Team Managements Skills

Launching Teams

As a prerequisite to team formation, team members must have a reason to work together, accept an interdependent relationship and commit to team values. Management supports the team process by:

Ensuring a constancy of purpose
Reinforcing positive results
Sharing business results
Giving people a sense of mission
Developing a realistic and integrated plan
Providing direction and support

Management as part of some mechanism such as a steering committee should provide relief from potential team constraints such as work schedules, or lack of technology. A participative style of management is the best approach to ensure employee involvement in the improvement process. Today’s workforce has higher educational levels and is eager to participate in the decision-making process that affects them. There is no better way of motivating employees than to provide them with challenging jobs that make use of their talents and abilities. In spite of all the obvious advantages, team participation is one of the key areas where most companies fail. Dr. Ishikawa, a leading Japanese quality professional, said of team involvement, “a people-building philosophy will make the program successful, a people-using philosophy will make the program fail.”

Benefits of working in a team Team

Usually, team members have diverse skills and experience and may represent various departments and functions in the organization. What they share in common is their involvement in the problem to be addressed. The benefits of a team approach to issues are numerous. Consider the role an individual plays in the organization. Team members may represent the role of supplier, processor, and customer. On a team, each member often brings different experiences, skills, know-how, and perspectives to the issues. Such diversity is important for most improvement teams. A single person trying to remove a problem or deficiency, no matter how skilled, has rarely mastered the intricacies of an entire work process. The most significant gains are usually achieved by teams — groups of individuals pooling their talents and expertise. Improvement teams can usually tackle larger issues than individuals working alone. Working in teams can build a fuller understanding of the process needing improvement and have immediate access to the technical skills and knowledge of all team members. The team members can rely on mutual support and cooperation that arises among team members as they work on a common project.

Benefits of Team Member

Teamwork offers some obvious benefits to team members, including:

An opportunity for greater understanding of the issues affecting their work
A chance to be creative and share ideas
The opportunity to forge stronger working relationships with colleagues
The opportunity to learn new skills and enhance existing ones
A chance to work on a project with the support and interest of management
The satisfaction of solving a chronic problem
The opportunity to please customers, increase revenues, and reduce costs

Team Resources

Resources are time, talent, money, information, and materials. The development of productive teams will use considerable resources. Management must optimize the resources available to teams. The team charter is the best place to establish the team’s expectations concerning available resources.

Management Support

Management must give more than passive team support. This means that management, especially mid-management, must be educated to the degree that they are enthusiastic about the team concept. The implementation of project schedules and solutions originating from teams should be given precedence. In order for teams to be successful, management must recognize that there will be additional work created by their efforts. Leaders, facilitators, and team members should be thoroughly trained in improvement techniques, as required. In spite of the potential benefits, some people are skeptical of the long-term success of teams. These people point out that the traditional style of management carries with it such momentum that the team approach will have a little appreciable long-term effect. There are reasonable arguments that can be expressed either for or against teams. The important questions that need answers are: (1) Does the company have the proper environment in which teams can survive and thrive? and (2) Does management fully comprehend the value of teams, to make them work?

Team Roles

The Team Member Role

Each team member is responsible for:

Participating in training to become an effective team member
Attending team meetings, as required
Completing assignments between meetings
Participating actively during meetings by contributing information and ideas
Encouraging active participation by other team members
Benefitting from the experience, expertise, and perspectives of others
Applying the steps of the improvement process

The Leader Role

Some teams have both leaders and facilitators. This is common for manufacturing line teams. As a general rule, the team leader focuses on the team product (the results) and the facilitator is most concerned with the team process. Teams consisting of staff personnel will often have only one of these roles; generally a facilitator. Within the six sigma framework, the team leader is normally trained both as a facilitator and black belt. The leader will:

Provide direction and suggest assignments
Act as a communication hub and as a liaison with management
Handle administrative details like meeting sites and scheduling
Ensure that individual needs and expectations are considered
Recommends meeting agendas and conduct meetings
Assess group progress to plan, evaluate and initiate action
Take the steps necessary to ensure success
Possess an ability to encourage participation
Be genuinely concerned about people
Be encouraging and supportive
Be accepting and tolerant of mistakes
Work with, not over participants
Stick to the task at hand
Be a good listener

The Leader’s role is not to “boss” the team but to ensure implementation of the team mission and charter.

The Team Facilitator Role

As noted earlier, the team leader is often the facilitator: However, many companies find facilitators useful both for team start- ups and for a variety of other team arrangements. The team leader andlor facilitator must understand group dynamics and how a group moves through developmental stages (forming, storming, norming, and performing).Facilitators are useful in assisting a group in the following ways:

Identifying members of the group that need training or skill building
Avoiding team impasses before the task is completed
Providing feedback on group effectiveness
Summarizing points made by the group
Balancing group member activity so each member is able to provide inputs
Helping to secure resources that the team needs
Providing an outside neutral perspective
Clarifying points of view on issues
Keeping the team on track with the process
Helping with interpersonal difficulties that may arise
Focusing on progress
Assessing the change process
Assessing cultural barriers (attitudes, personalities)
Assessing how well groups are accomplishing their purpose
Asking for feelings on sensitive issues
Helping the leader to do his/her job more easily
Coaching the leader and participants

If there is no facilitator, the team leader, an assigned black belt, or a coach must assume many of the above duties. The facilitator must avoid being judgmental of team members or their ideas, comments, opinions. The facilitator must also avoid taking sides or becoming caught-up in the subject matter. He/ She must not dominate the group discussions, solve a problem or make suggestions on the task instead of on the process

The Recorder Role

The team recorder/secretary is normally a full-fledged team member. The recorder maintains the team’s minutes and agendas. Often selected by team members, the recorder also coordinates the preparation of letters, reports, and other documents. Often, this duty is rotated among team members. He/she also distributes relevant materials to team members. The recorder:

May or may not participate as a member
Takes clear notes including project responsibilities
Publishes and distributes the minutes
May ask for clarification of issues (for the record)

The Timekeeper Role

The timekeeper’s role is an optional responsibility. This function sometimes becomes the responsibility of the facilitator, when a facilitator is assigned to a team. The timekeeper advises the team of the remaining time to review a project and enforces any time “norms” of the team

The Process Owner Role

Key processes should have a process owner. A process owner coordinates process improvement activities and monitors progress on a regular basis. Process owners work with black belts to improve the processes for which they are responsible. Process owners should have basic training in the core statistical tools but will typically only gain proficiency with those techniques used to improve their individual processes. In some organizations, process owners may be six sigma champions or sponsors. This upper-level manager should:

Be comfortable with the team’s capabilities
Believe in the team’s objectives
Support team members with resources and information
Share information with the team
Understand the team’s mission
Participate in project reviews
Believe that personal goals are aligned with the team’s goals

The Steering Committee Role

Establishing a steering committee is a logical first step when an organization lunches any improvement initiative. The steering committee is usually composed of upper management. In some companies, middle management and other employees are also represented. Some of the steering committee key roles include:

Setting goals. Top management identifies opportunities, improvement needs and sets strategic goals for the organization.
Identifying projects. The steering committee selects those major improvement projects critical to meeting quality and other goals.
Selecting teams. Once a project has been identified, the steering committee appoints a team to see the project through the remaining steps of the improvement process.
Supporting project teams. Six sigma techniques and processes are generally required to make significant improvements. It is up to the steering committee to see that improvement teams are well prepared and equipped to carry out their mission. Steering committee support may include:
- Providing training to the team
- Providing training in team tools and techniques to other team members
- Providing a trained leader or facilitator to help the team work efficientlyeviewing team progress
- Approving revisions of the project mission
- Identifying/helping with team-related problems
- Helping with logistics, such as meeting sites
- Providing expertise in data analysis and/or survey design.
- Furnishing resources for unusually demanding data collection
- Communicating project results throughout the organization
- Monitoring progress.

The steering committee is generally responsible for keeping the improvement process on track, evaluating progress, and making mid-course corrections to improve the effectiveness of the entire process. Various companies call this committee the six sigma steering committee, the quality council, or the executive steering committee.

Belbin Team Roles

Meredith Belbin describes a pattern of behavior that characterizes relationships in team performance. People often have a mixture of roles and will have dominant and sub-dominant traits. The Belbin roles can be used to identify types when starting up teams and ensure there is a good membership balance or that the imbalances are known and can be managed.

Action-oriented roles
- Shaper: Shapers are highly motivated people with a lot of drive, energy, and need for achievement. They often seem to be aggressive extroverts.
- Implementer: Implementers are well organized and have practical sense. They favour hard work and tackle problems in a systematic fashion.
- Completer: Completers have a great capacity for follow-through and attention to detail. They seldom start what they cannot finish.
People-oriented roles:
- Coordiantor: Coordinators have the ability to cause others to attain shared goals. They spot individual talents and use them to pursue group objectives.
- Team worker: Team workers are the most supportive members of a team. They are sociable and adaptive to different situations and people
- .Investigator: Investigators are good communicators both inside and outside the organization. They are extroverted and enthusiastic.
Problem-solving roles:
- Planter or innovator: Plants are innovators and can be highly creative. They provide the seeds and ideas from which major developments spring.
- Evaluator: Evaluators are serious, prudent, individuals. They are slow deciders and possess a critical thinking ability.
- Specialist: Specialists are self-starting professionals. They pride themselves in acquiring technical skills and specialized knowledge.

Selecting Team Members

When selecting a team, upper management identifies those parts of the organization that are associated most closely with the problem. There are four places to look:

Where the problem is observed or the pain is felt
Where sources or causes of the problem might be found
Among those with special knowledge, information, or skill
In areas that can be helpful in developing the remedy

Often a cross functional team is assembled to accomplish signiﬁcant results in a short period of time. The best and brightest people, the organization has to offer, should be chosen. What is required are people who believe that two or more minds are better than one, and who will contribute a diversity of perspective, experience and knowledge.

Adding New Team Members

Care must be taken when adding new people to existing teams. The rule is to not impose an individual on a team. This can be handled by involving the entire team in the selection process. Team members interview prospective new team members either one at a time or collectively. The team should be questioned about the skills they feel a new team member should bring to the team. When the team has a significant role in deciding on any new team member, the team will be much more committed to making sure the decision was the right decision.

Removing Team Members

Sometimes, despite everyone’s best efforts, a team member may need to be taken off the team. There is any number of reasons why this situation could occur. Perhaps one of the members lacks the required skills and shows little interest in developing them. Personality conflicts may exist between team members. Perhaps a team member is too stretched or stressed by other projects or personal problems, and can’t keep his/her commitments to the team. The result is a very delicate situation for the team leader or sponsoring manager. Both the team and the manager should have a series of frank discussions with the individual. The conversations should centre on what’s expected, what’s at stake, and what’s not happening that needs to happen, or what is happening that shouldn’t be happening. If the situation doesn’t improve, the team member must be removed.

Team Size

A team can consist of members from only one area, or it can be made up of a group of representatives from different parts of the organization. Each person may be a subject matter expert who understands the processes and activities at issue. It is usually impractical to include every person who could be involved. Conventional wisdom is that teams over 20 people, some think over 15, become too unwieldy and lose the active participation of all team members. Teams of 4 people or less may not generate enough ideas. A major change management principle embraces the notion that people will more readily accept and support a change if they are included in the development of the solution. This presents a major dilemma for teams: How can the team be kept small enough to effectively work together and at the same time involve everyone? This is not a trivial matter in large organizations that may have several hundred people actively supporting a work process. Extending the group to customers of the process generates an even larger group of people whose collective buy-in is needed to ensure successful change. Special efforts have to be used to involve the larger group in the understanding of the initial team’s charter and the collection of needed information. Input and ideas should be sought from the larger group as the solution set is developed. Successful teams organize, develop, and implement a communication plan to gain the participation, support, and ultimately, the commitment of an entire department or operation.

Team Diversity

To achieve optimum performance, a team often needs diversity in the orientation of its individual team members. Some team members are needed who are primarily oriented towards the task and target date accomplishment. Other team members will be needed who hold process, planning, organization and methods in the highest regard. Teams also need members who nurture, encourage and communicate well. Teams need some members who are creative and innovative. This quality is helpful when product design, inspiration, optimism, or humour is needed. It is important to understand that the above characteristics are not normally an assigned role. People naturally tend to orient their thinking along with one or more of the desired traits. A good understanding of the above strengths and the value each brings to a team provides much-needed guidance for team selection. Productive teams are sensitive to each other’s viewpoints. Refer to the following Belbin team role descriptions for additional insight into appropriate member selection.

Team Building Activities

Three key characteristics of effective team building are mutual trust, respect, and support. Team members need to be coached in the need to trust and support each other. Support involves actively keeping an eye on the other team members and demonstrating a willingness to help each other out when help is needed–even when it might not be requested. Team members encourage each other to stretch beyond their comfort zone by offering advice or assistance when asked or when it is obvious that the fellow team member needs it. Teams must strive to improve the quality of their teamwork as well as the quality of their output. Teams often have a coach or facilitator. The facilitator is responsible for teaching team building behavior. Team leaders, facilitators, and coaches are also helpful in making certain that the team receives guidance and training as needs arise. Activities that improvement teams may undertake include:

Awareness and education: Additional instruction may be necessary to broaden the understanding of company goals and policies, the improvement process, ways to understand and solve problems, data collection, brainstorming, data analysis, etc.
Data collection and presentation: Often to highlight problems or show improvement, bar graphs, charts, and cause-and-effect diagrams are used. Pareto diagrams are also a very effective tool in problem definition, data analysis, and data presentation. Pareto diagrams form a comparison basis for the performance of a department or process over time.
Problem solving and decision-making: This is the most productive endeavour that teams can participate in. Each time a goal is achieved, it should be documented and the resulting cost savings calculated. The improvement should also be submitted to management for recognition and information shaﬁng.
Organizing breakthroughs: The mentality that scraps and rework are inevitable is very deep rooted. Historically, each work area takes a certain percentage of scrap generation for granted. To counter this attitude with a “zero defect” mentality is not an easy task. The best approach is to brainstorm the process from the premise of how things would look if all waste were eliminated. In the six sigma team concept, meeting customers’ expectations is also extremely important.

Initial Project Selection

Management may define the team project. When the team chooses the improvement project, then the following considerations are important:

It should have broad appeal to members, co-workers, and management
It should be fairly simple but it should not be trivial
It should be selected to show quick benefits (within 3 to 4 months)
It should be within the group’s control
It should consider time and resource constraints

The two major activities are project resolution and learning teamwork. The Problem (Project) Must be properly Defined. The problem must be defined. There is often a tendency to work on a down stream symptom of an upstream problem. Problem statements are often fuzzy. Statements such as “Poor communications”, “Excessive downtime”, “Low recovery”, “Lack of training”, “A car runs rough”, ” Too much scrap” must be avoided.

A problem is a gap between:

What is? and What should be?
Current results and desired results.

A clearly defined problem statement that is measurable should be the initial product. Frequently, a target timetable is included. Consider the team to be working on a problem that is scheduled for the solution.

Team Stages

Most teams go through four development stages before they become productive: forming, storming, norming, and performing. These stages can also be cyclical. Individuals may be storming with one teammate and performing with another.

Forming
Forming is the beginning of team life. Expectations are unclear. Members test the water. Interactions are superﬁcial. This is the honeymoon stage. When a team forms, its members typically start out by exploring the boundaries of acceptable group behaviour. As each member makes the transition from individual to team member, each looks to the team leader (or facilitator) for guidance as to his or her role and responsibilities.
Storming
The second phase consists of conflict and resistance to the group’s task and structure. There are healthy and unhealthy types of storming. Conflict often occurs in the following major areas: authority issues, vision and values dissonance, and personality and cultural differences. However, if dealt with appropriately, these stumbling blocks can be turned into performance enhancers later. This is the most difﬁcult stage for any team to work through. Teams realize how much work lies ahead and feel overwhelmed. They want the project to move forward but are not yet experts at team improvement skills. They often cling to their own opinions, based on personal experience, and resist seeking the opinions of others. This can lead to hurt feelings and unnecessary disputes. Disciplined use of the quality improvement process and the proper tools and communication skills can assist teams members to express their various theories, lower their anxiety levels, and reduce the urge to assign blame.
Norming
During the third phase, a sense of group cohesion develops. Team members use more energy on data collection and analysis as they begin to test theories and identify root causes. Members accept other team members and develop norms for resolving conflicts, making decisions, and completing assignments. Norming takes place in three ways. First, as storming is overcome, the team becomes more relaxed and steady. Conflicts are no longer as frequent and no longer throw the team off course. Second, the team develops a routine. Scheduled team meetings give a sense of predictability and orientation. Third, norming is cultivated through team- building events and activities. Norming is a necessary transition stage. A team can’t perform if it doesn’t norm.
Performing
This is the payoff stage. The group has developed its relationships, structure, and purpose. The team begins to tackle the tasks at hand. The team begins to work effectively and cohesively. During this stage, the team may still have its ups and downs. Occasionally, feelings that surfaced during the storming stage may recur.
Adjourning:
At the end of most projects the team disbands. This step is called adjourning to rhyme with the four other team stages (forming, storming, norming and performing). Adjourning is also a very common practice for other project teams, task forces, and ad hoc teams.

Team life cycle characteristics:

Group will be uncertain
Group lacks cohesiveness
Group will not easily develop consensus
A leader exhibits a high-task/high-relationship style

Task related work is assumed by the group
The group must work to involve any non-participating members
A leader exhibits a low-task/high-relationship style
The team focuses on presentations, tasks, and relationships

Members prioritize and perform tasks
Members work out decisions in a caring way
Conflict is accepted, but cooperation is preferred
The team leader is a delegator and exhibits a low-task/low-relationship style
The team exhibits a high-task/high-relationship style

Team Motivation

The team process itself can be a highly effective, people-building, potential- releasing, the goal-achieving social system that is characterized by:

A climate of high support – Creative problem-solving
An open communication process – Individual achievement
Organizational goal achievement – Commitment

The fundamental purpose of establishing teams is to improve the internal and external efficiencies of the company. This is done through the efforts of the team members to improve quality, methods, and/or productivity. If teams are properly functioning, they will:

Improve employee morale
Remove areas of conflict
Develop creative skills of members
Improve communication and leadership skills of members
Develop problem-solving techniques
Improve attitudes of both management and team members
Indicate to team members that management will listen
Demonstrate that employees have good ideas
Improve management/employee relationships

Listed below are some of the reasons that teams have been successful in many companies:

If management has sanctioned teams in the company, they are more apt to listen to employees and believe they have ideas worthy of implementation.
The team procedure allows all team members to communicate and exercise creative expression.
The concept of teams is supported by modern motivational theory:
- Maslow’s higher level of human needs
- McGregor’s Theory Y which recognizes the worth of an individual
- Herzberg’s theory that true motivation is found in the work itself

Motivation Techniques

Probably the most challenging management responsibility is how to both sustain and increase internal motivation in the work group.’ Management should recognize that people do have certain needs in common, which may often be met in basically the same way. For example, two such common needs are that of being needed and of being treated with dignity and respect. Effective managers must have confidence in both their subordinates and themselves. Workers tend to respond to and respect the manager who knows their capabilities, who is fair and consistent, and who respects them as individuals. There are many qualities that a leader must possess and many conditions that must be satisfied to best motivate people in the industry. Among the important factors are the ability to communicate, provide leadership, expertise, and appropriate working conditions. In order to more effectively understand motivation, a review of some of the more notable milestones in motivational history is warranted.

The Hawthorne Studies
In 1924, Western Electric Company started research on individual productivity at its Chicago Hawthorne facility. They allowed Elton Mayo of Harvard to conduct studies on the effects of worker fatigue and output. The results of this research left countless unanswered questions and opened up many new areas for industrial research. Two important points were revealed in this study:
1. Group behavior has a powerful influence on individual members.
2. The workgroup is a social group that fulfills certain human needs.One of the primary objectives of the study was to determine the effect of illumination on productivity. The study actually revealed a far more important and insightful factor — so long as people are treated as human beings, giving due consideration to individual needs, they tend to cooperate in increasing productivity. The “Hawthorne effect” suggested that people who are singled out for special attention tend to perform as anticipated.
Abraham Maslow
A major theory on the needs and motivation of an individual is based on Abraham Maslow’s theory of human needs based on research conducted during World War II. He stated that there are five levels of human needs, and they are listed below from the highest to the lowest:
1. Self-actualization: Maximum achievement for self-fulfillment
2. Esteem: Respect, prestige, recognition, personal mastery
3. Social: Love, affection, relationships
4. Safety: Security, protection, and stability
5. Physiological: Basic human needs; food, water, housing
  Maslow’s theory affirmed the view that individuals are motivated to lower-order needs until these are satisfied and then higher-order needs must be met. Today’s society with a safety net for the lowest need level makes the threat of losing a job less severe than in the depression years. The current generation of professional knowledge workers might already have self-actualization needs. His message for modern management is that more emphasis should be placed on higher-order needs for most employees.

3. Douglas McGregor

During the mid-1950s, Douglas McGregor began to introduce new theories, Theory X and Theory Y, to his students at the Massachusetts Institute of Technology. McGregor contended that traditional management practices were rooted in certain basic negative assumptions about people (Theory X):

Are fundamentally lazy
Cannot direct their own behavior
Avoid responsibility
Are indifferent to organizational needs
Lack of integrity
Prefer to be directed by others
Are not very bright
Are not interested in achievement

By contrast, Theory Y contains the following important points:

The expenditure of physical effort in work is as natural as play or rest
The threat of punishment is not the only means to achieve objectives
Man can exercise self-direction and self-control
Commitment to objectives is a function of the associated rewards
The average human can learn to accept and seek responsibility
Imagination, ingenuity, and creativity are widely, not narrowly, distributed
Only a fraction of the intellectual potential of workers is utilized

McGregor viewed management’s job as one in which working conditions are created so that individuals can establish and integrate goals with those in the organization. McGregor stated that the following statements are true of Theory X organizations:

Operators don’t care about the operation and products (including quality)
Hostile relationships within and between departments are common
Emphasis is on who to blame if something goes wrong
An independent inspection group must be used to catch defects
Operators are not consulted for work-related improvements
A critical, fault finding upper management

A corresponding list of statements are true of Theory Y organizations:

Upper management empowers workers to improve the process
Supportive professional and friendly relationships abound
Employees share incentives, and individual leadership is encouraged
Emphasis is on what the problem is and how to ﬁx it
Operators contribute to work-related improvements on a continuous basis
Operators care and are interested in their product and jobs

4. Frederick W. Herzberg

Frederick W. Herzberg and his colleagues at Western Reserve Institute conducted studies on the motivation to work. He proposed that motivation can be divided into two factors, which have been referred to by a variety of names such as:

Dissatisfiers and satisfiers, or
Maintenance factors and motivators, or
Hygiene factors and motivators

The dissatisfiers or hygiene factors do not provide strong motivation but do cause dissatisfaction if they are not present. On the other hand, satisfiers do provide strong motivation and satisfaction when they are present. For the manager, this is a reminder that salary is not a motivator, but the lack of an appropriate salary can dissatisfy an employee. Management should be aware of the need to balance both sides of the equation in order to keep an employee from being dissatisﬁed and still have motivators available to influence the employee in a positive way.

Team Facilitation

Job Enrichment

Herzberg’s theory of satisfiers and hygiene factors for understanding job satisfaction and performance are linked to job enrichment. In this job design, jobs that are boring or lack of content are given elements that will satisfy and enrich the employee. Hackman suggests that the following job characteristics are important.

Skill variety: a variety of tasks, and types of skills

Task identify: an ability to do the complete job

Task signiﬁcance: the impact of the job on the firm

Autonomy: freedom from supervision, ability to schedule one’s own work

Job feedback: a person can see the direct results of their work

Employee Empowerment

Organizations have been searching for higher performance for many years. Research showed that most people desired increased involvement and participation. Organizations find that with empowerment, solutions are better, decisions have better acceptance, and performance is increased. Empowerment can be defined as “To empower is to give someone power, which is done by giving individuals the authority to make decisions, to contribute their ideas, to exert influence, and to be responsible.”Management can do a better job in erasing barriers to empowerment through:

Providing more support
Managing by walking around
Providing training
Responding quickly to recommendations
Being facilitators
Recognizing employee accomplishments
Being role models

Organizational Empowerment

Management has the responsibility of setting the tone for organizational empowerment. The purpose of this action is to engage the entire workforce in the activity of making things better. The need for continuous improvement includes productivity, cost containment, product and service quality, outstanding customer treatment, and respect for all employees of the company.

Management Actions

Without adequate consideration of the quality of work-life (by enriching it, enlarging it, or other methods) the individual worker will probably not be satisfied. Efforts at higher levels of empowerment may be doomed. Among the various concepts that management can use are:

Getting others involved in their own work assignments
Encouraging others to obtain the results of work assignments
Providing an environment of cooperation and information sharing
Sharing the ownership of results
Encouraging others to take initiative in the workplace
Allowing others to make decisions and solve their own problems
Letting others implement their ideas
Recognizing successes and contributors

Know thyself: Managers must understand their own motivation, strengths, and weaknesses.

Know your employees: A motivating manager knows their most valuable resource is people. They should talk to and listen to them.

Establish a positive attitude: Respect and sensitivity toward others is essential to the development of positive attitudes. Feedback should, for the most part (say 85-90%), be positive. Asking for and acting on employee opinions also builds an effective, cooperative atmosphere.

Share the goals: A motivated workforce needs well-defined goals that address both individual and organizational needs.

Monitor progress: Managers should periodically review performance.

Develop interesting work: Managers should consider altering an employee’s work by means of job rotation, job enlargement, and job enrichment.

Job rotation permits employees to switch jobs, reducing boredom and building process knowledge

Job enlargement combines tasks horizontally for growth

Job enrichment combines tasks vertically for growth

Communicate effectively: Managers should provide employees with work-related information rather than reliance on grapevine information.

Celebrate success: Recognizing employee achievement is perhaps the most powerful management tool available.

Team Communications

For any organization to be successful there must be effective internal and external communications. This concept certainly extends to team-based communications as well. Among other items, management must relay information regarding:

The vision and mission of the company
Team-based policies and procedures
Team performance feedback
The extent of project support
Satisfaction or dissatisfaction with team performance
Any shifts in priorities
The project’s progress and current status
Any requests for any change in resources
Items that may impact other teams or departments
Any signiﬁcant shifts in project direction
Any pertinent stakeholder information

Any requests for assistance (both internal or external) based on the type of team organization, oral communication can take a variety of forms such as the telephone, face-to-face meetings, formal brieﬁngs, videotapes, and the internet. Examples of written communications include letters, reports, computer messages, and e-mails. The written forms can be described as one-way channels. That is, with one-way channels, feedback to a report or a posting is not immediate. Face-to-face meetings generally allow for immediate feedback from the receiver to the sender (two-way communications). The skillful use of questioning is of great value to both management and Continual improvement teams. The following key questions should be asked:

Why? Use the Japanese technique of asking “why” ﬁve times.
What is the purpose?
What will it take to accomplish the project?
Who will care or benefit if the project is completed?
What data is available?
Where did the data come from?
Avoid leading questions: let the group or individual draw their own conclusion
Phrase questions in a positive manner

Prepare questions in advance whenever possible The use of open-ended questions will allow for some discussion and probing rather than just a simple “yes” or “no” answer. Listening, the other half of the communication concept often receives far too little attention. Verbal information can often be very difficult to understand, even when active listening takes place. Management, including team leadership, should spend a substantial amount of time being listeners. Active listening is defined as helping ﬁnd the source of problems or meaning. A passive listener will respond in a manner that will discourage the message sender from saying more.

Put the message sender at ease
Show that you want to listen
Remove listening distractions
Empathize with the speaker
Be patient with your own response
Hold your own temper
Avoid arguing and criticism
Ask questions
Stop talking

Many individuals would rather hear themselves speak than listening to another person. The good news is listening skills can be learned and developed by practice. Project reports are a great way to communicate team project status. However, a growing number of hospitals, hardware manufacturers, and service organizations are using condensed reporting formats such as the A3 report format

Team Performance Evaluation

Teams are established to accomplish something within a time frame. A clear understanding of the team’s objectives is a very important element of creating a successful team. The objectives may or may not be clear. Management may indicate that they desire a signiﬁcant improvement in overall organizational performance (new business, reduced costs, or improved services). In this instance, the team has some serious work to do defining and refining performance measures. A team can and should be expected to develop and refine its objectives and measures of performance. Even when management provides simple instructions such as a desire to reduce costs, many questions remain: Reduce costs at the expense of sales? Reduce our own costs, but push costs off on some other source (i.e. supplier or customer)? Larger objectives quickly come into play. The team may need to understand the company’s overall strategy. Once the strategy is set or understood by the team members, work can proceed on refining performance measures. Teams are often chartered to improve performance in some way. Performance is associated with speed, quality, cost, and effectiveness. Finding good measures on these variables is not always easy. Most organizations count what can be easily counted, without regard to the organization’s performance. Getting a better handle on performance usually means starting with the customer’s point of view. Finding out what is important to customers and building a set of measures around these variables is usually effective. An example team performance checklist is shown below.

Team Reward and Recognition

Team rewards, which are material items and are given to the team, should be the same for all members of the team. Many intangible rewards are not formally given by someone, but people can still receive and appreciate them. The ultimate reason that rewards and recognition are given is to provide positive reinforcement for good performance, with the expectation that this performance will be repeated in the future. The effect of the reward will depend on the perception of the person receiving the reward. Rewards and recognition are best received when they are personal to the individual receiving them. This is more difficult to achieve as the team size increases or as the number of awards increase. If the award is unique, it has greater value than the same recognition a second or third time. If the company gives out a certificate of achievement to one-third of the employees each month, the employees will very quickly think of the certiﬁcate as worthless and a waste of time. Management recognition of a team for successful completion of their objectives can be very positive and can encourage other teams to strive for excellence. If the team’s efforts are viewed by other teams as being less significant than were made by teams not receiving recognition, then the outcome can be counterproductive. Team and individual rewards and recognition are important to both the organization and to the individuals. However, rewards are often difficult to implement. While a reward may motivate one group, failure to receive a similar reward may discourage another group. The same reward, given under different conditions or at different times, may have totally different results. Probably one of the best rewards is “thank you” when it is sincerely meant. Yet “thank you” often seems to be taken for granted by the person receiving the benefits. Employees who are aware that their efforts are appreciated are often eager to do more than if they were to receive a large ﬁnancial award. (But don’t turn down the cash if it is offered.) One way to offer recognition and support for teams is to encourage them to present their accomplishments to upper management. Presentation objectives include:

Displaying skills
Showing accomplishments
Summarizing project results
Gaining necessary approvals
Opening lines of communication
Knowing the customer’s true needs

Presentation guidelines include many of the following:

Have a handout report and a leader
Introduce everyone and give them a chance to speak
Capture key problems and action steps
Indicate the costs and benefits of recommendations
Present an implementation plan
Use visual aids – be professional
Emphasize achievements and accomplishments
Start and end on time (about one-half hour duration)
Present no sudden surprises.

