Page 87 - Six Sigma Demystified

68 Six SigMa DemystifieD

Problem Statement
The problem statement summarizes the problems to be addressed. It also
should state the current or historical conditions, such as the defect rate or dol-
lars wasted as a result of poor performance.
As is evident in the following example, the problem statement should provide
quantifiable estimates of the issue and its impact. While data supporting these
estimates may not be available in the very early stages of project charter devel-
opment, the project team (or usually the black belt leading the project) must
gather preliminary data in the define stage to provide justification for allocation
of resource to the project. These preliminary data will be further substantiated
(or not substantiated) in the measure stage. If the data in the measure stage do
not support the data from the define stage, the project may be reevaluated at
that point in time to consider reallocation of resource to other projects.

Project exAmPle: Problem Statement

Current capacity in sales is constrained, while there are untapped opportunities
for increased sales. Sales involvement in order processing should be limited to
free up resources for lead follow- up and revenue generation. Errors and omissions
in order processing data increase the time needed to generate marketing and
software renewal e- mails to clients and prospects, further draining sales re-
sources. Data correction requires senior sales staff, who otherwise might be en-
gaged with clients, marketing efforts, or product development. Lost opportunity
cost is significant.

Business Need Addressed

The business- need- addressed statement should indicate the business case for
implementing the project and reference key metrics of cost [e.g., financial ben-
efit or return on investment (ROI)], schedule (e.g., cycle time), and/or quality
[e.g., sigma level or defects per million opportunities (DPMO)]. This answers
the “Why should we care?” question. A good project should be linked directly
to the strategic goals of the organization. This alignment is critical for program
and business success.
Jack Welch commented that the best projects solve a customer problem. An
example he cited was invoicing for appliances shipped to Wal- Mart (Slater,
1999). The initial problem was defined as something akin to “late payments