The Five Fundamental Assumptions of Six Sigma

Some people are angry and upset about the effectiveness of Six Sigma as a problem-solving discipline. Individuals routinely call for the next new quality discipline or argue why Six Sigma will not work in this case or the other. Some of this is one-upping – this approach is better; some of this is sour grapes – this approach is simpler, easier or less intimidating. Most of these arguments, however, indicate a lack of understanding of just what Six Sigma is intended to do for an organization.

To be fair, much of this dialogue is healthy. Six Sigma will never solve all problems and a smart leader knows he or she needs a complete set of quality approaches – not just one. Any continuous improvement processes must also be customized to the environment in which it is employed and must evolve as that environment changes. By far, however, the main reason for the clamor calling for new problem-solving methods is that Six Sigma has become more complex than necessary.

What follows in this article is a description of Six Sigma reduced to its fundamental assumptions, or theorems. If these simple concepts are understood, all the tools, all the tollgate deliverables, and all the statistics and jargon are put in their proper supporting roles. Rather than mastering all the tools and attempting to build the program from the bottom up, this approach depends on a top-down, theoretical foundation. Rather than a cookbook approach, Six Sigma should be seen as a mathematical proof.

Fundamental Assumption 1

Customers only pay for value.

It seems so simple. Of course the customer only pays for value, but most businesses define value incorrectly. The products and services being sold are not what confer value to the customer. Products and services are vehicles to deliver value. Value is only created when a specific need the customer has is fulfilled. If a customer need is not met, even if the product or service is perfect, no value is created. Quality is not a measure of perfection, but of effect.

Failing to understand customers and their needs is the biggest driver of cost in most businesses. Quality for many products is defined by whether engineering specifications are met rather than whether the product delivers to actual customer needs. Similarly, in many service environments, service quality is defined by what the customer wants or complains about rather than how the customer uses the service. This distinction is important because it is possible to deliver everything a customer asks for and do so perfectly while not satisfying his or her needs. When this happens, the costs to deliver go up but the revenue from delivering does not.

First Theorem of Six Sigma: Changes in critical to quality (CTQ) parameters  and only changes in CTQ parameters alter the fiscal relationship an organization has with its customers.

Those product or service qualities that alter the way a customer behaves with regard to purchase decisions are CTQs. Changes in CTQs, be they good or bad, drive customer loyalty. When CTQs are altered, a company’s ability to create customer value is altered. Improving the customer’s perception of value changes ultimately affects the fiscal relationship with that customer either in terms of price or cost to deliver.

The problem with managing to customer CTQs is not a question of intent. No business intentionally fails to deliver to CTQs. Companies fail to deliver to CTQs because of gaps in process knowledge. These gaps manifest themselves in process variation and poor process capabilities.

Fundamental Assumption 2

If a business has a profound and complete process knowledge, the products and services being delivered can be controlled so as to always create customer value. Gaps in process knowledge are the primary causes of failure and defect.

Process control focuses on ensuring that that the process is managed and executed in a consistent manner. If there are gaps in the understanding of how processes work or gaps in the understanding of how the customer ascribes value to the products and services being generated, process control is simply not possible. Six Sigma (and all continuous improvement processes) is fundamentally focused on closing these knowledge gaps.

Second Theorem of Six Sigma: Process outputs are caused by process, system and environmental inputs. 

 Y = ƒ (X1 . . . Xn)

The “holy grail” of Six Sigma is the process transfer function. Once this is properly defined, managers have all the tools they need to make the process perform in any manner desired. The transfer function is never really perfect, but were a company to ever have complete transfer functions for all their processes, optimizing costs, production and customer value would be a simple matter of arithmetic.

The big myth is that Six Sigma is about quality control and statistics. It is all that – but a helluva lot more! Six Sigma ultimately drives leadership to be better by providing the tools to think through tough issues. —Jack Welch

Good leaders strive to make good decisions all of the time. If, however, there are gaps in understanding, incorrect assumptions or false assumptions, what looks like a good decision will result in bad outcomes. Six Sigma is about reducing the probability of these bad outcomes.

Most processes have subject matter experts and institutional knowledge. In most cases, these subject matter experts and institutional knowledge allow businesses to create transfer functions that are 90 percent to 95 percent correct, which gives the illusion of expert knowledge. It is the illusion of expert knowledge that makes it difficult. Since most of the rules for how to run processes are known and since the knowledge gaps are subtle, it is believed that the issues are execution-related, not understanding-related. This is a dangerous situation as these small process knowledge gaps, compounded over a multistep process, can result in significant losses even when people attempt to execute the process to the best of their abilities.

Fundamental Assumption 3

All variation is caused.

Often the only clue to gaps in process knowledge is the degree of variability in the process. Processes always have variation (remember – entropy increases!) but it does not spontaneously occur. It must be caused. Variation is just another output of systems. Transfer functions can be written to describe it; the more complete those functions are the better variation can be controlled. There is no myth or magic. When a system does not perform in exactly the same manner for a static set of process inputs, that simply means there are additional factors that are not yet understood that influence those processes.