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Team Management in improvement Projects

Business Responsibilities

In today’s world, organizations must keep pace with ever increasing changes. The complexity of the business requires numerous functions in order to be competitive. A brief description of common business functional responsibilities include the following:

Human Resources
The human resources (HR) department is responsible for an analysis of the needs and training of the workforce, employee turnover analysis, absenteeism analysis, and attitude surveys. In addition, the HR department may recruit, select, and hire people for the organization.
Engineering
As a support service, production engineering is the problem solving arm of the company. The engineering department should be proactive (always searching) in their problem solving activities. The planning of new equipment or processes is a must for this department.
Sales and Marketing
It is up to sales and marketing to develop effective plans to identify customers and markets for the company’s current products and services, and to identify wants and needs for new products. They should work with engineering in order to pass along customer ideas or desires. The development of a marketing plan helps guide the production plan.
Finance
The financial department, in many plants, includes the accounting department. The accounting function compiles monthly statements and the profit or loss statements for the company. A standard cost system should be in place so that data can be collected and based against it. Budget forecasts, capital project requests, and external funding can also be coordinated by the finance department.
Product Liability
In the manufacture of certain products, there are numerous legal ramifications. The theories based upon breach of warranty have a statutory basis in the Uniform Commercial Code. Product safety requirements and labeling laws not only protect the consumer, but also should reduce the liability risk to the company.
Manufacturing
The manufacturing activity is associated with companies manufacturing a product or products. Manufacturing takes designs from engineering, schedules from planning and assembles, and tests the company products. For a service organization, this function is replaced by the personnel performing the service.
Safety and Health
The safety and health department aids the company in complying with local, state, federal, and industry regulations. The best known safety agencies include OSHA, state safety agencies, NFPA, etc. These agencies impact the establishment of a safety program, safety committee, and special safety task forces for the company.
Legal and Regulatory
A legal department (or attorneys on retainer) may be necessary to handle legal matters, especially in the very litigious society of today. A review of purchase agreements, land contracts, leases, right-of-ways, tax abatement, economic impact grants, etc. are examples.
Research and Development (R&D)
Research and development activities are critical for the future of the company. The customer is satisfied for a certain time span with the existing product or service, but eventually the customer will want a new and improved product. interaction with the marketing function and customer is needed to generate new ideas and products.
Purchasing
The securing of the proper raw materials, at the right time, is a basic requirement of the purchasing department. They must find ways to reduce the number of corporate suppliers, without increasing the risk of shutting down lines due to a lack of product. The forming of alliances and partnerships among suppliers and customers should always be of concern.
IT or MIS
The information technology (IT) or management information systems (MIS) function is a key ingredient in the factory of the future. Many companies have already exploited information technology. Some of the benefits of IT or MIS include electronic data interchange with customers and suppliers, electronic e-mail for communications, bar coding for all products, data collection for analysis, use of personal computers (PCs), online order status, and real time inventory.
Production Planning and Scheduling
Production planning and scheduling is a department that helps to coordinate the flow of materials throughout the plant. It tracks the levels of materials and inventory, schedules the product, tracks the product, and informs customers and suppliers of progress.
Quality
The quality department has but one function in the corporation, which is to coordinate the total quality effort of a company and direct the quality assurance activities.
Environmental
An environmental department, separate from safety and health, is desirable. The proliferation of new regulations make this a very volatile and difficult ﬁeld. What was permissible in the past can be deemed a violation today. The impact of The Clean Air is presently a concern, as is effluent water.
Technology
A technology department is a luxury that many large companies can afford. This department is capable of scanning the magazines, journals, trade shows, conferences, patent applications, and libraries looking for new products and technology. Such an arrangement offers a competitive advantage.
Servicing
Servicing relates to either manufactured or sold products, or the servicing of client accounts for non-manufacturing companies. Servicing is responsible for ﬁxing problems with the product, and assuring that customers are satisﬁed.

Types of organization structures

Some of the type of organization structures.

Flat Organizations
In flat organizations decision making is forced to lower organizational levels. Therefore, the decisions can be erratic and inconsistent. This statement is certainly dependent upon who makes the decision at any given point in time. There are fewer decision levels; therefore, the loss of key people can have a negative impact on these organizations. Resources may be so sparse that the culture can become extremely dependent upon the values of single individuals (such as the owner or CEO)
Tall (Vertical) Organizations
In a vertical organization, the lower levels have their decisions reviewed by the individuals above them. This also means that communications are not as rapid. Additionally, it can take much more time and effort to have people respond to certain directives. As jobs are added to handle the details of decision making, more layers of management are created. Sometimes, these levels become impediments. Decisions are made slowly. Vertical feedback is frequently ﬁltered. Upper management is often out of the loop on localized quality or customer issues. Some of these problems can fester into major issues. The vertical organizational culture can become too bureaucratic. Management attention can be directed at who gets the corner office or whose desk is bigger instead of servicing the customer or becoming more efficient.
Functional Organizations
The people in functional organizations can become very specialized in their field of expertise. Well rounded individuals may be difﬁcult to ﬁnd. Coordination of projects or problems can be more difficult than in a ﬂat organization. There is a danger that sub-organizational values and shared assumptions may become too inbred.
Product Organizations
In a product organization, there can be a duplication of selected services. Individuals may lack overall corporate focus since they are concerned with a smaller piece of the pie. Although segments of the company are better directed at meeting competitor challenges, they can also compete against each other for company resources and consumer markets.
Geographic Organizations
This arrangement presents similar problems as encountered with functional organizations. Additionally, many undesirable nationalistic or regional cultural features may arise.
Matrix Organizations
In matrix organizations, a specialist can report to two or more people, violating the one boss rule. It is often difﬁcult for the specialist to decide which superior to respond to ﬁrst. It is somewhat important not to upset the manager who evaluates performance and awards merit raises. The biggest problems with organizational culture in a matrix organization can be competing values and occupational subcultures.
Team Based Organizations
The entire employee selection process is much more stringent for a team based structure. Additionally, management time is directed at employee training and support. An organization that is experiencing severe short-term threats should not undertake this rather lengthy organizational rollout. There are also threats to all levels of management, particularly middle management. The loss of some of these individuals would mean a tremendous loss in job knowledge and expertise. A multitude of teams can spawn a multitude of occupational subcultures. There can also be a loss of clarity in business goals based on the numerous communication channels.
Cross Functional Collaboration
In traditional, functionally designed organizations, segments of vital activities are captive within and across many departments. For any customer order, each department has the responsibility to process its part of the order as efﬁciently and as effectively as possible. Various department heads are responsible for the activities within their department, which allows for good management controls and procedures, but no one owns the overall process and the results. Functional departments develop strong functional mindsets and will approach problems differently than other functional units. It is difficult when departments speak different “languages,” or have conflicting goals. The functional specialists will tend to focus on departmental matters and the immediate superior’s goals, not the customer or the industry. This describes the creation of a silo mindset. An example of such a conflict occurs when manufacturing is trying to meet the end of the month shipments, but quality is holding the shipments because of nonconforming product. Galbraith describes cross functional efforts as a lateral coordination effort.
Departments or functions at the same level (lateral) should be grouped together to produce the required output. The units are all interdependent of each other, if the ﬁrm is to succeed.
- Rules and procedures: everyone understands what to do Hierarchical referral: coordination problems go to a common superior Planning: objectives and targets are known by everyone Direct contact among managers: face-to-face contact among managers Liaison roles: cross trading of personnel to work in each other’s units Task forces and teams: people from different units on task forces Matrix organization: create a matrix structure for specific projects
This concept is also worthwhile for many other aspects of organizational improvement and rapid customer response.

Organizational Change

Business and technological changes have accelerated at an alarming rate. The world is becoming smaller, and companies in today’s environment must face global competitors in their own backyards. Customer expectations of products and services are also increasing at the same exponential rate. What was delightful to the customer yesterday, is now expected. A company must improve its products to meet the customers’ new expectations and must perpetually improve operations, processes, costs, cycle time, technology, productivity, etc. In times of change, everyone is involved in the change effort. Most managers and process owners are expected to be change agents. The change agent role is not limited to the top leaders of the corporation.

The Change Process :The classical model for a change process consists of three phases: unfreezing, movement, and refreezing.
Unfreezing:To the change agent, the first phase means unfreezing the existing behavior patterns and practices of the work group. This is where resistance to new programs appears and must be dealt with
.Movement:The next step would be to move the people or practices to a new arrangement. This could be accomplished through training or technology.
Refreezing:At the proper moment in time (with the skills, technology, or practices in place) the process, including the people, are refrozen. This is where the company wants to be. A process, procedure or department is now aligned for optimum organizational effectiveness. The acceleration of change in the world can be described as being in “permanent whitewater.” As soon as a program is completed, it is time to change again. That is, unfreeze the process, move in a new direction, refreeze, pause, and start again.

Change Agents:The change agent is the person or group that acts as the catalyst and assumes the responsibility for managing the change process. As CEOs, Lee lacocca and Jack Welch could drive the change effort. A manager may act as a sponsor or patron of the change process. The sponsor is a key political supporter and may provide the change agent with funds, staff, and resources. The process to be changed is deﬁned as the target. Change agents can be managers or other employees of the organization. They would be termed internal change agents. External change agents are outside individuals who are free from the political restraints of the organization. They can offer more objective viewpoints and analysis of the situation at hand. However, outside change agents will not have the insider’s knowledge of the organization’s culture, history, procedures, and personnel. Some characteristics of a good change agent include: being empathetic, sensitive, open, tolerant, flexible, patient, friendly, cooperative, imaginative, confident, self-reliant, and risk taking.

	Internal Change Agents	External Change Agents
Advantages	More knowledge company May be more available Lower cost A known quantity More local authority	More objective More diverse experience Has a broader network Technically prepared
Disadvantages	Too close to the problem May be part of the problem May be biased May be unwilling	Less company knowledge Higher cost An unknown quantity Long startup time Bad Management image

Comparison of Internal and External Change Agents

Types of Organizational Change
Organizations generally undergo change in four major areas: strategy, technology, structure, and personnel.
- Strategic changes occur when the company shifts its direction and resources toward new businesses or markets
- Technological changes occur when the company decides that automation or modernization of key processes are essential for overall competitiveness
- Structural changes occur when the company undergoes a management delayering process, or goes from a functional structure to a product structure
- Changing the attitudes and behaviors of company personnel is often undertaken through organizational development techniques
Large Scale Change
Most change agents, enacting revolutionary organizational changes, will advise management to allow 3 to 5 years for the change to take effect. The chief executive officer is often anxious for results to appear much quicker than that. The efforts to remodel an organization and to align personnel takes years due to the current methods of imparting the philosophy of change. To train everyone in a large organization could take 6 months or a year. By that time, the emphasis on the direction of the company and the intensity of the effort could be waning. Little wonder then, that more time and effort must be expended to realign people toward the direction or focus of the effort. A new movement coming from the organizational development area is the concept of very large groups coming together to work on a change. The idea is to involve people at the start and to have them enrolled in the cause. Teams of large size will definitely shorten the time to transmit the vision and mission and to enroll people in the change effort. A key element is to make sure that everyone who can make a decision is in the room. A result of this effort will be people committing and agreeing to specific action plans. A large scale change effort of this type generally lasts several days, but organizations can see results immediately.
Resistance to Change
People resist change because they will be asked to do something that they may be unfamiliar with. They could also be asked to accept a change which could cause them a personal loss. For example, certain older employees may reject change because they might be uncomfortable doing their job with a slightly different twist. Younger employees may not have invested as much time with the old process and may be more accommodating of change. The change agent must anticipate resistance to change and find ways to overcome it. Strategy for dealing with resistance to change:
- Educate and communicate the change
- Enlist employee participation in the project
- Provide support efforts such as training or counseling
- Have negotiated arrangements for change
- Use manipulation to obtain support
- Use threats or direct force, but only as a last resort

Linking Improvement Projects to Organizational Goals

Embarking on a Improvement initiative begins with a management decision to embrace a change that says “There’s a better way to run our organization.” The readiness assessment includes a review of the following areas:

Assess the outlook and future path of the business:
- is the strategy course clear for the company? Can we meet our ﬁnancial and growth goals? Does our organization respond effectively to new circumstances?
Evaluate the current organizational performance:
- What are our current overall business results? How effectively do we meet customer requirements? How effectively are we operating?
Review the capacity for systems change and improvement:
- How effective are we in managing system changes? How well are our cross functional processes managed? Are our current efforts in conflict with six sigma?

The above assessment will go a long way towards deciding if current efforts are sufficient or whether the timing is appropriate to undertake a Improvement Project effort. Continual Improvement can be measured in three categories:

Proﬁtability Productivity Quality

Performance	Do	Don’t Do
Low	Concentrate on basics Using Problem Solving Team Apply cost management Engage in customer innovation	Empowerment Benchmarking Strategic planning
Medium	Set goals and monitor them Use process simpliﬁcation Use department improvement teams Get middle management involved
High	Benchmark other ﬁrms Empower employees Communicate strategic plans Continuously improve

Best Company Strategies Based on Performance Level

A decision on Process Improvement might be negative if the following conditions exist:

The company already has an effective improvement effort in place Current changes are already overwhelming the company’s resources The potential gains aren’t sufficient to finance the necessary investments

There are a considerable number of options, dependent upon the goals and objectives of the organization. while implement improvement projects considerations include:

Focus on project cost savings
Focus on customer satisfaction deliverables
Focus on processes
Focus on problems
Focus on a targeted location
Focus on design
Focus on supplier processes

Team Formation

As a prerequisite to team formation, team members must:

Have a reason to work together
Accept an interdependent relationship
Commit to team values

Management supports the team process by:

Ensuring a constancy of purpose
Reinforcing positive results
Sharing business results
Giving people a sense of mission
Developing a realistic and integrated plan
Providing direction and support

Management as part of some mechanism such as a steering committee, should provide relief from potential team constraints such as work schedules, or lack of technology. The six sigma black belt, champion, or team leader may also be involved in easing other team constraints.

Types of Teams

The following types of teams are used by industries throughout the world today:

Improvement Teams
A group belonging to any department chooses to solve a quality/productivity problem. It will continue until a reasonable solution is found and implemented. The problem may be management selected, but the solution is team directed.
Process Improvement Teams
For a process improvement team, employees may be drawn from more than one department to look into the flow of material and semi-finished goods required to streamline the process.
Project Teams/T ask Forces/Ad Hoc Teams
Members are selected based on their experience and directed by management to look into specific areas such as the modernization of a piece of equipment or solution to a customer complaint. These teams are generally ad hoc and disband upon the completion of their assignments. Team membership can be all management, all work area, or a composite of the two. Usually, the boundaries of the assignment are tightly drawn for project teams or ad hoc teams. Some taskforces may have broader mandates.
Cellular Teams
Cellular teams are a variant of natural work teams. The name derives from the work cell arrangement in which a number of employees either fabricate or assemble parts. These teams can be led by a supervisor or may be self-directed.
Self-Directed Teams
After a team understands its charter and has worked through its norms, it is ready to get down to the business of solution building and improvement. Ideally, the team should select its own leader to interface with other teams and coordinate team activities. As the team meets and works together, the team leader should assume an equal position with the other team members. Some teams find it helpful to rotate team leadership to give everyone experience. At the pinnacle of performance, anyone on the team should be able to lead the team. This type of team operates with minimal day-to-day direction from management. Self-directed teams are asked to accomplish objectives within time frames that are truly stretch objectives. Management must give the team the maximum latitude possible for achieving their objectives.
Cross Functional Teams
Cross functional teams are made up of individuals who represent different if departments or functional areas in the organization. Individuals who represent a department or functional area should be subject matter experts. That is, they should be very knowledgeable about the policies, practices, and operations of their department or functional area. The thoughtful selection of the members is an important aspect of building an effective team. This becomes even more critical if the team is to work only on a single project for several months or more. Team involvement promotes sharing of the problem and minimizes “finger pointing.” Representation from various departments also promotes the acceptance and implementation of change throughout the organization. Solutions designed with the active participation of affected departments tend to be technically superior and accepted more readily by those who must implement them.
Natural Work Team Organization
Leadership is usually given to the area supervisor. Members come from the supervisor’s work force. Outside members from specialist organizations can be included in the membership, either as active members or as contributing guests. Often, a facilitator is another important person in this team organizational structure. He or she is specifically trained to coordinate multiple team activities, oversee team progress, document results, and train team members in their assorted duties.
Quality Circles .
The concept of circles originated in Japan after WW II. They were so successful in Japan that many managers in the United States tried to duplicate them. The circle is a means of allowing and encouraging people on the production floor to participate in decisions that will improve quality and/or reduce manufacturing costs. Quality is only a part of circle involvement. Most ideas worthy of implementation must be justified on the basis of cost savings in some way. Department members voluntarily participate to improve departmental performance. Quality circles are effective forums to exchange suggestions and find solutions. Since membership is voluntary, people are highly motivated to continue the improvement process.
Quality Teams
The quality circle approach has been on the decline in the U.S. for some time. Replacing circles have been a variety of quality team nomenclatures. The major reasons for the shift appear to be two-fold. First, the term “quality circle” has a strong Japanese connotation. And secondly, most circle projects tend to be employee selected, while most team efforts are management selected, but team directed. The fundamental purpose of establishing quality teams is to improve the internal efficiencies of the company and both internal and external products and service quality. This is done through the efforts of the team members to improve quality, methods, and/or productivity.
Virtual Teams
The world is becoming increasingly flat due to the advent of a variety of synchronous (chat rooms, teleconferencing, and videoconferencing) and asynchronous (web sites, e-mail, faxes, voice mail) tools. Since many companies are international, there is a growing need for a variety of project or ad hoc teams to address issues such as product quality, service instructions, delivery issues, and technical requirements.
Six Sigma Teams
Many organizations have implemented the following roles in their six sigma programs. Master black belts, Black Belts , Green Belts, Champion. Process owner, Executive Sponsors

Black Belts

Six sigma black belts are most effective in full-time process improvement positions. The term black belt is borrowed from the martial arts, where the black belt is the expert who coaches and trains others as well as demonstrates a mastery of the art. In a similar way, six sigma black belts are individuals who have studied and demonstrated skill in implementation of the principles, practices, and techniques of six sigma for maximum cost reduction and profit improvement. Black belts typically demonstrate their skills through signiﬁcant ﬁnancial improvement and customer benefits on multiple projects. Black belts may be utilized as team leaders responsible for measuring, analyzing, improving, and controlling key processes that influence customer satisfaction and/or productivity growth. Black belts may also operate as internal consultants, working with a number of teams at once. They may also be utilized as instructors for problem solving and statistics classes. Black belts are encouraged to mentor green belt and black belt candidates. Potential black belts often undertake four weeks of instruction over a three or four month period. A set of software packages can be used to aid in the presentation of projects, including Excel or MINITAB for the statistical portions. Specific elements will differ, but all stress an understanding of variation reduction, training, and project management. Black belts often receive coaching from a master black belt to guide them through projects. Black belts have the following duties in their company:

Mentor: Have a network of six sigma individuals in the company
Teacher: Train local personnel
Coach: Provide support to personnel on local projects
Identifier: Discover opportunities for improvement
Influencer: Be an advocate of six sigma tools and strategy

Master Black Belt

Six sigma master black belts are typically in full-time process improvement positions. They are, first and foremost, teachers who mentor black belts and review their projects. Selection criteria for master black belts includes both quantitative skills and the ability to teach and mentor. For master black belt recognition, an individual must be an active black belt who continues to demonstrate skill through signiﬁcant positive financial impact and customer benefits on projects. The ability to teach and mentor is evaluated by reviewing the number and caliber of people they have developed. Teaching may also be demonstrated in classroom environments.

Green Belts

Six sigma green belts are not usually in full-time process improvement positions. The term green belt is also borrowed from the martial arts, referring to an individual who has mastered the basic skills, but has less experience than black belts. Green belts must demonstrate proficiency with statistical tools by using them for positive financial impact and customer benefits. Individuals may remain green belts or, with experience, they may become black belts. Green belts operate under the supervision and guidance of a black belt or master black belt.

Executive Sponsors

Executive sponsorship is a key element in an effective black belt program. Executive leadership sets the direction and priorities for the organization. The executive team is comprised of the leaders that will communicate, lead, and direct the company’s overall objectives towards successful and profitable six sigma deployment. Executives typically receive training that includes a six sigma program overview, examples of successful deployment and strategies, and tools and methods for definition, measurement, analysis, improvement, and control.

Champions

Six sigma champions are typically upper level managers that control and allocate resources to promote process improvements and black belt development. Champions are trained in the core concepts of six sigma and deployment strategies used by their organization. With this training, six sigma champions lead the implementation of the six sigma program. Champions also work with black belts to ensure that senior management is aware of the status of six sigma deployment. Champions ensure that resources are available for training and project completion.

Process Owners

Six Sigma Structure

Companies have differing duties and terminologies for organizational roles that support six sigma improvement. Some of the common functions and optional structures are listed below:

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Benchmarking

Using Benchmarking to achieve Process Improvement

The definition of Benchmark is “a mark on a permanent object indicating elevation and serving as a reference in topographical surveys and tidal observations”, “a point of reference from which measurements may be made”, ” something that serves as a standard by which others may be measured”.

Omdahl defines benchmarking as a continuous improvement process in which a company:

Measures the most relevant specific attributes of its own products, services, and practices, often including Operations, Performance, Procedures, Project, Processes, Strategies
Compares its own performance against:
- Best-in-class company performance.
- Companies recognized as industry leaders.
- The company’s toughest competitors.
- Any known process that is significantly superior to the company’s.
Determines how those companies achieved their significantly superior performance level.
Uses that information to improve its own performance.
Ultimately reaches the level of performance achieved by the benchmarked process (or a level above that process).
Continually repeats the process in an iterative fashion.

Juran presents the following examples of benchmarks in an advancing order of attainment:

The customer specification
The actual customer desire
The current competition
The best in related industries
The best in the world

Benchmarking is the process of comparing the current project, methods, or processes with the best practices and using this information to drive improvement of overall company performance. The standard for comparison may be competitors within the industry but is often found in unrelated business segments. Benchmarking has gained tremendous influence and usage in the 1990s. Correspondingly, front-line employees and operating managers have applied basic benchmarking skills in scores of different business situations. Benchmarking is done to identify opportunities, set realistic but aggressive goals, and challenge internal paradigms on what is possible. Benchmark helps us to understand methods for improved processes. It uncovers strengths within your organization. we can learn from the leaders’ experiences and prioritize better to allocate resources. It helps in Performance Improvement. These applications can be grouped into distinctive types. Examples are explained below:

Process Benchmarking

Process benchmarking focuses on discrete work processes and operating systems, such as the customer complaint process, the billing process, or the strategic planning process. This form of benchmarking seeks to identify the most effective operating practices from many companies that perform similar work functions.

Performance Benchmarking

Performance benchmarking enables managers to assess their competitive positions through product and service comparisons. This form of benchmarking usually focuses on elements of price, technical quality, ancillary product or service features, speed, reliability, and other performance characteristics.

Project Benchmarking

Benchmarking of project management is easier than many business processes, because of the opportunities for selection outside of the group of direct competitors. Areas such as new product introduction, construction, or new services are activities common to many types of organizations. Although the project objectives are different, the projects will share the same constraint factors of time, costs, resources, and performance. Project management benchmarking, is useful in selecting new techniques for planning, scheduling, and controlling the project.

Strategic Benchmarking

In general terms, strategic benchmarking examines how companies compete. Strategic benchmarking is seldom industry-focused. It moves across industries seeking to identify the winning strategies that have enabled high-performing companies to be successful in their marketplaces.

Harry suggests that companies should always know their strongest competitors on a process by process basis. Benchmarking provides measurements of a company’s performance compared to the competition and is an essential part of six sigma projects during the measure and analysis stages. It is especially helpful for evaluating higher-level processes at the business and operational levels where both the measures and their allowable ranges are often in question.
It should be noted, in this regard, that benchmarking results should be treated like any other measure. A single value (benchmark result) should not receive too much value, especially when the normal range of values for that measure is not well known. In those situations where there are no known or related processes available, a company may have to resort to either reengineering or related techniques to improve the operation, project, product, or activity of concern. As identiﬁed in SWOT analysis, internal weaknesses and external threats are good sources for competitive benchmarking.

	Without Benchmarking	With Benchmarking
Defining Customer Requirements	Based on history/gut feel Acting on perception	Based on market reality Acting on objective evaluation
Establishing Effective Goals	Lack external focus Reactive Lagging industry	Credible, customer-focused Proactive Industry leadership
Developing True Measures of Productivity	Pursuing pet projects Strengths and weaknesses not understood	Solving real problems Performance outputs known, based on best in class
Becoming Competitive	Internally focused Evolutionary change Low commitment	Understand the competition Revolutionary ideas with proven performance High commitment
Industry Practices	Not invented here Few solutions Continuous improvement	Proactive search for change Many options Breakthroughs

Some companies attempt to achieve a higher performance level than their benchmark partner. Shown below is a comparison between a typical and a breakthrough benchmark approach.

Benchmarking Comparison

The competitive benchmarking partner presents some interesting options. For example, Xerox Corporation has used IBM and Kodak (direct competitors in many product lines) as benchmarks for many Xerox operations. However, Xerox chose L.L. Bean Company, a catalogue sales distributor of clothing and consumer products, as a benchmark for warehousing and distribution activities. They did this because they felt L.L. Bean to be world class.
In some cases, a benchmarking against the best-in-class is not possible because:

The best in world is not known (should be rare)
There is no related process available (rare)
The best-in-class is not willing to partner
The best-in-class is inaccessible due to geography or expense
It should be noted that organizations often choose benchmarking partners who are not best-in-class because they have identiﬁed the wrong partner or simply picked someone who is handy.

Types of Benchmarking

Internal: Comparisons between yourself and similar operations within your own organization.
Competitive: Comparisons among competitors for a specific product.
Functional: Comparisons to similar functions within the same industry.
Generic: Comparisons of processes independent of industry or overall functions.

Cost/Benefits Analysis:

Benchmarking Sequences

Often, benchmarking activities follow the sequence below:

Determine current practices
- Select the problem area.
- Identify key performance factors.
- Understand your own processes and the processes of others
- Select performance criteria based on needs and priorities
Identify best practices
- Measure the performance within the organization
- Determine the leader(s) in the criteria areas
- Find an internal or external organization to benchmark with
Analyze best practices
- Visit the organization as a benchmark partner
- Collect information and data of the benchmark leader
- Evaluate and compare current practices with the benchmark
- Note potential improvement areas
Model Best Practices ‘
- Drive improvement changes to advance performance levels
- Extend performance breakthroughs within the organization
- Incorporate the new information in business decision making
- Share results with the benchmark partner
- Seek other benchmark leaders for further improvement
Repeat the cycle

The Benchmarking Process

Planning Phase

Form (and train, if needed) benchmarking team
Analyze and document the current process
- Identify the area of focus
- Identify the critical success factors (CSF)s for the area
- Develop measures for the CSFs
Establish scope of benchmarking study
Develop purpose statement
Develop criteria for benchmarking partners
Identify target benchmarking partners
Define a data collection plan and determine how the data will be used/managed/distributed
Identify how implementation of improvements will be accomplished

Collection Phase

Secondary research based on select/sort criteria
Evaluate results and identify potential partners
Develop data collection instruments
Pilot data collection instruments internally
Identify and contact best practice partners and enlist participation
Screen partners and evaluate for best “fit” with criteria
Develop detailed questionnaire
Conduct detailed investigation
- Detailed questionnaire
- Follow-up telephone interviews
- Site visits

Analysis Phase

Compare your current performance data to your partners’ data
- Sort and compile data
- Make your performance data comparable (normalize)
- Identify gaps
Identify operational best practices and enablers
- What are participants doing that you are not doing
- How do they do it (enablers)
Formulate strategy to close the gaps
- Assess adaptability of practices and enablers
- Identify opportunities for improvement.
Develop implementation plan

Adapting Improvements

Implement the plan
Monitor and report progress
Document the study
- Communicate the results (internally and to benchmarking partners)
- Assist in the internal transfer of best practices
Plan for continuous improvement
- Identify new benchmarking opportunities
- Set new goals

Tools of Benchmarking

Process Mapping
Think of yourself as the product. Then…
– Walk the process and see what happens to you
– Identify each activity
– Determine if you are being operated on, transported, inspected, waiting, or stored
– Determine how far you were moved
– Determine how long each activity took
– Determine what value-added work was done on you
– Summarize the information
Process performance measurements
Performance measurements are tied to customer expectations and is aligned with strategic objectives. It should be clearly reflective of the process (not overly influenced by other factors). Data should be easily obtained and understood and can be monitored over time. Examples are Cycle time, Rejects per month, Costs.
Project management
Project management techniques are useful in Planning the benchmarking study and Developing the implementation plan.
Questionnaire design
1. Keep the questionnaire simple (no more than 2 pages).
2. Determine the intent of the questionnaire
  - screen potential benchmarking partners, or
  - obtain specific process-related information from a selected partner(s)
3. Briefly explain the study’s purpose and how their responses will be used.
4. Be specific about the process under study. (hint: include a simple process map)
5. Use neutral language. Don’t ask questions that presuppose the answer.
6. Test the questionnaire internally on people who are unfamiliar with your project.
  - Are the questions clear? Do the responses really address your issues?
7. Answer the questionnaire about your own process.
8. Ask yourself, “What kind of response do I expect from this question, and what will I do with the information when I get it?” Focus on the critical issues.
9. Don’t use acronyms or organization-specific terminology. (No TLAs)
10. Ask the respondents to forward the questionnaire if others are better able to answer the questions.
11. Provide a contact from the benchmarking team, and an address (or fax number) where the questionnaires should be returned or issues clarified.
12. Indicate whether the respondent should expect any further contact from your team.
13. Thank the participants for their cooperation.
14. Interviewing skills
15. Observation skills
16. Etiquette and legal issues
Interviewing Skills
- Be prepared. Know your own process and its performance measurements. Be familiar with the questions you will be asking, and have other questions thought out that would help you elicit additional information.
- Be sensitive to the protocol and culture of your benchmarking partner. Follow their lead.
- Use a standard set of questions with each benchmarking partner, but be flexible in the interview to permit them to share additional information. You might ask, “Is there anything that we’ve failed to ask you that might be useful to us?”
- Practice active listening skills, and listen more than you speak. Never argue-among yourselves or with your partners.
- Gather facts, but be open to hearing opinions.
- Be candid about the deficiencies of your own process, but don’t assign blame.
- Be considerate of your benchmarking partners’ schedule constraints. Never take more time than you have scheduled unless you are encouraged to do so by your partners.
- Thank your partners for their cooperation, and indicate if/when they should expect any further contact from your team.
Observation Skills
Site visits provide opportunities to observe the enablers in place at your benchmarking partners

7. Benchmarking Etiquette

Don’t ask for data that you aren’t willing to provide in return.
Remember that you and your team represent your whole company in the eyes of your benchmarking partners.
Send questions in advance of telephone conversations or site visits.
Inquire up-front about confidentiality issues or topics that are “off-limits.”
Never press for information that is not willingly given.
Don’t reveal information that other benchmarking partners have given you unless you are certain it was meant to be shared with other companies.
You may offer to share findings of the study, keeping in mind any issues of confidentiality between partner companies.
When in doubt, don’t ask!

