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Selecting Six Sigma Projects

Building a business case: What, Why, How, When and Where explanation

It's not always easy to get buy-in on a project or a strategy. Fortunately, many have blazed the dusty road of pitching ideas, and many have succeeded. But how did they do it? Obtaining buy-in is one of the most overlooked elements of both Lean and Six Sigma, especially if you are on the front lines and see the issues first hand. That firsthand knowledge of what's going on often turns your ideas into something you're passionate about.

Well, the solution to helping others understand is to make others passionate about the same thing too, and you will obtain buy-in. Okay, not so simple, but let's look at a few important elements that will help show others just what, why, how, when, and where we gained this passion for a specific improvement or strategic initiative. These tips will help you gain buy-in on both strategic and tactical-level initiatives. The first step towards gaining buy-in is to share what it is you want to do. Believe it or not, most great ideas fail at this first step. Either the improvement is never mentioned, or for other reasons, It gets turned down, and that's the end of it.

Before deciding what you want to do, you should first understand where the organisation is going. This may require you to become familiar with either the organisation or the leader's vision in order to ensure that what you want to do is aligned with the direction of the organization. Another good idea when seeking buy-in is to speak with others about what you would like to do. This gives you an opportunity to gather support and, in many cases, hear what others think about your pitch. Speaking with others may also give you insight pertaining to other attempts at similar projects and challenges.

Historical evidence and support can give a much firmer grasp on your business case and will pay off big time when the opportunity arises for you to present your business case. After defining what it is you want to do, be sure to keep your eyes and ears open. Sometimes, after you express what you want to do, others will agree, and any more explaining may frustrate you or make you talk yourself out of taking the initiative. Most of the time, you will need to back up your business case with why you are making the suggestion. This can come from any number of sources.

The first one might be to show the current performance of what it is you are trying to improve. Highlight critical issues and try to demonstrate to others why these issues are causing so much pain. After showing the current state performance assessment or analysis, providing a benchmark helps your audience understand not just why you are suggesting the improvement, but it also helps clarify why you feel the improvement will be a success. By gathering benchmarks, you can show others success and help them understand what is possible. Simply make sure that the benchmarks you share are somewhat similar or that you have a very clear model of how you will connect your why to the examples you share. The last very important thing to share with executives or managers is the return on investment.

Typically, the ROI is what most people are interested in. Here's an example: if we invest 40 hours of resource time, we can generate $200,000 in savings. That statement provides a very definitive answer to why we should move forward on a perfectly good topic or issue. How we do this and how we connect all of the dots for your audience It brings context and reality to your benchmarks, interviews, and every other piece of your business case. The how should lay out a very clear plan for how you will correct, improve, or fix what you are proposing, as well as document how you will achieve results related to your benchmarks and/or return on investment. Be sure that those who are suggesting your initiative understand that training alone will not be enough for success. There must be buy-in and continued action after training is complete.

A change in culture and behaviour is often the hardest. How to Explain However, it is necessary to explain if you hope to gain support. One common method of laying out the how is to first suggest or offer a pilot project. The pilot project, if a success, will give executives a taste of how the programme can be successful. It is a good idea to also lay out a one-year plan that shows two years of results. Your one-year plan can include projects, training, and many other activities that might be needed to reach your objective. At each step of your plan, no matter what the timeline, you need to show how the plan will result in a return and accomplish the goals that you first suggested.

This makes it very easy for others to understand—they can connect the dots and see clearly how each piece forms a complete concept or initiative. As part of your explanation of how you plan to accomplish results, you will also need to give a timeline of when you plan to execute the necessary activities. This allows the organisation to plan for resources and funds that may be needed to support your initiative.

When we talk about where, we are not talking about where the projects will be conducted or where the strategy will take place, although that may be helpful for large organisations, but where it will affect the company's bottom line. For example, if a black belt completes three projects per year, where will those savings be applicable? The important thing here is not just to show where savings are applicable but also where investments such as training software, travel supplies, and other investments are applicable too.

This gives executives or sponsors a clear understanding of what they need to put in and what they will get in return, allowing them to make a more educated decision. It is common knowledge that when all facts are laid out, if buying is accomplished, you'll have a much deeper level of support than if everything was not laid out. Coordinating and connecting all these pieces of information will help you gain buy-in on suggestions and ideas. Most of the time, connecting all the pieces of your proposal and making it easy to understand will get the job done. Although being able to tell a good story and supporting it with real facts may have you leaving the room thinking, "Did he just say okay?" Now that wraps up our look at building a business case.

The Lean Enterprise

1. History of Lean

Well, hi there. When we define what the term "history" means, we learn that history is the study of past events. Additionally, in most cases, it is connected to someone or something. Like any other strategy, lean has some great history behind it.