Third Theorem of Six Sigma: Variation in process outputs are caused by process, system and environmental inputs.

∂Y / ∂X = ƒ′ (X1 . . . Xn)

If Taguchi’s loss hypothesis (the cost of a system increases as it diverges from the performance expectations of its customer) is accepted, then process variation is the leading cause of customer dissatisfaction and operating costs. The factors that drive the process output and the process variation can be defined and controlled. Processes can then perform at the optimum balance between delivery and stability, thus driving the lowest possible cost and the highest possible customer satisfaction. In other words, if enough “profound knowledge” is added to the system, maximum value can be produced. The goal of Six Sigma, therefore, is always to increase process understanding. The goal is to populate transfer functions to the degree needed, and warranted, in order to best serve customers.

Fundamental Assumption 4

Given the right process knowledge and the ability to deliver products and services that satisfy the customers’ CTQs, management will always make the decision that most benefits the customer and achieves the highest possible return on investment.

The number one assumption when doing any type of continuous improvement is that if leadership is provided with the know-how, if knowledge gaps are filled in, leadership will make (or allow others to make) decisions that are best for the long-term well-being of the business. Some people are afraid to test this assumption; it is a trust issue. If power is held because of the ability to solve a recurring problem, if teams are rewarded for firefighting rather than preventing problems, then this process collapses. While it is tempting to let experience and tradition supersede structured problem solving, in the long term when overall systems understanding is improved, and leadership employs that learning for the advantage of all parties in the supply chain, the business prospers.

Fundamental Assumption 5

Given a choice between long-term sustainable growth and short-term profit, long-term growth will always outperform the short-term gain.

This is the final and most critical assumption. It is cornerstone to total quality management, the Toyota Production System (Lean) and Six Sigma. If people are helped with controlling their own destinies, and if they are provided with the wherewithal to achieve self-determination, they will naturally do what profits them the most. When educated about the long-term benefits of creating sustainable customer relationships, most people will choose to create value and maximize their payback on the relationship. This is a question of ethics.

Conclusion

There are three foundational theorems and a simple set of postulates or assumptions that these theorems are based upon. All the tools and processes of Six Sigma – both DMAIC (Define, Measure, Analyze, Improve, Control) and DFSS (Design for Six Sigma) – are grounded in these simple foundations. Get the assumptions correct and all else is commentary.

Using Six Sigma to Reduce Pressure Ulcers at a Hospital

Since 2001, Thibodaux Regional Medical Center (TRMC) in Louisiana has applied Six Sigma and change management methods to a range of clinical and operational issues. One project that clearly aligned with the hospital’s strategic plan was an initiative to reduce nosocomial or hospital-acquired pressure ulcers, because this is one of the key performance metricsindicating quality of care.

Although the pressure ulcer rate at the medical center was much better than the industry average, the continuous quality improvement data detected an increase between the last quarter of 2003 and the second quarter of 2004.

In October 2004, a Six Sigma project to address this issue was approved by the hospital’s senior executives. A team began to clarify the problem statement. Their vision was to be the “Skin Savers” by resolving issues leading to the development of nosocomial pressure ulcers. The project team included a Black Belt, enterostomal therapy registered nurse (ETRN), medical surgical RN, ICU RN, rehab RN and RN educator.

Scoping the Project

Through the scoping process, the team determined that inpatients with a length of stay longer than 72 hours would be included, while pediatric patients would be excluded. The project Y was defined as the nosocomial rate of Stage 2, 3 and 4 pressure ulcers calculated per 1,000 patient days. Targets were established to eliminate nosocomial Stage 3 and Stage 4 pressure ulcers and reduce Stage 2 pressure ulcers from 4.0 to less than 1.6 skin breaks per 1,000 patient days by the end of the second quarter of 2005.

The team developed a threats and opportunities matrix to help validate the need for change (Table 1). They encountered some initial resistance from staff, but were able to build acceptance as the project began to unfold.

Table 1: Threats and Opportunities Matrix
Threat Opportunity
Short Term Increase length of stay Improve quality of care
Increase costs Decrease medical complications to patient
Increase medical complications to patient
Long Term Decrease patient satisfaction Improve preventative care measures
Increase morbidity rate Improve hospital status/image
Decrease physician satisfaction Increase profitability
Increase number of lawsuits Improve customer satisfaction
Decrease reimbursement
Loss of accreditation

Measurement and Analysis

During the Measure phase, the team detailed the current process, including inputs and outputs. Using cause and effect tools, process steps having the greatest impact on the customer were identified as opportunities for improvement. The team also reviewed historical data and determined that overall process capability was acceptable, but that the sub-processes had a great deal of room for improvement. Improving these sub-processes would positively affect the overall process and further improve quality of care.

Measurement system analysis on the interpretation of the Braden Scale was performed to verify that results obtained by staff RNs were consistent with the results obtained by the enterostomal therapy RN, because this is the tool used to identify patients at risk of developing a pressure ulcer. This analysis indicated that the current process of individual interpretation was unreliable and would need to be standardized and re-evaluated during the course of the project.