Keys to Successful Benchmarking

Focus on the processes that are critical to your business
Desire to use benchmarking in conjunction with strategic planning
Willingness to admit that you’re not the best
Openness to new ideas from potentially unexpected sources
Commitment to provide resources and to overcome resistance to change
Recognition given to successful benchmarking teams
Understanding of the benchmarking process
Communication to the organization about the objectives of the benchmarking project

When You Shouldn’t Benchmark

You aren’t targeting a process or it isn’t critical to the business
You don’t know what your customers require from your process
Key stakeholders aren’t involved in the benchmarking project
Inadequate resources have been committed
You have an unreasonable fear of sharing information with benchmarking partners
There are no up-front plans for implementing your findings
You haven’t done your “homework” before contacting benchmarking partners
You’re benchmarking an organization rather than a process
There is a strong resistance to change (NIH syndrome)
When you are expecting results instantaneously

Illegal Benchmarking Practices

Submitting phony requests for information in order to obtain pricing information
Performing reverse engineering when the product is obtained illegally
Covert photography or tape recording
Violations of Antitrust Law/Unfair Trade Practices: Requesting information from direct competitors on Marketing strategies, Sales incentives, Cost or pricing data (other than commercially available price lists), Contract terms and conditions,
Unethical practices
- Misrepresenting yourself, your company, or your intentions in obtaining information
- Querying job candidates about practices of their present employers
- Using information that was given to you for a specific purpose for another reason without first obtaining permission from the benchmarking partner who provided it

Where Do You Start the Search for the Best?

Focus on the process, not the company
All of the processes at world-class companies aren’t world-class processes (beware of the “halo” effect)
Even mediocre companies can have a world-class process or two
Weigh the ease of getting access against possible performance compromises
- Understand the spectrum from parity (just “different”), to some improvement over the current process, to best practice, to best-in-class or world-class.
- Decide “best-in-class” or best-in- Pune or somewhere in-between

Tapping into “Hidden” Resources

Resources that are internally accessible
- Library databases and literature searches
- Employees who have worked at other companies, in other industries
- Sales and marketing personnel
- Field service personnel
- Media attention — articles, shows
- Other divisions of your organization
Resources that require external contact
- Professional associations
- Industry publications
- Customers
- Suppliers
- Industry/ Marketing Association
- Seminars and conferences
- Universities and alumni associations
- Benchmarking clearing houses
- Consultants

Establishing a Relationship with Benchmarking Partners

Initial contact must establish expectations
- Mutual benefit
- Effective/disciplined use of information
- Cultural fit
- Thorough preparation
- Willingness to share
- Respect for any issues of confidentiality
Process-specific information might include
- Process map
- Physical layout of the process (including floor space)
- Quality data
- Cycle time data
- Pictures of equipment and equipment/materials lists
- Associated procedures, forms, standards, and specifications
- Customer and supplier requirements
- Skills required and the syllabus from associated training
- Descriptions of any associated regulations, environmental factors, and healthy and safety data requirements
You may also want to offer the following information about your organization and may want to ask for similar information from your benchmarking partners
- Brochures describing the organization
- Organization charts
- Newsletters
Preparing for a Site Visit
- Get agreement on the agenda
- Send a confirmation letter (restate your intentions, ensure that the right people are present, and permit your host to review your questions)
- Clarify any issues of confidentiality
- Ensure that each member of your team understands his/her areas of responsibility
During Site Visits
- Pay attention during introductions (names, responsibilities, experience)
- Ask to tour the facilities, if possible, in addition to the areas involved in the subject process. Clarify the protocol for talking with employees during the tour
- Take thorough notes
- Use breaks and lunch to build rapport
- Be observant; look for the enablers
- Be open to “the unexpected”
Learning From the Best and Translating Information into Action
- Analyze the data and insights gathered from benchmarking partners
  - Compare process performance measurements
  - Review goals
  - Prepare a gap analysis
- Understand the factors that contribute to your partners’ superior performance
  - Which can be adopted?
  - Which can be adapted?
- Map the “to-be” process
- Use project management skills to identify tasks, resources, and schedule to implement process changes
- Identify who must be “sold” on process changes
- Implement and monitor process performance
Last Steps
- Send a letter of appreciation
- Ensure that any concerns your partner raised have been addressed
- When completed, send a courtesy copy of your final report
- Capture lessons learned from the benchmarking process itself
- Review new process performance to ensure that improvements have been sustained
- Identify other candidate processes for benchmarking
  - Potential for additional exchange with benchmarking partners
  - Build on success

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Quality Function Deployment

The voice of the customer translated into the voice of the engineer.

To design a product well, design teams need to know what it is they are designing, and what the end-users will expect from it. Quality Function Deployment is a systematic approach to design based on a close awareness of customer desires, coupled with the integration of corporate functional groups. It consists of translating customer desires (for example, the ease of writing for a pen) into design characteristics (pen ink viscosity, pressure on ball-point) for each stage of the product development. Quality function deployment (QFD) is a tool that is sometimes referred to as the “voice of the customer,” or as the “house of quality.” Quality function deployment has been described as a process to ensure that the customers’ wants and, needs are heard and translated into technical characteristics. The technical characteristics are handled by the company through the design function, or better still, through a cross-functional team that includes sales, marketing, design engineering, manufacturing engineering, and operations. This activity should focus the product or service on satisfying customer requirements. QFD is a tool for the entire organization to use. It is flexible and customized for each case and works well for manufactured products and in the service industry. The possible benefits of using the QFD process are:

Creates a customer driven environment
Reduces the cycle time for new products
Uses concurrent engineering methods
Reduces design to manufacture costs (fewer changes)
Increases communications through cross functional teams
Creates data for proper documentation of engineering knowledge
Establishes priority requirements and improves quality

The goal of QFD is to translate often subjective quality criteria into objective ones that can be quantified and measured and which can then be used to design and manufacture the product. It is a complementary method for determining how and where priorities are to be assigned in product development. The intent is to employ objective procedures in increasing detail throughout the development of the product. The 3 main goals in implementing QFD are:

Prioritize spoken and unspoken customer wants and needs.
Translate these needs into technical characteristics and specifications.
Build and deliver a quality product or service by focusing everybody toward customer satisfaction.

QFD was first applied in the Kobe shipyards in 1972 by Yoji Akao and his associates. It met with great success and was introduced to the United States by Don Clausing in the mid-1980s. Various United States companies (mostly automotive) have applied the principles of QFD to their product design process. By using QFD, Honda and Toyota were able to reduce the new product cycle time to two and a half to three years The U.S. carmakers were on a cycle time of five years (the late 80s to early 90s). QFD could be described as a concurrent engineering tool. QFD provides a graphic method of expressing relationships between customer wants and design features. It is a matrix that lists the attributes a customer wants and compares them to the design features (services that satisfy customer wants). The collection of customer wants and expectations are expressed through the methods available to most any organization: surveys, focus groups, interviews, trade shows, hotlines, etc. The house of quality is one technique to organize the data. The house of quality is so named because of the image used in its construction. The use of matrices is the key to the building of the house. The primary matrix is the relationship matrix between the customer needs or wants and the design features and requirements.

The left side of the house has the customer needs
The ceiling has the design features and technical requirements
The right side contains the customer priorities (comparisons)
The foundation contains the benchmarking, target values
The roof of the house contains a matrix describing the relationship between design features

QFD uses some principles from Concurrent Engineering in that cross-functional teams are involved in all phases of product development. Each of the four phases in a QFD process uses a matrix to translate customer requirements from initial planning stages through production control. Each phase, or matrix, represents a more specific aspect of the product’s requirements. Relationships between elements are evaluated for each phase. Only the most important aspects from each phase are deployed into the next matrix.

Phase : Product Planning:

Building the House of Quality. Led by the marketing department, Phase 1, or product planning, is also called The House of Quality. Many organizations only get through this phase of a QFD process. Phase 1 documents customer requirements, warranty data, competitive opportunities, product measurements, competing product measures, and the technical ability of the organization to meet each customer requirement. Getting good data from the customer in Phase 1 is critical to the success of the entire QFD process.

Phase 2: Product Design:

Phase 2 is led by the engineering department. Product design requires creativity and innovative team ideas. Product concepts are created during this phase and part specifications are documented. Parts that are determined to be most important to meeting customer needs are then deployed into process planning, or Phase 3.

Phase 3: Process Planning:

Process planning comes next and is led by manufacturing engineering. During process planning, manufacturing processes are a flowchart and process parameters (or target values) are documented.

Phase 4: Process Control:

And finally, in production planning, performance indicators are created to monitor the production process, maintenance schedules, and skills training for operators. Also, in this phase decisions are made as to which process poses the most risk and controls are put in place to prevent failures. The quality assurance department in concert with manufacturing leads Phase 4.

After setting the primary design characteristics “hows” from the house of quality can be converted to as the “whats” of another house that depicts detailed product design. This process is repeated with a process planning house and then production planning house. In this way, the voice of the customer is carried through from design to manufacturing.

While it is easy to get caught up in the process of constructing the house(s) and completing the entry of the data, one should not lose sight of the objectives of the house of quality methodology. Hauser states that “The house of quality is a kind of conceptual map that provides the means for inter-functional planning and communications.” “The principal benefit of the house of quality is quality in-house. It gets people thinking in the right directions and thinking together.”

The voice of the customer, both external and internal, is quantified and presented in the format of a house of quality. The different organizational functional groups, engineering, marketing, manufacturing, and so on, are able to see the effect of design and planning changes in order to balance customer needs, costs, and engineering characteristics in the development of new or improved products and services.

The House of Quality

The first phase in the implementation of the Quality Function Deployment process involves putting together a “House of Quality” which is for the development of a climbing harness

Steps to the House of Quality

Step 1: Customer Requirements – “Voice of the Customer”

The first step in a QFD project is to determine what market segments will be analyzed during the process and to identify who the customers are. The team then gathers information from customers on the requirements they have for the product or service. In order to organize and evaluate this data, the team uses simple quality tools like Affinity Diagrams or Tree Diagrams.

Step 2: Regulatory Requirements

Not all product or service requirements are known to the customer, so the team must document requirements that are dictated by management or regulatory standards that the product must adhere to.

Step 3: Customer Importance Ratings

On a scale from 1 – 5, customers then rate the importance of each requirement. This number will be used later in the relationship matrix.

Step 4: Customer Rating of the Competition

Understanding how customers rate the competition can be a tremendous competitive advantage. In this step of the QFD process, it is also a good idea to ask customers how your product or service rates in relation to the competition. There is remodeling that can take place in this part of the House of Quality. Additional rooms that identify sales opportunities, goals for continuous improvement, customer complaints, etc., can be added.

Step 5: Technical Descriptors – “Voice of the Engineer”

The technical descriptors are attributes about the product or service that can be measured and benchmarked against the competition. Technical descriptors may exist that your organization is already using to determine product specification, however, new measurements can be created to ensure that your product is meeting customer needs.

Step 6: Direction of Improvement

As the team defines the technical descriptors, a determination must be made as to the direction of movement for each descriptor.

Step 7: Relationship Matrix

The relationship matrix is where the team determines the relationship between customer needs and the company’s ability to meet those needs. The team asks the question, “what is the strength of the relationship between the technical descriptors and the customer’s needs?” Relationships can either be weak, moderate, or strong and carry a numeric value of 1, 3, or 9.

Step 8: Organizational Difficulty

Rate the design attributes in terms of organizational difficulty. It is very possible that some attributes are in direct conflict. Increasing the number of sizes may be in conflict with the companies stock holding policies, for example.

Step 9: Technical Analysis of Competitor Products

To better understand the competition, engineering then conducts a comparison of competitor technical descriptors. This process involves reverse engineering competitor products to determine specific values for competitor technical descriptors.

Step 10: Target Values for Technical Descriptors

At this stage in the process, the QFD team begins to establish target values for each technical descriptor. Target values represent “how much” for the technical descriptors, and can then act as a base-line to compare against.

Step 11: Correlation Matrix

This room in the matrix is where the term House of Quality comes from because it makes the matrix look like a house with a roof. The correlation matrix is probably the least used room in the House of Quality; however, this room is a big help to the design engineers in the next phase of a comprehensive QFD project. Team members must examine how each of the technical descriptors impacts each other. The team should document strong negative relationships between technical descriptors and work to eliminate physical contradictions.

Step 12: Absolute Importance

Finally, the team calculates the absolute importance of each technical descriptor. This numerical calculation is the product of the cell value and the customer importance rating. Numbers are then added up in their respective columns to determine the importance of each technical descriptor. Now you know which technical aspects of your product matter the most to your customer!

The Next stage

The above process is then repeated in a slightly simplified way for the next three project phases. A simplified matrix involving steps 1, 2, 3, 5, 6, 7, 9 & 11 above is developed. The main difference with the subsequent phases, however, is that in Phase 2 the process becomes a translation of the voice of the engineer into the voice of the part design specifications. Then, in phase 3, the part design specifications get translated into the voice of manufacturing planning. And finally, in phase 4, the voice of manufacturing is translated into the voice of production planning.
QFD is a systematic means of ensuring that customer requirements are accurately translated into relevant technical descriptors throughout each stage of product development. Therefore, meeting or exceeding customer demands means more than just maintaining or improving product performance. It means designing and manufacturing products that delight customers and fulfill their unarticulated desires. Companies growing into the 21st century will be enterprises that foster the needed innovation to create new markets.

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PROJECT CHARTER

Project Management

A project is a series of activities and tasks with a specified objective, starting and ending dates, and necessary resources. Resources consumed by the project include time, money, people, and equipment. Project management includes project planning and implementation to achieve:

The specified goals and objectives,
At the desired performance or technology level,
Within the time and cost constraints,
While utilizing the allocated resources.

The stages of project management are:

Planning – deciding what to do
Scheduling – deciding when to do it
Controlling – ensuring that the desired results are obtained

Key project management elements include:

Identifying schedule time limits
Allocation of functional responsibilities
Establishing continuous reporting methods
Selecting applicable trade-off methodologies
Measuring accomplishments against plans
Identifying problems early
Applying corrective action to problems
Knowing when objectives will be met or exceeded
Improving capabilities for future projects

Project management is concerned with doing things right. Project Management helps in maximizing business benefits is concerned with doing the right things. The person undertaking any improvement projects should have the “ability” to manage projects and reach closure, a persistent drive toward meaningful bottom-line results, and timely completion of projects. Many businesses have deployed project managers to ensure that complex production processes move through the proper functional elements and make the proper transitions in a timely and cost-effective manner. This form of “matrix management” has proven very effective in improving the on-time delivery of a good product. The project management roles and responsibilities include the following:

Lead the (cross-functional) team
Possess excellent interpersonal and meeting facilitation skills
Develop and manage a detailed project plan
Schedule and lead team meetings
Sustain team motivation and stability
Communicate the benefits of the project to all associated stakeholders
Track and report milestones and tasks
The interface between financial and information management

Projects need charters plans and boundaries. Projects may be selected from a broad range of areas including:

Improved process capabilities
Customer complaints
Reduction of internal defects
Cost reduction opportunities
Supplier-related improvements
Lean manufacturing principles?
Improved workflows
Administrative service improvements
Cycle time reductions
Market share growth

The actual project should be consistent with company strategies for survival and/or growth. The project will be rather specific. Examples may include Reduce scrap costs in the finishing department for closure defects by 20% by May 2013. Improve market share for left-handed widgets by 10% for the 2013 fiscal year. One manufacturer of low-volume, high-value products reported improvements in on-time delivery from less than 25% to 100% when project management was deployed to facilitate the complex production process.

Work Breakdown Structure

The work breakdown structure (WBS) is a detailed plan which expands the project (statement of work) into a detailed listing of activities required to complete the project. The project team leader is usually responsible for the completion of the work breakdown structure, including an assignment of responsibilities for each task to individuals or team groups. Each project task is divided into smaller activities, and then elements until the level are reached in which each element is under one identifiable, individual, or group responsibility. Another way to say this is: you take a long journey one step at a time. Each activity is assigned a duration, along with the interrelationships between activities. If one activity must be completed before another can begin, this is called a predecessor event. After the material, equipment, and personnel needs are established for each activity, the project network can be scheduled. The schedule is a balance between time constraints, resource constraints, and costs.
If the time constraints are fixed, such as a set deadline, then the resource constraints must be flexible to accommodate variations in the project. Time delays during the project require offsetting increases in resources and costs to maintain a set deadline. One example of a time-constrained project is the construction and delivery of a new product. These projects have fixed completion dates, often with penalties for each day, it is late. The contract is often won on the basis of the company that plans to meet the deadline date and is willing to risk the losses if the project is late. Time-constrained projects are assumed to have unlimited resources. In a practical sense, this means that resources must be acquired until they reach a level that will ensure on-time project completion.
Most projects have relatively fixed levels of resources including manpower and equipment. In resource-constrained projects, the objective is to meet the project duration requirements, without exceeding the resource limits. If these resources are shared within an organization, resource scheduling and coordination between projects becomes vital. For those resources with time conflicts, it may become necessary to schedule planned parallel activities as sequential tasks, using existing slack time and possibly delaying the project completion date.

Project Measures

It should be noted that key project measurements are also difficult to determine until the project selection and charter processes are complete. Careful selection of project measures ensures the overall success of the improvement project. Since most projects deal with time and money issues, most project measures will also be about time and money or will be closely related to them. Project measures provide the data and information needed to analyze, evaluate and improve the business process as well as manage and evaluate, the impact of the six sigma project. Project measures for both cost and revenue factors must be included. After a detailed list of projects, activities have been created (along with the resource requirements, and activity durations) the project budget is determined. During the project, actual costs are collected and used as inputs to the revised estimated project costs. The team leader or project manager compares the revised estimated costs with the budgeted costs to monitor progress. The project budget must be reasonable, attainable, and based on estimates of the tasks to be accomplished. Revenue factors included in the budget and analyses are:

Income from additional sales generated as a result of the improved product cost, quality, features, availability to the customer
Reduced losses for scrap, customer returns, warranty claims, cost of poor quality (COPQ), low throughput, a poor time to market

Cost factors included in the budget are:

Manpower and labour costs
Materials
Equipment costs, rentals, leases, etc.
Subcontracted work or fees
Overhead or consulting charges
Reserve or contingency funds

Business-level measures will likely be identified and provided by the executive steering committee as part of the project selection process. Detailed operations and process level measures should be chosen to support the business level measures used. The timing of the revenues and costs must also be identified. A project can have a projected net profit but fail because funds were not available in the time frame they were needed. Large corporations manage cash flows on a daily basis. The precision and detail of the project planning phase will have a major impact on the accuracy of the budget. The costs associated with each project task are estimated on the basis of quotes, historical information, standard rates, or similar activities previously performed. These costs are summarized to give the cost estimates for the project. The budget becomes the measurement standard for project costs. Some organizations use a budget that, once approved, is fixed for the duration of the project. Another method is to update the budget to adjust for deviations from the plan. Estimates of project revenues and costs are described by four types of measurements: budget, forecast, actual, and variance.

Budget: The approved written plan of the total costs and cash inflows, expressed in dollar amounts, for the project. The plan includes the timing of the revenue and costs and benefit-cost analysis.
Forecast: The predicted total revenues and costs, adjusting to include actual information at the point the project is completed.
Actual: Revenues and costs that have occurred, and for which the
amounts are known instead of estimated.
Variance: The difference between the budgeted and actual revenues and costs. A positive variance denotes a favourable deviation and a negative variance denotes an unfavourable deviation.

During project implementation, the actual cash flows are documented by the accounting department, and the information is provided to the team leader or project manager so that adjustments and decisions can be made. A favorable cost variance may be due to good execution, or maybe the result of incomplete work or material shortages.

Project Decision Analysis

In addition to benefit-cost analysis for a project, a decision to proceed must also include an evaluation of the risks associated with the project. To manage project risks, one should first identify and assess all potential risk areas. Risk areas include:

Business risks
Insurable risks
Technology changes
Property damage
Competitor actions
Indirect consequential loss
Material shortages
Legal liability
Health & safety issues
Personnel injury
Environmental issues

After the risk areas are identified, each is assigned a probability of occurrence and the consequence of the risk. The project risk factor is then the sum of the products of the probability of occurrence and the consequence of the risk.

Project Risk Factor = Z {(probability of occurrence) X (consequence of risk)}
Risk factors for several projects can be compared if alternative projects are being considered. Projects with lower risk factors are chosen in preference to projects with higher risk factors.

Project Portfolio Analysis

When there is a portfolio of project opportunities and limited resources, as in the real world, management must make decisions to approve, postpone, or reject project proposals. These decisions are based on the project benefit-cost analysis and the evaluation of the risks. The decision-maker may also make project approval decisions based upon the track record of the project team leader and on intuition or “gut-feel” for the non-financial benefits of the project and the likelihood of success. Regardless of the method(s) used for evaluating the project(s), ROA, ROI, NPV, IRR, payback period, risk factor, etc., each project will be compared against the other projects in the portfolio, and against a criteria amount established by the organization for that measure. For example, the organization may require a minimum ROI of 8% or a minimum NPV of $10,000 for the project to be considered. Typically, the project with the highest ﬁnancial benefit, shortest payback period, or lowest risk factor is chosen for implementation first.

Documenting Projects

The initial project documentation is the project proposal. The proposal is usually in response to meeting an improvement objective. The proposal should include the objective(s), project plan, and budget. Approval of the proposal is management’s indication of support for the project objectives and commitment to providing funding and resources. During the implementation of the project, status reports are the communication vehicle to management (or the customer) on the progress and health of the project.

1 Project Review

The project review is a formal and documented critique conducted by a committee of qualified company personnel. The project review extends over all phases of development, from inception to completion. The review process is established by management policy or customer specification, or both. A project review considers all of the important factors in the creation of mature product design. Some of the fundamental review topics include: –

The adequacy of personnel, time, equipment, and money
The project effectiveness as determined by internal and external information
The effectiveness and reliability of corrective actions
The true quality level of the delivered product and/or service

Results of project reviews will be retained along with the other project documentation and archived for future reference.

2. Measurement of Project Activity

During the planning stage of project management, the monitoring and measuring requirements should be defined. In most cases, upper management requires scheduled briefing sessions during the project. These sessions range in depth from an overview of the project milestones to comprehensive reports. The project monitoring plan should address the following areas:

What is being monitored
The purpose of the monitoring
Timing or frequency of reporting
Method of reporting (written reports, verbal summaries, forms used)
Procedure for indicating a need for assistance
Criteria for reporting of unusual events or urgent information
The channel for feedback (to whom and how the information is sent)
Assignment of feedback loop responsibilities
Action to be taken when performance differs from requirements

The feedback loop defines the methods for monitoring and adjusting the process if results are different than desired. Planning for feedback is analogous to designing an automatic control system. The success or failure of a project is measured in the following dimensions:

Were the specified goals and objectives achieved?
Within the time deadlines?
At or below cost constraints?
Utilizing the allocated resources?

Well executed project plans meet all of the above criteria. As project complexity, project duration, or innovative technology increase, the more likely the project will not meet the desired time target. Crash programs, to return a project to the desired time schedule, are done at the expense of higher costs and resource usage. It is possible for a project to be considered a success, even when the project is late, over budget, or does not meet the stated objectives. An example of this type of success is when the project accomplishes a significant feat. Nearly every project encounters unanticipated events or problems, but this is not an acceptable excuse for failure to meet the performance standards. The skillful project leader will manage the resources to resolve the issues and maintain the project schedule and budgets. Performance is measured on results, not effort. The project timeline is the most visible yardstick for the measurement of project activities. The unit of measurement is time in minutes, hours, days, weeks, months, or years, and is readily understood by all participants on a project. The overall project has definite starting and ending dates, both planned and attained. From a quality viewpoint, both early and late projects have the opportunity for poor quality compared to the project on schedule. For projects ahead of schedule, the skeptical question is asked, “What corners were cut?” For projects behind schedule, an appropriate question is, “What is not being done properly in an effort to regain lost time?” Methods for planning, monitoring, and controlling projects range from manual techniques (using plain paper, graph paper, grease boards, and colored magnetic markers) to computer software.

Advantages of manual project management methods include:

Ease of use
Low cost
Best for monitoring schedules and timing of events
A hands-on feel for the status of the project
Easily customized for the specific project needs
Minimal training requirements

Advantages of computer-automated project management methods include:

Able to model what-if scenarios
Able to show the impact of alternate options
Can present information in a variety of formats and detail
Schedules are automatically calculated
Variances from the plan are known in almost real-time
Project status reports are easier to generate
People at different locations can input data and share the same information
Projects can be easily summarized
Some data collection activities can be automated

Whichever method is used by the project team, keep in mind that the method is only a tool to organize and summarize the data and the completion of the project is the objective, not the status boards or bar charts.

3. Milestones Reporting

Milestones are significant points in the project which are planned to be completed at specific points in time. Intermediate milestones serve the purpose of refocusing priorities on the longer-range objectives, and at the same time providing the status of progress. Milestones typically occur at points where they act as a gate for a go/no-go decision to continue the project. The project team leader would be expected to make a presentation to management at each major milestone. The status of the project relative to the milestone, any potential roadblocks for the completion of the project, and plans for dealing with roadblocks, would be presented. The date and time for the milestone and the milestone activity are set very early on in the project planning phase. Once set and approved, the milestones are not normally subject to change or negotiation. If the project is late on meeting a milestone, this fact will reach the visibility of upper management quite quickly.

4. Project Report

The final report is the report card on project performance for completion of objectives, comparison of actual benefits and costs with budgets, and measures of major activity completion dates versus milestones. The next step of project closure is postmortem analysis. An analysis of what went well and what went wrong is used as a learning tool for future projects. The intent is to avoid making the same mistakes and to benefit from effective processes.

5.Document Archiving

The final project stage is documented archiving. This includes test data, traceability of materials, key process variables, and reports generated during the project. The documents must be complete and organized. Storage requirements include:

Protection from damage, including fire, water, and other deterioration
Security of access
Retrievability within a reasonable period, e.g. 3 days
Adequate markings and an indication of storage location
Consideration of duplicate copies at different sites
Use of a medium with a life longer than the record retention period

Project Charter

A critical element in the establishment of an improvement team is the development and acceptance of a charter. A charter is a written document that defines the team’s mission, the scope of operation, objectives, time frames, and consequences. Charters can be developed by top management and presented to teams, or teams can create their own charters and present them to top management. Either way, top management’s endorsement of a team’s charter is a critical factor in giving the team the direction and support it needs to succeed. The charter begins with a purpose statement. This is a one or two-line statement explaining why the team is being formed. The purpose statement should align with, and support, the organization’s vision, and mission statements. The charter should also identify the objectives the team is expected to achieve. Objectives should always be stated in measurable terms. The charter should also define the operating scope. This is an opportunity to identify the organizational or operational boundaries within which the team is expected and permitted to operate. Defining boundaries is crucial to avoid energy-draining and time delaying turf wars. Teams need to know what top management expects of them. The team has the authority, permission, and blessing from the necessary levels of management to operate, conduct research, consider and implement any changes needed to achieve the expected project results. A charter provides the following advantages:

Eliminates any confusion
Defines the subject boundaries
Identifies areas which should not be addressed
Identifies the deliverable product
Provides a basis for team goal setting
Authorizes the team to collect relevant data
Provides access to necessary resources
Approves time for team members to address problems

Moen suggests that a team project charter should contain the following key points:

Business case (financial impact)
Problem statement
Project scope (boundaries)
Goal statement
Role of team members
Milestones deliverables (end products of the project)
Resources required

Identifying the above details, in written form, will provide a constant and consistent target for the team.

Business Case

The business case is a short summary of the strategic reasons for the project. The general rationale for a business case would normally involve quality, cost, or delivery of a product with financial justification. Moen suggests that there are four basic activities:
– Design of a new product
– Redesign of an existing product
– Design of a new process
– Redesign of an existing process
Eckes reports that a common problem for many projects is the lack of a company impact measurement. For example, if the existing quality defective rate is at 5,000 defectives per million opportunities; the possible justification is a reduction to 250 defectives per million opportunities with a cost savings of $1,000,000. Another example would be a reduction of product cycle time from 6 weeks to 5 days for an additional 10,000 units of production, resulting in an additional $1,000,000 of revenues. A project improvement team should follow typical financial department justification guidelines. The advantages and disadvantages of a project should be researched. Other individuals or departments should be involved, if necessary, to examine the key costs and resources for a successful project. Projects which do not show a significant financial impact to the company should be stopped or eliminated as soon as possible.

Problem Statement

A problem statement will detail the issue that the team wants to improve. Eckes explains the problem statement should be crafted to be as descriptive as possible. That is, how long has the problem existed, what measurable item is affected, what is the business impact, and what is the performance gap. The problem statement should be neutral, to avoid jumping to conclusions. A sample problem statement might be: “The ABC Company, in 2007, has experienced a 25% drop in sales, with a 40% drop in net profits.” The problem statement should include a reference to a baseline measure for guidance. A baseline measure is the level of performance of a particular metric at the initial start of a project. The collection of good data and process performance measurements will provide a picture of the areas in the company that are in greatest need of improvement. In addition, the measurement system will provide a foundation for other teams to use to pursue other projects. If the baseline measures differ from the assumptions of the team or company, more clarification may be necessary.

Project Scope

The project scope refers to the boundaries of the project. It is an attempt to outline the range of the team’s activities. In the area of product development, the team may decide to limit itself to the launching of a new product at a single manufacturing site. Issues or problems regarding market research, prototype development, or financial investments would be outside the scope of the team activities. Each team works very hard in its first meetings to clarify the project scope. The team champion, the team leader, and the team will all be involved in this process.

Goal Statement

The goal statement will be created and agreed to by the team and team champion. Hopefully, the goals will be achievable within a 120 to 160 day period. A typical “rule of thumb” for goals is a requirement of a 50% reduction in some initial metric (or improvement of 50%). For example, reduce the collectables from 120 days to 60 days; reduce the scrap from 5% to 2.5%.

Milestones/Deliverables

For any well-managed project, a set of stages or milestones are used to keep the project on track and to help bring a project to completion. A typical milestone chart might be:

Day 0: Start team activities
Day 1: Start the define portion of the project
Day 40: Begin the measure portion of the project
Day 80: Start the analysis portion of the project
Day 120: Start the improvement phase of the project
Day 160: Conclude the project with a management presentation
>Day 160: Bulk of project control elements in progress

Resources Required

The resources required for a project must be detailed. Typical resources required for a project could include:

Qualified people
Machine time
Equipment
Phones and faxes
Machinery
Computer equipment
Lab or office space
Utilities, etc.

