The growth of the Six Sigma DMAIC continuous improvement process in the United States’ more service-oriented economy is not proceeding as fast as it did earlier in the country’s manufacturing industries. DMAIC is a well-proven process, but requires a systematic approach to project selection in transactional environments.
When companies are squeezed on cost and drive for efficiency, Six Sigma Black Belts wonder why management will not embrace quality improvement based on a process that has proven effectiveness. Management questions return on investment, initial outlay, time deficit and – in a world moving to a service economy – how the DMAIC process fits in. As business objectives that impact customers are determined and linked to key process characteristics, how projects align with particular business cases follow relatively subjective project selection procedures. In some cases the selected project just might work so it is determined to just go with it. An objective project selection process within a defined business problem could alleviate skepticism and allow Black Belts to do what they were trained to do.
Using Methodology to Optimize Project Selection
The methodology can be used to create an optimal project selection process that filters down through the balance of the DMAIC project thereby minimizing the risk of failure. The key to an effective project and the intent of this additional process is to assure that the selected project utilizes the strongest level of complementary resources.
The S-C-P Model (Structure-Conduct-Performance) uses a top-down approach as a key to an effective project. Structure measures the economic value of the project. Conduct is the ability to exploit the maximum value from the project. Performance evaluates the potential for a successful project. After initial assessment of the project list the next portion of the analysis assesses strengths, weaknesses, opportunities and threats of each of the listed projects based on the initial S-C-P Model. Specific attributes of individual projects contribute to the level of success or failure depending on the variables that are assessed within the complete analysis.
SWOT analysis (strengths, weaknesses, opportunities, threats) is an effective tool in bringing together a realistic assessment of relevant projects based on a specific thought process. Strengths established from the S-C-P Model are assessed within the value chain processes where things are already done well. In addition, further strengths are established based on the new set of SWOT variables. Opportunities assess what economic and technical trends than produce the highest value and return. Weaknesses allow assessment of unrealistic goals that would be the hardest to accomplish. Threats to an effective project would be barriers to success such as reverting back to subjectivity as the easiest way to determine the most relevant direction. The results of the SWOT analysis give an objective idea of the strongest projects that filter down to the pragmatic analysis that results in project choice.
Pragmatic Analysis Predicts Strongest Projects
VRIO analysis (valuable, rare, imitable, organized) assesses the strongest projects determined through the SWOT analysis. Now that the project list has been pared down, complementary resources can be assessed to predict the strongest projects. A project is valuable if it helps the project deter a threat or exploit an opportunity. A project is rare simply if it is not widely possessed by other processes if the project could be questioned as to its impact. A project is inimitable and not substitutable if it is difficult for another project to be done that would produce the same results. This is probably the toughest criteria to examine because given enough time and money almost any project can be substituted by some level of subjectivity or what is just good enough. A project is organized if it is actually exploitable with maximum benefit. Organization is frequently neglected because it often deals with the inner workings of a system such as subjective opinion and unfocused activities that tend to cause project creep.
Interpretation of the VRIO analysis usually results in the optimal selection and leaves few questions regarding the relevance of the project to the business problem. An optimum project may meet all four criteria. However, that is always not the case. Depending on the outcome of the analysis, VR_O or even V_ _ O could be considered core competencies and a project may be optimal based on only those criteria. The maximum number of criteria with positive outcome is determined and deemed to be the best project selection. It is not necessary for the selected project to necessarily meet all four of the VRIO parameters due to the fact that it may not be possible to assess every factor for every project.
This project choice methodology of the top-down S-C-P Model with SWOT and VRIO analyses in combination provides more open thinking as to project objectives. The way things have always been done becomes second to realistic views of projects. Once the project choice is made, the DMAIC process proceeds to implementation and the outcome is optimized because the most advantageous project was selected. The project selection process creates a more defined focus of which project is best to resolve the business problem.
Based on a more objective method, the project has now been selected to provide the optimum value. Measurement can take place based on objective project goals. Analysis can take place based on the most specific criteria within a well thought-out scope based on the more critical definition of the project. Improvements will be the most value-added and control of the optimized project will be easier because it is the most relevant project for the specified problem.
Removing the Project Selection Stumbling Block
Project selection is often the stumbling block to getting a viable project off the ground. It is important to have a project selection methodology that uses basic business analysis concepts that when put in sequence with the DMAIC process can produce more specific and defined quality and cost reduction projects. The enhancement to the project choice portion of the Define phase of the already proven DMAIC process should negate the skepticism that accompanies what would have appeared to be costly projects without any guarantee of success.
Of course improvement projects are slated toward efficiency, innovation, customer responsiveness or increasing quality. Therefore the most prudent projects can be identified with the S-C-P Model selection process. In addition, development of realistic views of the project outcome and impact are extremely important to success. The business case, goal statement and opportunity statement can now be optimized by an objective project selection method that enhances the DMAIC process.