AUM MGMT 405 Define Phase 1 Blank

gnaanter@gmail.
com 55431618:‫ت‬ ‫ عنتر سليمان‬/‫م‬
Define phase
Using of Six Sigma
 Initially in manufacturing
 Commercial applications (Banking, Finance, Public sector, and Services)
The purpose of Define Phase:

1- Develop a clear project charter based on a real problem that is both relevant to the
customer, and that will provide significant benefits to business.
2- To have the team and its sponsor reach agreement on the scope, goals, and financial
and performance targets for the project.
Objective of Define phase:

1- Identify and/or validate the business improvement opportunity
2- Define critical customer requirements
3- Document (map) process
4- Establish project charter, build team
We can do the following in define phase:
IE533: Stat III IE530: Quality control IE386: Work I E486: Work II
IE580: System simulation IE343: Engineering Economics
gnaanter@gmail.com 55431618:‫ت‬ ‫ عنتر سليمان‬/‫م‬
Project Selection:
• Deciding which of the best candidate projects to implement first involves a strategic
decision about what is most important to the company and its customers
• Target areas are usually identified by looking at what’s important to the business (the “value
levers” such as profit, cost, revenue, customer segments, etc.) and gathering ideas from
diverse sources (customer/marketing information, process data, employee opinions,
regulatory changes, etc.).
• The project selection process starts by screening the ideas based on just a few critical
criteria to make the list more manageable.
• Each remaining idea is assigned to someone who will do more investigation and prepare a
draft charter that provides more details about potential costs, benefits, scope, etc.
• These draft charters are then evaluated against more rigorous criteria to select the best
opportunities
• Identify the products or processes that need a priority intervention through Six Sigma
projects
• Once several products/processes on which it is evident some improvement potential exists

are identified, the prioritization is done through the use of tools such as the Pareto diagram
The project selection follow that:
Identify Potential Obtain Data, Categorize and

Problems Evaluate, Select Charter
Identify Potential Problems
Input Process Output
•Customer dissatisfaction
•Costs of poor quality •Investigate prime sources of

information about the •A comprehensive list of
•Reviews and audits organization potential Six Sigma projects
•Regulatory issues •List potential problem(s) •Input to project evaluation

identified from each source
•Strategic Business plans
•Results of quality projects
•Managers and other

associates
Obtain Data:
•Process assessments
1-Collect specific objective data on each

problem or process identified as a
potential project
2-Determine each potential project's
•Potential Projects Updated list of potential projects
probable impact on:
–retaining customers
–attracting new customers
–reducing the COPQ
–enhancing associates satisfaction
Evaluate & Select:
• Potential Projects •Evaluate each project to verify that it

meet “must” criteria A project to be chartered
• Data on each
•Rate the relative strength of each
project
potential project with respect to “want”
criteria
•Select best project(s)
Potential Projects:
• Conduct effort to impact analysis and prioritize the project list
Projects with high impact are preferred
Risk and Return Assessment
• Risk assessment evaluates a potential project across several dimensions to establish an

overall risk factor for the project which will be used to determine the attractiveness of the
project.
• The risk and return scores are placed on a grid to determine the attractiveness of the
potential project.
Six Sigma Project Selection Grid Matrix:
Importance level is a weighing factor of the Criterion, independent of the project, in a

scale of 1-3.
Criteria
• Likely Financial Benefits
• Positive Customer Impact
• Alignment with Organization Strategy
• Potential Difficulty of Gathering Data
• Capital Investment Required
• Estimated Time to Implement Changes
Pareto Priority Index
Charter
Written Draft of Charter