The following information should be provided for the team champion, team leader, and team members:

Importance of the project
Goals of the project
Knowledge of the team champion, leader and members
Scope of the project in terms of time and budget resources
The key process involved
Current baseline metrics
What the customer requirements are

Developing a project charter

In developing a project charter, there are several inputs to the process:

Contract – The contract that is used as an input is the contract between your organization and the organization you’re asking to provide a product or service.
Statement of Work (SOW) – An SOW is a narrative description of products, services, or results to be supplied. The SOW indicates a business need, a product scope description, or a strategic plan.
Enterprise environmental factors – Enterprise environmental factors are any external environmental factors and internal organizational environmental factors that surround or influence the project’s success. These factors include organizational culture and structure, infrastructure, existing resources, industry databases, and market conditions.
Organizational process assets – Organizational process assets are any or all process-related assets, from any or all of the organizations involved in the project, that can be or are used to influence the project’s success. These include processes and procedures as well as the organization’s lessons learned and other historical information.

The inputs for creating a Project Charter are contracts, Statements of Work, enterprise environmental factors, and organizational process assets. You may not use all of these inputs for every Project Charter, but using some of these inputs is a good place to start before chartering.

A project manager requires an appropriate set of tools and techniques to build a Project Charter. With these tools and techniques, the project manager and project team can act on the inputs to create outputs. Creating a good charter often requires relying on appropriate tools and techniques:

Project selection methods – Project selection methods are used by the performing organization to determine which projects to undertake. Such methods include benefit measurement methods, constrained optimization (mathematical models), and decision models.
Project management methodology – The methodology refers to a collection of processes, project process groups, and control functions that include formal and informal methods to help a team develop a charter. One such methodology is called the agile development lifecycle another could be ITIL release management.
Project management information systems (PMISs) – A PMIS is a set of automated tools accessible within an organization and integrated into a system. It is used by a team to create a Project Charter, elicit feedback, manage changes, and submit the approved document. Some organizations successfully use project central and SharePoint as their PMIS.
Expert judgment – Expert judgement is used to evaluate the inputs needed for Project Charter development. People with specialized knowledge apply expertise to project details during the Project Charter development process.

By applying these tools and techniques to the Project Charter inputs, the project manager and project team can develop the Project Charter. Developing the Project Charter is the start of the rest of the project. The inputs and tools and techniques are used to create the Project Charter, which is the output of the Develop Project Charter process. A Project Charter provides an overview of the project and its goals. The Project Charter details the project purpose, overview, goals, and high-level deliverables.

The elements of a Project Charter are:

Define what the customer expects from the project by Writing an Overview of the Project Scope
Define where the project starts and ends by Determining the Team’s Boundaries for Creating the Deliverables.
Defining the Customers’ Criteria for Acceptance by Establishing the factors that are critical for satisfying the customers of the project.
Determine the Required Reviews & Approvals by deciding who must be involved in review and approval process.
Establish Risk Limits by Identifying the degree of risk the organization will accept in doing the project.
Select the project leaders and team members by Identifying who must be on the team for the project to succeed.
Set Deadlines for Delivery of the Final Deliverables by setting a date when the final deliverables will be given to customers.
Set the limit on the amount of money or time that can be devoted to the project.
Create a list of required reports and Identify the reports that are needed to monitor and communicate the Required progress of the project.
Identify Organizational Constraints & Project Priorities and clarify the priorities within the project.
Assemble the Project charter and distribute it to key stakeholders.

Write an Overview of the Project Scope

Briefly describe the purpose of the project. Limit the description to three sentences or less.
Give the project a name. Choose a name that reflects the purpose or the anticipated final deliverable of the project.
Identify the customers of the project. Identify who will use the final deliverables of the project. Who will receive the products, services, processes, or plans that are created as a result of the project? These are the customers of the project.
Define the customer’s’ needs and requirements. Determine what problem the customer wants to solve by using a specific final deliverable (Customer need.) Find out if the customer is looking for specific features in the final deliverable, or has defined specifications for the final deliverable. (Customer requirement.)
Identify and list the final deliverables of the project. A final deliverable is a product, service, process, or plan, which is delivered to the customers of the project and must satisfy customer needs and requirements. A project usually has only one or two major final deliverables.
Define any deliverables that must be created for the organization. A deliverable for the organization is a product, service, process, or plan that is created to meet an organizational need or requirement, not a customer need. These deliverables are byproducts or additional deliverables of the project. A deliverable that is created for the organization and delivered to the sponsor is called an organizational deliverable.
Example: a report on a new area of technology that a team used in its production of a final deliverable for a customer.
Define any additional organizational goals for the project that are not deliverables.

Some examples of organizational goals that are not deliverables are:
– To generate a specific amount of savings as a result of a reengineering project.
– To enter into a new market or technology.
– To use the project as an opportunity to cross-train team members.

Determine the Team’s Boundaries for Creating the Deliverables

Determine the Life cycle stage where project team members will begin their work and the stage in which their work will end. In general, the life-cycle stage where a project ends determines what final deliverable is produced. The word “boundaries” applies to the starting and ending points for creating each final deliverable. The creation of any product, service, process, or plan will move through all of the development stages, from concept to delivery, and eventually to retirement, but a single project team may not be responsible for all of the stages. The project team may be responsible for one, some, or all of the stages. It is the sponsor’s responsibility to tell team members where their boundary of involvement begins and ends for each final deliverable.

Define the Customers’ Criteria for Acceptance

Determine the customers’ criteria for accepting the final deliverables. Ask customers for these criteria, whenever possible. If it isn’t feasible to ask customers what criteria are most important to their satisfaction with the final deliverable, make the best possible decision on what the criteria should be. Determine a way to measure the customers’ level of satisfaction with the final deliverable.

Determine the Required Reviews and Approvals

Make a list of the deliverables (interim and final) that require review or approval. Identify who will provide the review and approval for each deliverable. Note the reason why the deliverable should be reviewed or approved. Depending on the project, it may be beneficial to also include customers in the review and approval process. For example: If the project is to improve an internal information system, the customers (potential users) may want to provide review and probably approval at certain stages in the development of the information system.

Establish Risk Limits

Assign a limit for the maximum degree of risk that the organization is willing to accept for each final deliverable. This risk is the uncertainty of not being able to physically produce the final deliverable according to the criteria set by the customer–of not having the ability, skill, or technological knowledge to create the final deliverable as promised. It does not include the risk of not having the needed resources, such as time, people, or money, to create the final deliverable. Using a scale from 1–10, assign a number to represent the risk limit for each final deliverable.
1 = an extremely low degree of risk or risk-free
10 = an extremely high degree of risk
Where possible, provide an explanation as to which types of risks are acceptable and which are not.

Select the Project Leader and Team Members

Assign a project leader. Look for someone who is skilled in these areas of Leadership, Facilitation, Coordinating tasks, Communication, Project management knowledge. The project leader should be a key stakeholder. A key stakeholder has a strong interest in making the project succeed because he or she (or the area he or she represents) is affected by the activities or deliverables of the project.
Select the members of the project team. Consider the types of skills, knowledge, and expertise that are important for the project. Although all key stakeholders should be considered for membership, they don’t necessarily need to have regular membership status (attend all team meetings). Some can be ad hoc members (attend team meetings when their presence is required) and some can be kept informed of the progress of the project through reports and meetings with the team liaison. Usually, the smaller the size of the team, the better.

Set Deadlines for Delivery of the Final Deliverables

1. Determine when the final deliverables must be delivered to the customer. The team will build the project schedule around these dates.

2. Record any other deadlines that apply to the project. Are there any other deadlines that must be met, such as deadlines for completing any of the lifecycle stages? For completing the project plan? Record only critical deadlines that, if not met, will have a significant impact on the project.

Set Limits on Staffing and Spending

1. Define the limit for how much time the staff can devote to the project. This limit applies to internal staff time only. Staff time can be expressed in hours, weeks, months, or years. Some ways to express staff time may be:
“No more than 20% of people’s time.”
“One day every two weeks for three months.”
“One two-hour meeting once a week.”

2. Define the spending limits for the internal and/ or external costs that will be expended during the project.
• Internal costs = cost for staff time and other internal charges, e.g., supplies, copies, equipment
• External costs = outside purchases, e.g., contract labor, materials, equipment

Create a List of Required Reports

Create a list of all the reports that are required to monitor the progress of the project. The team will create a list of reports to help monitor its own progress. The sponsor needs to specify the reports that management needs to monitor the status of the project. On the list, include the following:
– Type of report
– Person requesting the report
– Date required or frequency
– Content of the report

Identify Organizational Constraints and Project Priorities

Identify any constraints that the organization will impose on the project. Constraints are limitations placed on the project such as “No unscheduled equipment downtime,” or “No additions to headcount.”
Consider which of the following factors such as lower cost, earlier delivery, or more features for the final deliverable has the highest improvement priority for the project, and which factor has the lowest improvement priority. As a baseline, assume the project will meet the deadline, the spending limits, and the customers’ minimum criteria for acceptance. Give a rank of 1 to the highest priority, a rank of 2 to the next highest priority, and a rank of 3 to the lowest priority.

Assemble the Project Charter

1. Assemble the charter using the following four divisions:
• Project Scope: Describe the scope of the project, including the project objectives; customer needs and requirements; each final deliverable with its life-cycle boundaries and customer acceptance criteria; each organizational deliverable with its life-cycle boundaries and sponsor acceptance criteria; any organizational goals for the project; and the reviews and approvals required for the project.
• Project Scope Risk: List the risk limit for each final deliverable for the project, and the reason for the limit. Also, list the risk limit for each organizational deliverable and the reason for the limit.
• Project Resources: Define the resource limitations (deadlines, staffing limits, cost limits) and priorities of the project. List the team assignments.
• Project Status Reports: List the reports that will be required by management to monitor the status of the project.

2. If required, get the charter approved. The sponsor may need to have the customer and/ or the project steering group approve the charter. If the project team completed the charter, the project leader will need to review it with the sponsor, make whatever modifications might be needed, and then have the sponsor approve it.

3. Issue the charter. Distribute copies of the charter to:
– Project sponsor
– All members of the project team (both regular and ad hoc)
– Functional managers who will be affected by the project
– The customer, where appropriate
– The project steering group or project office
– Anyone else who has a stake in the project

When the sponsor or sponsors sign off on the charter, it marks the beginning of the planning phase of a project.

Template-for-project-charter

1. Review the problem statement on your charter
2. Review the data from the Measure step of the DMAIC method to get clues about the specifics (i.e., who, what, when, where, which) of the problem you are addressing
3. Complete a worksheet using the questions provided to develop a Focused Problem Statement. There are no rules that tell you when a problem is focused enough. Trying to develop a Focused Problem Statement is a balancing act. You want to have enough focus so that it is easy to identify causes and take effective action, but you don’t want to spend so much time, effort, and money on this step that you never get around to taking action! At some point, therefore, you have to decide whether the cost of getting more data and more focus is worth the investment.

Charter Negotiation

The project charter can be created and presented to the team by upper management. However, the project team might be closer to the actual facts and might propose a different mode of attack than envisioned by management. Hence, charter negotiation may be required.

Consider the following examples:

Objectives: The final customer product or internal process may require a substantial redesign that was not envisioned.
Scope: The boundaries of the project could require expansion. The project may be sufficiently large to require dividing into more manageable pieces. This could I require two or three projects in succession by a single team or additional project teams working on a portion of the original project.
Boundaries: The project team may discover that additional areas (engineering, maintenance, finishing, etc.) should be included in the solution.
Resources: Excessive project resources are rarely provided. Generally, an oversight of some key resource components is encountered. These needed resources can be internal or external to a company. Management may be called upon to prioritize certain fixed resources outside of the team’s control.
Project transition: The transition of a project to normal company controls may necessitate either a time extension or additional monitoring on the part of another group. This may or may not require lengthier team involvement.
Project closure: The improvement team could discover that related processes or products need the same type of effort as that which was undertaken for the initial project. In some cases, the project closure date might be moved up because of such diverse events as unexpected success or shifts in customer preference.

Obviously, both the project team and upper management are interested in success, not failure. There should be a willingness on the part of both parties to negotiate a number of project details. Generally, it is best to handle charter negotiations at the start of a project. However, all pertinent information may not be apparent at this point. Charter negotiations can be required at any point during the project.

VOC Data collecting tools

To identify the key drivers of customer satisfaction. It is only through understanding your customers’ thought processes while they are making their purchasing decisions and while they are using your products or services that you can effectively design, deliver, and improve them. The term voice of the customer, or VOC, is used to describe your customers’ needs and their perceptions of the quality of your products or services. What does it do?

Properly focuses your improvement project
Provides data to help you develop appropriate measurements
Helps the team decide what products and services to offer
Identifies critical features for those products and services, known as Critical-To-Quality characteristics, or CTQs
Provides a baseline measure of customer satisfaction against which to measure improvement
Identifies the key drivers of customer satisfaction

Step involved in collecting Data For Voice of Customer (VOC)

Identify your customers and what you need to know about their needs.
- In a SIPOC (Suppliers, Inputs, Process, Outputs, and Customers) context, a customer is anyone who uses or benefits from the output of your process.
  - One of your customers is the next step that occurs in a process after the process delivers an output.
  - Only your customer can define what a defect is.
- In a marketing context, the term customer is usually restricted to the people and groups outside an organization who purchase and/or use a company’s products or services.
- Ask yourself the following questions:
  - What are the outputs of our process? Who are the customers of that output?
  - Are there particular groups of customers whose needs are especially important to our organization?
You must decide which of the above definitions of customer makes more sense for your project. Often it helps to use both definitions—that is, you work primarily with the people involved with the next process step, but you check to ensure that their needs are consistent with the needs of the final customer. Keep in mind the following points:
- The final customer, or end user, might be far removed from your particular job, but their needs are still important to you (and to everyone else in your organization).
- You might have multiple customers (and thus multiple needs to consider).
- If you work on administrative processes, your customers might include your suppliers. For example, a supervisor who supplies you with information that you incorporate into a report for him/her is your customer.
As you work to identify your customers, check with your sponsor(s) and your marketing staff to see if there are large or influential customers whom you should make sure not to overlook.
Often there is no single VOC. Different customers or types of customers usually have different needs and priorities. You should include a wide variety of customers in your initial customer- research efforts. Different types of customers are often referred to as market segments.
Decide what you need to know about your customers.
- Revisit your charter. What is the purpose of your project?
- How does this purpose relate to the needs of the customers you have identified? What do you need to know about these customers’ needs to make sure your project purpose is on track?
Collect and analyze reactive system data; then fill any gaps with proactive approaches. There are two types of data-collection systems: reactive and proactive.
1. Reactive systems involve information that you receive whether or not you take any action to obtain it.
  - Reactive systems are customer-initiated. Some examples are complaints, returns, credits, and warranty claims.
  - It is best to start your data-collection process with reactive data because it is usually easier to get and can give you a basic understanding of customer concerns, allowing you to better focus
    your proactive work.
  - Reactive systems generally gather data about the following:
    - Current and former customer issues or problems.
    - Current and former customers’ unmet needs.
    - Current and former customers’ interest in particular products or services.
  - Sometimes customers communicate with you when they have a problem, but other times they let their behavior do the talking. Also, they often don’t think of a problem they have as a problem that your organization can solve. Rather, they might blame themselves for the product or service not working right, think they have the wrong product or service, or simply take their business elsewhere. Reactive systems help you capture all the ways in which customers communicate their needs. It is important to explore this often-underused source of information before making an effort to gather new information. You can learn a great deal about improving your existing products and services if you put extra effort into categorizing and analyzing data from reactive systems and reviewing them periodically to identify patterns, trends, and other opportunities. Tip Feedback from customers is easily lost. Extra effort must be made to preserve as much of this information as possible.
2. Proactive systems involve taking action to gather information.
  - Proactive systems are not customer-initiated. Some examples are market research, customer interviews, and surveys.
  - Follow up on the information you obtain to expand your understanding of your customers’ needs and to quantify the importance they place on various product/service characteristics.
  - Proactive systems are those in which you initiate contact with customers. Ideally, they involve some face-to-face interviews or customer-site visits. Typically they also involve telephone interviews or surveys and/or questionnaires that customers fill out and return to your organization. You will likely have to design and initiate targeted customer contact to gather information specifically related to your project. Look for ways to integrate your efforts with ongoing customer contact done by your organization. For example, request that customer service or marketing staff ask additional questions during their regular contacts
    with customers, or see if your customers will allow you to observe their workplace during a scheduled visit.
Analyze the data you collect to generate a key list of customer needs in their language. Much of this data will be verbal. It is helpful to summarize this information in a meaningful way, perhaps by using an Affinity Diagram.
Use an Affinity Diagram, a CTQ Tree, and the Kano Model to prioritize the CTQs for your project.

Instruments to Gather Data

There are instruments or tools available to everyone for the purposes of collecting customer information. Some of the common instruments are described below:

Surveys: A properly designed questionnaire gathers data using a consistent set of standardized questions. Usually, a sample is selected for use. Interviewers can be used or it can be self-administered.
Focus groups: A small group (3 to 12 typically) of individuals is assembled to explore specific topics and questions. A time period of 1 to 2 hours is normally required.
Face-to-face interviews: Individual interviews of 30- 60 minutes in length may be used. This can be very time-consuming.
Satisfaction/complaint cards: The return of a card prompts a reaction by the company. These could function as feedback forms.
Dissatisfaction sources: Some methods that voice dissatisfaction include: complaints, claims, refunds, recalls, returns, repeat service work, litigation replacements, downgrades, warranty work, mis-shipments, etc.
Competitive shoppers: Shoppers evaluate a company and competitors. CEOs may call their own offices to measure the ease of customer access.

SURVEYS AND FOCUS GROUPS

There are a number of reasons why a firm may wish to communicate with its customers. A primary reason is the evaluation of the customer’s perception of the firm’s product and service quality and its impact on customer satisfaction. The purpose may be to get an idea of the general condition of quality and satisfaction, or a comparison of the current levels with the firm’s goals. A firm might wish to conduct employee surveys and focus groups to assess the organization’s quality structure. There are four primary strategies commonly used to obtain information from or about customers and employees: sample surveys, case studies, field experiments, and available data.
With sample surveys, data are collected from a sample of a universe to estimate the characteristics of the universe, such as their range or dispersion, the frequency of occurrence of events, or the expected values of important universe parameters. This is the traditional approach to such surveys. However, if survey results are collected at regular intervals, the results can be analyzed using quality control tools to obtain information on the underlying process. The process excellence leader should not be reticent in recommending that survey budgets be allocated to conducting small, routine, periodic surveys rather than infrequent ‘‘big studies.’’ Without the information available from time-ordered series of data, it will not be possible to learn about processes that produce changes in customer satisfaction or perceptions of quality.
A case study is an analytic description of the properties, processes, conditions, or variable relationships of either single or multiple units under study. Sample surveys and case studies are usually used to answer descriptive questions (‘‘How do things look?’’) and normative questions (‘‘How well do things compare with our requirements?’’). A field experiment seeks the answer to a cause-and-effect question (‘‘Did the change result in the desired outcome?’’). Use of available data as a strategy refers to the analysis of data previously collected or available from other sources. Depending on the situation, available data strategies can be used to answer all three types of questions: descriptive, normative, and cause-and-effect. Original data collection strategies such as mail questionnaires are often used in sample surveys, but they may also be used in case studies and field experiments. Research on customer satisfaction can be worthwhile in helping the company’s efforts. Customer satisfaction research was a $2 billion industry in the United States. The objectives of customer research very, but a few major themes are noted below:

To determine what quality is
Find out what competitors are doing
Define quality performance measures for use
Identify factors to give a competitive edge
Identify urgent problems

Customer Surveys

In the evaluation of customer information, not all attributes and transactions should be treated equally. Some are much more important than others. As customers’ needs change, the evaluations will change. Griffin conducted a study on the best customer satisfaction practices and recommended the use of multiple instruments to collect customer satisfaction data. Validation of the initial results can be accomplished via multiple measurements.
Perceived quality and satisfaction must be measured. Perceived quality is evaluated through experience (cumulative) and value received (including costs).

Customer survey sample sizes and frequency can have significant cost implications and should be chosen to balance business resources and the need to monitor changes in the business environment. Breyfogle suggests dividing the customer survey sample into 12 monthly sub-samples that are conducted on a rotating basis. This can provide both good long-term precision and good short-term sensitivity to changes in customer attitudes. Surveys can be developed in questionnaire form. An adequate number would range from 25 to 30 questions. For an L-Type matrix survey, the use of a numerical scale. from 1 (very dissatisfied) to 10 (very satisfied) can make it easier to quantify the
results, as shown in Figure below. Breyfogle recommends using questions that measure relative changes in customer attitudes from one survey period to the next, or from one product to another. He suggests using a Likert scale to evaluate changes in customer attitudes and determine shifts in the business environment.

GUIDELINES FOR DEVELOPING QUESTIONS

The axiom that underlies the guidelines shown below is that the question writer(s) must be thoroughly familiar with the respondent group and must understand the subject matter from the perspective of the respondent group. There are eight basic guidelines for writing good questions:

Ask questions in a format that is appropriate to the questions purpose and the information required.
Make sure the questions are relevant, proper, and qualified as needed.
Write clear, concise questions at the respondent’s language level.
Give the respondent a chance to answer by providing a comprehensive list of relevant, mutually exclusive responses from which to choose.
Ask unbiased questions by using appropriate formats and item constructions and by presenting all important factors in the proper sequence.
Get unbiased answers by anticipating and accounting for various
respondent tendencies.
Quantify the response measures where possible.
Provide a logical and unbiased line of inquiry to keep the reader’s attention and make the response task easier.

There are several commonly used types of survey responses.

Open-ended questions: These are questions that allow the respondents to frame their own response without any restrictions placed on the response. The primary advantage is that such questions are easy to form and ask using natural language, even if the question writer has little knowledge of the subject matter. Unfortunately, there are many problems with analyzing the answers received to this type of question. This type of question is most useful in determining the scope and content of the survey, not in producing results for analysis or process improvement.
Fill-in-the-blank questions: Here the respondent is provided with directions that specify the units in which the respondent is to answer. The instructions should be explicit and should specify the answer units. This type of question should be reserved for very specific requests, e.g., ‘‘What is your age on your last birthday?_____________ (age in years).’’
Yes/No questions: Unfortunately, yes/no questions are very popular. Although they have some advantages, they have many problems and few uses. Yes/no questions are ideal for dichotomous variables, such as defective or not defective. However, too often this format is used when the measure spans a range of values and conditions, e.g., ‘‘Were you satisfied with the quality of your new car (yes/no)?’’ A yes/no response to such questions contains little useful information.
Ranking questions: The ranking format is used to rank options according to some criterion, e.g., importance. Ranking formats are difficult to write and difficult to answer. They give very little real information and are very prone to errors that can invalidate all the responses. They should be avoided whenever possible in favor of more powerful formats and formats less prone to error, such as rating. When used, the number of ranking categories should not exceed five.
Rating questions: With this type of response, a rating is assigned on the basis of the score’s absolute position within a range of possible values. Rating scales are easy to write, easy to answer, and provide a level of quantification that is adequate for most purposes. They tend to produce reasonably valid measures. Here is an example of a rating format:

Guttman format: In the Guttman format, the alternatives increase in comprehensiveness; that is, the higher-valued alternatives include the lower-valued alternatives. For example,

Likert and other intensity scale formats: These formats are usually used to measure the strength of an attitude or an opinion. For example:

Intensity scales are very easy to construct. They are best used when respondents can agree or disagree with a statement. A problem is that statements must be worded to present a single side of an argument. We know that the respondent agrees, but we must infer what he believes. To compensate for the natural tendency of people to agree, statements are usually presented using the converse as well, e.g., ‘‘The customer service representative was not knowledgeable.’’
When using intensity scales, use an odd-numbered scale, preferably with five or seven categories. If there is a possibility of bias, order the scale in a way that favors the hypothesis you want to disprove and handicaps the hypothesis you want to confirm. This way you will confirm the hypothesis with the bias against you will give you a stronger result. If there is no bias, but the most undesirable choices First.

Semantic differential format: In this format, the values that span the range of possible choices are not completely identified; only the end points are labeled. For example,

Example-of-survey-questions

Surveys are a method to gather data, but care should be taken with that data. A well-designed and properly executed survey can be a help to the company. The survey can show what resources do not satisfy customers, identify opportunities for growth or correction, and focus on customer issues. However, there can be problems with the use of surveys:

Improper survey form design
Poorly defined survey issues
Sampling errors or poor sampling techniques
Ignoring non responses
Treating customer perceptions as objective measures
Using incorrect analysis methods
Treating surveys as an event, not a process
Asking nonspecific questions
Failing to ask the right questions
Ignoring the results or using them incorrectly
Failing to provide feedback when necessary
Using too many questions (25-30 questions are typical)
Using a temporary employee to conduct interviews

Focus groups

The focus group is a special type of group in terms of purpose, size, composition, and procedures. A focus group is typically composed of seven to ten participants who are unfamiliar with each other. These participants are selected because they have certain characteristics in common that relate to the topic of the focus group. The researcher creates a permissive environment in the focus group that nurtures different perceptions and points of view, without pressuring participants to vote, plan, or reach consensus. The group discussion is conducted several times with similar types of participants to identify trends and patterns in perceptions. Careful and systematic analyses of the discussions provide clues and insights as to how a product, service, or opportunity is perceived. A focus group can thus be defined as a carefully planned discussion designed to obtain perceptions on a defined area of interest in a permissive, non-threatening environment. The discussion is relaxed, comfortable, and often enjoyable for participants as they share their ideas and perceptions. Group members influence each other by responding to ideas and comments in the discussion. Focus groups are useful in a variety of situations:

prior to starting the strategic planning process
generate information for survey questionnaires
needs assessment, e.g., training needs
test new program ideas
determine customer decision criteria
recruit new customers

FOCUS GROUP ADVANTAGES

The focus group is a socially-oriented research procedure. The advantage of this approach is that members stimulate one another, which may produce a greater number of comments than would individual interviews. If necessary, the researcher can probe for additional information or clarification. Focus groups produce results that have high face validity, i.e., the results are in the participant’s own words rather than in statistical jargon. The information is obtained at a relatively low cost and can be obtained very quickly.

FOCUS GROUP DISADVANTAGES

There is less control in a group setting than with individual interviews. When group members interact, it is often difficult to analyze the resulting dialogue. The quality of focus group research is highly dependent on the qualifications of the interviewer. Trained and skilled interviewers are hard to find. Group to group variation can be considerable, further complicating the analysis. Finally, focus groups are often difficult to schedule.

Complaint handling

When a customer complaint has been received it represents an opportunity to increase customer loyalty, and a risk of losing the customer. The way the complaint is handled is crucial. The importance of complaint handling is illustrated in Figure below. These data illustrate that the decision as to whether a customer who complains plans to repurchase is highly dependent on how well they felt their complaint was handled. Add to this the fact that customers who complain are likely to tell as many as 14 others of their experience, and the importance of complaint handling in customer relations becomes obvious. Despite it’s impressive nature, even these figures dramatically understate the true extent of the problem. Complaints represent people who were not only unhappy, they notified the company. Research indicates that up to 96% of unhappy customers never tell the company. This is especially unfortunate since it has been shown that customer loyalty is increased by proper resolution of complaints. Given the dramatic impact of a lost customer, it makes sense to maximize the opportunity of the customer to complain. Complaints should be actively sought, an activity decidedly against human nature. This suggests that a system must be developed and implemented to force employees to seek out customer complaints. In addition to actively soliciting customer complaints, the system should also provide every conceivable way for an unhappy customer to contact the company on their own, including toll-free hotlines, email, comment cards, etc.

Other customer information systems

Complaint and suggestion systems typically provide all customers with an easy-to-use method of providing favorable or unfavorable feedback to management. Due to selection bias, these methods do not provide statistically valid information. However, because they are a census rather than a sample, they provide opportunities for individual customers to have their say. These are moments of truth that can be used to increase customer loyalty. They also provide anecdotes that have high face validity and are often a source of ideas for improvement.
Customer panels are composed of a representative group of customers who agree to communicate their attitudes periodically via phone calls or mail questionnaires. These panels are more representative of the range of customer attitudes than customer complaint and suggestion systems. To be effective, the identity of customers on the panel must be withheld from the employees serving them.
Mystery shoppers are employees who interact with the system as do real customers. The identity of the mystery shopper is withheld from employees.

Customer Data Analysis

Once customer feedback has been obtained, it must be used to improve the process and product quality. A system for utilizing customer feedback is as shown

Local managers and employees serve customers’ needs on a daily basis, using locally modi¢ed procedures along with general corporate policies and procedures.
By means of a standardized and locally sensitive questionnaire, determine the needs and attitudes of customers on a regular basis.
Comparing financial data, expectations, and past attitude information, determine strengths and weaknesses and their probable causes.
Determine where and how effort should be applied to correct weaknesses and preserve strengths. Repeat the process by taking action as in step 1 and maintain it to attain a steady state or to evolve in terms of customer changes.
A similar process can take place at higher levels, using aggregated data from the field and existing policy flows of the organization.

Although this system was developed by marketing specialists, note that it incorporates a variation of the classical Shewhart quality improvement PDCA (Plan-Do-Check-Act) cycle

The customer data is analyzed in order to determine when and where customer attitudes are different or are changing. Comparing customer attitudes over time or between groupings can provide insights into market niches and changes. The results of customer feedback data collection can be analyzed using a variety of tools:

Statistical tests: A large number of non-parametric tests and contingency tables can be used to determine, with identified confidence levels, whether customer preferences have shifted. In addition, most normal statistical tests may be used on many of the numerical survey results such as the Likert scale (0-5 or 0-10 ranking) surveys described earlier.

Line graphs: Line graphs can graphically show whether either discrete or continuous characteristics of a product or service are changing. In most cases, a visual assessment can be made to determine if the product or service is getting better, worse, or staying the same.
Control charts: A variety of variable or attribute charts can also be used to display customer feedback data. This tool offers an advantage over line charts because the addition of calculated control limits facilitates the ability to detect special or assignable causes of variation.
Matrix diagrams: A variety of matrix diagrams can be used for examination of customer defects or complaints. Data from matrix diagrams can be used to create a Pareto chart or can be used directly for project selection, where a large number of occurrences are noted.
Pareto analysis: Snapshots of customer defects or rejects (Pareto charts) can be displayed at selected time intervals to answer such questions as: Are reject categories still of the same magnitude? Are reject categories still in the same sequence of magnitude?
Other comparative analyses: The comparative Pareto analysis illustrated above is a powerful tool for analyzing customer data. In the same way, other charts (control charts, line graphs, histograms, and even matrix diagrams) can be compared from one time period to another, from one supplier to another, etc. to provide real insight into the needs of the customer and the changes in the market. Visual comparisons, however, are risky. A significance test may be required.

