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Projects Selection

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  • #38573

    Ja
    Participant

    Hi everybody,
    We are trying to implement six sigma but there are several opinions about criterias for projects selection.  We really don’t know which problems should be resolved by six sigma.  Overall in projects not directly related to manufacturing processes.  Some people say that projecs like ” Inventory adjustment reduction” shoulds be resolved using other kind of methodology less sofisticated.
    I will apreciate your support,
    Thanks

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    #115515

    Mike Carnell
    Participant

    Ja,
    “Overall in projects not directly related to manufacturing processes.  Some people say that projecs like ” Inventory adjustment reduction” shoulds be resolved using other kind of methodology less sofisticated.”
    This part of your post makes no sense. Being related to manufacturing has nothing to do with anything. You can seach the articles on this website and find several that are written about the application of Six Sigma to all types of industries and processes. That is thinking from over a decade ago.
    As for your person who feels it should be resolved using a less sofisticated methodology? That is an opinion. What is it based on? You need to start asking those questions or else they will continue to throw up those road blocks. If you have the problem either they didn’t care enough to fix it in the past (which it sounds like since they are trying to get you to go play somewhere else) or their less sofisticated tools they have been using aren’t working.
    As far as your inventory issues you need to remember inventory is a symptom. Purchasing people intuitively understand process capability and rolled throughput yield. If you have an order for 100 of anything and they order 125 – guess what they know. Not very scientific but if you watch their buying habits you can get a clue to where your process is having issues. You will find a fairly loose relationship between process capability and inventory levels. It is typically a function of how environmentally concious the purchasing person is.
    “Inventory adjustment reduction.” That is a nice name for an out of control process. It is fixable with Lean and/or Six Sigma.
    Take some calcium and good luck.
     

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    #115521

    Adam Bowden
    Participant

    Mike,
    I’m sure Ja and fellow workers are also taking some Zinc, Magnesiun, Iron (typical vitamins) – could this could be the source of the inventory issues – the folks are eating it to suplement their diet :-)
    I totally agree with you about inventory – it is the visible issues from the processes.  Where I worked before they needed 1 gallon of special paint for the Military aerospace products.  The procurement folks sourced the paint and it was only available in a 45gallon drum as it had to be specially made.  At $2,000 that’s expensive paint.  They used the 1 gallon and after it’s expiration date paid an additional $4,000 to dispose of it.  Procurement was measured on cost per unit – was it cheaper to pay $2k for a gallon or $2k for 45 plus an additional $4k – hmmmm let me analyse that for a nano second. 
    Inventory – one of the easiest targets for improvement – free up cashflow, reduce huge amounts of waste in doing so.  Inventory adjustments as you rightly point out indicate an out of control process.  If they optimize it – they’re probably just optimizing wastefull process that needs to be eliminated.   
    Best regards,
    Adam
     

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    #115525

    Mike Carnell
    Participant

    Adam,
    We used to work with a guy named Jim Blanden who always suggested that we needed calcium then it would be our choice to use it to stiffen our bones or to make white wash.
    People treat inventory like it is a stand alone entity. It does have indigenous processes but it survives as a function of the rest of the organization. It is like a petri dish for all the diseases that are affecting the rest of the organization. The part that is amazing is that you see an organization work an inventory project repeatedly year after year and never get the root cause.
    The one that is interesting is watch the reduction of excess and obsolete. Some one works their butt off to find what they can get rid off and then run into this brick wall called accounting “We can only write down $X this year.” You may have $10,000,000 in excess and obsolete – if the budget is $250,000 that is it. You work the project to whatever number they have  (it isn’t a good project to begin with – the cause of excess and obsolete is) and when you hit it you cut your losses and stop.
    Just my opinion.
    Regards

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    #116218

    Baker
    Participant

    Ja-
    I agree with the other posts that your description is not at the root of the problem, and that if it could be easily addressed by other tools then someone would have already done it.  However, it is the team’s job to focus the project on the root causes…not the project selection committee.
    I believe that your original question, which no one has addressed yet, has to do with project selection criteria.  Every company uses different criteria, but there are some general standards: Financial Benefit, Customer Impact, Likelihood of Success, Facility/Company Impact, Safety/Environmental Impact, Strategic Fit, Resources Available, etc.
    Just use categories like these to build a weighted decision matrix for scoring by the committee.  You can use 1-5, 1-10, or 1-3-9 ratings…just whatever you prefer.  You may also consider doing a short (1-2 hour) overview of SS for the committee, as there seems to be some lack of understanding on their part.  Talk to your Champion 1st though, and make sure you have support for such an act.
    Hope this helps.

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