Page 203 - The Six Sigma Project Planner

totally dependent on the accuracy of the inputs. The resulting number is an index value
for a given project. The PPI values allow comparison of various projects. If there are
clear standouts, the PPI can make it easier to select a project. Table 13 shows the PPIs for
several hypothetical projects.

Table 13. Illustration of the Pareto Priority Index (PPI)
Savings, $ Cost, $
Project Probability Time, Years PPI
Thousands Thousands

Reduce wave $70 0.7 $25 0.75 2.61
solder
defects 50%
NC machine $50 0.9 $20 1.00 2.25
capability
improvement
ISO 9001 $150 0.9 $75 2.00 0.90
certification

Eliminate $250 0.5 $75 1.50 1.11
customer
delivery
complaints
Reduce $90 0.7 $30 1.50 1.40
assembly
defects 50%

The PPI indicates that resources be allocated first to reducing wave solder defects, then
to improving NC machine capability, and so on. The PPI may not always give such a
clear ordering of priorities. When two or more projects have similar PPIs, a judgment
must be made on other criteria.

Throughput-Based Project Selection
While careful planning and management of projects is undeniably important, it matters
little if the projects being pursued have no impact on the bottom line (throughput). As
you will see below, if you choose the wrong projects, it is possible to make apparently
big “improvements” in quality and productivity that have no impact whatever on the
organization’s net profit. Selecting projects to pursue is of critical importance. In this
section, we will use the theory of constraints (TOC) to determine which project(s) to
pursue.

Theory of Constraints
Every organization has constraints. Constraints come in many forms. When a
production or service process has a resource constraint (i.e., it lacks a sufficient quantity
of some resource to meet the market demand), then the sequence of improvement

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