Page 177 - The Six Sigma Project Planner

• Change manufacturing planning. An organization’s manufacturing plans describe
in detail how product is to be processed and produced. Often the Six Sigma
project team will discover better ways of doing things. If manufacturing plans
are not changed, the new and improved approach is likely to be lost due to
personnel turnovers, etc. In organizations that have no manufacturing plans, the
Six Sigma project team should develop them, at least for products and processes
developed as part of the project. Note: this should not be considered scope creep
or scope drift because it is directly related to the team’s goals. However, it will be
better still if the team can obtain a permanent policy change to make
manufacturing planning a matter of policy (see above).
• Revise accounting systems. Six Sigma projects take a value-stream perspective of
business systems, i.e., a global approach. However, many cost accounting
systems (such as activity-based costing) look at local activities in isolation. If kept
in place, these accounting systems produce perverse incentives that will
eventually undo all of the good the team has done by breaking the integrated
value-delivery process into a series of competing fiefdoms. Throughput
accounting is recommended (Goldratt, 1990).
• Revise budgets. Improvements mean that more can be done with less. Budgets
should be adjusted accordingly. However, the general rule of free markets
should also be kept in mind: capital flows to the most efficient. I.e., don’t cut the
budgets of those who succeed.

• Revise manpower forecasts. Toyota’s Taiichi Ohno, the creator of Lean Production,
says that he isn’t interested in labor savings, only in workforce savings. In other
words, if as a result of a Six Sigma project the same number of units can be
produced with fewer people, this should be reflected in staffing requirements. I
hasten to point out, however, that research shows that Six Sigma and Total
Quality firms increase employment at roughly triple the rate of non-Six Sigma
firms. Greater efficiency, higher quality, and faster cycle times allow firms to
create more value for customers. Investors, employees, and other stakeholders
benefit. Still, resources should be directed to activities that need them.
• Change information systems (e.g., MRP, inventory requirements, etc.). Much of
what occurs in the organization is not touched by humans. For example:
– A purchase order might be issued automatically when inventories for a part
reach a certain level. However, a Six Sigma project may have eliminated the
need for safety stock.

– An MRP system may generate a schedule based on cycle times rendered
obsolete by Six Sigma improvements.

When Six Sigma projects change the underlying relationships on which the
automated information systems are based, programs should be modified to
reflect this.

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