KANO MODEL OF CUSTOMER EXPECTATIONS

Customer expectations, priorities, needs, and ‘‘voice’’. Although customers seldom spark true innovation (for example, they are usually unaware of state-of-the-art developments), their input is extremely valuable. Obtaining valid customer input is science itself. Market research firms use scientific methods such as critical incident analysis, focus groups, content analysis, and surveys to identify the ‘‘voice of the customer.’’ Noritaki Kano developed the following model of the relationship between customer satisfaction and quality. The Kano model shows that there is a basic level of quality that customers assume the product will have. For example, all automobiles have windows and tires. If asked, customers don’t even mention the basic quality items, they take them for granted. However, if this quality level isn’t met the customer will be dissatisfied; note that the entire ‘‘Basic Quality’’ curve lies in the lower half of the chart, representing dissatisfaction. However, providing basic quality isn’t enough to create a satisfied customer. The ‘‘Expected Quality’’ line represents those expectations that customers explicitly consider. For example, the length of time spent waiting in line at a checkout counter. The model shows that customers will be dissatisfied if their quality expectations are not met; satisfaction increases as more expectations are met. The ‘‘Exciting Quality’’ curve lies entirely in the satisfaction region. This is the effect of innovation. Exciting quality represents unexpected quality items. The customer receives more than they expected. For example, Cadillac pioneered a system where the headlights stay on long enough for the owner to walk safely to the door. When first introduced, the feature excited people. Competitive pressure will constantly raise customer expectations. Today’s exciting quality is tomorrow’s basic quality. Firms that seek to lead the market must innovate constantly. Conversely, firms that seek to offer standard quality must constantly research customer expectations to determine the currently accepted quality levels. It is not enough to track competitors, since expectations are influenced by outside factors as well. For example, the quality revolution in manufacturing has raised expectations for service quality as well.

Kano Model

Helps to describe which needs, if fulfilled, contribute to customer dissatisfaction, neutrality, or delight
Identifies the “Must Be” needs, which are those that the customer expects. If they are unfulfilled, the customer is dissatisfied; however, even if they are completely fulfilled, the customer is not
particularly satisfied. An example of a Must Be need is airline safety.
Identifies the “More Is Better” needs, which are those that have a linear effect on customer satisfaction: The more these needs are met, the more satisfied customers are. An example is inexpensive airline tickets.
Identifies “Delighter” needs, which are those that do not cause dissatisfaction when not present but satisfy the customer when they are. An example is serving hot chocolate chip cookies during an airline flight.
Assists in the prioritization of needs—for example, Must Be needs are generally taken for granted unless they are absent. Take care of these needs first.

Steps involved preparing Kano Model

1. Gather sorted customer needs from the Customer – Data Affinity Diagram.

2. Review the themes from the Affinity Diagram and sort them into the three categories in the Kano Model (Must Be, More Is Better, and Delighters)
3. If there are very few or no needs listed in one of the categories, collect additional customer data. Customers generally cannot articulate what their basic expectations are or what would delight them. Therefore, when you prioritize customer needs based on what they say is important, you must remember that generally, they will identify only More Is Better characteristics. You must use other means—such as direct observation of customer use—to identify and set priorities for Must Be characteristics and Delighters.
4. After you have collected additional data, return to the Kano categories and complete the sorting of customer needs
5. Prioritize the customer needs you will use when you develop CTQs
6. First work on any Must Be characteristics that, if absent, would create customer dissatisfaction. Consider the importance of More Is
Better characteristics to provide steady and strong increases in satisfaction, and include in your priorities a few Delighters that will increase satisfaction dramatically. Also, consider how these categories relate to your company’s competitive advantage. Customer needs change over time. A Delighter today might be a Must Be tomorrow. In addition, different customer segments might have different needs.

For example, a business traveler might consider a hotel-room iron a Must Be and the size of the desk’s work surface a More Is Better. A family traveling on vacation, on the other hand, might consider free movies and video games a More Is Better characteristic.

Critical to Quality (CTQ) Tree

Critical to Quality(CTQ) focuses on the key metrics of customer satisfaction. A CTQ tree will translate the initial customer requirements to numerical or quantified requirements for the product or service. These are the detailed critical requirements for the organization to satisfy. These can be regarded as key results of the process. The development of a CTQ tree would go from the general requirement to the specific, or from “hard to measure” to “easy to measure.”It helps identify Critical To Quality (CTQ) characteristics, features by which customers evaluate your product or service and that can be used as measures for your project. A useful CTQ characteristic has the following features:

It is critical to the customer’s perception of quality.
It can be measured.
A specification can be set to tell whether the CTQ characteristic has been achieved.
CTQ Tree links customer needs gathered from your voice of the customer (VOC) data-collection efforts with drivers and with specific, measurable characteristics
CTQ Tree enables the project team to transform general data into specific data
CTQ Tree makes the measuring process easier for the team

The creation of CTQ involves the following steps

Gather sorted customer needs from your data collection process. The needs you use in the CTQ Tree can include the themes or specific needs from a Customer-Data Affinity Diagram
List the major customer needs from the Customer-Data Affinity Diagram on the left side of the CTQ Tree
. Try to view each need from the customer’s point of view. As you consider each need, ask, “What would that mean?” from the customer’s standpoint. Each answer becomes a driver for the CTQs. Keep asking, “What would that mean?” until you reach a level where it would be absurd to continue. Your answers at this level are the CTQs.
Validate the requirements with the customer to ensure that key requirement are know to them

Example:

“Good customer service” means “knowledgeable reps.”
“Knowledgeable reps” means the answers they give are correct.
It would be absurd to ask what “correct answers” means, so you should stop at this point. “Correct answers” is an appropriate CTQ.

Perceptual Maps

The following steps describe how to determine the appropriate questions to help quantify and prioritize the needs of the customer.

Conduct brainstorming sessions to identify a wish list of features and/or problem resolutions.
Rank the brainstorming session items and consider the highest ranking items for possible customer survey questions.
Construct the set of questions, being careful not to bias responses on customer satisfaction or customer importance with the wording.
Collect a numerical ranking (e.g. 1-5 on both satisfaction and importance) for each item and plot them on a perceptual map.

In the Figure below, nine items are ranked from 1 to 5 in both customer importance and satisfaction and plotted on a perceptual map. In this example, items 3 and 7 are rated as very important but satisfaction is low. These items clearly need attention. Item 2 is not important, so the high satisfaction levels will not likely influence a customer’s purchase decision. Items 5, 6, and 9 appear to be relatively strong points that may influence purchase decisions.

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Voice of the customer

Voice of the Customer (VOC)

An understanding of the needs of the customer is critical to the survival of most companies. The pace of change in today’s economy mandates that a company cannot rely on its past knowledge of the customer. A detailed plan to gather and collect customer needs and customer perceptions can be described as listening to the voice of the customer (VOC). This enables the organization to:

Make decisions on products and services
Identify product features and specifications
Focus on improvement plans
Develop baseline metrics on customer satisfaction
Identify customer satisfaction drivers

An interesting concept to consider in this technique is to determine the reactive approaches being used and then replace them with proactive approaches. The following steps can be taken for collecting VOC data:

Identify customers and their needs
Collect and analyze reactive data (complaints, service calls) and then consider proactive approaches (interviews, surveys)
Convert collected data into customer needs
Sort out the most important attributes (the critical characteristics)
Obtain specifications from the critical to quality characteristics

Not only can VOC input be useful in product and process design, but it can also be critical in six sigma team project selection and measurement.

Project Stakeholders

Any quality improvement project with high impact will bring about major changes to a system or to the entire company. The change can affect various people inside and outside of the system. Major resistance to the change can develop. As part of the defined process, attempts to remove or reduce the resistance must be made. The stakeholders involved should be identified and then a plan to convert them or to enroll them in the change process must be developed. This should provide for the needed buy-in, alternate solutions, and removal of pitfalls. Stakeholders can be identified as:

Managers of the process
Customers
People in the process
Suppliers
Upstream people in the process
Finance
Downstream people in the process

A communication plan for the stakeholders should be developed. The communication plan should involve the stakeholders and identify, on a scale, the level of commitment or resistance that the stakeholder is perceived to have. A communication plan should then be developed to reduce or remove the resistance to the change.

Identify the Customer

Total Quality is built around the customer. Everything starts and ends with customers. They define quality and ‘set expectations. They rightfully expect performance, reliability, competitive prices, on-time delivery, service, and clear and accurate transaction processing. At times, the customer of the project may not be as evident as initially thought. The receiver of the next operation, an internal department, could be thought of as a customer. The external customer of a process could be the purchaser. But yet, if the purchaser is a distributor, then they may not really be the true customer. The primary customer of the process will or should have the highest impact on the process. The primary customer is of utmost importance to the process. The sorting out of the primary customer may take some discussion on the team’s part. The question of “Who is the customer?” may bring out discoveries of “Which customers make us money?”. That is, are there certain customers that make up the bulk of company revenues? Is there a small proportion of customers that simulate the Pareto law? The case is that 80% of the revenues come from 20% of the customers, or that 80% of the net profit comes from 20% of the customers. External customers are the most important part of any business. If one can identify them and understand their requirements, we can design products (goods and services) that they will want to buy. Every business has many potential customers, and each customer has their own decision criteria. They attempt to weigh the overall value of goods and services by considering cost, quality, features, and availability factors (CQFA). Businesses compete for customers on this CQFA value grid and must excel in at least one category in order to succeed. Any flaw with customer data would be like “getting information from the wrong customers.” Companies are eager to sell products. Products are initially designed for a particular market segment, yet anyone can usually obtain the product. Those products sold to that “undersigned” market segment will not receive the best product for their needs. Therefore, customer satisfaction surveys may result in information that reflects the thoughts of a market segment for which the product was not intended. The largest portion of unhappy customers may come from the unintended end user. The company will then react to the bad data. Fingers will be pointed in the wrong direction. Even worse, the organization may fix the wrong problem.

Customers can constitute:

Current, happy customers
Current, unhappy customers
Lost customers
Competitor’s customers
Prospective customers

The following methods can be used to collect information and data from customers or would-be customers:

Surveys
Focus groups
Interviews
Complaint systems
Market research
Shopper programs
Targeted and multi-level surveys
Targeted and multi-level interviews
Customer scorecards
Data warehousing
Data mining
Customer audits
Supplier audits
Quality function deployment

The information gathered should allow the organization to identify customer requirements and spot upcoming trends. The trends will be new ways for the company to gain or retain customers. Customers seem to be more satisfied if they receive feedback than if they do not receive feedback. Clearly, the voice of the customer is critical to business success. The relationship that management can develop with either basic customer type will affect the company’s ability to be effective in delivering customer satisfaction.

Internal Customer

An internal customer can be defined as anyone in the company who is affected by the product or service as it is being generated. The internal customer is sometimes forgotten in the effort to produce an item or service for the external customer. The immediate goal should be to produce the product or service in a simple and convenient manner for internal consumption. The effort to remember to do things a specific way, to be trained properly, to be given the proper equipment, or to be given speciﬁc instructions can often be neglected. Internal customers are often employees of the company. Kaoru Ishikawa coined “The next operation as customer” in order to remove the sectionalism of departments toward each other. The essential idea is to enable employees of all departments to come together to solve problems. Staff members such as design, manufacturing, purchasing, project, and plant engineering must consider themselves as service providers. Otherwise, the staff members are in constant struggle with the line management and employees, and nothing gets done. Within a company, the staff should consider what kind of work they can perform for the line departments. Research has shown that management practices relate to employee satisfaction, which also impacts customer satisfaction. When employees are satisfied with their treatment, given the right tools to do the job, and supported by management; customers are more likely to have higher perceptions of quality and will continue to do business with the company. Internal employee communications for customer satisfaction can be improved through the following options:

Company newsletters: Basic information, corporate news
Story boards: A wallboard display; memos, letters, projects, etc.
Team meetings: Share business news or announce new events
Posting customer letters of appreciation or dissatisfaction
Staff meetings: Share the information
Display of goals, progress charts, etc.
Quality awards from customers

To stay competitive in this environment, a constant schedule of training for the entire workforce is required. Typical employee training must focus on helping them do their job better.

External Customers

External customers are not part of the organization but are impacted by it. End users, Intermediate customers, and impacted parties are described in more detail below. Generally, external customers play a critical role by providing a major portion of company revenues.

End Users
The category of external customers includes those that purchase a product or service for their own use. In this case, they would be the “end-user” of the product.
Intermediate Customers
Intermediate customers purchase the product or service and then resell, repackage, modify, or assemble the product for sale to an end-user. These “channels” can provide volume sales opportunities for a business but will have significantly different requirements than end-users.
Examples of intermediate customers include:
- Retailers
- Distributors
- Manufacturer’s representatives
- Wholesalers
- Transport companies
Impacted Parties
The third external category is those who did not purchase or use the product but are impacted by it. Certainly, the families of the authors would be in this category.
Meeting external customers’ needs can become a complex process.

External Customer Identification

External customers may be sorted in many ways in an attempt to better understand their requirements and identify possible market niches. Business customers can include for-profit and not-for-profit enterprises. Examples of not-for-profits might include schools, hospitals, public agencies, etc. The various customer groups could also be reviewed for:

High-profit margin
Competition in market
Risk of market
Growth in market

The consumer customer market differs from the business market as follows:

The consumer market has a large number of customers
The majority of consumer purchases are small in actual dollar amounts
The transaction is usually a simple purchase
Most consumers are not very knowledgeable about the product
The supplier does not share proprietary information with the consumer
In contrast, the business customer acts in the following manner:
There are a very small number of business customers; maybe only one
The amount purchased per transaction is quite large
The purchase is handled through specialized personnel
The customer may know more about the requirements than the producer
The supplier may allow the customer access to all sorts of information
It is also important to look at the market for the next two to five years and estimate how it will change and grow. This requires a look at all potential customers and their requirements.

Customer Service

The customer-driven company is beginning to emerge in America. A project team could certainly focus on an improvement in customer service. The public demands and expects better quality products and services. One sample program follows:

Listen to the customer: customer needs
Define a service strategy: the customer focus
Set standards of performance: needed for measures and results
Select and train employees: the right employees and the proper training
Recognize and reward accomplishment: not enough of this is done

There is the need to listen to the customer, provide a vision, provide training, improve the process, ﬁnd or develop response metrics, and measure the results. About 70% of customers who leave a company do so not because of the product quality, but because of service quality. Whiteley suggests that the following information is essential:

To determine who your customers are
To know those customers’ needs and expectations
Work toward satisfying those needs and expectations

Note, there is also a need to obtain information from non-customers.

Customer Retention

Most organizations spend the bulk of their resources on obtaining new customers and smaller amounts on retaining customers. High customer satisfaction numbers do not necessarily mean the company has good customer retention and good customer loyalty. It has been found that current customers are worth as much as five times more than new customers. The cost of retaining a current customer is only one-fourth the cost of acquiring a new customer. Another study showed that companies will boost profits by about 100% by just retaining 5% more of their customers. The life cycle of a customer is defined by 5 stages:

Acquisition: Converting a prospect to a customer, high costs
Retention: Keeping the customer, 1/4 of the cost to acquire them
Attrition: Customer enthusiasm fades, as dissatisfaction creeps in
Defection: Losing the customer
Reacquisition: Regaining the customer, but at an even higher cost

The effort to retain customers requires some effort on the company’s part. Over 60% of dissatisfied customers are so tired of poor service that they think it is futile to complain. Customers buy expectations, not just products and services. A happy customer is sometimes known as an “apostle.” The apostle is thrilled and enthused with the product and is willing to tell the world about it and your company. They will assist you with product troubleshooting when problems occur and are your best source of new product ideas. Clearly, the objective is to create and nurture more apostles. Unfortunately, an unhappy customer can be even more devastating. They can become “terrorists,” and will broadly spread a negative message. Some techniques for getting to know customers better:

Don’t use your own instincts as research data (you’re not the customer)
See the world from the customer’s side
The higher you are in the organization, the more out of touch you are
Get customers to talk: 90% to 96% of unhappy customers won’t complain
Do research to retain customers
Determine how satisﬁed customers are
Conduct research on customer expectations
Develop a customer profile
Share the results of customer research studies a
Don’t go overboard on the details and measurement
Coordinate and use research efforts
Understand that sometimes research does not help the situation

Customer Loyalty

The value of a loyal customer is not measured on the basis of one gigantic purchase, but rather on his/her lifetime worth. Loyal customers account for a high proportion of sales and profit growth. Customer retention generates repeat sales, and it is cheaper to retain customers. For example, in life insurance, a new policyholder becomes profitable in 3 years. In the credit card business, the break-even point for a new customer is 6 years due to high marketing and bad debt costs. Customer loyalty is something that must be demonstrated through an act of execution, trust, or delightful service. They become partners.

Customer Metrics Selection

The metrics that will affect projects involving suppliers, internal processes, and customers would be quality, cycle time, cost, value, and labor.

The primary metrics for consideration in a project could come from several sources:

Suppliers
Internal processes
Customers

Garvin and Besterfield suggest nine dimensions of quality measurement:

Performance: Primary features of the product
Features: Secondary features added to the product
Conformance: Obtaining a product that meets fit, form, and function
Reliability: The dynamic quality of a product over time
Durability: Useful life
Service: Ease of repair
Response: Human interface
Aesthetics: Product appearance
Reputation: Based on past performance

Hill presents similar measurements that are important in the marketplace. Hill framed his characteristics to answer the question, “How do products win orders in the marketplace?” His suggested measurements are:

Price
Product range
Conformance quality
Design
Delivery speed
Brand name
Reliability of delivery
Technical support
Demand increases
After sales support
Color range

The secondary or consequential metrics would be derived from the primary metrics. For example, if cycle time was determined to be a key metric, the next step would be to establish the numerical measurement. Examples of measurements include:

Defects per unit (DPU)
Defects per million opportunities (DPMO)
Average age of receivables
Lines of error free software code
Reduction in scrap

Collecting Customer Data

Collecting data to gain “the voice of the customer” is a multi-level task. When collecting data from customers, it helps to consider the levels where customers impact the business.

Business Level
Customers at this level are primarily shareholders and top management employees. The data of interest is primarily ﬁnancial data such as stock price, market share, revenues, earnings, return-on-investment (ROI), return-on-net assets (RONA), etc. Typical measurement intervals may be quarterly or annually.
Operations Level
Customers at this level are primarily those who purchase the product (external) and those who manage production operations (internal). Data of interest measures overall process performance with the focus on customer satisfaction (external measures of operational effectiveness), and internal operations efficiency (internal measures such as rolled throughput yield, sigma levels, WIP inventory, etc.). Typical analysis tools come from six sigma methods and lean manufacturing, industrial engineering, and various forms of operations analysis. Typical measurement intervals may be daily or weekly.
Process Level
Customers at this level are primarily internal, including employees and the “next process” in the operation. External customers include suppliers for detailed materialspeciﬁcation questions. Data of interest primarily involves key process variables. Typical analysis tools are statistical methods for process control, capability, and improvement. The typical measurement may vary from hours to fractions of a second, depending on production rates. Since employees are customers, they should be surveyed on a regular basis. Jack Welch has stated that employee satisfaction is a key toward greater productivity and quality. He feels the survey factors should include:
- Job satisfaction
- Advancement fairness
- Training
- Treatment: respect & dignity
- Pay
- Company’s interest in the well-being

Voice of the Internal Customer

Surveys can establish a communication process serving as a tool for overall improvement. Information should be gathered on improvement efforts and some of the following factors:

State of the company: What is the employee’s perception of the company?
State of quality efforts: Are the quality efforts worthwhile?
State of the processes: Are there improvements?
Reaction to policies: What dumb things have been implemented?
Rating of job satisfaction: Do I like my job, my boss, etc.?
Rating of company satisfaction: is the company a good place to work?

Voice of the External Customer

The voice of the customer is an expression for listening to the external customer. It is necessary to have constant contact with the customer. To some companies, complaints are the only way that they listen to their customers. It has been stated that complaints are gold because complaints let the company know how to improve, and how to beat the competition. Among the ways that a company can listen to the external customer are:

Immediate customer surveys
Customer follow-up surveys (6 months, 1 year, 2 years)
Community surveys: a look at what the community is doing
Personal customer contact: CEO spends one day per month with a customer
Customer contact reports given to the contact employee
Focus groups: small and large groups
Customer interviews or councils
Electronic mail
Test marketing: a small area is tested for use
Quality guarantees: if not satisfied, we will redo the training
Inspectors: use of mystery shoppers, auditors
Ombudsmen: advocates for the customer
Use of toll-free phone numbers or suggestion boxes

Determining Critical Customer Requirements

Customers ultimately determine the value of any product (goods and services) with their decision to buy or not buy. These decisions are made based on a complex system of critical customer requirements. In order to manage (control and improve) any business process, one must be able to determine the critical customer requirements that influence these decisions. Customer value consists of cost, quality, features, and availability factors (CQFA). To prosper, a business process must do well in at least one of these four areas while at least meeting acceptable levels in the others. If a business can be “best in class” in one of these four quadrants, or above average in more than one quadrant, they can thrive. However, the level of the bar in all of the quadrants is constantly changing because of the environment and competition. For this reason, the determination of critical customer requirements must be a continuing activity rather than a one-time study. In addition to looking at customer’s CQFA preferences, it also helps to understand the entire system of customer expectations, needs, and priorities. To understand the critical relationships and interactions of all these factors, tools, such as the cause-and-effect matrix and quality function deployment, should be employed.

Customer Expectations

Deep knowledge and understanding of the customer are required in order to properly serve them. There is a need to go beyond the sale, to uncover the subjective factors of why the product was purchased. By emphasizing the need to listen to the customer, one will gain a better understanding of the customer’s expectations, priorities, and needs. The customer’s expectations can be described through an analogy similar to Maslow’s hierarchy of human needs. :

Basic: The bare essential attributes of the product or service should be present. A new personal computer should be assembled, formatted, and loaded with some basic software. A rental car will be serviced and operating properly.
Expected: Some attributes will be provided as a part of the product. A knowledgeable technician may provide general operating features of a personal computer. The rental car should be conveniently located, features explained, and policies clarified.
Product simplification features: New products can be complicated to use. Products or services should help ease the conversion to their use.
Communications: The need to be informed and to be given access to rightful information. An open-door policy is a must for many situations.
Service for product failures: When a product fails, what recourse (warranties, returns, exchanges, etc.) does the customer have? A newly purchased tennis racket cracks. What is the replacement policy?
Customer service: Customers are expecting companies to have properly trained personnel on hand to handle complaints. The agent of the company should be empowered to satisfy the customer at that point. Customers’ needs are changing at a more rapid rate than ever before. They require new products or services to take the place of existing or inadequate ones.

Customer Priorities

The customer will have priorities as to which of their many expectations and needs will be met. Thus, a supplier has a problem in determining how to know what their customers want and what the company’s priorities should become. Services or products that are of a high priority today, maybe unimportant 5 years later. This could be related to the sale of newspapers. They are very high in importance at the moment of publication, but not as high in value in 5 years (unless that particular issue featured something outstanding). Companies can make use of customer interviews, surveys, focus groups, phone surveys, mail surveys, audits, sales reports, or other data gathering tools to identify customer needs and expectations. Those same tools can be used by the customer to assign priorities to the quality attributes of the company’s product or service. The tools do not have to be complicated but should ask the right questions:
– What attributes are of value?
– How desirable is each attribute (using some form of rating)?
– How do we compare with competitor’s products?
– What other features or services would be of value?
The use of priorities for customer needs and expectations can enable the company to respond in a more timely manner.

ELEMENTS OF CUSTOMER-DRIVEN ORGANIZATIONS

The proper place of the customer in the organization’s hierarchy is illustrated in Figure below. This perspective is precisely the opposite of the traditional view of the organization. The difficulties involved in making such a radical change should not be underestimated.

A customer- and market-driven enterprise can be defined as one that is committed to providing excellent quality and competitive products and services to satisfy the needs and wants of a well-defined market segment. The journey from a traditional to a customer-driven organization has been made by enough organizations to allow us to identify a number of distinct milestones that mark the path to success. Generally, the journey begins with the recognition that a crisis is either upon the organization, or imminent. This wrenches the organization’s leadership out of denial and forces them to abandon the status quo. When the familiar ways of the past are no longer acceptable, the result is a feeling of confusion among the leaders. At this stage the leadership must answer some very basic questions:

What is the organization’s purpose?
What are our values?
What does an organization with these values look like?

A ‘‘value’’ is that which one acts to gain and/or keep. It presupposes an entity capable of acting to achieve a goal in the face of an alternative. Values are not simply nice-sounding platitudes, they represent goals. Pursuing the organization’s values implies building an organization that embodies these values. This is the leadership’s vision, to create a reality where their values have been achieved.
Customer-driven organizations share certain common features.

Flattened hierarchies – Getting everyone closer to the customer involves reducing the number of bureaucratic ‘‘layers’’ in the organization structure. It also involves the ‘‘upside-down’’ perspective of the organization structure shown in Figure above. The customer comes first, not the boss. Everyone serves the customer.
Risk-taking – Customers’ demands tend to be unpredictable. Responsiveness requires that organizations be willing to change quickly which involves uncertainty and risk Customer-driven organizations encourage risk-taking in a variety of ways. One important aspect is to celebrate mistakes made by individuals who engage in risky behavior. Bureaucratic impediments such as excessive dependence on written procedures are minimized or eliminated. Employees are encouraged to act on their own best judgments and not to rely on formal approval mechanisms.
Communication – During the transformation the primary task of the leadership team is the clear, consistent, and unambiguous transmission of their vision to others in the organization. One way this is done is through ‘‘internal marketing’’ which involves using the principles of marketing to get the message to the target ‘‘market’’: the employees. It is vital that the leaders’ actions are completely consistent with their words. The assistance of outside consultants may be helpful in identifying inconsistencies. Leaders should realize that their behavior carries tremendous symbolic meaning. This can contribute to the failure of convincing employees; a single action which is inconsistent with the stated message is sufficient to destroy all credibility. On the plus side, an action that clearly shows a commitment to the vision can help spread the word that ‘‘They’re serious this time.’’ The leadership should seek out stories that capture the essence of the new organization and repeat these stories often. For example, Nordstrom employees all hear the story of the sales clerk who allowed the customer to return a tire (Nordstrom’s doesn’t sell tires). This story captures the essence of the Nordstrom ‘‘rule book’’ which states:
Rule #1 – Use your own best judgment.
Rule #2 -There are no other rules.
Leaders should expect to devote a minimum of 50% of their time to communication during the transition.
Boards of directors – It is vital to obtain the enthusiastic endorsement of the new strategy by the board. Management cannot focus their attention until this support has been received. This will require that management educate their board and ask them for their approval. However, boards are responsible for governance, not management. Don’t ask the board to approve tactics. This bogs down the board, stifles creativity in the ranks, and slows the organization down.
Unions – In the transformed organization, everyone’s job changes. If the organization’s employees are unionized, changing jobs requires that the union become management’s partner in the transformation process. In the flat organization union employees will have greater authority. Union representatives should be involved in all phases of the transformation, including planning and strategy development. By getting union input, the organization can be assured that during collective bargaining the union won’t undermine the company’s ability to compete or sabotage the strategic plan. Unions also play a role in auditing the company’s activities to assure that they comply with contracts and labor laws.
Measuring results – It is important that the right things be measured. The ‘‘right things’’ are measurements that determine that you are delivering on your promises to customers, investors, employees, and other stakeholders. You must also measure for the right reasons. This means that measurements are used to learn about how to improve, not for judgment. Finally, you must measure the right way. Measurements should cover processes as well as outcomes. Data must be available quickly to the people who use them. Measurements must be easy to understand.
Rewarding employees – Care must be taken to avoid punishing with rewards. Rewarding individuals with financial incentives for simply doing their jobs well implies that the employee wouldn’t do the job without the reward. It is inherently manipulative. The result is to destroy the very behavior you seek to encourage . The message is that rewards should not be used as control mechanisms. Employees should be treated like adults and provided with adequate and fair compensation for doing their jobs. Recognizing exceptional performance or effort should be done in a way that encourages cooperation and team spirit, such as parties and public expressions of appreciation. Leaders should assure fairness: e.g., management bonuses and worker pay cuts don’t mix.

	TRADITIONAL ORGANIZATIONS	CUSTOMER- DRIVEN ORGANIZATIONS
Product and service delivery attitude	It is OK for customers to wait for products and services	It is best to provide fast time to market products and services
Product and service planning	Short-term focus Reactionary management Management by objectives planning process	Long-term focus Prevention-based management Customer-driven strategic planning process
Measures of performance	Bottom-line financial results Quick return on investment	Customer satisfaction Market share Long-term profitability Quality orientation Total productivity
Attitudes toward customers	Customers are irrational and a pain Customers are a bottleneck to profitability Hostile and careless ‘‘Take it or leave it’’ attitude	Voice of the customer is important Professional treatment and attention to customers is required Courteous and responsive Empathy and respectful attitude
Quality of products and services	Provided according to organizational requirements	Provided according to customer requirements and needs
Marketing focus	Seller’s market Careless about lost customers due to poor customer satisfaction	Increased market share and financial growth achieved
Process management approach	Focus on error and defect detection	Focus on error and defect prevention
People orientation	People are the source of problems and are burdens on the organization	People are an organization’s greatest resource
Mode of operation	Career-driven and independent work Customers, suppliers, and process owners have nothing in common	Management-supported improvement Teamwork between suppliers, process owners, and customers practiced
Improvement strategy	Crisis management Management by fear and intimidation	Continuous process improvement Total process management
Basis for decision making	Product-driven Management by opinion	Customer-driven Management by data

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The seven new management and planning tools

Management and planning tools include:

Affinity diagrams
Matrix diagrams
Interrelationship digraphs
Process decision program charts
Tree diagrams
Activity network diagrams
Prioritization matrices

Formal research on the seven new quality tools began in 1972 as part of the Japanese Society of QC technique development meetings. It took several years of research before the seven new tools were formalized. The original seven tools of quality (scatter diagram, flow charts, histogram, etc.) were adequate for data collection and analysis. However, the new tools allow for more identification, planning, and coordination in finding a problem solution. The seven new tools, as written by Japanese authors Mizuno Shigeru (1988) and Asaka Tetsuichi and Ozeki Kazuo (Tetsuichi, 1990), are:

Relations diagram
Affinity diagram (KJ method)
Systematic diagram
Matrix diagram
Matrix data analysis
Process decision program chart (PDPC)
Arrow diagram

Translating the seven new tools into English provided a better U.S. understanding. Later, these tools were modified and adapted to the American industry. Goal/QPC (Brassard, 1989) (Domb, 1994) formed the statistical resource committee which modified the seven new QC tools to a similar set of seven management and planning tools. A few of the names were changed. One tool was modified. They are identified by the corresponding Japanese sequence number and are listed below:
2. Affinity diagram
3. Tree diagram
6. Process decision program chart (PDPC)
5. Matrix diagram
1. Interrelationship digraphs (l.D.)
4. Prioritization matrices
7. Activity network diagram

Affinity Diagrams

The affinity diagram is a technique that an individual or team can use for problem-solving. Affinity encourages creativity by everyone on the team at all phases of the process. Affinity Diagrams break down longstanding communication barriers. Affinity Diagrams encourages creativity by everyone on the team at all phases of the process. It can break down longstanding communication barriers. It can encourage non-traditional connections among ideas/issues. It allows breakthroughs to emerge naturally, even on long-standing issues. It encourages “ownership” of results that emerge because the team creates both detailed input and general results. It can overcome “team paralysis,” which is brought on by an overwhelming array of options and lack of consensus. It encourages non-traditional connections among ideas/issues. It allows breakthroughs to emerge naturally, even on long-standing issues. IT Encourages “ownership” of results that emerge because the team creates both the detailed input and general results. It overcomes “team paralysis,” which is brought on by an overwhelming array of options and lack of consensus. Unfamiliar problems may present difficulties to the group. This technique is beneficial for new or complex problems. The affinity diagram appears similar to the mind mapping technique, in that one generates ideas that link up to other ideas to form thought patterns. The affinity diagram uses an organized method to gather facts and ideas to form developed patterns of thought. To allow a team to creatively generate a large number of ideas/issues and then organize and summarize natural groupings among them to understand the essence of a problem and breakthrough solutions. It can be widely used in the planning stages of a problem to organize ideas and information. The steps can be organized as follows:

Define the problem under consideration.
Have 3” x 5” cards or Post-it® notes available.
Enter ideas, data, facts, opinions, etc. on the cards or notes.
Place the cards or notes on a conference table or on a wall.
Arrange the groups into similar thought patterns or categories.
Develop a main affinity category for each similar group of ideas.
Once all of the cards have been placed under an appropriate affinity category, borders can be drawn around each affinity group to complete the diagram. The affinity diagram is also referred to as the KJ Method. It was developed by Dr. Kawakita Jiro, founder of the Kawayoshida Research Center.

