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