THURSDAY, JULY 19, 2018
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Six Sigma Tools & Templates Risk Management Assess Opportunities and Risks to Maximize Projects

Assess Opportunities and Risks to Maximize Projects

Black Belts sometimes become so focused on the processes being improved that they lose sight of what is around them. For example, the same improvements resulting in production increases at Station A may create bottlenecks at Station R. Or an improvement in one area may have application in another.

The astute Black Belt must be aware of all the ramifications of the changes that may be involved in the project, and be careful not to adversely affect any downstream operations or to miss out on opportunities to apply improvements. This is easier said than done, and the difficulty is directly proportional to the size of the organization or company.

To focus on the risks and benefits associated with a process change, C&H Die Casting Inc. developed the Improvements, Challenges, Opportunities, Risks (ICOR) Analysis (Figure 1). The approach melds risk management practices with the SWOT (strengths, weaknesses, opportunities, threats) analysis, a strategic planning method developed in the 1960s and ’70s.

The ICOR chart, adapted from a SWOT template created by consultant Alan Chapman and accessed through his free resources website businessballs.com, puts in plain view not only the improvements expected, but also any challenges that will be faced, any opportunities to be realized elsewhere and any risks involved with the activity (Figure 1).

Figure 1: ICOR Analysis Worksheet
ICOR Analysis: Profit Improvement Project
Thought Starters

Improvements

Challenges

Thought Starters
Advantages of the project?
Any increased capabilities?
Process improvements?
Employee ownership?
Increased experience base?
Innovative aspects?
Price, value, quality?
Accreditations, qualifications, certficiations?
Systems improvements?
Attitude, behavior improvement?
Disadvantages of the project?
Hardware capabilities?
Core competencies?
Abilities?
Timescales, deadlines?
Cash-flow, cash-drain?
Effects on core activities?
Dedication, leadership?
System capabilities?
Employee acceptance?
Management acceptance?
Appropriate staff?
Support?
Thought Starters

Opportunities

Risks

Thought Starters
Quality improvement elsewhere?
Increased efficiency?
Technology and innovation?
Other applications?
New product starts?
Effects on quotations?
Business and product development?
Information and research?
Volumes, production, economies?
Quality decrease?
Customer satisfaction decrease?
Increased costs?
Scheduling effects?
Internal rejections?
External rejections?
Loss of key staff?
Loss of financial backing?
Effect on other activities?
PPM increase?
Additional rework?

Summary of Chart

Belts start compiling information for this worksheet during the Define stage, and continually update it throughout the project. Information should be updated at least once in each phase of the project.

The categories tracked are fairly straightforward. While there is some redundancy and overlap of information, the act of formally documenting improvements, challenges, opportunities and risks focuses the team on all of the ramifications of the activity. The chart also incorporates “thought starters” to help in the analysis.

As an aid for quick interpretation, the squares of potentially “good” outcomes are shaded in green, and the potentially “bad” outcomes are in yellow. If a glance at the chart shows many more notations on the yellow side, it is a pretty good indication that the team should proceed carefully and make an effort to effectively manage the challenges and risks so as to not affect adversely operations elsewhere.

Improvements

Here the team considers the objective of the project and thinks about what else must change to facilitate the major improvement. In a manufacturing situation, an improvement in throughput may also have underlying benefits of scrap reduction, improved machine maintenance and improved routing.

Once the gathered individuals start working as a team, a realistic scope of all the possible improvements directly related to the project becomes evident. The overall objective does not change, but all of the underlying contributors to the objective are highlighted, giving a more complete view of the project.

Will all of the improvements listed materialize? Probably not, but it does not hurt to think about them. This is a list of “nice to haves.”

Challenges

Will the operators accept the changes? Even though the team has upper management support, how will the remaining management view the activity? Does the team have the necessary skills to accomplish the goals? Are the necessary systems in place to support the project? Will the production schedule permit the team’s investigations?

These are just a few challenges that may face the project team. As the team progresses through Define and Measure and into Analyze and Improve, the challenges become more real and immediate.

