Page 186 - Six Sigma Demystified

166 Six SigMa DemystifieD

PRoject examPle: assessing the benefits of the
Proposed Solution

The automated solution using the Web- order database almost entirely re-
moved the human interaction necessary to process the order because the
CRM system was no longer necessary for even a business- value- added con-
sideration. For Web orders (approximately 70 percent of the total), this re-
duced processing time by sales staff from the 21-minute average to
approximately 3 minutes. Manual entry into the Web-order form also was
streamlined (relative to the CRM), and with integration of the code generator
and automated e- mails to accounting, the order processing time for these
orders was reduced to an average of 7 minutes per order.
The simplification of the process also enabled consideration of transferring
the order processing to a less expensive cost center: the order fulfillment
team, which currently handles the shipping aspects of the order. This possibil-
ity pleased the team member representing that department because the de-
partment staff levels had been reduced over the past five years owing to
reductions in shipments (corresponding to the increase in downloads and
changes in business models). The sponsor, who also supervised the area, sup-
ported the recommendation.
The deliverables are broken down by metric:
• Cost per order (calculated in the order fulfillment department based on
30 percent of orders manual data entry) = 0.70 × (2 minutes × $1 per
minute) + 0.30 × (7 minutes × $1 per minute) = $3.50 per order × 1,350
orders per year = $3,780. annual savings are $40,000 – $4,725 = $35,275.
• E- mail marketing costs: Errors leading to increased marketing costs are
expected to fall to zero, meeting the project goals of $24,000 annual
savings.
• The impacts of the improved marketing on the software renewal rate
and resulting renewal revenue will be monitored in the control stage.

implementation and Verification

Once the improvement methodology and new process levels have been deter-
mined, they can be implemented. Even in the simplest of improvements, cau-
tion and diligence must be exercised at this point.