Lecture 2. Simple Tools for Problem Definition
07.07.2010 T-31 days
IE 197 Six Sigma DMAIC
If all you have is a hammer, everything looks like a nail.
It is be6er to solve the right problem incorrectly;
Than to solve the wrong problem correctly.
What A concise statement that specifies the problem, its magnitude, loca@on, and @me-‐frame
Why
When
A clear and specific problem statement provides a clear, unified direc@on for the members of a project team; it also prevents project failure by being clear and specific about the issue being resolved by the project
Before going deep-‐dive into data collec@on; Before thinking about root causes; Before thinking of solu@ons;
Focused Problem Statement
High Fever Influenza Presence of virus
Remove the in+luenza
Remove the fever
Business Symptom Pain felt elsewhere
as a result
Missed Exams
Remove the virus
“We have a lot of unful+illed customer orders”
This is obviously not a focused problem statement.
What does it lack?
Over the past year (when), we have been averaging 30 unfulfilled customer orders per month (how much) in the chocolate powder line (where). This has resulted in $300,000 in actual lost sales per month and $500,000 opportunity losses (impact)
The problem statement should not address more than one problem.
The problem statement should not assign a cause.
The problem statement should not assign blame.
The problem statement should not offer a solu@on.
Problem Statement: don’ts
What A concise statement that states the business value of the project
Why
When
To jus@fy to stakeholders why the project was selected, in monetary and business terms
During project ini@a@on
The Business Case
1. Specific system or process being scru@nized
2. The area of the business affected
3. The base goal or objec@ve not being met
4. The resul@ng problems or issues
5. The es@mated impact, in monetary or other metric
The drying process of the manufacturing plant has been suffering from an average down@me rate of 30%.
This causes WIP to build up in the mixing tanks, which results in WIP further building up downstream.
At any given @me, we have about 24 hours worth of inventory in the mixing tanks. We lose on the average about $300,000 worth of customer orders every month due to our inability to deliver on @me.
Can you iden/fy the 5 elements of an effec/ve business case from this example?
The drying process (process) of the manufacturing plant (area of business) has been suffering from an average down@me rate of 30% (devia2on from baseline or standard).
This causes WIP to build up in the mixing tanks, which results in WIP further building up downstream. At any given @me, we have about 24 hours worth of inventory in the mixing tanks (resul2ng issue or problem).
We lose on the average about $300,000 worth of customer orders every month due to our inability to deliver on @me (impact)
What SMART statements that indicate the level of improvement expected from improvement efforts
Why
When
Objec@ve statements sets the boundaries for the project scope in terms of work to be accomplished, deliverables, and @me
AXer defining the problem
SMART Objectives
Specific. What’s the specific purpose of the project?
Measurable. Objec@ve must be quan@fiable and verifiable. Should include such things as quality, quan@ty, cost, and @meliness.
Aggressive, but a4ainable. Should be challenging but realis@c.
Relevant. Must be relevant to business goals
Time-‐bound. Must state a defini@ve @me-‐frame.
SMART Objectives
“Find out how to lower the number of unfulfilled customer orders”
This is obviously not a SMART objective statement.
What does it lack?
Our goal is to reduce (specific and aggressive) the number of unfulfilled customer orders from 30 to 0 a month (measurable and a9ainable), by the end of January 2010 (2me-‐bound). Doing so will result in increased revenues of $800,000 per month (relevant)
What A simple tool used to organize ideas, facts, opinions, issues into natural groupings
Why
When
To find themes in customer, process, business statements; to encourage par@cipa@on; to be more systema@c in consolida@ng ideas
Used when scoping projects, defining problems, brainstorming root causes and solu@ons
Affinity Diagram
Not a l l people are c reated equa l .
Not a l l products are c reated equa l .
Not a l l customers are c reated equa l .
Not a l l problems are c reated equa l .
Developed by economist Vilfredo Pareto
The cri2cal few >> 80-‐20 rule Items of interest are iden@fied and measured on a common scale
Pareto Principle
What A data display tool that breaks down discrete observa@ons into separate categories for the purpose of iden@fying the “Vital Few”.
Why
When
To priori@ze problems and poten@al root causes; To avoid “shiXing the burden”, where the solu@on removes some causes but worsens others
Used in defining the problem;
Used in iden@fying and verifying root causes aXer iden@fying and exhaus@ng all poten@al root causes
Pareto Chart
Problem Category Frequency Percent (%)
No adviser 68 48.6
Not eligible 20 14.3
No class available 19 13.6
Printing Problems 16 11.4
Long line in payment 10 7.1
No assessor 5 3.6
Others 2 1.4
Total 152 100
24
Problem Category – lists all problems/ issues observed during a defined @me period of the study.
Frequency – shows the number of occurrence of each problem/issue during the defined @me period of the study.
Percent (%) – rela@ve frequency in percent = (Frequency/Total)*100%
Before we go deep dive into the specific details of a process we need to able to understand the following: What is the intent of the process?
What are the boundaries of the process?
What are the inputs? What are the outputs?
Who are the customers of the process?
The SIPOC Analysis for Constraints is a useful tool for high-‐level ini@al process defini@on
High-level process modeling
What Stands for Supplier-‐Input-‐Process-‐Output-‐Customer; a high-‐level process mapping format that captures the voice of the customers and suppliers in the whole process chain
Why
When
To define the scope and boundaries of the process targeted by the improvement project; to align process with top level customer requirements
In the Define, Ini@a@on, or Formula@on of Problem Phase
SIPOC
Process Start
Process End
Process Name
What are the
outputs? Who is the customer of each output?
What does each
customer expect from
each output?
What inputs are required to enable
this process? Who
supplies each input?
What does the process expect of
each input?
How to Create the SIPOC
High-‐level SIRPORC for the Billing process at a restaurant
SIPOC
The Project Charter: Integrative Tool
Sample 1
Sample 2
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