How to Determine the Level of Improvement for a Six Sigma Project
Perhaps you’ve now convinced yourself that you have a viable Six Sigma project and that you can convince others to help make improvements. You know specifically what must be improved to make life better for everyone. Now the questions are “How much improvement do we need?” and “How much improvement can we make?” You need to answer these questions before you can create your objective statement.
You want to target the amount of improvement for the project by looking simultaneously at how much improvement you need to satisfy business requirements and how much improvement you can make given the opportunity and the power of Six Sigma. Sound confusing? Don’t worry; some simple guidelines can assist you here.
Setting the objective for the project’s level of improvement is a prioritizing activity with several key inputs:
Defining your own opinion of what success is
Finding the hidden operation
Striving for breakthrough levels of improvement
Listening to the needs of your customer
Some people like to go right to the cash. They establish some threshold of savings and try to configure the amount of improvement required to achieve those savings. Although this approach is okay in some cases, the best strategy is to strive for an aggressive but rational level of improvement and to let the dollars flow later.
Ask “How much am I entitled to?”
Entitlement is an extremely powerful, eye-opening Six Sigma concept used to determine the potential level of improvement; when understood, it can change the way you think about everything. Entitlement is the best performance that a process, as currently designed, has demonstrated in actual operation.
Suppose you have a business process that has a 90-percent average yield over a long-term period. In other words, 90 percent of the time, it delivers to requirements. Now imagine that you observe the same process delivering at a 98-percent level for a few weeks or some other short period. You may consider the uptick to be incidental or just plain lucky — an alignment of the stars.
In Six Sigma–speak, however, you would say that the conditions or inputs to this process all combined in such a way that they delivered the observed improved performance. Therefore, if you can determine the right alignment for the inputs that have led to this improved performance, you’re entitled to operate at this performance level all the time! This alignment is the entitlement level of performance for the process.
As the Six Sigma saying goes, “You can’t unscramble scrambled eggs, but you can unscramble entitlement!” When determining the amount of improvement, always take entitlement into consideration.
Other hidden opportunities
The hidden factory is another Six Sigma concept that can change the way you think about the work in your company. The hidden factory or hidden operation is work that is done above and beyond what is required to produce a product or a service, such as rework or repair.
The hidden factory is also the work that creeps into the organization when you forget to ask yourself, “Why are we doing this activity, because it isn’t adding any value?”
So where do hidden factory effects come from? You may have experienced something like this: “Over a year ago, we did this quick fix on a problem, followed by an additional inspection to make sure the problem was contained.” That quick fix may well have become part of normal procedures. If you’ve ever heard, “That’s the way we’ve always done it,” you probably have a hidden operation opportunity to find.
At some point in almost every process, you find steps that are very similar to these steps. Work is done on the product or service during one of the process steps called Op i, which is a form of shorthand for naming this process step. You also see the next step in the process is operation i + 1, which in shorthand means the next work step in the process.
Between these two work steps in the process is an inspection or verification step. When there is a verification step in a process, you have a high potential for a hidden factory to exist.
All these steps add cost because the product or service wasn’t correct the first time. Most organizations just accept these types of additional steps as “That’s the way we do things here; that’s the way we’ve always done it.” When this rationalization occurs, you have mentally hidden this operation.
Finding the hidden factory and quantifying its effect helps you further understand your potential level of improvement when writing your objective statement.
Another important approach is to estimate a breakthrough level of improvement that may be possible by carrying out your project. This estimation helps you avoid setting your sights too low, which can often happen when you don’t have a lot of experience with the problem-solving power of Six Sigma. Your current thinking is probably influenced by your sense of how much improvement you can achieve by using traditional methods.
So what constitutes breakthrough improvement? Always consider a 70-percent improvement over baseline performance as a starting point for the target improvement in your objective statement. For example, if you have a process step with a 10-percent problem for a particular characteristic, a Six Sigma project should be able to lower the defect rate to less than a 3-percent problem.
Remember that this rate of improvement is an average that doesn’t necessarily hold true for all projects; most actual projects will be somewhat higher or lower.