Page 184 - Six Sigma Demystified

164 SIX SIGMA DeMYSTiFieD

Each of the key risks identified in the FMEA then were evaluated in a PDPC
based on the proposed process changes, as shown in Figure 7.4. The team’s
proposed use of the Web-order database permitted automated entry of the
information for all Web orders, which constituted the majority of orders. The
license code generator would automatically write the license details to
the database using the input from the Web-order database as entered by the
customer. This would prevent inconsistencies in both input and output: The
license codes, counts, and renewal dates would be naturally consistent with
the order payment.
The smaller percentage of orders received via phone would be processed
using the same Web-order form, necessitating manual data entry by the order
processor for these orders. The team added this function to the PDPC, requir-
ing a confirmation e-mail to the customer to confirm order details. This e-mail
would be presented to the order processor, forcing review of the order before
the e-mail is sent or the data committed to the database. The calculated risk
for this additional step was below the threshold of 120 established by the
organization, which satisfied the team and its sponsor.

Assessing Benefits of the Proposed Solution

It’s not uncommon for a team to reach the improve stage with several possible
methods of process improvement. These potential techniques must be evaluated
using objective, data-driven methods to maximize buy-in of the solution and
ensure that stakeholders receive their optimal return on the project investment.

x
The prioritization matrix (introduced in Chapter 4) can be used to compare
the proposed solutions against the criteria defined as critical in the define stage
of the project.
Financial analysis tools are used to estimate the cost savings associated with
the proposed solutions. To quantify financial value (and risk) associated with a
proposed solution, variable costs must be differentiated from fixed costs. As
shown in Figure 7.5, fixed costs (or fixed benefits) are constant regardless of
volume (i.e., the number of orders filled, customers processed, or units pro-
duced), such as the costs associated with building and support personnel. Vari-
able costs and benefits depend on volume and include such items as materials,
direct labor, and shipping.
r
r
If fixed and variable costs and benefits are known, the earnings before inter-