Selected project Describe customers, problem, mission,
scope, benefits, milestones, and team. Statement
Project Charter
• An agreement between management and the team about what is expected.
• Communication vehicle for the project
—Clarifies what is expected of the team
—Keeps the team focused
—Keeps the team aligned with organizational priorities
—Transfers the project from the champion to the improvement team
Project Charter Elements
 In the last 6 months (when), 20% of our repeat customers - not first-timers - are over
60 days late (what) paying our invoices. The current rate of late payments is up from
10% in 2012 and represents 30% of our outstanding receivables (magnitude). This
negatively affects our operating cash flow (impact or consequence).
 In the last year (when), product returns are 15% of sales (what) This is up from 5% in
2012 (magnitude), resulting in a business unit negative profit impact of 50,000 JD and
reduced market share of 10% (impact or consequence).
Quality Cost
• The costs connected with both attaining and missing the desired level of quality in a service
or product.
• Cost of good quality —costs of preventing quality problems, measuring quality levels,
controlling and/or inspecting quality levels,
• Cost of poor quality (COPQ) —the costs associated with providing (poor) quality products
or services.
Internal failure costs
• Are costs associated with defects found before the customer receives the product or service.
• Are incurred to remedy defects discovered before the product or service is delivered to the
customer.
• Occur when the results of work fail to reach design quality standards and are detected
before they are transferred to the customer.
• They could include:
 Waste: Performance of unnecessary work or holding of stock as a result of errors,

poor organization, or communication
 Scrap: Defective product or material that cannot be repaired, used, or sold
 Rework or rectification: Correction of defective material or errors
 Failure analysis: Activity required to establish the causes of internal product or
service failure
External failure costs
• Are costs associated with defects found after the customer receives the product or service.
• Are incurred to remedy defects discovered by customers. These costs occur when products
or services that fail to reach design quality standards are not detected until after transfer to the
customer.
 Repairs and servicing: Of both returned products and those in the field
 Warranty claims: Failed products that are replaced or services that are re-performed
under a guarantee
 Complaints: All work and costs associated with handling and servicing customers’
complaints
 Returns: Handling and investigation of rejected or recalled products, including
transport costs
Appraisal costs
• Are costs incurred to determine the degree of conformance to quality requirements.
 Are associated with measuring and monitoring activities related to quality.
• Are associated with the suppliers’ and customers’ evaluation of purchased materials,
processes, products, and services to ensure that they conform to specifications.
 Verification: Checking of incoming material, process setup, and products against

agreed specifications
 Quality audits: Confirmation that the quality system is functioning correctly
 Supplier rating: Assessment and approval of suppliers of products and services
Prevention costs
• Are costs incurred to keep failure and appraisal costs to a minimum.
• Are incurred to prevent or avoid quality problems.
• These costs are associated with the design, implementation, and maintenance of the quality
management system.
• They are planned and incurred before actual operation, and they could include:
 Product or service requirements: Establishment of specifications for incoming

materials, processes, finished products, and services
 Quality planning: Creation of plans for quality, reliability, operations, production, and
inspection
 Quality assurance: Creation and maintenance of the quality system
 Training: Development, preparation, and maintenance of programs

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gnaanter@gmail.

com 55431618:‫ت‬ ‫ عنتر سليمان‬/‫م‬

The purpose of Define Phase:

Objective of Define phase:

We can do the following in define phase:

• Once several products/processes on which it is evident some improvement potential exists

The project selection follow that:

Identify Potential Obtain Data, Categorize and

Identify Potential Problems

Input Process Output

•Costs of poor quality •Investigate prime sources of

•Regulatory issues •List potential problem(s) •Input to project evaluation

•Results of quality projects

•Managers and other

Input Process Output

1-Collect specific objective data on each

Evaluate & Select:

Input Process Output

• Potential Projects •Evaluate each project to verify that it

Projects with high impact are preferred

Risk and Return Assessment

• Risk assessment evaluates a potential project across several dimensions to establish an

Six Sigma Project Selection Grid Matrix:

Importance level is a weighing factor of the Criterion, independent of the project, in a

• Positive Customer Impact

• Alignment with Organization Strategy

• Potential Difficulty of Gathering Data

• Capital Investment Required

• Estimated Time to Implement Changes

Pareto Priority Index

Input Process Output

Written Draft of Charter

• Communication vehicle for the project

—Clarifies what is expected of the team

—Keeps the team focused

—Keeps the team aligned with organizational priorities

—Transfers the project from the champion to the improvement team

Project Charter Elements

Internal failure costs

• They could include:

 Waste: Performance of unnecessary work or holding of stock as a result of errors,

External failure costs

• They could include:

• Are costs incurred to determine the degree of conformance to quality requirements.

 Are associated with measuring and monitoring activities related to quality.

• They could include:

 Verification: Checking of incoming material, process setup, and products against

• Are costs incurred to keep failure and appraisal costs to a minimum.

• Are incurred to prevent or avoid quality problems.

 Product or service requirements: Establishment of specifications for incoming

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