Six Sigma Pizza - Pie 8

So far...

In our journey towards helping my friend's pizza outlet business, we had shortlisted three projects - 2 among them are top line problems and one from bottom line losses. We used Kano model to prioritise top line projects and Pareto analysis for bottom line projects.

Once projects are clear, I started discussing the methodology and the 'project charter' to start with

Now...

Project Charter

"Charter?" Ben exclaimed "What's it about?"

I continued, "Hey, that's so simple. Charter is a single page document that usually contains all the key information about the project".

"But, before getting into the whats and hows of the project charter, I would like to explain you the structure of six sigma projects".

"The most important element of Six Sigma is its DMAIC framework. To understand the relevance and the importance, let me tell you an interesting story. Everyone ready to listen to a story?"

Half of them shouted with a loud "Yes…!"

Then I started-

The History of Six Sigma

I hope you all know that Six Sigma was developed in Motorola in the US.

Motorola was founded in the year 1928 by Paul Galvin along with his brother as a Galvin Manufacturing Corporation - manufacturing battery eliminators. Later, the company started manufacturing automobile radios and named them Motorola meaning sound in motion.

It went on to manufacture radio equipment for military, police and space research organisations. As people connected themselves more with the product Motorola, Galvin Manufacturing Corporation was renamed as Motorola in 1947.

Motorola manufactured car radio telephones for Bell labs. In fact, the first words spoken from the moon were spoken, transmitted and telecasted using Motorola equipment. In 1947, Motorola entered television manufacturing business in a big way and rapidly captured market share. In 1960, they introduced 19 inch TVs and in 1963, introduced the revolutionary ‘Truly Rectangular' TVs. Globally, Motorola held a stature of pride in the telecommunication, electronics and household equipment.

The shocking revelation

However, by 1974, Motorola's TV manufacturing division encountered strong headwinds and went into losses. Motorola sold off the division to Matsushita Electric Co. (now Panasonic).

It was not the sale that impacted Motorola profoundly but the fact that the division became profitable under the new Japanese management within a short time. The TVs manufactured in the new brand met with rave response from the customers. Motorola found out that the reduced number of defects in the TV manufacturing process led to the unimaginable success of the Japanese brand.

This was when the realisation dawned upon Motorola regarding quality of its manufacturing processes.

Motorola realised the hard way that biggest impediment to organisational growth is lack of quality in its products and services. They realised that the success of Japanese companies was due to exceptional quality of their products. Motorola then started giving high importance to quality in all its products further to their realisation that if they were to stay in business and compete with Japanese counterparts, they have to deliver great quality products.

In 1981, when Bob Galvin (son of Paul Galvin) took over the reins of Motorola, he challenged the company that each and every division have to register a 10 fold increase in quality of their manufacturing processes.

Is rework a problem?

In 1985, Bill Smith, then Senior Vice President of Quality of Motorola released an article about the quality of Motorola products. In his research, he pointed out correlation between manufacturing defects (reworks) and warranty claims raised by customers. Using statistics, he claimed those products that had no defects during production had a long service life and resulted in more satisfied customers. Up to that point in time, reworks were a common phenomenon of manufacturing.

These claims were acknowledged by Bob Galvin and others. They set out to identify way and methods by which defects can be eliminated. That was when the newly joined quality engineer from Arizona University Dr. Mikel Harry Ph.D. proposed to use his thesis on Logical Filters as a methodology to eliminate defects in the manufacturing processes.

With a goal of eliminating the problem (rework in manufactured products), Mikel Harry and Bill Smith devised the Measure-Analyze-Improve-Control (MAIC) as a four-step approach to defect elimination. They proposed that every batch with the problem will be measured for the quantum of defects, analysed for causes of defects and improved upon.

They claimed that by doing so, they could achieve highest levels of quality. In terms of statistics, they expected to reach an acceptance level of 99.99967%, i.e., only 3.4 defects would be produced against one million opportunities (to make defects). This is at the level of 6 in statistical sigma scale. That's how the MAIC framework acquired the name of Six Sigma methodology.

Malcolm Baldrige Prize

The US Government instituted Malcolm Baldrige award in 1987 to recognise and motivate companies that work on improving the quality of their business.

Motorola was one of the companies to receive the honour in 1988 (first year of awards). As per contractual obligation in award application, Motorola willingly shared its secret of success to the world. Hurray, Six Sigma got delivered to the world!

The Belts

After resounding success of this methodology, Motorola began expanding the knowledge base with its suppliers. In this massive effort, Mikel Harry was assigned to improve the production process of one of Motorola's suppliers - Unisys Corporation, a manufacturer of circuit boards. He joined hands with the production in-charge of Unisys Mr. Clip Amess.

They chose a few interested employees from the company and decided to turn them into experts in Six sigma methodology. In order to attract talent, successful candidates were awarded the title of Black belt, much like the one awarded in martial arts. The nomenclature is adapted from belts provided in traditional martial art - karate.

In 1989, Mikel Harry formed the framework of spreading the knowledge of six sigma across the organisation through the Black Belt program in Motorola. As a result, the product quality has become everyone's responsibility and did not remain a responsibility of the quality department alone.

The D in DMAIC

When they wanted to attend to every problem of organisations - unlike the initial focus on reworks, they realised the need for understanding and clearly 'defining the problem'. It resulted in addition of 'D' as prefix 'MAIC' framework to give DMAIC.