A cause and effect matrix was constructed to rate the outputs of the process based on customer priorities and to rate the effect of the inputs on each output (Figure 1). The matrix identified areas in the process that have the most effect on the overall outcome, and consequently the areas that need to be focused on for improvement (Table 2).

The team identified several critical Xs affecting the process:

  • Frequency of the Braden Scale – The Braden Scale is an assessment tool used to identify patients at risk of developing pressure ulcers. Policy dictates how frequently this assessment is performed.
  • Heel protectors in use – Heel protectors are one of the basic preventative treatment measures taken to prevent pressure ulcers.
  • Incontinence protocol followed – Protocol must be followed to prevent against constant moisture on the patient’s skin that can lead to a pressure ulcer.
  • Proper bed – Special beds to relieve pressure on various parts of the body are used for high-risk patients as a preventative measure.
  • Q2H (every two hours) turning – Rotating the patient’s body position every two hours is done to prevent development of pressure ulcers.

Figure 1: Cause-and-Effect Matrix

Figure 1: Cause-and-Effect Matrix

Table 2: Data Analysis

Process

Defects

Opportunities

% Defective

Z Score

Overall Process

64

16,311

0.39

2.66

Braden Scale Frequency

10

76

13.16

1.12

Proper Bed

24

76

31.58

0.48

Q2H Turning

49

76

64.47

-0.37

Data analysis revealed that the bed type was not a critical factor in the process, but the use of heel protectors, incontinence protocol compliance, and Q2H turning were critical to the process of preventing nosocomial pressure ulcers. The impact of the Braden Scale frequency of performance was not identified until further analysis was performed (Figure 2).

Figure 2: One-Way Analysis of Means for Sub-Process Defects

Figure 2: One-Way Analysis of Means for Sub-Process Defects

Evaluating data specific to at-risk patients, the team separated populations who developed nosocomial pressure ulcers from those who did not have skin breakdowns. The Braden Scale result at the time of inpatient admission from each population was analyzed to see the effect on development of a nosocomial pressure ulcer. One unexpected finding was that the admit Braden Scale result was higher for patients who develop nosocomial pressure ulcers than for those who do not develop them, showing that patients at risk are not being identified in a timely manner, thus delaying the initiation of necessary preventative measures.

The team then looked at defects for Braden Scale frequency of performance for each population of patients using a chi square test. They found the frequency of Braden Scale performance did have an effect on the development of nosocomial pressure ulcers. This was confirmed with binary logistic regression analysis (Table 3).

Table 3: Binary Logistic Regression Analysis
Process

Coefficient

Odds

Probability

Odds Ratio

No Defects

–0.5222

0.59

0.37

N/A

Braden Scale Defects

2.54322

7.55

0.88

12.72

Bed Defects

1.56220

2.83

0.74

4.77

Q2 Turn Defects

–2.16870

0.07

0.07

0.11

The most significant X is the Braden Scale frequency of performance. This analysis confirmed the need to increase the frequency of Braden Scale performance to identify at-risk patients.

Recommendations for Improvement

During the Improve phase, recommended changes were identified for each cause of failure on the FMEA with a risk priority number of greater than 200. Some of the recommendations include:

  • Frequency of Braden Scale performance to be increased to every five days
  • Braden Scale assessment in hospital information system (HIS) to include descriptions for each response
  • Global competency test on interpretation of Braden Scale to be repeated annually
  • Prompts to be added in HIS to initiate prevention/treatment protocols
  • ET Accountability Tracking Tool to be issued for non-compliance with prevention and treatment protocols as needed

The Braden Scale R&R was repeated after improvements were made on the interpretation of results. The data revealed an exact match between RNs and the ETRN 40 percent of the time, and RNs were within the acceptable limits (+/– 2) 80 percent of the time. Standard deviation was 1.9, placing the results within the specification limits. The data indicated that the RNs tend to interpret results slightly lower than the ETRN, which is a better side to err on because lower Braden Scale results identify patients at risk of developing pressure ulcers.

The Control Phase

Another round of data collection began during the Control phase to demonstrate the impact of the improvements that had been implemented. A formal control plan was developed to ensure that improvements would be sustained over time, and the project was turned over to the process owner with follow-up issues documented in the Project Transition Action Plan.

The team implemented multiple improvements, including compilation of a document concerning expectations for skin assessment with input from nursing and staff. They also gave a global competency test on interpretation of the Braden Scale, which will be repeated annually. The Braden Scale frequency was increased to five days, and they corrected the HIS calculation to trigger clinical alerts for repeat of the Braden Scale. Prompts were added for initiating the Braden Scale, and monthly chart audits were developed for documentation of Q2H turning. A turning schedule was posted in patient rooms to identify need and document results of Q2H turning of patient. Additional solutions included the following:

  • ETRN to attend RN orientation to discuss skin issues
  • Revise treatment protocol to be more detailed
  • Wound care products to be reorganized on units
  • Unit educators to address skin issues during annual competency testing
  • CNA and RN to report at shift change to identify patients with skin issues
  • Task list to be created for CNAs
  • ET accountability tracking tool to be issued for non-compliance with prevention and treatment protocols as needed

Results and Recognition

Since this was a quality-focused project, the benefits are measured in cost avoidance and an overall improved quality of care. A 60 percent reduction in the overall nosocomial pressure ulcer rate resulted in an annual cost avoidance of approximately $300,000.