Knowing these challenges in the beginning, and tracking how they increase or decrease throughout the project, enables the team to plan for possible roadblocks and try to manage them effectively. The team may not know the answers to how to solve the challenges now, but knowing the questions in advance gives them an advantage if the challenge materializes.

Many years ago a retired carpenter told me that you do not judge how good a carpenter is by the number of mistakes he makes; you judge by how well he recovers from those mistakes. Words to live by. A team must be able to resolve the challenges and recover if they are to be successful.

Opportunities

Where else can the team slide these improvements? Is it possible that with a little tweak they can gain an improvement and related cost advantage in another area? That is what the team wants to know to complete this part of the chart. When they compile the information for this block they already have a project underway; here they are looking at an opportunity to get a little more “bang for the buck.” It really makes no sense to start from square one on a similar project when all of the background work is being done now.

For example, part of a profit improvement project, as in this example (Figure 1), may involve evaluations of and improvements to profit models, extensive analysis of the product flow, an understanding of the processes involved, analysis of data collection, verification of system accuracy, and separation of the insignificant many from the vital few. Because the team separated out the unnecessary bits from the initial project, now they can make a simplified “guide” of the entire project to use it elsewhere. Methods used can be adapted to similar products and put into new strategies. Those opportunities are listed in the opportunities box.

By documenting this information, the Black Belt does not need to be a major player in the subsequent projects. The major work will have already been done during this project. Availability for advice and guidance when necessary is pretty much all that is required; subsequent project teams will basically be following a cookbook recipe.

Risks

This category is the devil’s advocate of the analysis. It really does not do any good, for example, to improve productivity in one area if that change results in a productivity decrease in another. In the worst case, the improvement may actually be a detriment if the productivity loss in another area results in lost customers.

The team must continually be aware of not only the effects impacting their project, but also the effects their project may have on everything else in the organization. Although difficulty in understanding the effects of a project elsewhere is directly proportional to the size of the organization, in the case of risk the opposite is true: As the size of the organization or company decreases, the effects of risk increase. It is important for the team to understand the risks associated with what they are doing; they do not want a situation where “the operation was a success, but the patient died.”

After finishing the risks section, the worksheet is complete (Figure 2).

Figure 2: Completed ICOR Analysis
ICOR Analysis: Profit Improvement Project
Thought Starters

Improvements

Challenges

Thought Starters
Advantages of the project?
Any increased capabilities?
Process improvements?
Employee ownership?
Increased experience base?
Innovative aspects?
Price, value, quality?
Accreditations, qualifications, certficiations?
Systems improvements?
Attitude, behavior improvement?
  • Profit increase
  • Process enhancements
  • Cycle time reductions
  • Scrap reduction
  • Personnel education
  • Process step reduction
  • Attitudes: “Not invented here” and “can’t be done”
  • Equipment maintenance
  • Supervisor acceptance
Disadvantages of the project?
Hardware capabilities?
Core competencies?
Abilities?
Timescales, deadlines?
Cash-flow, cash-drain?
Effects on core activities?
Dedication, leadership?
System capabilities?
Employee acceptance?
Management acceptance?
Appropriate staff?
Support?
Thought Starters

Opportunities

Risks

Thought Starters
Quality improvement elsewhere?
Increased efficiency?
Technology and innovation?
Other applications?
New product starts?
Effects on quotations?
Business and product development?
Information and research?
Volumes, production, economies?
  • Roll out to similar products
  • Enhanced, more inclusive profil model
  • Employee business understanding
  • Employee ownership, partnership
  • Better new product estimating
  • Improved APQP
  • Delivery performance reduction
  • Quality degradation (PPM increase)
  • Loss of customer certification
Quality decrease?
Customer satisfaction decrease?
Increased costs?
Scheduling effects?
Internal rejections?
External rejections?
Loss of key staff?
Loss of financial backing?
Effect on other activities?
PPM increase?
Additional rework?

Staying Focused

The ICOR analysis provides a quick guide and easy reference to the project. It keeps teams focused on the overall effect on the business while allowing them to continue with the job at hand.

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