More often than not, Lien is connected with the Toyota family's famous Toyota production system, which a well-known engineer by the name of Taiichi Ono helped establish. While the Toyota production system has been given much credit for Lien, when we look at history, we learn that some other great names before Toyota were using many of the same methods. In the late 1790s and early 1800s, Eli Whitney, an American inventor, used his notable skills as a craftsman to begin producing Musketeer rifles. Whitney was driven to grow his armoury and pioneered the use of both interchangeable parts on muzzleloaders and what would be known as one of the earliest milling machines in history.

As you may have guessed, interchangeable parts still influence automotive industries around the world, including Toyota. One other name that can be identified is Frederick Taylor. Frederick Taylor was given credit for developing what was known as "scientific management." Well, wouldn't you know it? The theory was focused on efficiency. Frederick quickly realised as a machinist that workers must have the correct tools, good planning, and a desire to work hard. This eventually led him to experiment with time and motion in order to create a more efficient environment. Now we can't truly understand the history of Lean without taking some time to acknowledge Mr. Henry Ford and his contributions to manufacturing.

Ford used techniques like the can-do system that evolved into the five-s system and established a mass production assembly line that arguably established flow in production environments. While his production facility was absolutely amazing, the idea of an entrepreneur creating a car that the market was selling for $500 using a process that allowed him to sell his vehicles for only $900 created quite a stir in the world.

In fact, it created such a stir that as America moved into the Great Depression and later, when World War II was ending, the Toyota family began to show interest in Ford's assembly lines. Over the years, this assembly line would become part of the just-in-time system. While Ford continued to manufacture automobiles, the Allied victory and the mass production of materials used in the war captured the attention of the Japanese. After studying Ford's methods and some of the concepts of statistical control, two brilliant engineers by the names of Taichi Ono and Shigeo Shingo began to incorporate the techniques they learned.

Paired with new production methods, cellular manufacturing, and teamwork, Toyota became a force to be reckoned with. Now, as a side note, one of the first major developments in the Toyota production system came from Mr. Sakichi Toyota watching his grandmother endlessly spin her loom. According to legend, the thread would frequently break, wasting a large amount of material unless someone noticed the broken thread and stopped.

Sakichi watched this and wanted to help, so he developed a method that would sense the broken thread and stop it right away. He applied that concept to production, which freed workers to run more machines and saved lots of material. While history will always play an important role in the birth of lean manufacturing, it is important to note that each and every one of you will play an important role, too. Lean is most effective when approached as a community. So through your desire to learn Lean, you keep the legacy alive and continue to add new ways of doing things. Well, I hope you enjoyed this look into a part of Lean history. So until next time, keep on improving, and we will keep on giving you solutions that ignite your power.

2. Benefits of Lean

Well, hello. I'm glad you could make it back. We've talked a lot about lean and what its focus is. But if I were to ask you a question like, "What benefits can Lean provide your organization?" What would you say? Well, before we jump into some of the common reasons other organisations decide to go lean, let's pause for about five minutes so you can answer that question. I'm sure you listed quite a few ideas and probably had a million more in your head to write down when time ran out. But don't worry, you can always jot those down later. Besides, we will probably mention a few that you are thinking of in this lecture.

Now, as we've discussed, the general purpose of Lean is focused on fulfilling the customer's needs. Along with the customer-centric aspects of Lean, the strategy works to flow that same value to the customer in the most efficient way possible. One of the key ways that Lean accomplishes this is through the elimination of waste. As you learned in the overview of Lean, focusing on waste provides an organisation with many more opportunities to improve. But unless you have been through a Lean transformation, it's tough to identify the benefits of Lean. Sometimes this is quite a common stepping stone when the deployment of a lean strategy first begins. In this lecture, we will discuss seven very common benefits and reasons a company decides to go lean.

Those seven reasons are to meet customer demands, increase utilisation of resources, and reduce the need for working capital. Additionally, companies go lean in order to improve efficiency of activities, cash flow, and inventory turnover. The final reason a company will pursue a lean strategy is to increase profit margins and scale the organisation to meet time demands. Well, let's take a deeper look at each of these reasons. The first reason we mentioned was to meet customer demands. As with any other customer-focused strategy, everything starts with the customer. In Lean, it is the same. The goal of the strategy is to define what the customer views as valuable and eliminate anything they do not perceive as valuable. In doing this, organisations are better able to capitalise on opportunities that may not have been available or taken advantage of before.

By improving flow, eliminating waste, and establishing standard problem-solving methods, organisations are able to increase the overall velocity of the organisation and free up resources that often get consumed in firefighting activities. While those first two benefits sometimes still leave a lingering thought in people's minds, the third benefit is oftentimes the most convincing for organizations.

By focusing only on what the customer is demanding and freeing up resources, an organisation naturally finds it needs less capital to run the business. Much of this benefit comes from focusing on only producing what has demand attached to it and lowering work-in-progress, finished goods, and raw material inventory levels. Along with this, companies always find that overtime goes down and employees begin to finish tasks within a normal workday, ultimately resulting in a reduced need for working capital.