To make sure their initiatives are producing a positive impact on the patient care environment, the hospital continuously measures patient and employee satisfaction through Press Ganey. Inpatient satisfaction is consistently ranked in the 99th percentile and employee satisfaction in the 97th percentile. TRMC also has received recognition in the industry for their achievements, including the Louisiana Performance Excellence Award for Quality Leadership (Baldrige criteria), Studer Firestarter Award and Press Ganey Excellence Award.

“This project is a perfect example of the need to verify underlying causes using valid data, rather than trusting your instincts alone,” said Sheri Eschete, Black Belt and leader of the pressure ulcer project at TRMC. “Six Sigma provided us with the tools to get to the real problem so that we could make the right improvements. There had been a perception that not turning the patients often enough was the issue, but the data revealed that it was really the frequency of the Braden Scale. Leveraging the data helped us to convince others and implement appropriate changes.”

The nosocomial pressure ulcer rate is monitored monthly as one of the patient-focused outcome indicators of quality care. The results are maintained on the performance improvement dashboard (Figures 3 and 4).

Figure 3: Stage 3 and 4 Nosocomial Ulcers

Figure 3: Stage 3 and 4 Nosocomial Ulcers

Figure 4: Stage 2 Nosocomial Ulcers

Figure 4: Stage 2 Nosocomial Ulcers

LEAN SIX SIGMA- TECH DELIVERY & OP EXCELLENCE PRACTITIONER

JOB DESCRIPTION

Role : Tech Delivery&Op Excellence Practitioner

Role Description :
Design, build and configure applications to meet business process and application requirements.

1)Understand how to deliver value to clients, and use that commercial competency to apply methods or certifications appropriately.
2)Attention to detail and deep expertise allow them to see inherent risks or improvement opportunities that others may not.
3)Work directly with client teams to ensure a high standard of delivery and operational excellence are met.”

Salary: Not Disclosed by Recruiter
Industry: IT-Software / Software Services
Functional Area: IT Software – Application Programming, Maintenance
Role Category: Admin/Maintenance/Security/Data warehousing
Role: Technical Support Engineer
Employment Type: Permanent Job, Full Time
Keyskills: Lean Six Sigma, Op Excellence, Operational Excellence, business process.

LEAN SIX SIGMA- TECH DELIVERY & OP EXCELLENCE PRACTITIONER

JOB DESCRIPTION

Role : Tech Delivery&Op Excellence Practitioner

Role Description :
Design, build and configure applications to meet business process and application requirements.

Salary: Not Disclosed by Recruiter
Industry: IT-Software / Software Services
Functional Area: IT Software – Application Programming, Maintenance
Role Category: Admin/Maintenance/Security/Data warehousing
Role: Technical Support Engineer
Employment Type: Permanent Job, Full Time
Keyskills: Lean Six Sigma, Business Process, Operational Excellence, Tech Delivery, Op Excellence.

Ensuring Lean Six Sigma Success With a Robust Define Phase

Completing the define phase of a lean Six Sigma (LSS) project is a critical part of any project, although it’s often underestimated in practice. The define phase of the define, measure, analyze, improve, control (DMAIC) process typically includes three elements. The first is selecting a specific, measurable, achievable, relevant, and time-bound (SMART) project objective. Second is creating a charter, and third is selecting a process to be improved. However, a lot more needs to be done before moving to the measure phase.

When Motorola created Six Sigma, it was originally set up as a four-step process, namely “MAIC.” The define step was added when it was found that having a clear, agreed-upon understanding of the project was critical to success. In this article, we discuss 10 key elements project leaders must keep in mind in completing the define phase. These ideas can also serve as a rubric for evaluating project presentations.

The 10 key elements of the design phase are:
1. Motivation for the project/alignment with mission and objectives
2. Statement of the problem
3. Lean vs. Six Sigma?
4. Data collection, measurement, and analysis (of your “y”)
5. SMART objective
6. Current-state process flowchart and supplier, input, process, output, customer (SIPOC)
7. Best-in-class process benchmarking (internal and/or external)
8. Benefits estimation
9. Change management
10. Project charter

Motivation/alignment

To clarify the motivation for the project, some basic questions must be addressed, such as: “What brought this on?” and, “How do we know we are working on the right project?” Typically, answers can be obtained from customers (i.e., the voice of the customer), breakdowns in a process (voice of the process), or from complaints and needs (voice of the customer or the employee). Aligning the choice of project to what senior management has decided should be done (as opposed to something employees might find fun to work on) will also help to demonstrate real results and ensure continued management support.

