Page 88 - Six Sigma Demystified

Chapter 4 DEF INE STAGE 69

from Wal- Mart.” While this seemed accurate from General Electric’s (GE’s)
perspective, from the customer perspective, GE was doing a poor job of filling
orders, making it difficult for the customer to close out and pay the invoice.

Project exAmPle: Business Need Addressed

The example order processing efficiency project charter breaks the business need
addressed statement into separate entries for each of the three main stakeholder
groups:

Customer impact: improved notification rate for renewals and upgrades;
reduction in order processing cycle time.

Shareholder impact: Reduced costs for order processing and marketing
to existing clients; increased capacity in sales and marketing; increased
renewal rates.
Employee impact: Clearer responsibilities; fewer interruptions in process
flow.

tIP: Use matrix diagrams to ensure that project objectives are aligned with business
objectives.

objective

The objective is a more specific statement of the outcome desired. GE used the
following as a guideline:

• If the process is operating at or less than a 3s level of performance, then
the project objective should be a 10 times reduction in defects. For ex-
ample, if the current DPMO is 10,000, then the goal is for the improved
DPMO to be 1,000 or less.

• If the process is operating at greater than the 3s level, then a 50 percent
reduction in defects is warranted. For example, a process operating at
1,000 DPMO should be brought to a level of 500 DPMO.

While DPMO can be useful, it also can lead to somewhat arbitrary defini-
tions of defects and opportunities. Since the Six Sigma deployment effort
should be directly related to financial benefits, cost savings provide the most
useful indication of project benefit.