Software development process affinity diagram

Affinity Diagrams Example:

Phrase the issue under discussion in a full sentence.

What are the issues involved in planning fun family vacations?

From the start, reach a consensus on the choice of words you will use. Neutral statements work well, but positive, negative, and solution-oriented questions also work.

2. Brainstorm at least 20 ideas or issues
a) Follow guidelines for brainstorming.
b) Record each idea on a Post-it® Note in bold, large print to make it visible 4–6 feet away. Use at minimum, a noun, and a verb. Avoid using single words. Four to seven words work well.

Affinity Diagrams ideas

A “typical” Affinity has 40–60 items, it is not unusual to have 100–200 ideas.

3. Without talking: sort ideas simultaneously into 5–10 related groupings
a) Move Post-it® Notes where they fit best for you; don’t ask, simply move any notes that you think belong in another grouping.
b) Sorting will slow down or stop when each person feels sufficiently comfortable with the groupings.

Affinity diagram grouping

Sort in silence to focus on the meaning behind and connections among all ideas, instead of emotions and “history” that often arise in discussions. As an idea is moved back and forth, try to see the logical connection that the other person is making. If this movement continues beyond a reasonable point, agree to create a duplicate Post-it®. It is okay for some notes to stand alone. These “loners” can be as important as others that fit into groupings naturally.

4. For each grouping, create summary or header cards using consensus
a) Gain a quick team consensus on a word or phrase that captures the central idea/theme of each grouping, record it on a Post-it® Note and place it at the top of each grouping. These are draft header cards.
b) For each grouping, agree on a concise sentence that combines the grouping’s central idea and what all of the specific Post-it® Notes add to that idea; record it and replace the draft version. This is a final header card.
c) Divide large groupings into subgroups as needed and create appropriate sub headers.
d) Draw the final Affinity Diagram connecting all finalized header cards with their groupings.

Spend the extra time needed to do solid header cards. Strive to capture the essence of all of the ideas in each grouping. Shortcuts here can greatly reduce the effectiveness of the final Affinity Diagram. It is possible that a note within a grouping could become a header card. However, don’t choose the “closest one” because it’s convenient. The hard work of creating new header cards often leads to breakthrough ideas.

Variations

Another popular form of this tool, called the KJ Method, was developed by the Japanese anthropologist Jiro Kawakita while he was doing fieldwork in the 1950s. The KJ Method, identified with Kawakita’s initials, helped the anthropologist and his students gather and analyze data. The KJ Method differs from the Affinity Diagram described above in that the cards are fact-based and go through a highly structured refinement process before the final diagram is created.

Variations

Issues Surrounding implementation of the Business Plan

Interrelationship Digraphs (I.D)

The l.D. technique is ideal for complex problems. The I.D technique allows a team to systematically identify, analyze, and classify the cause-and-effect relationships that exist among all critical issues so that key drivers or outcomes can become the heart of an effective solution. If the issue is very complex, exact relationships may be difficult to determine. There may be intertwined causal relationships involved. The l.D. technique encourages team members to think in multiple directions rather than linearly. It explores the cause-and-effect relationships among all the issues, including the most controversial. It allows the key issues to emerge naturally rather than allowing the issues to be forced by a dominant or powerful team member. It systematically surfaces the basic assumptions and reasons for disagreements among team members. It allows a team to identify the root cause(s) even when credible data doesn’t exist. The idea is to have a creative, problem-solving process that will eventually indicate some key causes. In fact, the final “solution” to the problem will be determined when the team has analyzed the graph for the key causes. The interrelationship digraph can also be referred to as a relations diagram, although there are some minor differences in the uses of the digraph. Several other tools can be used as material for this technique. Affinity diagrams, tree diagrams, or cause-and-effect diagrams can provide input. Interrelationship digraphs can be created in the following fashion:

Develop about 50 items that pertain to the basic problem. These probably should be on Postit® notes or 3” x 5” cards (l.D. cards).
A decision is made to either place closely related items together right away, or to shuffle the cards for a random display on a table. The random method can be justified if one wishes to uncover different ways of looking at a problem. The early placement of closely related cards together may have a tendency to bias thought patterns.
The fun begins with discussion regarding the placement of relationship arrows. The relationship arrow goes from the cause item to the effect item (cause —> effect). This is done for every card until completed.
Since this technique presumes there is adequate time to study the problem at hand, several revisions can be made. The digraph can be copied onto a large sheet of paper and distributed to team members for review. The group can report back in a week or so to go over any revisions.
Once the revisions have been made, a final draft of the digraph is created, and an analysis can be made. The drawing of arrows leading away or to certain (l.D.) cards can lead to inferences for the team to use.
The team will develop a consensus on the items that need to be worked on right away. These key items should be the ones with the greatest number of connecting arrows. A high number of outgoing arrows indicates a root cause or driver. A high number of incoming arrows indicates an outcome. Select only a few key items for project work.

Issues Surrounding implementation of the Business Plan

Interrelationship Digraph (ID) Example:

1. Phrase the issue under discussion in a full sentence.

What are the issues related to reducing litter?

If using an original statement (i.e., it didn’t come from a previous tool or discussion), create a complete sentence that is clearly understood and agreed on by team members.
If using input from other tools, such as an Affinity Diagram, make sure that the goal under discussion is still the same and clearly understood.

2. Assemble the right team

The ID requires more intimate knowledge of the subject under discussion than is needed for the Affinity. This is important if the final cause-and effect patterns are to be credible.
The ideal team size is generally 4–6 people. However, this number can be increased as long as the issues are still visible and the meeting is well facilitated to encourage participation and maintain focus.

3. Lay out all of the ideas/issue cards that have either been brought from other tools or brainstormed

Arrange 5–25 cards or notes in a large circular pattern, leaving as much space as possible for drawing arrows. Use large, bold printing, including a large number or letter on each idea for quick reference later in the process.

Interrelationship Digraph Idea

4. Look for cause/influence relationships among all of the ideas and draw relationship arrows

Choose any of the ideas as a starting point. If all of the ideas are numbered or lettered, work through them in sequence.
An outgoing arrow from an idea indicates that it is the stronger cause or influence.

one-way relationship arrows

Draw only one-way relationship arrows in the direction of the stronger cause or influence. Make a decision on the stronger direction. Do not draw two-headed arrows.

5. Review and revise the first-round ID

Get additional input from people who are not on the team to confirm or modify the team’s work. Either bring the paper version to others or reproduce it using available software. Use a different size print or a color marker to make additions or deletions.

6. Tally the number of outgoing and incoming arrows and select key items for further planning

Record and clearly mark next to each issue the number of arrows going in and out of it.
Find the item(s) with the highest number of outgoing arrows and the item(s) with the highest number of incoming arrows.
Outgoing arrows. A high number of outgoing arrows indicates an item that is a root cause or driver. This is generally the issue that teams tackle first.
Incoming arrows. A high number of incoming arrows indicates an item that is a key outcome. This can become a focus for planning either as a meaningful measure of overall success or as a redefinition of the original issue under discussion.

Use common sense when you select the most critical issues to focus on. Issues with very close tallies must be reviewed carefully, but in the end, it is a judgment call, not science.

7. Draw the final ID

Identify visually both the key drivers (greatest number of outgoing arrows) and the key outcomes (greatest number of incoming arrows). Typical methods are double boxes or bold boxes.

What are the issues related to reducing litter?

Variations

When it is necessary to create a more orderly display of all of the relationships, a matrix format is very effective. The vertical (up) arrow is a driving cause, and the horizontal (side) arrow is an effect. The example below has added symbols indicating the strength of the relationships. The ”total“ column is the sum of all of the ”relationship strengths“ in each row. This shows that you are working on those items that have the strongest effect on the greatest number of issues.

Tree Diagrams

The tree diagram is a systematic method to outline all the details needed to complete a given objective. The Tree diagram is used to break any broad goal, graphically, into increasing levels of detailed actions that must or could be done to achieve the stated goals. The tree diagram can also be referred to as a systematic diagram. It is an orderly structure similar to a family tree chart or an organization chart. The method of logic is similar to that of value analysis. The organization is by levels of importance (i.e., why – how, goals – means). The tree diagram encourages team members to expand their thinking when creating solutions. Simultaneously, this tool keeps everyone linked to the overall goals and sub goals of a task. It allows all participants (and reviewers outside the team) to check all of the logical links and completeness at every level of plan detail. It helps the planning team move from theory to the real world. It reveals the real level of complexity involved in the achievement of any goal, making potentially overwhelming projects manageable, as well as uncovering unknown complexity. The tree diagram can be used to:

Develop the elements for a new product
Show the relationships of a production process
Create new ideas in problem solving
Outline the steps to implement a project

The supplies needed for tree diagram development should include 3” x 5” cards, Post-it® notes, flip charts, or a large board, Input ideas (ways to accomplish, reasons why, etc.) are written on the cards or notes. A group or team provides the ideas. One way to organize a tree diagram is as follows:

Determine the overall objective(s), goal(s), and basic function of the tree diagram. For example, “passing the CSSBB exam” can be the basic function or goal. Put that objective on a note card and place it on the far left side of the board.
Next determine the second level of means that would achieve the goal, or “how” can you achieve the “why” card to the left,
For each level of the tree, the same line of questioning is used, until a final level is achieved. The final level occurs when all details necessary to solve the overall objective are on the chart.
After finishing the diagram, go back over it to confirm that each step will lead to a successful objective. If so, the tree is complete.

If an affinity diagram or a cause-and-effect diagram have been developed, the same causes could be used to fill in the tree diagram quicker. A general brainstorming session can be held with the purpose of writing down all of the characteristics or elements relating to the objective. After sufficient time to display all of the thoughts on paper, the cards can be aligned according to their appropriate levels on the tree diagram.

An example of a tree diagram.

Tree Diagrams Example:

1. Choose the Tree Diagram goal statement

Goal: Increase workplace suggestions

Typical sources:
- The root cause/driver identified in an Interrelationship Digraph (ID).
- An Affinity Diagram with the headers as major subgoals.
- Any assignment given to an individual or team.
When used in conjunction with other management and planning tools, the most typical source is the root cause/ driver identified in the ID. Tip Regardless of the source, work hard to create— through consensus—a clear, action-oriented statement.

2. Assemble the right team

The team should consist of action planners with detailed knowledge of the goal topic. The team should take the Tree only to the level of detail that the team’s knowledge will allow. Be prepared to hand further details to others.
Four to six people is the ideal group size, but the Tree Diagram is appropriate for larger groups as long as the ideas are visible and the session is well facilitated.

3. Generate the major Tree headings, which are the major sub goals to pursue

The simplest method for creating the highest, or first level of detail, is to brainstorm the major task areas. These are the major “means” by which the goal statement will be achieved.
To encourage creativity, it is often helpful to do an “Action Affinity” on the goal statement. Brainstorm action statements and sort into groupings, but spend less time than usual refining the header cards. Use the header cards as the Tree’s first level sub goals.

Use Post-it® Notes to create the levels of detail. Draw lines only when the Tree is finished. This allows it to stay flexible until the process is finished. The Tree can be oriented from left to right, right to left, or top-down. Keep the first level of detail broad, and avoid jumping to the lowest level of the task. Remember: “If you start with what you already know, you’ll end up where you’ve already been.”

4. Break each major heading into greater detail

Working from the goal statement and first-level detail, placed either to the extreme left, right, or top of the work surface, ask of each first-level item, “What needs to be addressed to achieve the goal statement?”
Repeat this question for each successive level of detail.
Stop the breakdown of each level when there are assignable tasks or the team reaches the limit to its own expertise. Most Trees are broken out to the third level of detail (not counting the overall goal statement as a level). However, some sub goals are just simpler than others and don’t require as much breakdown.

5. Review the completed Tree Diagram for logical flow and completeness

At each level of detail, ask, “Is there something obvious that we have forgotten?”
As the Tree breaks down into greater detail (from general to specific) ask, “If I want to accomplish these results, do I really need to do these tasks?”
As the Tree builds into broader goals (from the specific to the general) ask, “Will these actions actually lead to these results?”
Draw the lines connecting the tasks.

The Tree Diagram is a great communication tool. It can be used to get input from those outside the team. The team’s final task is to consider proposed changes, additions, or deletions and to modify the Tree as is appropriate.

Example of tree diagram

Process Decision Program Charts (PDPC)

The process decision program chart (PDPC) is a technique designed to help prepare contingency plans. It is modeled after reliability engineering methods of Failure Mode, Effects, and Criticality Analysis (FMECA) and Fault Tree Analysis. The emphasis of PDPC is the impact of the “failures” (problems) on project schedules. Also, PDPC seeks to describe specific actions to be taken to prevent the problems from occurring in the first place and to mitigate the impact of the problems if they do occur. An enhancement to classical PDPC is to assign subjective probabilities to the various problems and to use these to help assign priorities. The process decision program chart (PDPC) method is used to chart the course of events that will take us from a start point to our final complex goal. As with many complex goals (Kennedy’s challenge to America to put a man on the moon), an uncertainty of attaining intermediate events is possible. This could derail progress toward goal completion. The various events are charted and any anticipated contingencies are planned for. Of course, some contingencies cannot be foreseen. There may be insufficient knowledge or unexpected changes in events may occur.
This method is similar to contingency planning. Some uses for the process decision program chart (PDPC) include:

The problem is new, unique, or complex in nature. It may involve a sequence of very difficult and challenging steps.
The opportunity to create contingencies and to counter problems are available to the team. Sidesteps in the problem solving sequence are unknown, but anticipated. The PDPC method is dynamic.
Some example projects are:
- Accident prevention
- New human resource policies and their effects
- A new computer registration system for a college

There are several ways to construct a process decision program chart (PDPC):
One graphic method can be developed to show the sequences required. A forward sequence of steps can be used to show how to progress from point Al to A2 and to point Z (our goal). As the project is worked out, if A3 proves to be a stumbling block, then new steps must be developed to resolve A3; such as BI, B2, B3…leading to point Z (our goal).
Another graphic method can be developed with our goal, point Z, as the starting point. In this case, a modified tree diagram is developed showing the various points to consider. The tree should be developed by order of detail, that is, with higher-order levels at the top of the chart, and lower details at the bottom. At the lowest level, the contingency plans are developed through questioning, “what-if?” Suitable countermeasures are put forth to resolve the “what-if?” condition.
An outline format method could be used to indicate the levels of the problem. The outline format could resemble the method used for outlining a textbook. The major steps (chapter headings), subtopics, paragraph headings, and sub-point would make up the outline. These would constitute a format for a project.

Process decision program chart

Process Decision Program Chart (PDPC) Example:

The Process Decision Program Chart (PDPC) is a valuable tool for improving implementation through contingency planning. The PDPC, based on the Tree Diagram, involves a few simple steps.

Assemble a team closest to the implementation
Determine proposed implementation steps
List 4–10 broad steps and place them in sequence in the first Tree level.
Branch likely problems off each step
Ask, “What could go wrong?”
Branch possible and reasonable responses off each likely problem
Choose the most effective countermeasures and build them into a revised plan

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Matrix Diagrams

Matrix diagrams show the relationship between objectives and methods, results and causes, tasks and people, etc. The objective is to determine the strength of relationships between a grid of rows and columns. The intersection of the grid will clarify the problem strength. There are several basic types of matrices:

L-type…elements on the Y-axis and elements on the X-axis
T-type…2 sets of elements on the Y-axis, split by a set of elements on the X-axis.
X-type…2 sets of elements on both the Y-axis and X-axis
Y-type…2 L-type matrices joined at the Y-axis to produce a matrix design in 3 planes
C-type (3-D matrix)…2 L-type matrices joined at the Y-axis, but with only I set of relationships indicated in 3-dimensional space (the use of a computer software package is recommended for this type)
Variations of the above matrices can generate additional types. The results of a tree diagram or even 2 trees can be meshed into a single matrix. The strength of relationships can be determined via a legend containing numerical values. The numerical values are usually at 3, 2, and I, but they can be adjusted as appropriate. Tallying the strength values can assist with making objective decisions.

Matrix Diagrams Example:

Select the key factors affecting successful implementation
The most important step is to choose the issues or factors to be compared. The format is secondary. Begin with the right issues, and the best format will define itself. The most common use is the distribution of responsibilities within an Lshaped or T-shaped matrix.
Assemble the right team
Select individuals that have the influence/power to realistically assess the chosen factors.
When distributing responsibilities, include those people who will likely be involved in the assigned tasks or who can at least be part of a review team to confirm small-group results.
Select an appropriate matrix format
Base your choice of format on the number of sets of items and types of comparisons you need to make.
Choose and define relationship symbols
The possible meanings of the symbols are almost endless. The only requirement is that the team comes to a clear understanding and creates an equally clear legend with the matrix.
Complete the matrix
If distributing responsibilities, use only one “primary responsibility” symbol to show ultimate accountability. All other core team members can be given secondary responsibilities.

Focus the quality of the decision in each matrix cell. Do not try to “stack the deck” by consciously building a pattern of decisions. Let these patterns emerge naturally.
Interpret the matrix using total numerical values only when it adds value. Often the visual pattern is sufficient to interpret the overall results.

Examples of Matrix Diagram

Prioritization Matrices

Prioritization Matrices are used to narrow down options through a systematic approach of comparing choices by selecting, weighing, and applying criteria. The original Japanese matrix data-analysis tool would arranged data into a matrix diagram. Allowing a large array of numbers to be seen at one time. The degree of correlation would be entered into the proper cell. This technique is the most complex of the tools introduced so far. It is not as easy to use, due to its greater emphasis on statistical analysis. To counter the heavy mathematical emphasis of the matrix data-analysis, the prioritization matrices approach was developed. There are several matrices to build and use in this approach. The answers that result from these matrices will be the basis for decision-making. To use the prioritization matrices, the key issues and concerns have been identified and alternatives have been generated. The need is to determine the option to use. Other similar decision-making techniques have been developed along these lines, such as the type developed by Kepner and Tregoe in The Rational Manager(Kepner,1965). The prioritization matrix is a system for decision-making such that computer usage is not a requirement. However, the math can become intricate. The prioritization matrix quickly surfaces basic disagreements so they may be resolved upfront. It forces a team to focus on the best thing(s) to do, and not everything they could do, dramatically increasing the chances for implementation success. It limits “hidden agendas” by surfacing the criteria as a necessary part of the process. It increases the chance of follow-through because consensus is sought at each step in the process (from criteria to conclusions). It reduces the chances of selecting someone’s “pet project”
M. Brassard in The Memory Jogger PIus+ (Brassard, 1989) provides a description of three types of prioritization matrices that can be used:

The full analytical criteria method: It is used when Smaller teams are involved (3–8 people); Options are few (5–10 choices); There are relatively few criteria (3–6 items);Complete consensus is needed; The stakes are high if the plan fails;
The Consensus Criteria Method: It is used when Larger teams are involved (8 or more people); Options are many (10–20 choices); There is a significant number of criteria (6–15 items); Quick consensus is needed to proceed.
The combination I.D. imatrix method: This method is different from the other two methods because it is based on cause and effect, rather than criteria. It is used when Interrelationships among options are high, and finding the option with the greatest impact is critical.

The full analytical criteria method is the most complex of the three methods, but the consensus criteria method can be a bit involved as well. They both require sets of matrices to form the final matrix. The criteria in both cases get prioritized, weighted, and applied against the options generated. A decision, based on numerical values, can generally be obtained as a result. The combination l.D./matrix method is used to prioritize options. The interrelationship digraph (l.D.) can be used since it does not numerically value the cause-and-effect relationship. In an L-shaped matrix, which compares all of the options to each other, the strength values can be developed.

The full analytical criteria method: Example:

1. Agree on the ultimate goal to be achieved in a clear, concise sentence
If no other tools are used as input, produce a clear goal statement through consensus. This statement strongly affects which criteria are used.

Choose the most enjoyable vacation for the whole family

2. Create the list of criteria
Brainstorm the list of criteria or review previous documents or guidelines that are available, e.g., corporate goals, budget-related guidelines.

Cost Educational value Diverse activity Escape reality

The team must reach consensus on the final criteria and their meanings, or the process is likely to fail!

3. Using an L-shaped matrix, weight all criteria against each other

Reading across from the vertical axis, compare each criterion to those on the horizontal axis.
Each time a weight (e.g., 1, 5, 10) is recorded in a row cell, its reciprocal value (e.g., 1/5, 1/10) must be recorded in the corresponding column cell.
Total each horizontal row and convert to a relative decimal value known as the “criteria weighting.”

4. Compare ALL options relative to each weighted criterion

For each criterion, create an L-shaped matrix with all of the options on both the vertical and horizontal axis and the criteria listed in the left hand corner of the matrix. There will be as many options matrices as there are criteria to be applied.
Use the same rating scale (1, 5, 10) as in Step 3, but customize the wording for each criterion.
The relative decimal value is the “option rating.”

The whole number (1, 5, 10) must always represent a desirable rating. In some cases this may mean “less,” e.g., cost; in others this may mean “more,” e.g., tasty.

5. Using an L-shaped summary matrix, compare each option based on all criteria combined

List all criteria on the horizontal axis and all options on the vertical axis.
In each matrix cell multiply the “criteria weighting” of each criterion (decimal value from Step 3) by the “option rating” (decimal value from Step 4). This creates an “option score.”
Add each option score across all criteria for a row total. Divide each row total by the grand total and
convert to the final decimal value. Compare these decimal values to help you decide which option to pursue.

6. Choose the best option(s) across all criteria

While this is more systematic than traditional decision-making, it is not a science. Use common sense and judgment when options are rated very closely, but be open to non-traditional conclusions as well.

Example of consensus criteria method

A team had to choose which of four projects to pursue first. To help them decide, they identified four criteria for selection and their weights as follows: high impact on the bottom line (weight=0.25), easy to implement (0.15), low cost to implement (0.20), and high impact on customer satisfaction (0.40). The four projects were then ranked according to each criterion; the results are shown in the table below.

In the above example, the team would begin with project #2 because it has the highest score. If the team had difficulty reaching a consensus on the weights or ranks, they could use totals or a method such as the nominal group technique described below.

ACTIVITY NETWORK DIAGRAMS (AND)

Activity network diagrams, sometimes called arrow diagrams, have their roots in well-established methods used in operations research. The arrow diagram is directly analogous to the Critical Path Method (CPM) and the Program Evaluation and Review Technique (PERT). These two project management tools have been used for many years to determine which activities must be performed when they must be performed, and in what order. Unlike CPM and PERT, which require training in project management or systems engineering, arrow diagrams are greatly simplified so that they can be used with a minimum of training. The figure below, an illustration of an arrow diagram, is reproduced here.

PERT network for constructing a house

Activity network diagram allows a team to find both the most efficient path and realistic schedule for the completion of any project by graphically showing total completion time, the necessary sequence of tasks, those tasks that can be done simultaneously, and the critical tasks to monitor. All team members have a chance to give a realistic picture of what their piece of the plan requires, based on real experience. Everyone sees why he or she is critical to the overall success of the project. Unrealistic implementation timetables are discovered and adjusted in the planning stage. The entire team can think creatively about how to shorten tasks that are bottlenecks. The entire team can focus its attention and scarce resources on the truly critical tasks

Example of Activity network diagrams

Assemble the right team of people with firsthand knowledge of the subtasks
Brainstorm or document all the tasks needed to complete a project. Record on Sticky Notes.
Find the first task that must be done, and place the card on the extreme left of a large work surface

Ask: “Are there any tasks that can be done simultaneously with task #1?” If there are simultaneous tasks, place the task card above or below task #1. If not, go to the next step.
Ask, “What is the next task that must be done? Can others be done simultaneously?” Repeat this questioning process until all the recorded tasks are placed in sequence and in parallel. At each step always ask, “Have we forgotten any other needed tasks that could be done simultaneously?”
Number each task, draw the connecting arrows, and agree on a realistic time for the completion of each task. Record the completion time on the bottom half of each card. Be sure to agree on the standard time unit for each task, e.g., days, weeks.

Determine the project’s critical path
- Any delay to a task on the critical path will be added to the project’s completion time, unless another task is accelerated or eliminated. Likewise, the project’s completion time can be reduced by accelerating any task on the critical path.
- There are two options for calculating the total critical path and the tasks included within it.Longest cumulative path. Identify total project completion time. Add up each path of connected activities. The longest cumulative path is the quickest possible implementation time. This is the project’s critical path.

Calculated slack. Calculate the “slack” in the starting and completion times of each task. This identifies which tasks must be completed exactly as scheduled (on the critical path) and those that have some latitude. Determining the longest cumulative path is simpler than calculating the slack, but can quickly become confusing in larger ANDs. The calculated slack option determines the total project and slack times, and therefore the total project time and critical path are identified “automatically.”

Gantt Charts (Bar Charts)

Gantt charts (bar charts), named after Henry Gantt, display activities or events as a function of time (or cost). It is a simple tool that uses horizontal bars to show which tasks can be done simultaneously over the life of the project. Each activity is shown as a horizontal bar with ends positioned at the starting and ending dates for the activity.
Advantages of Gantt charts include:

The charts are easy to understand.
Each bar represents a single activity.
It is simple to change the chart.
The chart can be constructed with minimal data.
Program task progress versus date is shown.

Disadvantages of Gantt charts include:

They do not show interdependencies of activities.
The effects of the early or late start of an activity are not shown.
There is no means to indicate the variation in the expected time to complete an activity.
The details of an activity are not indicated.
There is little predictive value to this presentation of data.
The bar charts indicate only an ambiguous description of how the project as a system reacts to changes. The network relationship between activities that are indicated in AND are not shown in the Gantt chart.

Planning Grid

A planning grid helps you identify the resources for, and outcomes of, each step in a project. The following features make it easy to use:
• Its table form quickly summarizes the tasks needed to complete a project.
• You can easily customize it to track information specific to your project.
• It is easy to create with pen and paper.

The steps for completing a planning grid are as follows:

Specify the final outcome of the project.
Identify the final step and what it produces.
Identify the starting point and what it produces.
Brainstorm a list of steps that occur between the starting point and the final step.
Clean up the list by eliminating duplication, combining related ideas, rewriting unclear statements, and so forth.
Label the columns of a grid as shown in the example at left.
Write your final list of steps in sequence down the side of the grid.
Fill in the Product column for each step.
Enter a tentative due date or time for each step.
Revise steps if necessary.
Complete the remaining columns.
The categories across the top of the grid can vary, depending on the needs of your project.

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Seven QC Tools

Kaoru Ishikawa’s Basic Seven QC Tools

These tools are as given as below –

Cause-and-effect diagram (also called Ishikawa or fishbone chart): Identifies many possible causes for an effect or problem and sorts ideas into useful categories.
Check sheet: A structured, prepared form for collecting and analyzing data; a generic tool that can be adapted for a wide variety of purposes.
Control charts: Graphs used to study how a process changes over time.
Histogram: The most commonly used graph for showing frequency distributions, or how often each different value in a set of data occurs.
Pareto chart: Shows on a bar graph which factors are more significant.
Scatter diagram: Graphs pairs of numerical data, one variable on each axis, to look for a relationship.
Flow chart: A process flow chart is simply a tool that graphically shows the inputs, actions, and outputs of a given system.

1. CAUSE AND EFFECT DIAGRAMS

Process improvement involves taking action on the causes of variation. With most practical applications, the number of possible causes for any given problem can be huge. Dr. Kaoru Ishikawa developed a simple method of graphically displaying the causes of any given quality problem. His method is called by several names, the Ishikawa diagram, the fishbone diagram, and the cause-and-effect diagram.
Cause and effect diagrams are tools that are used to organize and graphically display all of the knowledge a group has relating to a particular problem. Usually, the steps are the following:

Develop a flow chart of the area to be improved.
Define the problem to be solved.
Brainstorm to find all possible causes of the problem.
Organize the brainstorming results in rational categories.
Construct a cause and effect diagram that accurately displays the relationships of all the data in each category.

Once these steps are complete, constructing the cause and effect diagram is very simple.

Draw a box on the far right-hand side of a large sheet of paper and draw a horizontal arrow that points to the box. Inside of the box, write the description of the problem you are trying to solve.
Write the names of the categories above and below the horizontal line. Think of these as branches from the main trunk of the tree.
Draw in the detailed cause data for each category. Think of these as limbs and twigs on the branches.

A good cause and effect diagram will have many “twigs,”. If your cause and effect diagram doesn’t have a lot of smaller branches and twigs, it shows that the understanding of the problem is superficial. Chances are you need the help of someone outside of your group to aid in the understanding, perhaps someone more closely associated with the problem.
Cause and effect diagrams come in several basic types. The dispersion analysis type is created by repeatedly asking “why does this dispersion occur?” For example, we might want to know why all of our fresh peaches don’t have the same colour.

