Page 76 - Six Sigma Demystified

Chapter 3 f o c u s i n g t h e d e p loy m e n t 57

Note that the PPI increases as the probability of success or the dollar savings
increases and decreases as the implementation cost or completion time in-
creases. The units used for each of these terms should be consistent across
projects to provide a valid comparison.
Inclusion of the “probability of success” points out a simple fact: Not all Six
Sigma projects will be successful. Six Sigma projects are usually not tasked for
simple problems but more often for problems that have persisted despite prior
attempts at solution. A number of reasons may be behind this lack of success:
lack of resources, lack of management commitment or authorization, and/or
lack of sufficient analysis to understand the true causes of the problems (includ-
ing treating the symptoms rather than the causes). A proper Six Sigma project
definition and deployment strategy [i.e., adhering to the rigors of the define,
measure, analyze, improve, and control (DMAIC) methodology] will address
these issues, resulting in a successful project conclusion.
However, other issues also can prevent success. In some cases, the solution is
too costly to be justified by the market. In others, the technical knowledge is
lacking, and until further research and development are undertaken, a solution
is not feasible. It is important that these issues be recognized as soon as possible
so that project resources can be redeployed to solvable problems.
The cost to deploy is fairly easy to calculate, including costs such as labor,
materials, work stoppage for data collection, and so on. Initial estimates docu-
mented on the project charter should be updated as the project proceeds to
ensure that they do not overwhelm the savings. It is the project team leader’s
responsibility to update these budgets as the project proceeds so that the proj-
ect sponsor can manage the resources effectively.
It is important that the cost and benefit estimates are accepted by the orga-

nization as fair and accurate. For this reason, the accounting and finance func-
tions within the organization are responsible for defining the true costs and
benefits for each project based on predetermined methods of cost estimation.
This allows consistency across projects and removes any bias that might be
perceived toward the black belt or sponsor.
The potential savings and benefits include the following, which can be applied
only if and when they are actually realized by the organization’s bottom line:

• Decreased material costs.
• Increased sales owing to a capacity increase. Note that this produces a
benefit only if the process is currently capacity- constrained [i.e., the cur-