Define Phase

Goal or purpose:

• Define the process (high level with a clear scope/boundaries).
• Define the process customers (internal and/or external)
• Clearly define the problem, opportunity or need to be addressed (projects should advance the organizations strategy.)
• Define the goals.
• Define the schedule and milestones.
• Define the team membership.
• Define the project's business case (see below).
• Obtain authorization.

Deliverables:

• A well-defined problem statement, objective and statement of the intended improvement and how it will be measured.
• A list of the process or product's customers.
• A Y = f (X) diagram or similar graphic to outline what is known about the relationship between the input and output variables.
• A primary metric trend chart indicating the process's historical performance.
• A high level process map with designated scope.
• A business case.
• Project Charter Form

Relevant tools:

• Pareto charts, time plots, control charts, Gantt charts, project plans, project charter and communication plans.

Questions to be answered:

• What problem or gap are you addressing?
• Why is this project important?
• What are the key measures or performance indicators? How are they defined? How will you know if things improve? What is your current performance level?
• What major steps in the process will you be improving? Who are the suppliers? What are the inputs and outputs?
• Who is your customer? What impact will closing the gap or solving the problem have on your customer?
• Have you developed a business case for the project?
• What measures are important to your customer? How do you know?
• What are the boundaries of the project?
• Have you established project milestones?
• Is the project properly scoped? Or is it possibly over-scoped: Does it cover more than one area, or deal with a number of models, products or issues? Is it scoped to be completed in four to six months?
• Is the project going to be led by a new Black Belt, does it require advanced tools?
• Have you summarized the results of these steps in your project charter

Business Case

What is a business case? It is translating the objectives of the project from operations performance measure improvement to financial performance measure improvement.

The purpose of Six Sigma projects is to improve an operation. To improve an operation, you have to state specifically what performance measures of the operation you are improving. For example, lets say I am the operations manager of Spartan Bakery. There are many performance measures of my operation such as number of cakes produced per hour, scrap or defect rate, cake attributes such as moisture level and weight, cycle time per cake, labor hours per cake, labor hours per shift, yield (ratio of pounds of product produced to pounds of raw material used), productivity, raw material costs, utility costs, etc. You have to state specifically which of these you are going to improve.

Once you define the projects purpose in terms of the operation performance measure(s), such as 10% increase in production amount, 5% reduction in labor used, 7% reduction in scrap rate, 2% decrease in cycle time, 2% increase in cake moisture, you have to translate that into financial or business benefit terms. Your accountant will assist with this. You need to know the bottom line dollar benefit of the project, and then you can compare that with the cost.

It is more than a matter of translating labor hours or cycle time reduction to dollar terms. You have to assess if there will be a financial benefit. For example, lets say you increase production from 100 cakes per day to 110 cakes per day. Sounds good, right? But what if your sales department is only selling 75 cakes per day? The increase in production has no financial value unless you can get your sales over 100 cakes per day. For another example, say you reduced your labor needs by 5% by automating part of the process. This will have no benefit unless you can actually reduce labor or reassign that labor elsewhere for some financial benefit. Just reducing the labor needs may result in people standing around more and not to a labor cost reduction.

As a part of a Six Sigma charter, you have to calculate the financial benefit and state the business case, and then have that reviewed and approved by accounting.

i. Define Phase 1. Six Sigma Project Charter Form a. Process to be Improved b. Team, Leader, Champion C. Problem/Opportunity d. Goals/Objectives with Baselines e. Business Case f. Project Constraints g. Resources Required h. Schedule 2. High Level Process Map of Flowchart 3. Process Customers 4. Primary Metric Trend Chart