CAUSE AND EFFECT DIAGRAMS

The production process class cause and effect diagram use production processes as the main categories, or branches, of the diagram. The cause enumeration cause and effect diagram simply display all possible causes of a given problem grouped according to rational categories. This type of cause and effect diagram lends itself readily to the brainstorming approach we are using. Cause and effect diagrams have a number of uses. Creating the diagram is an education in itself. Organizing the knowledge of the group serves as a guide for discussion and frequently inspires more ideas. The cause and effect diagram, once created, acts as a record of your research. Simply record your tests and results as you proceed. If the true cause is found to be something that wasn’t on the original diagram, write it in. Finally, the cause and effect diagram is a display of your current level of understanding. It shows the existing level of technology as understood by the team. It is a good idea to post the cause and effect diagram in a prominent location for all to see.

2.CHECK SHEETS

Check sheets are devices which consist of lists of items and some indicator of how often each item on the list occurs. In their simplest form, checklists are tools that make the data collection process easier by providing pre-written descriptions of events likely to occur. A well-designed check sheet will answer the questions posed by the investigator. Some examples of questions are the following: “Has everything been done?” “Have all inspections been performed?” “How often does a particular problem occur?” “Are problems more common with part X than with part Y?” They also serve as reminders that direct the attention of the data collector to items of interest and importance. Such simple check sheets are called confirmation check sheets. Check sheets have been improved by adding a number of enhancements, a few of which are described below. Although they are simple, check sheets are extremely useful process-improvement and problem-solving tools. Their power is greatly enhanced when they are used in conjunction with other simple tools, such as histograms and Pareto analysis. Ishikawa estimated that 80% to 90% of all workplace problems could be solved using only the simple quality improvement tools.

Check sheets are great tools for organizing and collecting facts and data. By collecting data, individuals or teams can make better decisions, solve problems faster, and earn management support.

Recording Check Sheets

A recording check sheet is used to collect measured or counted data. The simplest form of the recording check sheet is for counted data. Data is collected by making tick marks on this particular style of Check sheets

Typical Recording Check Sheet

The check sheet can be broken down to indicate either shift, day, or month. Measured data may be summarized by the means of a check sheet called a tally sheet. To collect measured data, the same general check sheet form is used. The only precaution is to leave enough room to write in individual measurements.

Checklists

The second major type of check sheet is called the checklist. A grocery list is a common example of a checklist. On the job, checklists may often be used for inspecting machinery or product. Checklists are also very helpful when learning how to operate complex or delicate equipment.

Process check sheets

These check sheets are used to create frequency distribution tally sheets that are, in turn, used to construct histograms. A process check sheet is constructed by listing several ranges of measurement values and recording a mark for the actual observations. Notice that if reasonable care is taken in recording tick marks, the check sheet gives a graphical picture similar to a histogram.

Process check sheets

Defect check sheets

Here the different types of defects are listed and the observed frequencies observed. If reasonable care is taken in recording tick marks, the check sheet resembles a bar chart.

Stratified defects check sheets

These check sheets stratify a particular defect type according to logical criteria. This is helpful when the defect check sheet fails to provide adequate information regarding the root cause or causes of a problem.

Stratified defect check sheet

Defect location check sheet

These “check sheets” are actually drawings, photographs, layout diagrams or maps which show where a particular problem occurs. The spatial location is valuable in identifying root causes and planning corrective action. In the Figure below, the location of complaints from customers about lamination problems on the running shoe is shown with an “X.” The diagram makes it easy to identify a problem area that would be difficult to depict otherwise. In this case, a picture is truly worth a thousand words of explanation.

Defect location check sheet lamination complaints.

Cause and effect diagram check sheet

Cause and effect diagrams can also serve as check sheets. Once the diagram has been prepared, it is posted in the work area and the appropriate arrow is marked whenever that particular cause or situation occurs. Teams can also use this approach for historic data when such data is available.

3. HISTOGRAMS

A histogram is a pictorial representation of a set of data. It is created by grouping the measurements into “cells.” Histograms are used to determine the shape of a data set. Also, a histogram displays the numbers in a way that makes it easy to see the dispersion and central tendency and to compare the distribution to requirements. Histograms can be valuable troubleshooting aids. Comparisons between histograms from different machines, operators, vendors, etc., often reveal important differences.

How to construct a histogram
1. Find the largest and the smallest value in the data.
2. Compute the range by subtracting the smallest value from the largest value.
3. Select a number of cells for the histogram. The table below provides some useful guidelines. The final histogram may not have exactly the number of cells you choose here, as explained below. As an alternative, the number of cells can be found as the square root of the number in the sample. For example, if n=100, then the histogram would have 10 cells. Round to the nearest integer.

SAMPLE SIZE	NUMBER OF CELLS
100 or less	7 to 10
101-200	11 to 15
201 or more	16 to 20

4. Determine the width of each cell. We will use the letter W to stand for the cell width. The number W is a starting point. Round W to a convenient number. Rounding W will affect the number of cells in your histogram.

5. Compute “cell boundaries.” A cell is a range of values and cell boundaries define the start and end of each cell. Cell boundaries should have one more decimal place than the raw data values in the data set. for example, if the data are integers, the cell boundaries would have one decimal place. The low boundary of the first cell must be less than the smallest value in the data set. Other cell boundaries are found by adding W to the previous boundary. Continue until the upper boundary is larger than the largest value in the data set.
6. Go through the raw data and determine which cell each value falls. Mark a tick in the appropriate cell.
7. Count the ticks in each cell and record the count, also called the frequency, to the right of the tick marks.
8. Construct a graph from the table. The vertical axis of the graph will show the frequency in each cell. The horizontal axis will show the cell boundaries. The figure below illustrates the layout of a histogram.

Layout of histogram

9. Drawbars representing the cell frequencies. The bars should all be the same width, the height of the bars should equal the frequency in the cell.

Histogram example

Assume you have the data on the size of a metal rod. The rods were sampled every hour for 20 consecutive hours and 5 consecutive rods were checked each time.(20 subgroups of 5 values per group).

1. Find the largest and the smallest value in the data set. The smallest value is 0.982 and the largest is 1.021.
2. Compute the range, R, by subtracting the smallest value from the largest value. R= 1.021 -0.982 = 0.039.
3. Select a number of cells for the histogram. Since we have 100 values, 7 to 10 cells are recommended. We will use 10 cells.
4. Determine the width of each cell, W. Using Equation V.I, we compute W=0.039 / 10 = 0.0039. We will round this to 0.004 for convenience. Thus, W= 0.004.
5. Compute the cell boundaries. The low boundary of the first cell must be below our smallest value of 0.982, and our cell boundaries should have one decimal place more than our raw data. Thus, the lower cell boundary for the first cell will be 0.9815. Other cell boundaries are found by adding W = 0.004 to the previous cell boundary until the upper boundary is greater than our largest value of 1.021.

Cell Number	Lower cell Boundary	Upper cell Boundary
1	0.9815	0.9855
2	0.9855	0.9895
3	0.9895	0.9935
4	0.9935	0.9975
5	0.9975	1.0015
6	1.0015	1.0055
7	1.0055	1.0095
8	1.0095	1.0135
9	1.0135	1.0175
10	1.0175	1.0215

6. Go through the raw data and mark a tick in the appropriate cell for each data point.
7. Count the tick marks in each cell and record the frequency to the right of each cell.

Construct a graph from the above table. The frequency column will be plotted on the vertical axis, and the cell boundaries will be shown on the horizontal (bottom) axis. The resulting histogram is as shown

Use of Histogram

Histograms can be used to compare a process to requirements if you draw the specification lines on the histogram. If you do this, be sure to scale the histogram accordingly.
Histograms should not be used alone. Always construct a run chart or a control chart before constructing a histogram. They are needed because histograms will often conceal out of control conditions since they don’t show the time sequence of the data.
Evaluate the pattern of the histogram to determine if you can detect changes of any kind. The changes will usually be indicated by multiple modes or “peaks” on the histogram. Most real-world processes produce histograms with a single peak. However, histograms from small samples often have multiple peaks that merely represent sampling variation. Also, multiple peaks are sometimes caused by an unfortunate choice of the number of cells. Processes heavily influenced by behavior patterns are often multi-modal. For example, traffic patterns have distinct “rush-hours,” and prime time is prime time precisely because more people tend to watch television at that time.
Histograms can be used to compare a process to requirements if you draw the specification lines on the histogram. If you do this, be sure to scale the histogram accordingly.
Histograms should not be used alone. Always construct a run chart or a control chart before constructing a histogram. They are needed because histograms will often conceal out of control conditions since they don’t show the time sequence of the data.
Evaluate the pattern of the histogram to determine if you can detect changes of any kind. The changes will usually be indicated by multiple modes or “peaks” on the histogram. Most real-world processes produce histograms with a single peak. However, histograms from small samples often have multiple peaks that merely represent sampling variation. Also, multiple peaks are sometimes caused by an unfortunate choice of the number of cells. Processes heavily influenced by behaviour patterns are often multi-modal. For example, traffic patterns have distinct “rush-hours,” and primetime is prime time precisely because more people tend to watch television at that time.

Histograms have the following characteristics:

Frequency column graphs that display a static picture of process behaviour. Histograms require a minimum of 50-100 data points.
A histogram is characterized by the number of data points that fall within a given bar or interval. This is commonly referred to as “frequency.”
A stable process is frequently characterized by a histogram exhibiting unimodal or bell-shaped curves. A stable process is predictable.
An unstable process is often characterized by a histogram that does exhibit a bell-shaped curve. Obviously other more exotic distribution shapes (like exponential, lognormal, gamma, beta, Weibull, Poisson, binomial, hypergeometric, geometric, etc.) exist as stable processes.
When the bell curve is the approximate distribution shape, variation around the bell curve is chance or natural variation. The Other variation is due to special or assignable causes.

4. PARETO CHARTS

Definition—Pareto analysis is the process of ranking opportunities to determine which of many potential opportunities should be pursued first. It is also known as “separating the vital few from the trivial many.”
Usage—Pareto analysis should be used at various stages in a quality improvement program to determine which step to take next. Pareto analysis is used to answer such questions as “What department should have the next SPC team?” or “On what type of defect should we concentrate our efforts?”
How to perform a Pareto analysis

Determine the classifications (Pareto categories) for the graph. If the desired information does not exist, obtain it by designing check sheets and log sheets.
Select a time interval for analysis. The interval should be long enough to be representative of typical performance.
Determine the total occurrences (i.e., cost, defect counts, etc.) for each category. Also determine the grand total. If there are several categories which account for only a small part of the total, group these into a category called “other.”
Compute the percentage for each category by dividing the category total by the grand total and multiplying by 100.
Rank-order the categories from the largest total occurrences to the smallest.
Compute the “cumulative percentage” by adding the percentage for each category to that of any preceding categories.
Construct a chart with the left vertical axis scaled from 0 to at least the grand total. Put an appropriate label on the axis. Scale the right vertical axis from 0 to 100%, with 100% on the right side being the same height as the grand total on the left side.
Label the horizontal axis with the category names. The leftmost category should be the largest, second-largest next, and so on.
Draw in bars representing the amount of each category The height of the bar is determined by the left vertical axis.
Draw a line that shows the cumulative percentage column of the Pareto analysis table. The cumulative percentage line is determined by the right vertical axis.

Example of Pareto analysis
The data in Table below has been recorded for boxes of apple arriving at Super Duper Market during August.

PROBLEM	APPLE LOST
Bruised	100
Undersized	87
Rotten	237
Rotten	9
Wrong variety	7
Wormy	3

The Pareto table for the data is given in the table below.

Rank	Problem	APPLE LOST	Percentage	Cumulative percentage
1	Rotten	235	53.29%	53.29%
2	Bruised	100	22.68%	75.97%
3	Undesired	87	19.73%	95.7%
4	Others	19	4.31%	100.01%

Note that, as often happens, the final percentage is slightly different than 100%. This is due to round-off error and is nothing to worry about. The finished diagram is shown in Figure below

5. SCATTER DIAGRAMS

Definition—A scatter diagram is a plot of one variable versus another. One variable is called the independent variable and it is usually shown on the horizontal (bottom) axis. The other variable is called the dependent variable and it is shown on the vertical (side) axis.
Usage—Scatter diagrams are used to evaluate cause and effect relationships. The assumption is that the independent variable is causing a change in the dependent variable. Scatter plots are used to answer such questions as “Does vendor As material machine better than vendor B’s?” “Does the length of training have anything to do with the amount of scrap an operator makes?” and so on.
How to construct a scatter diagram
1. Gather several paired sets of observations, preferably 20 or more. A paired set is one where the dependent variable can be directly tied to the independent variable.
2. Find the largest and smallest independent variable and the largest and smallest dependent variable.
3. Construct the vertical and horizontal axes so that the smallest and largest values can be plotted. Plot the data by placing a mark at the point corresponding to each X-Y pair. The figure below shows the basic structure of a scatter diagram. If more than one classification is used, you may use different symbols to represent each group.

Example of a scatter diagram
The orchard manager has been keeping track of the weight of peaches on a day by day basis. The data are provided in Table below

Number	Days on trees	WEIGHT (OUNCES)
1	75	4.5
2	76	4.5
3	77	4.4
4	78	4.6
5	79	5.0
6	80	4.8
7	80	4.9
8	81	5.1
9	82	5.2
10	82	5.2
11	83	5.5
12	84	5.4
13	85	5.5
14	85	5.5
15	86	5.6
16	87	5.7
17	88	5.8
18	89	5.8
19	90	6.0
20	90	6.1

1. Organize the data into X-Y pairs, as shown in Table V.4. The independent variable,X, is the number of days the fruit has been on the tree. The dependent variable, Y, is the weight of the peach.
2. Find the largest and smallest values for each data set. The largest and smallest values are as shown

Variable	Smallest	Largest
Days on tree (X)	75	90
Weight of peach (Y)	4.4	6.1

3. Construct the axes. In this case, we need a horizontal axis that allows us to cover the range from 75 to 90 days. The vertical axis must cover the smallest of the small weights (4.4 ounces) to the largest of the weights (6.1 ounces). We will select values beyond these minimum requirements, because we want to estimate how long it will take for a peach to reach 6.5 ounces.
4. Plot the data. The completed scatter diagram is shown

Using scatter diagrams

Scatter diagrams display different patterns that must be interpreted; Figure below provides a scatter diagram interpretation guide.

A Correlation Coefficient r can be calculated to determine the degree of association between the two variables

Be sure that the independent variable, X, is varied over a sufficiently large range. When X is changed only a small amount, you may not see a correlation with Y, even though the correlation really does exist.

If you make a prediction for Y, for an X value that lies outside of the range you tested, be advised that the prediction is highly questionable and should be tested thoroughly. Predicting a Y value beyond the X range actually tested is called extrapolation.

Watch for the effect of variables you didn’t evaluate. Often, an uncontrolled variable will wipe out the effect of your X variable. It is also possible that an uncontrolled variable will be causing the effect and you will mistake the X variable you are controlling as the true cause. This problem is much less likely to occur if you choose X levels at random. An example of this is our peaches. It is possible that any number of variables changed steadily over the time period investigated. It is possible that these variables, and not the independent variable, are responsible for the weight gain (e.g., was fertilizer added periodically during the time period investigated?).

Beware of “happenstance” data! Happenstance data is data that was collected in the past for a purpose different than constructing a scatter diagram. Since little or no control was exercised over important variables, you may find nearly anything. Happenstance data should be used only to get ideas for further investigation, never for reaching final conclusions. One common problem with happenstance data is that the variable that is truly important is not recorded. For example, records might show a correlation between the defect rate and the shift. However, perhaps the real cause of defects is the ambient temperature, which also changes with the shift.

If there is more than one possible source for the dependent variable, try using different plotting symbols for each source. For example, if the orchard manager knew that some peaches were taken from trees near a busy highway, he could use a different symbol for those peaches. He might find an interaction, that is, perhaps the peaches from trees near the highway have a different growth rate than those from trees deep within the orchard. Although it is possible to do advanced analysis without plotting the scatter diagram, this is generally bad practice. This misses the enormous learning opportunity provided by the graphical analysis of the data.

6. FLOWCHARTS

A process flow chart is simply a tool that graphically shows the inputs, actions, and outputs of a given system. These terms are defined as follows:
Inputs—the factors of production: land, materials, labour, equipment, and management.
Actions—the way in which the inputs are combined and manipulated in order to add value. Actions include procedures, handling, storage, transportation, and processing.
Outputs—the products or services created by acting on the inputs. Outputs are delivered to the customer or other user. Outputs also include unplanned and undesirable results, such as scrap, rework, pollution, etc. Flow charts should contain these outputs as well.

A flowchart or process map is useful to people familiar with a process, as well as those that have a need to understand a process. A flow chart can depict the sequence of products, containers, paperwork, operator actions, or administrative procedures. A flow chart is often the starting point for process improvement by six sigma teams. Flow charts can be used to identify improvement opportunities as illustrated by the following sequence:

Organize a team for the purpose of examining the process
Construct a flow chart to represent each process step
Discuss and analyze each step in detail
Ask the key question, “Why do we do it this way?”
Compare the actual process to an imagined “perfect” process
Is there unnecessary complexity?
Does duplication or redundancy exist?
Are there control points to prevent errors or rejects? Should there be?
Is this process being run the way it should?
Improvement ideas may come from substantially different processes

The flowchart in Figure below shows a high-level view of a process capability analysis. The flowchart can be made either more complex or less complex. As a rule of thumb, to paraphrase Albert Einstein, “Flow charts should be as simple as possible, but not simpler.” The purpose of the flow chart is to help people understand the process and this is not accomplished with flow charts that are either too simple or too complex.

Flow charts show unexpected complexity, problem, unnecessary loops, and where simplification and standardization may be possible. It compares and contrasts the actual versus the ideal flow of a process to identify improvement opportunities. It allows a team to come to agreement on the steps of the process and to examine which activities may impact the process performance. It identifies locations where additional data can be collected and investigated. It serves as a training aid for understanding the complete process

Steps in preparing the flowcharts

Determine the frame or boundaries of the process
- Clearly define where the process under study starts (input) and ends (final output).
- Team members should agree to the level of detail they must show on the Flowchart to clearly understand the process and identify problem areas.
- The Flowchart can be a simple macro-flowchart showing only sufficient information to understand the general process flow, or it might be detailed to show every finite action and decision point. The team might start out with a macro flowchart and then add in detail later or only where it is needed.
Determine the steps in the process
Brainstorm a list of all major activities, inputs, outputs, and decisions on a flipchart sheet from
the beginning of the process to the end.
Sequence the steps
Arrange the steps in the order they are carried out. Use Post-it® Notes so you can move them around. Don’t draw in the arrows yet. Unless you are flowcharting a new process, sequence what is, not what should be or the ideal. This may be difficult at first but is necessary to see where the probable causes of the problems are in the process.
Draw the Flowchart using the appropriate symbols.
- An oval is used to show the materials, information, or action (inputs) to start the process or to show the results at the end (output) of the process. A box or rectangle is used to show a task or activity performed in the process. Although multiple arrows may come into each box, usually only one output or arrow leaves each activity box.A diamond shows those points in the process where a yes/no question is being asked or a decision is required.
  A circle with either a letter or a number identifies a break in the Flowchart and is continued elsewhere on the same page or another page. Arrows show the direction of flow of the process.
- Keep the Flowchart simple using the basic symbols. As your experience grows, use other, more graphic symbols to represent the steps. Other symbols sometimes used include:
  - A half or torn sheet of paper for a report completed and/or filed.
  - A can or computer tape wheel for data entry into a computer database.
  - A large “D” or half circle to identify places in the process where there is a delay or wait for further action.
- Be consistent in the level of detail shown.
  - A macro-level flowchart will show key action steps but no decision boxes.
  - An intermediate-level flowchart will show action and decision points.
  - A micro-level flowchart will show minute detail.
- Label each process step using words that are understandable to everyone.
- Add arrows to show the direction of the flow of steps in the process. Although it is not a rule, if you show all “yes” choices branching down and “no” choices branching to the left, it is easier to follow the process. Preferences and space will later dictate direction.
- Don’t forget to identify your work. Include the title of your process, the date the diagram was made, and the names of the team members.
Test the Flowchart for completeness
- Are the symbols used correctly?
- Are the process steps (inputs, outputs, actions,decisions, waits/delays) identified clearly?
- Make sure every feedback loop is closed, i.e., every path takes you either back to or ahead to another step.
- Check that every continuation point has a corresponding point elsewhere in the Flowchart or on another page of the Flowchart.
- There is usually only one output arrow out of an activity box. If there is more than one arrow, you may need a decision diamond.
- Validate the Flowchart with people who are not on the team and who carry out the process actions. Highlight additions or deletions they recommend. Bring these back to the team to discuss and incorporate into the final Flowchart.
Finalize the Flowchart
- Is this process being run the way it should be?
- Are people following the process as charted?
- Are there obvious complexities or redundancies that can be reduced or eliminated?
- How different is the current process from an ideal one? Draw an ideal Flowchart. Compare the two (current versus ideal) to identify discrepancies and opportunities for improvements.

7. Control Charts

Variation can be classified as common cause variation or special cause variation. Common cause variation is due to the natural variation of the process; that is, variation due to the way the process was designed. An example of common cause variation is the variation that might be seen by having several people working in the process. Each person might do things slightly differently. Special cause variation is the variation that is due to assignable causes. An example of special cause variation is the variation that might result if someone untrained is allowed to work in the process. Special cause variation is the variation that can be assigned a reason. The best tool to determine if the variation is a common cause or special cause is the control chart. A control chart is a specialized run chart. The Y-axis is the metric of interest and the X-axis is time, or a factor that indicates time such as lot or run number. The difference between a run chart and a control chart is a control chart has three statistically calculated lines: a centre line, an upper control limit, and a lower control limit. There are many types of control charts but generically these lines can be described as:
Centerline = Mean of the metric of interest
Lower control limit = Mean of the metric – 3 * Standard Deviation of the metric
Upper control limit = Mean of the metric + 3 * Standard Deviation of the metric
Special cause variation is identified by points falling below the lower limit or above the upper limit, trends, runs or any unusual patterns. Any indication of a special cause should be investigated to see if the process has changed. Here is a control chart with all points in control.

Example Control Chart

An important consideration when using a control chart is the subgroup size to use with the chart. In each time period, the data collected could be an individual value or a small sample, or subgroup. The determination of the size of the subgroup will be based on practical issues such as the cost of sampling, how quickly a change needs to be detected and the cost of investigating false alarms (false indications of instabilities).
To determine the subgroup size and frequency, consider the following:

Determine the subgroup size so that the samples in the subgroup are produced under essentially the same conditions. The goal is for the effect of an assignable cause (x) to show up between subgroups, not within a subgroup. The variation within a subgroup should be due to non-assignable chance causes only.
Ensure that the observations included in the subgroup are independent. Some processes may contain autocorrelation as a natural function of the process (e.g., chemical processes). Autocorrelation is the dependence of a current data point on previous data points within a given single stream of data.
Determine the frequency of sampling so that the control chart can detect any changes in the process over time. As an initial starting point, sample twice as frequently as a change in the process could happen (e.g., if a change from shift-to-shift is possible, take two samples every shift.) Then, as the process proves to be stable over a period of time, consider reducing the frequency of sampling. Typically, for high-volume processes, taking small samples frequently is the best strategy.

Selecting the right control chart is based on whether the data to be plotted are continuous or discrete. If the data are continuous, two charts are suggested – one to monitor the location of the data and one to monitor the spread of the data. The typical charts for data collected in subgroups are an X-bar and an R chart. In other words, the two charts are a plot of the subgroup means and a plot of the ranges of the subgroups. If the data are collected one value at a time, typical charts are an Individuals chart and a Moving Range chart; in other words, a plot of the individual values and a plot of the moving ranges. For the moving range chart, the moving range is defined as the range between two adjacent data points.

If the data are discrete, one chart is usually plotted. The chart type is dependent on the nature of the data – whether the data are counts of defects or defective units. There are four traditional charts for discrete data. C and U charts are used for defects, where c is the count of defects and u is the average number of defects per unit. P charts and NP charts are used for defective units where p is the proportion of defective units and np is the count of defective units.
To generate a control chart, these steps should be followed:

Identify the process quality characteristic to be charted and the potential sources of variation of that characteristic.
Ensure that the data collected are appropriate for the construction of the control chart. Two common assumptions about the data are that they are independent and normally distributed. If these assumptions are not true, then a non-traditional control chart should be used.
Calculate the control limits.
a. Initially, calculate the control limits using 25-30 data points. If that much data are not available, establish the limits with what is available. However, re-evaluate the limits as more data are obtained.
b. When creating the control chart with these 25-30 data points, if any point is below the lower control limit or above the upper control limit, investigate to see if there was a special cause:

If a special cause is found, eliminate that data point and recalculate the limits.
If no special cause is found, keep the data point in the calculation of the limits.
Document the details of the complete control plan for the process.
Document the specific tests used to indicate out-of-control conditions and the associated corrective actions in the Out-of-Control Action Plan. This plan is described below.
Decide when the control limits should be revised. Revise the limits if there has been a change in the process. Also, consider re-evaluating the limits after some time has passed since they were calculated (e.g., 3-6 months).

Out-of-Control Action Plan

An important tool to use with a control chart is an Out-of-Control Action Plan (OCAP). OCAP documents how instabilities will be detected and resolved.
To create an OCAP:
1. Define what tests to use to indicate out-of-control conditions. The one test for out-of-control applicable to any control chart is a data point falling above the upper control limit or a data point falling below the lower control limit. Other commonly used tests are:
a. Test for a trend – several points in a row trending up or trending down
b. Test for a run – several points in a row on one side of the centre line.
2. Establish how to react to each out-of-control condition:
a. Set up specific and clear guidelines to follow. These guidelines may include what corrective actions to take, procedures for documenting the out-of-control situation, procedures for notifying those who are responsible for maintaining and improving the process, etc.
b. A flowchart format for the plan is recommended. Indicate which path was followed to stabilize the process. Data can be collected on this information to determine if there is a need for a more permanent corrective action. The figure below shows a section of an example OCAP.
3. Establish how to determine whether the corrective action has been effective. In other words, has the process been re-stabilized? This may include extra data collection.

Example Section of a Flowchart OCSP

Business Process Management

Business Process Management Overview

Business process management (BPM) is a fundamental concept of six sigma. Efforts to improve individual (local) process components are replaced by systematic methods to understand, control, and improve (even optimize) overall business results. These methods have evolved from the basic tenets of quality and continuous improvement to address specific business objectives.

W. Edwards Deming defined quality in general terms as a product or service that provides value and enjoys a sustainable market. In order to help us understand, control, and improve the business process, he described the familiar supplier —process — customer model, with several key concepts:-

Process inputs, controls, and outputs are interdependent
Statistical methods can improve process control and guide improvements
Process feedback can be used to redesign products and processes, and improve overall business results

BPM is focused on understanding, controlling, and improving business processes to create value for all stakeholders. Six sigma builds on classic concepts to ensure results.
Juran defines three principal dimensions for measuring the quality of this process:

Effectiveness: how well the output meets customer needs
Efficiency: the ability to be effective at least cost
Adaptability: the ability to remain effective and efficient in the face of change

This clearly addresses the need for business processes to provide value to both the customer (effectiveness) and shareholders (efficiency), now and in the future (adaptability). Six sigma initiatives strive to manage the entire business process to maximize these goals for the overall business. Most businesses are structured as functional organizations based on functional groupings such as R&D, product development, engineering, production, distribution, marketing, sales, finance, administration, information technology, etc. Each vertical function also has several vertical levels from the top executive down. Products (goods or services) are produced across many functional boundaries and business levels. Business process management represents a major advance in quality improvement thinking by managing the entire process including those areas between functional responsibilities. Business process management includes steps to plan, organize, control, analyze, and improve the process to maximize overall business results. Traditional management structures are built around functional organizations (vertical silos). The obvious objective is to control and improve each individual function with respect to its own local goals and objectives (e.g. throughput, production costs, quality, and so on). For example, an information technology department should be responsible for managing and improving IT services.

Organization Function

It becomes very difficult to optimize the overall production process when a product path crosses many functional boundaries as shown by the process input/ output path. Here, production starts with the process inputs and flows across many vertical functions and horizontal business levels to produce process outputs (products, goods, or services). Managing across these transitions between functional elements is difﬁcult because, often, no one is in charge. Differences in function, organizational structure, time, vocabulary, and location are sources of confusion and defects. When functional relationships are not clearly understood, business processes can become more expensive or fail. Business process management addresses this problem by taking a matrix organization and project management approach to production. Sometimes this may mean intentional sub-optimization of a local function in order to improve the overall business outcome. For example, an extra setup or changeover in one operation may increase local costs or cycle times, but reduce overall WIP inventory and provide much higher customer value. ” Clearly, the business process management role is critical to overall business success.

Processes

Processes are definable portions of a system or subsystem that consist of a number of individual elements, actions, or steps. Omdahl defines a process as a set of interrelated resources and activities which transform inputs into outputs with the objective of adding value. Systems, subsystems, and processes exist for all human activities. They are utilized in both the manufacture of a product or the delivery of a service. All three must be coordinated for maximum benefit.

Business Processes

Process interactions must also be evaluated to ensure that changes that improve one operation do not create more defects in another operation. For example, changing a front end, the burn-in operation may improve front end yields but drive back end yields to zero. On the other hand, an engineering group may take longer to develop a product by fully implementing design for manufacturability standards, but save the company many times the additional amount spent in engineering, through reduced manufacturing costs and reduced rework.
In some operations, the elimination of opportunities for error may be achieved through automation. Automating a poor process, however, is just as likely to result in more stable defect levels rather than a reduced number of defects. Process improvements can be applied to accounting operations and numerous other staff functions by eliminating process steps that do not add value to the organization. All organizational functions can benefit from process optimization.

Systems

From an organizational standpoint, a system is defined as a series of actions, activities, elements, components, departments, or processes that work together for a definite purpose. System effectiveness is a measure of the degree to which a system can be expected to achieve a set of specific (mission) requirements, that may be expressed as a function of performance (availability, dependability, and capability). Subsystems are major divisions of a system that are still large enough to consist of more than one process.

Business Systems

Strategic planning, production, delivery, human resources, accounting, maintenance, development, and engineering. All of these functions must work together to achieve customer satisfaction. Management leadership is a measure of how senior executives guide the organization and how the organization addresses its responsibilities to the public and practices good citizenship. Listed below are some key management activities:

Strategic planning-Examines how the organization sets strategic directions and how it determines key action plans.
Customer and market focus-Examines how the organization determines requirements and expectations of customers and markets.
Information and analysis-Examines the management, effective use, and analysis of data and information to support key organizational processes and the organization’s performance management system.
Human resource focus-Examines how the organization enables its workforce to develop its full potential and how the workforce is aligned with the organization’s objectives.
Process management-Examines aspects of how key production/delivery and support processes are designed, managed, and improved.

SIPOC DIAGRAM

The SIPOC process map is designed to be a high-level process view with 4 – 7 displayed steps. This is a flow chart viewed at the 50,000-foot level. The map enables all team members to view the process in the same light. The diagram should not be made too detailed and thereby lose the ability to focus on an improvement project that has a significant reward.

The SIPOC diagram is a foundation technique for six sigma management and improvement.