If this is your first LSS project, be sure that your champion (and the CFO!) are aware as early as possible that success in LSS will affect some of their most important metrics in a seemingly negative way. Without their knowledge and buy-in, this can be a show-stopper. For example, when you begin to produce to order, rather than producing large quantities at a time, you will have fewer items to spread your inventory costs, and unit costs will go up. This can be a major problem for finance people if they are not given heads up in advance.

Statement of problem

Your improvement project will typically start with a problem statement. You then need to identify a key outcome indicator, metric, or “little y” that, if improved, will solve the problem. “Little y” or “y” often refer to the key metric that one is trying to improve in the SMART objective of a LSS. project.

After identifying the key metric, you then need to find the process to improve that will, in turn, improve your metric. (See figure 1.) Note that before going any further, this would be a good time to answer such questions as, “Who is the customer?” and, “Can the entire process be eliminated?”


Figure 1: Lean Six Sigma (LSS), from problem to metric to process

Lean vs. Six Sigma

Six Sigma is about reducing variation to eliminate defects. Too many projects focus only on improving the mean. Quality is a about doing things consistently and within customer specifications. The key metric to assess should therefore be the variance (or standard deviation). Also, by employing lean thinking, such as eliminating waste, creating continuous flow, and standardizing processes, variation in throughput time will be reduced.

If reducing time is your focus, then lean tools will steer you toward reducing wait times, which typically represent 95 percent or more of total throughput time. In other words, the “arrows” on your flowchart become the target of your improvement project. If quality is your focus, then your focus will be in the “boxes” on your flowchart, improving quality through Six Sigma. In any event, it is usually beneficial to start with some lean activities, such as eliminating waste, 5S, before searching for root causes. You will figure all of this out as you begin to “peel the onion” in your project.

Data collection, measurement, and analysis of key metric

Select data that you can collect a lot of in a short period of time. Don’t expect to have enough data if, for example, you are trying to improve monthly income statement results, quarterly audit information, or semiannual survey results. Always select a continuous (i.e., measured) variable as your key metric if possible. In this way, you will need a lot less data to get significant results. If you are planning to “drill down” in your data by category, you will need even more data. These are define-phase issues because you will need to thoroughly study the variation in your key metric before even thinking about a cause or causes during the measure phase of your study.

SMART objective

Perhaps the most important task in define is to establish an incredibly clear objective for your key metric. Once the key metric has been identified, it is important to study its past and current behavior. Analysis of the key metric over time and across multiple segments can help understand the source of variation, and narrow the scope of the project. Before one starts looking for the causal variables, it helps to know whether the variation in the key metric is primarily coming from specific machines, or due to specific people, or locations, times of the day or week, and so on. The use of control charts to study the behavior of the key metric over time can help identify special-cause variation, check whether the process is in control, and also determine the degree of “stretch” (i.e., how large an improvement needs to be for statistical significance) in your SMART objective.

Current-state process

Lean and Six Sigma are both process improvement methodologies. It is therefore not sufficient to simply identify a problem. Rather, one must find the process associated with the problem. What is the sequence of steps that leads to the outcome that one wishes to change? Creating the process flowchart helps to define the scope of the project in terms of the beginning and ending points of the process. Further analysis of the process involves creating a SIPOC chart to identify the key suppliers, inputs, processes, outputs, and customers for each step within the process. This helps identify the stakeholders in the process so they can be kept informed or included in the project team. Adding another column to the SIPOC for the measures will help to begin to identify possible root causes.

Benchmarking

Benchmarking, both internally and externally, can help identify best-in-class processes, so that one can set reasonable targets for the project and determine potential benefits. Benchmarking is talked about a lot, but not often done.

Start by benchmarking your own processes. Find the best way to do things in your organization. Note that parts of the process may be done better in different locations. Because many LSS projects are often designed to improve administrative or other processes that are common to all organizations, you can benchmark organizations in other industries.

Benchmarking is usually suggested as a tool for other steps in the DMAIC process, but it should definitely begin in define. To facilitate benchmarking, find something your organization does that you can share with others who may have the best-in-class process information you seek. Be prepared to trade information. Otherwise, why should others take their valuable time to help you?

Benefits

All project objectives should estimate potential financial and nonfinancial benefits from doing the project. This helps to get buy-in from management, since any project involves a cost in terms of the time spent by the team members at the very least. Showing potential savings in cost or increases to revenue can go a long way in getting the project approved. Benefit and cost estimates can change as the scope of the project evolves. Be conservative. Don’t put yourself in a position to have to defend your benefit estimate to skeptics.

Change management

Without the support of a critical mass of your organization, LSS improvements are destined for failure. If you are fortunate enough to successfully develop a new and improved process with your team, you still have the daunting task of making the new process stick. That is why it is critical to deal with the organizational politics right up front. Identifying key stakeholders who might not be supportive of your proposed changes, and developing plans to gain their support (or at least get them to a neutral position), are essential for success.