Depending on the size, objective and complexity of the problem, we will go through the phases in a fixed timeframe.

Typically, a green belt level project might take anywhere between 4 to 6 months. During this period the status of the project will be reviewed by the management along with the mentor at a predefined interval. These reviews are called milestone reviews or toll gate reviews or steering committee reviews.

Whatever the team had done in each phase will be discussed in detail. Problems, setbacks and issues that need management approval and attention will also be discussed during the meeting.

So, from now on, we will frequently use DMAIC and will try to adhere to the discipline of following the sequence. I will not encourage you to talk about solutions to the problems in detail during Define or Measure phases or even during the analysis phase.

We talk only about what is the problem, how it affected our business, who is going to work on it, what are the intentions of the team and when they are supposed to reach a milestone in the define phase. We will not even ask what could be the reasons for failure or what we need to do to avoid such failures in this phase.

Each phase has to precisely answer only one question each. I wrote the questions on the board and waited for them to take a note of it.

The Project Charter

"Now, let us discuss the project charter.

It explains the need for the project, expectations, people involved and their responsibilities. In the early days of Six Sigma, it was used as an agreement between the top management and the six sigma team.

Remember, any improvement initiative is a business investment.

From the cost of quality point of view, the Chief of the organisation is sponsoring the project by allocating the yellow, green and black belts, appointing an external master black belt or a consultant, allowing the teams to get trained. Each green belt team will have to dedicate around 20 working days in a span of 4 to 5 months in the six sigma project. Imagine then if there are 4 green belt teams then 80 man-days of the staff are spent (though it is an investment) in projects".

"Then there would be soft and hard changes that will be required as ‘solutions’ to the problem. Only upon implementing these solutions, we can expect the problems to be solved. So, there is another investment".

"To understand the need for improvement, we need to have a clear understanding of 'what is business?'

Business is a smart process where we multiply our money through providing a solution to the customer.

So, any investment in a business to be thoroughly scrutinised for returns. This requirement is fulfilled by project charter. With the above logic, can you just tell me what are the details that will be presented in the charter?", I awaited their response.

"The amount of money needed and amount of money that could be saved by the project?", someone from the back answered with a suspect-question.

"The list of problems that could be solved?" raised another.

"Justification for the selected project and how much we can save with the solutions", and the answers kept coming.

"Yes, Yes Yes! All these will be the parts of project charter., I continued. "As it has evolved over time, we have a near complete template for the project charter. The components are", I started writing on the board.

Project title:

It gives the title of each project - it has to explicitly say what is expected from the project.

Project y:

Do you all remember, as we discussed earlier, the objective of Six Sigma is to arrive at the relationship between the problem in hand and its root causes. We have seen this relationship in a mathematical form as

y = f(x)

Here, ‘y’ is the part problem in hand - fragmented problem. So in practice, we call this as our ‘project y’.

Business Case:

This is the epitome of project management in six sigma. We agreed that it would make a business sense to arrive at the benefit of doing the project (attending to one project ‘y’) in terms of money? That is the objective of Business Case in the project charter. It advocates the approval and allocation of resources and funds to the project from the sponsor.

The best Business Case shall answer following three questions -

1. Why do we need to undertake this project?
2. Why do we need to consider this project over other projects?
3. Why do we need to take up this project now? Why not later? What is the urgency?

Problem Statement:

I paused for a while and to break the monologue, I asked them - "Think of your biggest problem or worry for a while. It may related to your personal life or of the professional life, work place or the problems we are discussing now".

I gave them few minutes to think through and requested volunteers to share their problems.

One of them came up with “I am always late to the counter. I am trying to work on it, but I end up with 2 or 3 minutes past my deadline everyday.”

The next one said “I do not like my girlfriend anymore; that's my greatest problem now”. With a bit of laughter, everyone looked at him and by looking at his age, they understood his problem. I asked his name, he said with a hesitant and husky voice, “Abhishek”.

The third “My son scores poor in maths; I am worried about his exam and ultimately, his future”.

Then I gave them few minutes to define their problem - which will bring in more clarity and understanding of their situation. After some attempts and queries, they accepted that they could not progress towards more clarity with the situation.

I said “the reason for problem statement, here in the charter is to bring in that clarity to the management and to the team members. Before going to the problem statement, let us understand our problem in a right perspective".

"We feel unhappy or uncomfortable when we see our expectations are not met. This condition is called a problem. Hence, we can define a problem as the gap between the expected state and actual state".

Now you fit in your problem here, and you will see more clarity. For example, you always want to come to office by 10 AM in the morning and you end up punching at 10.05.

Then I turned up to Abhishek and asked, “shall I make a similar chart for your problem, Abhishek?”, and we burst into laughter. He replied politely that he already got that done and got the clarity, then.

I told them

Many improvement projects fail not because the team is unable to find out the solution; instead they failed to understand the problem first!

"So, our problem statement shall have the following 3 components

1. What is the expected state?
2. What is the current state? And
3. What is the evidence for both?"

“Remember, In God…” I wanted them to complete the sentence and they did it perfectly.

Next

Will complete the Project Charter in the next chapter and will cover the tools of Define phase like SIPOC, Process flow chart, Stakeholder support analysis, Communication plan and RACI matrix in the future chapters.