SIPOC is an acronym for the ﬁve major elements in the diagram:

Supplier(S): The organization providing resources to the process of concern
Input(I): The information, materials, or service provided
Process(P): The set of action steps that transforms the inputs into outputs
Output(O): The final product or service resulting from the process
Customer(C): The person, process, or organization that receives the output

Input and Output Variables

Measurements of process inputs and outputs can be used to optimize the process being measured. Process inputs may be raw materials, human resources, or services. All inputs have some quantifiable measurement, including human effort and skill level. Process input requirements should be stated so that key measures of input quality can be controlled. Measurements within the process can also be used as effective controls. Once process capabilities are known, output measures can be used to monitor if the process has remained in control. Feedback from downstream process measurements can be used to improve an upstream process. For example, electrical testing for solder shorts can be used to as optimize a circuit board soldering operation even if it is several processes upstream from the testing operation.

When considering the entire organizational feedback system, complex interrelationships are likely to exist. This is where planned experimentation and designing for six sigma comes into play. Planned experimentation deals with isolating the effects of several different, independent variables on a process.

The advantages of using a SIPOC model include:

A display of cross functional activities in a single, simple diagram
A “big picture” perspective to which additional detail can be added
A framework applicable to both large and small organizations

Creating SIPOC diagram

The ultimate goal is to identify essential workflows and sources of variation in work overtime. The diagram can also be adapted to a number of essential support processes. SIPOC captures the key components of success from suppliers through internal processes and on to key customers. Other tools such as process mapping, flowcharting, and affinity diagrams can be used to further identify the major steps in a process or system.

The following steps may be used for developing a SIPOC diagram:

Start by identifying the starting and ending points of the process you are studying
State the purpose of the process. Ask:
- Why does this process exist?
- What is the purpose of this process?
- What is the outcome?
Fill in the main process steps between the starting and ending points so you have a total of five to seven steps.WhendoingaSIPOC analysis, be sure to keep the process to between five and seven steps. You want to portray an overall picture of the major actions that occur in the process, not delve into details.Think of your diagram as a top-level flowchart, where the focus is on main steps, not details. Here you are not concerned with loops or errors. To identify the main steps in the process, ask the following questions:
- What happens to each input?
- What conversion activities take place?
Identify outputs from the process. Outputs can include physical products, documents, information, services, and decisions. To identify outputs, ask the following questions:
- What product does this process make?
- At what point does this process end?
- What information does this process produce?
Identify the customers for each output by asking:
- Who uses the products/information supplied from this process?
- Who are the customers of this process?
Identify the key process inputs. Here it helps to try to think of what actually flows through your process and what is being transformed. Is it a physical part or raw materials? A form? Documentation? A sample? Most process inputs are primarily in the form of materials and information, but they can also include ideas, labor, and environment. To identify inputs, ask:
- What flows into the process?
- What triggers the process to start?
Identify the key suppliers for each input by asking:
- Where does the information or material we work on come from? Who are our suppliers?
- What do they supply?
- Where do they affect the process flow?
- What effect do they have on the process and on the outcome?
Some suppliers might provide more than one input, and a process often has more than one output.
Thus
- Have the team create the process map.
- The process may have 4 or 5 key steps. How is the raw material transformed?
- List the outputs of the process. What is the end product or service?
- List the customers of the output of the process. Who is the end user?
- List the inputs of the process. Where do the materials come from?
- List the suppliers of the process. Who are the key suppliers?
- As an optional step, identify some preliminary requirements of the customers.
- Involve the team leader, champion, and other stakeholders for verification.

A close investigation of the SIPOC model shows how six sigma is based on the powerful concept of closed-loop business system models:

Any change in the process output (0) will be related to one or more changes in supplier, inputs, or process actions (SlPs).
If all SlPs are stable, the output (0) will be stable.
A change in 0 means one or more of the SlPs must have changed.
Apparent violations of this rule indicate that the process model is incomplete.
If one or more of the SlPs change significantly, the Os may or may not change.
If they do, SIP changes may be used to predict and control changes in O.
If not, the changed SlPs are robust and may provide process savings.
Closed-loop relationships between SlPs and 05 provide a method to define process correlations and possible cause-effect relationships.

Six Sigma relies on the SIPOC model to create, monitor, and improve closed-loop business systems for process management, process improvement, and process design/redesign. SIPOC can help everyone “see” the business from an overall process perspective by:

Displaying cross functional activities in simple diagrams (process flow charts)
Providing a framework applicable to process of all sizes
Helping maintain the big picture business perspective
Providing methods for adding additional detail as needed

When process flow charts are used with the SIPOC model, business process monitoring, control, understanding, and improvement are greatly enhanced. To complete the picture, however, it is helpful to consider one additional factor: the levels of the business process. Processes can be viewed as being both comprised of smaller micro-processes or sub-processes and constituents of larger macro-processes. Process problems are hierarchical and interconnected to operational issues, which in turn, are tied to support systems ultimately linked to business issues such as customer satisfaction, profitability, and shareholder value. The three main levels may be described as a business, operations, and process.

The Business level.

High-level problems often relate to the enterprise information and financial systems used to “steer” the business. These represent strategic sigma projects. Some examples include systems that measure customer feedback and supplier quality systems. Harry’s six sigma breakthrough strategy at the business level is:

Recognize the true states of your business
Deﬁne what plans must be in place to realize improvement of each state
Measure the business systems that support the plans
Analyze the gaps in system performance benchmarks
Improve system elements to achieve performance goals
Control system-level characteristics that are critical to value
Standardize the systems that prove to be best in class
Integrate best-in—class systems into the strategic planning framework

The operations level.

The issues of managing operations and making products or producing services are the focus at this level. It is important to recognize operational issues that link to key business systems. Issues of the product cost, quality, inventory, throughput, and availability are often important at this level. Six sigma projects at this level may take a year or more to complete because of the complex combination of factors involved. Required improvements at this level may be derived from the business level needs. Harry’s six sigma breakthrough strategy, at the operations level, is:

Recognize operational issues that link to key business systems
Define six sigma projects to resolve operational issues
Measure performance of the six sigma projects
Analyze project performance in relation to operational goals
Improve six sigma project management system
Control inputs to project management system
Standardize best-in-class management system practices
Integrate standardized six sigma practices into policies and procedures

The process level.

The process level deals with process elements that may be contributing locally to the cost of poor quality (COPQ). The objective is to recognize process problems that link to important operational issues. Harry’s six sigma breakthrough strategy, at the process level, is:

Recognize functional problems that link to operational issues
Define the processes that contribute to the functional problems
Measure the capability of each process that offers operational leverage
Analyze the data to assess prevalent patterns and trends
improve the key product/service characteristics created by key processes
Control the process variables that exert important influence
Standardize the methods and processes producing best-in-class performance
Integrate standard methods and processes into the design cycle

The six sigma business improvement process moves up and down the vertical levels of the organization as well as across the functional elements. Using the SIPOC process model, and understanding the differences in process levels, will make it easier to manage the process of business improvement.

Value of Six Sigma

Six Sigma is a highly disciplined process that focuses on developing and delivering near-perfect products and services consistently. It is also a management strategy to use statistical tools and project work to achieve breakthrough profitability and quantum gains in quality. It has been stated that product characteristics with six sigma process capabilities (Cpk > 1.5) are of world-class performance. Snee describes six sigma as, “A business improvement approach that seeks to find and eliminate causes of mistakes or defects in business processes by focusing on outputs that are of critical importance to customers.” Motorola, under the direction of Chairman Bob Galvin, used statistical tools to identify and eliminate variation. From Bill Smith’s yield theory in 1984, Motorola developed six sigma as a key business initiative in 1987. Dr. Mikel Harry, who had led the corporate effort, subsequently left Motorola and later founded the Six Sigma Academy to accelerate the efforts of corporations to achieve world-class standards.

Sigma is a statistical term that refers to the standard deviation of a process about its mean. In a normally distributed process, 99.73% of measurements will fall within ± 3.0 sigma and 99.99966% will fall within ± 4.5 sigmas. In a stable attribute distributed process, 99.73% of values will fall within the probability of 0.00135 and 0.99865. Motorola noted that many operations, such as complex assemblies, tended to shift 1.5 sigmas over time. So a process, with a normal distribution and normal variation of the mean, would need to have speciﬁcation limits of 1 6 sigmas in order to produce less than 3.4 defects per million opportunities. This failure rate can be referred to as defects per opportunity (DPO), or defects per million opportunities (DPMO).

Sigma Level

It should be noted that the term “six sigma” has been applied to many operations including those with non-normal distributions, for which a calculation of sigma would be inappropriate. The principle remains the same, deliver near-perfect products and services by improving the process and eliminating defects. The end objective is to delight customers.

The six sigma steps for many organizations are described as DMAIC:

Deﬁne: Select the appropriate responses (the “Ys”) to be improved.
Measure: Data must be gathered to measure the response variable.
Analyze: Identify the root causes of defects, defectives, or significant measurement deviations whether in or out of specifications. (The “Xs”, independent variables).
Improve: Reduce variability or eliminate the cause.
Control: With the desired improvements in place, monitor the process to sustain the improvements.

Harry proposes that the entire six sigma breakthrough strategy should consist of the following eight elements:

R Recognize the true states of your business.
D Define what plans must be in place to realize improvement of each state.
M Measure the business systems that support the plans.
A Analyze the gaps in system performance benchmarks.
I Improve system elements to achieve performance goals.
C Control system-level characteristics that are critical to value.
S Standardize the systems that prove to be best-in-class.
I Integrate best-in-class systems into the strategic planning framework.

The business successes that result from a six sigma initiative include o Cost reductions, Productivity improvements, Market – share growth, Customer relations improvements, Defect reductions, Product and service improvements, Culture changes, Cycle – time reductions

Motorola credits the six sigma initiative for savings of $940 million over three years. AlliedSignal now Honeywell reported an estimated $1.5 billion in savings in 1997. GE has invested a billion dollars with a return of $1.75 billion in 1998 and an accumulated savings of $2.5 billion for 1999. Harry reports that the average black belt project will save about $175,000. There should be about 5 to 6 projects per year, per black belt. The ratio of one black belt per 100 employees can provide a 6% cost reduction per year. For larger companies, there is usually one master black belt for every 100 black belts. Organizations that follow a six sigma improvement process for several years find that some operations achieve greater than six sigma quality. When operations reach six sigma quality, defects become so rare that when they do occur, they receive the full attention necessary to determine and correct the root cause. As a result, key operations frequently end up realizing better than six sigma quality. Snee provides some reasons why six sigma works:

Bottom line results
Senior management is involved
A disciplined approach is used (DMAIC)
Short project completion times (3 to 6 months)
Clearly defined measures of success
Infrastructure of trained individuals (black belts, green belts)
Customers and processes are the focus
A sound statistical approach is used

Companies that have embraced six sigma include Motorola, AlliedSignal, General Electric, Black &Decker, Dupont, Dow Chemical, Polaroid, Federal Express, Kodak, Boeing, Sony, Johnson & Johnson, Toshiba, Navistar.

Lean Enterprise

The lean enterprise encompasses the entire production system, beginning with the customer. It includes the sales outlet, the final assembler, product or process design, and all tiers of the supply chain( including raw materials). Any truly lean system is highly dependent on the demands of its customers and the reliability of its suppliers. No implementation of lean manufacturing can reach its full potential without including the entire enterprise in its planning. Lean techniques are, in their most basic form, the systematic identification and elimination of waste, the implementation of the concepts of continuous ﬂow, and customer pull. The touted benefits of lean production systems include lower production costs, fewer persons, quicker product development, higher quality, higher proﬁtability, and greater system flexibility. By continually focusing on waste reduction, there is truly no end to the benefits that can be achieved.

Generally, five areas that drive the lean producer are cost, quality, delivery, safety, and morale. Just as mass production is recognized as the production system of the 20th century, lean production is viewed as the production system of the 21st century. Typically, Japanese terms are used in defining lean principles in order to convey broad concepts with iconic (representative) terminology. Once properly explained, the term “Kanban” can be more descriptive than “those little cards which help control product moves.” One should choose carefully the training methods (and terms) for conveying lean tools and methods. Are lean techniques applicable in a service-oriented industry or office environment? Every system contains waste. Whether one is producing a product, processing material, or providing a service, there are elements that are considered waste. The techniques for analyzing systems, identifying and reducing waste, and focusing on the customer are applicable in any system, and in any industry. Any implementation of lean techniques will be different, depending on various factors such as industry, internal culture, and internal business considerations. The tools used to implement lean operations, and the order in which one combines them, is highly dependent on whether a company is a discrete manufacturer, continuous producer, or provider of a service.

Integration of Lean and Six Sigma

There is an ongoing debate in some organizations regarding the difference between lean and six sigma, and whether they are mutually exclusive. Toyota in particular is credited with making lean a well-known approach as embodied in the Toyota Production System (TPS). Lean is about eliminating wastes, taking time out of processes, and creating better flow. Asked about the essence of Lean (TPS), Taiichi Ohno summarized it as, “All we’re trying to do is shorten the timeline from order receipt to collecting the cash for the goods or services provided.” Six Sigma has been defined in a variety of ways. One definition states, “Six Sigma is a business strategy and philosophy built around the concept that companies can gain a competitive edge by reducing defects in their industrial and commercial processes.” A few key characteristics of lean and six sigma are discussed and compared below.

Both six sigma and lean focus heavily on satisfying customers. Six Sigma makes customers the primary driver for action in a “war on variation” and identiﬁes opportunities that promise a large, fairly immediate, financial reward. Lean considers customer inputs and conducts a “war on waste.” One of the selling points that some six sigma gurus tout is that six sigma zeroes in better on “big bang” improvements. Black belts are expected to target and achieve large bottom-line savings in projects every year.
Both six sigma and lean empower people to create process stability and a culture of continuous improvement. The cornerstone of the lean strategy are tools such as Value Stream Mapping(VSM), 5s, Total Productive Maintenance (TPM), Kanban, Kaizen, Setup Reduction, Teamwork, Error Proofing, Problem-solving, cellular manufacturing, and one-piece flow. Many problem identification and problem-solving techniques are commonly used with both lean and six sigma methodologies. These include brainstorming, cause-and-effect diagrams, 5 “whys”, Pareto analysis, 8-Ds, FMEAs, and others. Both six sigma and lean methodologies have a heavy emphasis on careful problem deﬁnition. Six sigma better promotes a rigorous, systematic process to ﬁnd the true root cause(s) of the problem. Value stream mapping (VSM) is the principal lean diagnostic tool. It is credited to Toyota, who called it material and information flow mapping.. VSM creates a visual representation of what is happening in a process to improve system performance. Process mapping is a tool favored by the six sigma community and is best used to identify the inputs, outputs, and other factors that can affect a process.
Should six sigma and lean coexist in any organization? Yes. Lean approaches should precede and coexist with the application of six sigma methods. Why? Put simply, lean provides stability and repeatability in many basic processes. Once stability has taken hold, much of the variation due to human processes go away. The data collected to support six sigma activities thereby become much more reliable and accurate.

When to use Lean tools?

If major business problems fall into the following categories:

There seems to be a lot of waste
There is a need to minimize inventories and redundancies
There is a need to improve work ﬂows
There is a need to speed up processes
There are human mistakes

If so, then lean tools should be utilized to Eliminate wastes, Simplify processes, Increase speeds, Improve flows, Minimize inventories, Mistake proof processes

When to use Six Sigma tools?

However, if organizational challenges exhibit the following attributes:

There are quality issues
There is excessive variation
There are complex problems
There are challenging root cause identifications
There are numerous technical considerations

In these cases, six sigma tools should be utilized to Minimize variation, Apply scientific problem solving, Utilize robust project chartering, Focus on quality issues, Employ technical methodologies.

Lean and Six Sigma tools

Most executives recognize that they have a combination of both sets of issues. Placing lean six sigma in the middle of this continuum reﬂects a more holistic and synergistic approach. If a specific problem requires only lean or six sigma tools, then that is perfectly ok. Lean six sigma is a relatively new paradigm providing a broader selection of approaches. If the only tool in a company’s bag is a hammer, then all problems start to look like a nail. It is best to have a tool kit with a broader set of tools, principles, and ways of thinking. What has been occurring for some time (at least the past several years) is a marriage of lean and six sigma initiatives into a unified approach called lean six sigma or some variant of this nomenclature. If lean-specific projects represent a 6% corporate improvement overtime, and six sigma initiatives represent another 6% improvement, then a combination could potentially represent an improvement of 12% or more. An increasing number of organizations (manufacturing, service, hospitals, municipalities, military, insurance, etc.) have been unifying their efforts into a lean six sigma approach. The mechanisms of these combinations vary widely. The most effective approaches include management direction and involvement, a cadre of trained specialists, the use of teamwork, the use of project management, team member training, the humane treatment of people, and understandable problem-solving methodology, and some mechanism to apply the appropriate tool(s). Refer to the table below for some applications of the various lean and six sigma tools at various problem-solving stages.

Lean Six Sigma Tools in a DMAIC Matrix.

There are a multitude of effective tools in addition to those listed above.

CRITICAL REQUIREMENTS

Six sigma projects can be directed at any number of CTX (critical to X) requirements. An incomplete set of examples is listed below:

CTQ

Critical to quality improvement projects may include:

Simplifying product designs
Aligning product designs with customer requirements
Meeting current marketplace quality levels
Exceeding current marketplace quality levels
Exceeding reliability and maintainability requirements
Exceeding product appearance expectations
Meeting technical requirements
Providing products that are more durable

COQ

Cost of quality improvement projects may include:

Reducing internal rejections
Reducing external rejections
Minimizing salvage and sorting operations
Reducing warranty claims
Reducing product variation
Reducing process variation
Reducing various forms of waste
Eliminating unnecessary inspections

CTD

Critical to delivery improvement projects may include:

Providing exact amounts of product
Providing service within a specific time interval
Ensuring immediate responses to customer questions
Providing a product or service on the proper day and time
Providing more rapid field service
Providing cost-effective delivery methods
Meeting customer packaging requirements
Minimizing shipping damage

CTP

Critical to process improvement projects may include:

Designing products that are easier to assemble
Minimizing changeover times
Reducing in-process inventories
Minimizing product touch times
Optimizing work cell design
Streamlining internal work flows
Reducing process flow variation
Enhancing process velocity
Eliminating redundant operations
Maximizing product yields
Speeding up operations
Reducing cycle times
Minimizing equipment downtime
Maximizing preventative maintenance
Performing value stream mapping

CTS

Critical to safety improvements may include:

Simplifying tasks
Mistake proofing operations
Providing operator visual prompts
Providing safety cut-off devices
Using warning alarms
Providing adequate employee training
Providing clear written instructions
Protecting both operators and equipment from damage
Making products that are user-friendly
Providing constraints to prevent incorrect product use
Providing back-up redundancies for critical processes
Conducting safety reviews
Expanding prototype testing
Providing protective devices when applicable
Eliminating failure-prone elements
Meeting product disposal requirements

PERFORMANCE MEASURES

Effective business process management (BPM) requires an integrated system of metrics in order to achieve the desired six sigma business improvements. It describes how this system of metrics might link all three levels of the enterprise, with the KPOVs (key process output variables) of each level of the process becoming the KPIVs (key process input variables) of the next:

This system should provide monitoring and control of each metric at each level of the business, as well as identify the linkages needed to discover the key relationships of KPIVs to KPOVs across the entire system. It should facilitate the collection of data and building of summary information from detailed parameters (temperatures, voltages, or dimensions) at the process level to customer and manager parameters (DPMOs, yields, and throughputs) at the operations level to market and financial indicators (profit, growth, market share) at the business level. A closer look at each level reveals the kind of measures and sampling strategies required for an effective six sigma process.

Business Level Metrics

Business level metrics are typically financial (external) and operational (internal) summaries for shareholders and management. Business level management metrics can be the following areas:

Financial
Customer perception
Internal business processes (Operations)
Company learning and growth
Employee satisfaction (sometimes added as a fifth category)

Operations Level Metrics

Operational efficiency measures relate to the cost and time required to produce the products. They provide key linkages between detailed process measures and summary business results, and help identify important relationships and root causes. Senge found that employees and teams who can see the impact of their efforts on the overall business outcome learn and make improvements more effectively and efficiently.

Process Metrics

Detailed process-level metrics include the data from production people and machinery. This is the information that operators and supervisors need to run normal operations. This information is also the subject of much of the measure, analyze, improve, and control phases (MAIC) of six sigma, once the improvement project has been selected and defined.

Measurement System Considerations

Some helpful recommendations for effective process performance metrics for the modern enterprise.

The vital few versus the trivial many: Large organizations may have hundreds or even thousands of metrics, but no individual should have to focus on more than a few. Overall business level metrics should be less than 20.
Metrics should focus on the past, present, and future. Past history provides context for decisions and builds organizational wisdom. The present data provides real-time process control. Future predictions provide the basis for estimates, improvement plans, and strategies.
Metrics should be linked in a systematic way to meet the needs of shareholders, customers, and employees.
The key to an effective system is to have multiple metrics, not just one important one. Success is about balance, not a mindless focus on quality, shareholder value, profit, or any other individual measure.
Metrics should be linked to shareholder needs at the business level.
Metrics should be linked to the customer needs on the operations level.
Metrics should be linked to the employee needs on the process level.
Metrics should be consistent for all levels of the organization.
Multiple measures can be combined (aggregated) into overall indices of performance for higher levels.
Metrics should evolve as strategy and situations evolve.
Metrics must have targets or goals based on research. Six sigma improvement methods help establish improved goals.

Cost-Benefit Analysis

Harry states simply that six sigma is about making money. It is about profitability, although improved quality and efﬁciency are immediate byproducts. The financial beneﬁts of six sigma projects are the measurements that create a link between philosophy and action. Financial benefits and associated risks are the factors used to evaluate, prioritize, select, and track all six sigma projects. This section describes the common financial measures, methods for risk analysis, and the features of quality cost systems used for this purpose. Project cost-benefit analysis is a comparison to determine if a project will be worthwhile. The analysis is normally performed prior to the implementation of project plans and is based on time-weighted estimates of costs and the predicted value of benefits. The cost-benefit analysis is used as a management tool to determine if approval should be given for the project go-ahead. The actual data is analyzed from an accounting perspective after the project is completed to quantify the financial impact of the project.

The sequence for performing a cost-benefit analysis is:
Identify the project benefits.
Express the benefits in dollar amounts, timing, and duration.
Identify the project cost factors including materials, labor, and resources.
Estimate the cost factors in terms of dollar amounts and expenditure period
Calculate the net project gain (loss).
Decide if the project should be implemented (prior to starting), or if the project was beneficial (after completion).
If the project is not beneficial using this analysis, but it is management’s desire to implement the project, what changes in beneﬁts and costs are possible to improve the cost-benefit calculation?

Return on Assets (ROA)

Johnson gives an equation for return on assets (ROA) as:

Where the net income for a project is the expected earnings and total assets is the value of the assets applied to the project. Additionally, a calculation of the return on investment is widely used:

Where net income for a project is the expected earnings and investment is the value of the investment in the project.

There are several methods used for evaluating a project based on the dollar or cash amounts and time periods. Three common methods are the net present value (NPV), the internal rate of return (IRR), and the payback period methods. Project risk or the likelihood of success can be incorporated into the various cost-beneﬁt analyses as
well.

Net Present Value (NPV) Method:

The equation for net present value (NPV) as:

Where n is the number of periods, t is the time period, r is the per-period cost of capital for the organization (also denoted as I if the annual interest rate is used) and CF_tis the cash flow in time period t. Note that CFO cash flow in period zero is also denoted as the initial investment. The cash flow for a given period, CF_t is calculated as:

CF_t = CF_B,t – CF_C,t

Where CF_B,t, is the cash flow from project benefits in time period t and CF_C,t, are the project costs in the same time period. The standard convention for cash flow is positive (+) for inflows and negative (—) for outflows.

The conversion from an annual percentage rate (APR) equal to I, to a rate r for a shorter time period, with m periods per year is:

If the project NPV is positive, for a given cost of capital, (r), the project is normally approved.

Internal Rate of Return (IRR) Method

The internal rate of return (IRR) is interest or discount rate, I or r, that results in a zero net present value, NPV = 0, for the project. This is equivalent to stating that time weighted inflows equal the time weighted outflows. The equation for IRR is

The IRR is that value of r which results in NPV is equal to 0 and is calculated by an iterative process. Once calculated for a project, the IRR is then compared with other projects and investment opportunities for the organization. The projects with the highest IRR are approved until the available investment capital is allocated. Most real projects would have an IRR in the range of 5% to 25% per year. Managers, given the opportunity to accept a project which has calculated values for IRR higher than the company’s return on investment (ROI), will normally approve them, assuming the capital is available.

The above equations for net present value and internal rate of return have ignored the effects of taxes. Some organizations make investment decisions without including taxes, while others look at the after tax results. The equations for NPV and IRR can be used with taxes, if the cash ﬂow effect of taxes is known.

Payback Period Method:

The payback period is the length of time necessary for the net cash beneﬁts or inflows to equal the net costs or outflows. The payback method generally ignores the time value of money, although the calculations can be done taking this into account. The main advantage of the payback method is the simplicity of calculation. It is also useful for comparing projects on the basis of a quick return on investment. A disadvantage is that cash beneﬁts and costs beyond the payback period are not included in the calculations.

Organizations using the payback period method will set a cut-off criteria, such as 1, 1-1/2, or 2 years maximum for approval of projects. Uncertainty in future status and effects of projects, or rapidly changing markets and technology tend to reduce the maximum payback period accepted for project approval. If the calculated payback period is less than the organization’s maximum payback period, then the project will be approved. For projects with an initial investment and ﬁxed annual cash inﬂow, the payback period is calculated as follows :

Cost of Poor Quality (COPQ)

The costs of poor quality (COPQ) are those costs associated with providing poor quality products or services. There are four categories of costs: internal failure costs (costs associated with defects found before the customer receives the product or service), external failure costs (costs associated with defects found after the customer receives the product or service), appraisal costs (costs incurred to determine the degree of conformance to quality requirements) and prevention costs (costs incurred to keep failure and appraisal costs to a minimum). The following quality cost deﬁnitions are:

Prevention costs: The costs of activities specifically designed to prevent poor quality in products or services.
Appraisal costs: The costs associated with measuring, evaluating, or auditing products or services to ensure conformance to quality standards and performance requirements.
Failure costs: The costs resulting from products or services not conforming to requirements or customer/user needs-that is, the costs resulting from poor quality.
Failure costs are divided into internal and external failure cost categories:

Internal failure costs: Failure costs which occur prior to delivery or shipment of the product, or the furnishing of a service, to the customer.
External failure costs: Failure costs which occur after shipment of the product, or during or after furnishing a service, to the customer.

The Three Levels of Product Costs

Prevention Costs

The following elements may be included in the Preventive cost categories.

Applicant screening, Personnel reviews, Capability studies , Pilot projects, Controlled storage, Planning, Design reviews, Procedure reviews, Education (Quality or SPC), Procedure writing, Equipment maintenance, Prototype testing, Equipment repair, Quality design, Field testing, Safety reviews, Fixture design and fabrication, Surveys, Forecasting, Time and motion studies, Housekeeping, Training, Job descriptions, Vendor evaluation, Market analysis and Vendor surveys

Appraisal Costs

The following elements may be included in the Appraisal cost categories.

Audits, Laboratory testing, Document checking, Other expense reviews, Drawing checking, Personnel testing, Equipment calibration, Procedure checking, Final inspection, Prototype inspection, In-process inspection, Receiving inspection, Inspection and test, Shipping inspection, Inspection and test reporting, Test equipment and Maintenance

Internal Failure Costs

The following elements may be included in the Appraisal cost categories.

Accidents Cost, Late time cards, Accounting error corrections, Obsolescence, Design changes, Overpayments, Employee turnover, Premium freight, Engineering changes, Redesign, Equipment downtime, Reinspection, Excess interest expense, Repair and retesting, Excess inventory, Retyping letters, Excess material handling, Rework, Excess travel expense, Scrap, Failure reviews, and Sorting

External Failure Costs

The following elements may be included in the Appraisal cost categories. Note that many of the costs related to internal failure also appear on this list.

Bad debts, Overpayments, Customer complaint visits, Penalties, Customer dissatisfaction, Premium freight, Engineering change notices, Price concessions, Equipment downtime, Pricing errors, Excess installation costs, Recalls, Excess interest expense, Redesign, Excess inventory, Reinspection, Excess material handling, Repair costs, Excess travel expense, Restocking costs, Failure reviews, Retesting, Field service training costs, Returns, Liability suits, Rework, Liability, Scrap, Loss of market share, Sorting, Obsolescence, design changes, Warranty expenses

Optimum Quality Costs

Usually considered indirect costs Six sigma is all about ﬁnancial benefits. A good quality cost system is an important part of the six sigma infrastructure and critical to good process management. Some authorities contend that every dollar spent on prevention will save approximately seven dollars in failure costs. Whether this figure can be defended or not, most companies initially find that they spend an inadequate amount on prevention activities. Initially, managers discover that prevention costs are too low and both internal and external failure costs are too high. Often, failure costs will exceed the appraisal costs as well. Even the relationship between internal and external failure costs may point to needed changes in planning or product design.

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Launching Teams

Benefits of working in a team Team

Benefits of Team Member

Team Resources

Management Support

Team Roles

The Team Member Role

The Leader Role

The Team Facilitator Role

The Recorder Role

The Timekeeper Role

The Process Owner Role

The Steering Committee Role

Belbin Team Roles

Action-oriented roles

People-oriented roles:

Problem-solving roles:

Selecting Team Members

Adding New Team Members

Removing Team Members

Team Size

Team Diversity

Team Building Activities

Initial Project Selection

Team Stages

Forming

Storming

Norming

Performing

Adjourning:

Team life cycle characteristics:

Team Motivation

Motivation Techniques

The Hawthorne Studies

Abraham Maslow

3. Douglas McGregor

4. Frederick W. Herzberg

Team Facilitation

Job Enrichment

Employee Empowerment

Organizational Empowerment

Management Actions

Team Communications

Team Performance Evaluation

Team Reward and Recognition

Business Responsibilities

IT or MIS

Types of organization structures

Functional Organizations

Organizational Change

Types of Organizational Change

Resistance to Change

Linking Improvement Projects to Organizational Goals

Team Formation

Types of Teams

Black Belts

Master Black Belt

Using Benchmarking to achieve Process Improvement

Process Benchmarking

Performance Benchmarking

Project Benchmarking

Strategic Benchmarking

Types of Benchmarking

Cost/Benefits Analysis:

Benchmarking Sequences

The Benchmarking Process

Planning Phase

Collection Phase

Analysis Phase

Adapting Improvements

Tools of Benchmarking

Process Mapping

Process performance measurements

Project management

Questionnaire design

Interviewing Skills

Observation Skills

7. Benchmarking Etiquette

Keys to Successful Benchmarking

When You Shouldn’t Benchmark