Charter

The charter is a formal document that describes your SMART metric, the preliminary scope of your project, the target to be achieved, the team members, a timeline (with milestones) for the project, and much more. It is a document that ensures your team is on the same page. It is essential for you to get your champion to sign and date the charter, indicating that this project is worthy of the organization’s priority and resources. Also, expand on your charter by creating a project plan to determine how you are going to get to your future state.

Note that reducing the scope and modifying the charter should be done during the define phase as well as any time that you discover that you can deliver the majority of the project benefits by further reducing the scope of your project. Make sure that this is done “officially” with an approved change in the charter.

Creating the team

You are now ready to get more people on board and start your team process. Select a specific day, time, and place to meet. This will minimize forgetting of meetings. Be sure to emphasize the importance of attendance.

Creating a “parking board” for potential solutions is very useful at this point because you don’t want to jump to solutions before truly defining the project objective. On the other hand, management doesn’t want you to wait for the team to complete the project before starting to realize the benefits of “low-hanging fruit” or other obvious improvements that can be made right away. So, begin working on some of these improvements as soon as the charter is approved. A good example is that many processes can be improved with the implementation of a smart form, where customers enter their requirements themselves, as opposed to an operator. With built-in error proofing, this will improve standardization, reduce variation, reduce errors, and reduce rework of many processes.

Learning how to manage meetings is especially valuable to the successful initiation of a LSS initiative. People hate unproductive meetings, and they already have too many of them! There are some simple tools that, when used well, can significantly improve LSS meetings (as well as all other meetings). If this isn’t already a part of your formal training for LSS, add it. And, if you don’t need a team to complete a project, don’t form one. Teams are expensive.

Note that it is very helpful to identify the problem, the specific metric to improve, and do some charting and other preliminary analysis on your key metric before forming the team. Otherwise you may find that after forming the team, you don’t have the needed data, or that the data do not support your assumption that this proposed improvement project is justified. Also, once it is well known that you are forming a team with a specific objective, managers or workers who are responsible for the process may begin to improve it on their own, making it difficult to establish a meaningful baseline.

Take the time to get your team off to a successful start during the define phase. It will make all the difference.

McDonald’s Benefits from Six Sigma Methodologies

For a large corporation like McDonald’s, quality management is one of the biggest driving forces behind its success.

There is nothing arbitrary about the Six Sigma practice — and the business of McDonald’s. When specifications are created at McDonald’s, it is because it is important to what the customer wants and requires. And the results prove that — everyday, 64 million people in 118 countries visit a McDonald’s.

Management Always Gets Involved

By listening to the customer, the company created an extensive training facility through Hamburger University. Here, management works the front lines to get to know the customers and see for themselves what goes on.

Actions like this exemplify the use of Six Sigma for quality customer service. When the processes used in business are in sync to what the customer wants, waste is eliminated because only tasks that create value are done.

Having management man the front lines eliminates unnecessary protocols or unreasonable expectations from management. As it stands, McDonald’s will not hire management unless they have had experience working with the customers in the restaurant. Or, if they decide to hire an employee who has not worked in the restaurant, they are expected to work the restaurant on a temporary basis before assuming management responsibilities.

McDonald’s corporate also makes surprise visits to their restaurants to see how things are running and in which ways they need to improve. To remain true in running their restaurants efficiently and effectively, they will hire a third party company to come in on a surprise visit.

So Who Benefits from McDonald’s Control on Quality?

So who benefits from the Six Sigma methodologies? Customers, stockholders, and employees benefit, which is the reason McDonald’s is able to sell more than 75 burgers per second!

 

CLINICAL TRIAL MANAGERS SEEK UNIFICATION, STREAMLINING OF SOFTWARE APPS

 

 

The increased interest in process improvement that has swept across so many industries has now reached the area of clinical trials.

In a recent survey, nearly all respondents said there is an industry-wide need to unify clinical operations. This would address one of the biggest challenges facing managers of clinical trials: the disparate nature of clinical trial software systems. As many as five are used in every trial.

More than half of those surveyed said “faster study execution and improved study quality” would result from making clinical trials more efficient, according to a news release from Veeva, which conducted the study.

Unified Clinical Model

Veeva, a California-based company that provides cloud-based software for the life sciences industry, released the survey this summer.

As with most organizations and industries that adopt process improvement strategies, those who responded to the survey said streamlining the system would result in practical benefits.

Those areas of improvement and the percentage of respondents who mentioned them included:

  • Faster study execution (65%)
  • Improved study quality (63%)
  • Cost savings (59%)

That’s not a surprising list for those who work in process improvement methodologies such as Lean Six Sigma.

As things stand now in the clinical trial industry, no one unified system exists. The most popular software applications used by trial managers are called EDC, CTMS and eTMF. However, the average number of applications used on trials is four, with 36% using five.

Not surprising, 69% of those surveyed said integrating those various applications is the biggest challenge they face. Another 61% cited communicating information across multiple applications as a major problem, according to PharmPhorum.

