7. 4-6 Month Target goal ($)
committed by Champions orProcess Owners
If a project ranks high after sortingproject totals for 1-5, 6 and 7, thisproject should be a strongcandidate for selection
The Cause and Effect (C&E) Matrix
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2001 ConceptFlow 43
Finance departmentReport cycle time reductionReport accuracy improvementReducing a/r day outstandingReducing a/p day variabilityReduce cycle time for removing assets from books
Reduce cycle time for data reconciliationIT
System availability improvementSystem problem resolution cycle time reductionReduce failed changes to systems
System recovery time improvementRepeat defect reductionSystem response time improvementUser call resolution cycle time reduction
Project Examples
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2001 ConceptFlow 44
HRImprove employee retentionImprove employee training effectivenessImprove employee hiring speedReduce cycle time to add employees to payroll and benefitsReduce defects in changing employee information
Client RelationshipsProcess risk and market errorsCA productivityPerformance reporting process
US Banking
MLCC credit approval processBank treasury systems and operationsBank loan portfolio and support structure
Investor StrategiesClient communications and mailings
Product features (statements, etc.)
Project Examples
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2001 ConceptFlow 45
FAC/Retirement Group
FAC Middle Office and operational support
FAC ISA productivity
Retirement plan profitability at point of sale
Retirement plan communication and marketing
TechnologyDASD storage
CPU run time/jobs
Development costs/TSO usage
Project Examples
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2001 ConceptFlow 46
Key Learning Points
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2001 ConceptFlow 47
Module Review
By the end of this module, the participant will be able to:
Discuss how values drive a companys behavior
Understand how the relationship between client values and companyvalues plays a key role in six sigma
Translate client needs and wants into specifications and measures
for six sigma projects Translate specifications and measures into functional process
requirements
Create a CT Tree to define CTSs in terms of clients needs and
wants
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Trademarks and Service Marks
Six Sigma is a federally registered trademark of Motorola, Inc.
Breakthrough Strategy is a federally registered trademark of Six Sigma Academy.
ESSENTEQ is a trademark of Six Sigma Academy.
METREQ is a trademark of Six Sigma Academy.
Weaving excellence into the fabric of business is a trademark of Six Sigma Academy.
FASTART is a trademark of Six Sigma Academy.
Breakthrough Design is a trademark of Six Sigma Academy.
Breakthrough Lean is a trademark of Six Sigma Academy.
Design with the Power of Six Sigma is a trademark of Six Sigma Academy.
Legal Lean is a trademark of Six Sigma Academy.
SSA Navigator is a trademark of Six Sigma Academy.
SigmaCALC is a trademark of Six Sigma Academy.
SigmaFlowis a trademark of Compass Partners, Inc.
SigmaTRAC is a trademark of DuPont.
MINITAB is a trademark of Minitab, Inc.
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