While the benefit of reduced working capital oftentimes drives the decision for implementation, the added benefits of the next three reasons are typically the most common. Improved efficiency of activities, cash flow, and inventory turnover are desirable objectives for any organisation you can imagine, and embracing the principle of making value flow through the elimination of waste certainly supports things getting done quicker than you could imagine. In fact, when looking at processes from a value stream approach, businesses often find that the turnover of activities and products begins to rise. That ultimately leads to your cash being invested for a much shorter period of time before you receive a return on your investment.

Tactical items such as projects often yield improved cycle times, more flexible responses to customer needs, and reduced variability in process-level initiatives. Now that we've discussed these six benefits a company can count on when pursuing lean, it becomes much easier to understand the final reason for improved profit margins. Common sense confirms to all of us that by attacking and mitigating activities that add no value to an organization, the company will surely see results in both hard and soft savings.

One other thing to note is that the establishment of improved efficiency without adding extra overhead resources can result in an increased level of profit on your investments. Well, that outlines seven of the core benefits that companies pursue, lien for. But don't forget, if you answered our first question, remember what benefits lean can provide your organization. You probably have a few more reasons in mind. And justifiably so; the list of benefits is never-ending and long, so keep that list handy. You never know; it may spark others' interests too. So until next time, keep on improving, and we will keep on giving you solutions that ignite your power.

3. Core Principles in Lean

In Lean, there are five major principles that assist in creating a lean environment and help drive the strategy forward. Well, before we begin talking about the five major principles of Lean, we should first answer the question, "What is Lean?" Lean is an operational excellence strategy that enables organisations to change for the better. Of course, we all know that change is not necessary, but that's only because survival is not mandatory. But let's face it, in order to sustain and advance in the recent economic struggles, we all must look at positive opportunities for change.

It doesn't matter where in the world you are located. Somewhere in the world, somebody is working just as hard, if not harder, to make something better for less money. Now, these are only a few of the reasons why a company might begin to implement a lean strategy. Some other reasons that companies might start a lean journey are to better utilise assets, meet customer demand, correct quality issues, or just plain improve. It's been said that when a company partakes in a lean strategy, every other strategy just becomes a checkmark. Now that we understand what Lean is and why companies partake in a Lean strategy, let's begin to understand the five core concepts and principles within Lean.

Under the five key Lean principles, a planning office becomes highly customer-focused, providing the highest quality at the lowest cost in the least amount of time compared to a non-Lean company. In the book Lean Thinking by James Walmack and Daniel Jones, They summarise lean thinking in five key principles. Those five principles are key for an organisation to reap the rewards of lean strategy and significantly gain a competitive advantage. Just be reminded that, although you may not perfect these five principles right away, getting started will yield some significant results right away. The first of the five core principles of Lean is to define value from the customer's perspective. Now, this could be internal or external customers, but it's important to find out what they're willing to pay for. It is important to understand that not all activities add value added. We will talk more about this later on.

As you begin to recognise that only 15%–20% of the activities in an organisation actually add value, you start to understand that you should do the work the customer is willing to pay for. In order for us to do that work specifically, we must ask our customers, "What are you willing to pay for?" and attempt to understand as if we were them. We then try to remove anything they are not willing to pay for. After you have identified what value means to the customer, you should seek to remove anything that's not adding value added. And that brings us to the second core principle of a lean strategy, which is to identify the value stream and eliminate any waste found therein. The value stream is the entire set of activities. Value streams come in different levels. Some are across all parts of the organisation involved in jointly delivering the product or service, and some may be catered to a specific department.

No matter what they're connected to, though, remember that it's every activity. This represents the end-to-end process that delivers value to the customer. Once you understand what your customer wants, the next step is to identify how you are delivering it to them. The next step is to make that value flow through the various streams at the request of your customers.

Typically, when you first map out the value stream, you will find that only 15%–20% of the activities actually add value. That's pretty low. This can rise to almost 40% or so in a service environment, but only if the company already has some sort of strategy in place. Eliminating this waste ensures that your product or service flows to the customer without any interruption, detour, or waiting, and at a cost that they're willing to pay for. It will also ensure that what is flowing is actually valuable. We've already mentioned the fourth principle of the alean strategy, but the gist of it is to do activities and respond only to customer polls. Now, this principle is largely focused on understanding what your customers demand or what they're pulling for. Remember, customers can be internal or external.

When you operate at the will of all your customers, you produce only what the customer wants, when the customer wants it. The final principle of lean is the relentless pursuit of perfection. The pursuit of perfection sounds like a crazy idea, but imagine if you worked in an environment where you took one step up and immediately began working on the next best thing. Like this concept, continuous improvement operates the same way.

You start with a standard and continue to move forward and relentlessly pursue perfection. One other principle that's important to any lean strategy is respect for people. While we should always fight to eliminate waste and make value flow, we should never lose sight of our most important resource: our employees.

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