Jennifer Goldsmith, senior vice president of the Veeva Vault CTMS system, said in the news release that the transition to a unified clinical environment is driving a streamlining of “end-to-end processes and systems within modern applications.”

Six Sigma and Software

Lean Six Sigma methodology already has had an impact on software companies across a variety of fields.

For example, the director of global learning at a California company recently told instructors at the University of California-San Diego that applying Six Sigma methods helped increase productivity, revamp qualify assurance processes and also emphasized the need for continuing statistical analysis of the company’s business model.

While process improvement has not always been as much a part of the creativity-driven software industry, it has become more valuable as software companies and processes mature.

The situation with clinical trial management is a case in point. They already have started to move away from paper records and into digital data management. They also have discovered how data analysis can help improve trial management.

However, the software issue found by Veeva is another challenge. As with many industries and organizations, managers want to eliminate the “silo” nature of clinical trials.

And just like in those other industries – from manufacturing to healthcare – the move into unifying systems and streamline processes has now taken the industry into a new level of operational efficiency.

Six Sigma Proves Its Value in Funds Management

Six Sigma is a systematic data-driven approach that works across most processes, products and industries. It focuses on improving process performance to enhance customer satisfaction and bottom-line results. Yet, some organizations take a look at Six Sigma and conclude that it will not work for them.

Why? Because the organizations know that Six Sigma was developed in and for manufacturing environments, and it is not clear to them how the methodology applies to a service environment or a support function like finance. Of course, Six Sigma does apply in all kinds of transactional businesses. For example, Six Sigma was instrumental in increasing the return on investment (ROI) in a funds management function, as outlined here.

The Problem

The funds management department of a leading telecom service provider was charged with improving the cumulative ROI of the treasury operation by 0.25 percent within five months. The goal included increasing the existing reserves, worth $360 million, by an additional $1 million.

One of the biggest challenges was to gain commitment for the project from the team and other key stakeholders. During an initial meeting, the project Champion asked a couple of very basic questions:

  • “DMAIC/DFSS does not really apply to finance, and especially funds management, does it?”
  • “We are already the benchmark in our field, so what do we have to improve?”

The simple answer to these questions is that Six Sigma is applied wherever there is a customer who benefits from the output of a process.

The Approach

Several steps were undertaken to begin the project. First, the project team created a threat-versus-opportunity matrix and conducted a stakeholder analysis. The funds management department did not have a well-defined process map, so the team documented a high-level process map to define the key suppliers, inputs, processes, outputs and customers (SIPOC). After identifying the moments of truth with the help of the SIPOC, a well-defined cross-deployment flow chart was drawn, clearly identifying the roles and responsibilities of key stakeholders.

The next step was to identify the possible risks in each step of the portfolio management process through the use of a failure mode and effects analysis (FMEA). Once the risks were identified, the team brainstormed to define risk mitigation plans. Ideas were generated and then evaluated based on risk, liquidity, rate of return, investment horizon and corporate ethics. Prioritization of the risk mitigation plan elements yielded the following key action steps:

  • Investment in short-term floating rate funds
  • Investment in liquid funds
  • Investment in quarterly fixed maturity plans

As a result of these actions, the cumulative ROI increased by 0.15 percent To achieve the target of 0.25 percent ROI, the team had to think in a completely unconventional way. The concept of “wishful thinking provocation” was introduced.

Wishful Thinking Provocation

Wishful thinking provocation required the team to create a desired end result and then subsequently, to generate ideas to reach that goal. For example, a wishful thinking provocation target might include the statement, “My pen automatically corrects my spelling mistakes.”

Wishful Thinking Provocation Roadmap

The funds management project team faced a specific challenge in its quest to further increase the ROI. The financial risks involved in the funds management process are high. As a result, the project team was required to obtain approval from the board of directors to change the investment mix of the various portfolios. The restrictions were so stringent they precluded investment in the shares of group companies. The team’s wishful thinking provocation was stated as, “The company board of directors does not impose regulations on investment selection.” During the idea-generation phase of the project, the team suggested the following ideas to increase the ROI:

  • Investment in equities/equity-based mutual funds
  • Investment in inter-corporate deposits (ICDs)
  • Breaking of fixed deposits and investing in other possible options
  • Redemption from mutual funds and investment in other possible options

One of the benefits derived from the wishful thinking provocation process was the clarification of existing investment rules. The team was under the impression that there is a clear restriction from the board of directors that breaking fixed deposits and mutual funds was not allowed. However, after reviewing the regulations in detail, the team found that no such restriction exists. However, it was noted that breaking these investments results in a large penalty. The investment restriction, in effect, was the assumption that the penalty would outweigh any investment gain.

The team analyzed the gain potential and determined that breaking, then changing, the investments would yield a positive net return.

Results Achieved

The team implemented its solution and met its goal of improving ROI by 0.25 percent, yielding the desired financial benefit of increasing reserves by $1 million. In addition, the team realized the power of creative thinking over conventional wisdom. And in doing this, the team proved that Six Sigma is indeed relevant within a funds management operation.

Prince 2 JOB- IS Project Manager

Tasks:

As an IS Project Manager you will be responsible for following but not limited to :

•Ensure successful delivery of the IS project and closely collaborate with Business Project Manager on overall project success;
•Plan, schedule, coordinate, and deliver the IS project outcomes to time, scope, cost and agreed quality;
• Monitor and control the project management processes;
• Execute IS project communication, report IS project performance against plan and expected business outcome;
• Ensure appropriate ABB IS Project Management standards and methods are followed;
• Manage stakeholders’ expectations and relationship;
• Collaborate with Workforce Manager and Service Manager on the project delivery;
• Manage, coach, develop and lead the project team allocated to the IS project;
• Define, jointly with Business Project Manager, all project documents, including scope and financial plans, schedule and risk management plans;
• Effectively monitor and control project progress, proactively manage and mitigate project risks;
• Monitor and control project financials, oversee project invoicing status, cost, expenses and cash flow;
• Ensure that the project applies contract and claims management in accordance with contractual agreements;
• Ensures the successful close down of the project on project completion and the capture and documentation of lessons learned.

Requirements:

• General Project Management knowledge in area of IT/IS(SAP), with min. 10 years of Project Management experience, certified by PMI, PRINCE2 or CAPM is must;
• Experience in at least one of the following areas: ERP Systems, Finance Systems, Supply Chain Management, Marketing & Sales, Product Configurations, PDM & PLM Systems, Analytical & Business Performance Tools or General IS Systems;
• Experience in leading transition / transformation projects within global working environment being a strong plus;
• Bachelor’s or Master’s degree in IT, management or related fields, or related work experience;
• Experience with Project Management Methodology and tools;
• Strong English written and verbal communication skills;
• Good organization, time management, decision making and negotiation skills
• Flexibility, persistence, accompanied by quality and results orientation;
• Demonstrated customer focus with the ability to build effective working relationships with all stakeholders;
• Required business domain and business processes knowledge and experience;
• Leadership/Management competencies;
• Knowledge on application development processes including thorough knowledge of IT service management concepts (ITIL) being a plus;
• Strong negotiation, facilitation and consensus building skills;
• Communication – Effectively communicate to steering committee, reference teams and stakeholders (including project plans, announcements, metrics/KPIs, etc.).

Additional information

We offer
• An interesting job in a company promoting innovative and modern technologies;
• Opportunity for professional development in an international environment and for increasing your abilities and skills in various areas;
• Employment in a stable company with an established position in the market;

• Good working environment.

Six Sigma and Business Analytics: Shareholder Value Analytics

 

 

Sigma methodology is perfect for discovering innovative ways of improving your organization’s operations. Likewise, there’s more to the business process improvement methods than just manufacturing and production processes. If you are considering to publicly list your company or want to find ways to improve your market value, Six Sigma can help. Combining with business analysis, Six Sigma looks to calculate your shareholder value analytics (SVA). In today’s article, we will discuss what SVA is, why you should use it, and how it relates to Six Sigma.

What is ‘Shareholder Value Analytics (SVA)’?

SVA is a precise calculation of your company or organization’s value in the public market. This analytical tool assesses the returns you make to your shareholders and measures the financial pros and cons of your strategies. We use SVA as a measure of a company’s operations simply because all public corporations will try to maximize shareholder value. If you’re able to do this, chances are you have found innovative ways to efficiently increase your operations. Additionally, stock market analysts will use SVA to calculate your organization’s success and value. Business analysts will typically shy away from looking at only your revenue and profit since these figures can be manipulated and tell different stories. SVA, on the other hand, is not nearly as misleading and paints a more concrete picture of your operations.

Why Should You Use SVA?

There are a variety of questions your management team and shareholders will ask that you can answer by looking at your SVA. These include analyzing your operational strategies, calculating how much value you deliver to your shareholders, and seeing how you perform compared to your competitors. To make an accurate prediction for your shareholder value, you must look towards your economic value added. This metric will calculate your organization’s profit by measuring the return and cost on capital. Likewise, you must also effectively manage shareholders’ opinions. Much of the stock market is driven by expectations investors have on certain organizations. If you can prove your organization has effective operations and is resourceful with its capital, your SVA will increase.

SVA & Six Sigma

Your shareholders will only expect a payout if your returns on equity are higher than your costs. Saying this, an increase in your shareholder’s value will correlate with effectively running your organization. This is where Six Sigma methodologies come into play. There are multiple ways for you to increase the efficiency of your operations.

First, we look to the 5 K’s of Kaizen. These steps look to minimizing your usage of resources, carefully placing items, and increasing customer relations. When more people buy your products and believe they are of superior quality, your shareholder value will increase. Likewise, implementing the steps of DMAIC is an excellent way to find inefficiencies within your business processes. With the management of a Six Sigma Black Belt or higher, your team will use DMAIC to find innovative ways of improving any and all processes within your organization. This, in return, will decrease your capital costs and increase your market share value and thus, your SVA.