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16.2 Define Phase

The Define phase has three components: business case with a project objective, SIPOC analysis, and Voice of the Customer (VoC) analysis.

Prepare a Business Case with a Project Objective

Preparing a business case requires team members to answer the following eight partially redundant questions. Some of the answers can be obtained from the draft project objective completed by the champion and process owner. The redundancy in the questions helps team members distill the critical elements of the business case.

  • Question: What is the name of the process?

  • Answer: MSD Purchasing Process. The first step in the supply chain for the MSD process is the process for purchasing MSDs. Hence, the first operation to be investigated by MSD quality project team members is the process for purchasing MSDs. Team members may study other factors that affect the quality of MSDs, such as the method of use or shelf-life at a later time.

  • Question: What is the aim of the process?

  • Answer: The aim of the purchasing process as it relates to this project is to purchase MSDs that improve the productivity and morale of the employees in the PSD and decrease production costs.

  • Question: What is the business case (economic rationale) for the project? This is answered by addressing the following subquestions:

  • Question: Why do the MSD project at all?

  • Answer: According to a judgment sample of three employees and two managers from the PSD, team members determined that MSDs that cannot withstand four or more bends are unacceptable because they are unlikely to remain intact throughout the paper shuffling processes and will not hold papers tightly. This is called durability. Defective MSDs create costs for POI; for example: (a) papers from different clients may get mixed together if not properly bound, requiring additional processing time, (b) employees may have to use multiple MSDs for one project, creating additional material costs, and (c) employees get frustrated and do not perform their jobs efficiently and productively, consequently increasing labor costs. Additionally, team members discovered that a large proportion of the boxes containing MSDs arrive to the PSD with five or more broken MSDs. This is called functionality. This creates additional processing costs for POI; for example, (a) increased unit costs and (b) frustrated and nonproductive employees and managers. Team members used the same judgment sample as above and determined that approximately 60% of individual MSDs do not meet durability criteria, and 60% of MSD boxes do not meet functionality criteria (see the survey questionnaire in Table 16.3 and the data matrix in Table 16.4).

    Table 16.3. Survey Questionnaire

    Survey

    Name: __________________________

    1. Please estimate the percentage of MSDs that cannot withstand four or more bends. _______

    2. Please estimate the percentage of MSD boxes that contain greater than five broken MSDs. _______

    Table 16.4. Survey Data

    Survey Number

    Response Q1

    Response Q2

    1

    55%

    70%

    2

    50%

    55%

    3

    60%

    65%

    4

    65%

    60%

    5

    70%

    50%

    Average

    60%

    60%

  • Question: Why do the MSD project now?

  • Answer: Because the PSD is experiencing very high monthly production costs (see Figures 16.1 and 16.2) and because internal customers, including managers and hourly employees, are submitting an increased number of complaints: 14 in the first quarter, 18 in the second quarter, and 32 in the third quarter, as recorded in the Purchasing Department's complaint log for the fiscal year 2003. There are 100 hourly workers in the PSD.

  • Question: What business objectives are supported by the MSD quality project?

  • Answer: The MSD project is most strongly related to the "minimize production costs" and "eliminate employee complaints" business objectives (see Table 16.2).

  • Question: What are the consequences of not doing the project?

  • Answer: The consequences of not doing the project are decreased profit margins due to higher production costs and increased employee complaints due to frustration with materials.

  • Question: What projects have higher or equal priority?

  • Answer: At this time, the MSD quality project has the highest priority (4.95) (see the bottom row of Table 16.2).

  • Question: What is the problem statement? What is the pain?

  • Answer: Low-quality MSDs create additional production costs and employee frustration.

  • Question: What is the goal (desired state) for this project?

  • Answer: The Champion and Process Owner of the MSD process initially determined that a 100-fold improvement in MSD quality (durability and functionality) should be the goal for the Six Sigma project. They derived the concept of a 100-fold improvement from Motorola's 1986 stated improvement rate of tenfold every 2 years, or a 100-fold every 4 years during the kickoff of the Six Sigma effort. Because 100-fold improvement means the defects per million opportunities (DPMO) would decrease from 600,000 to 6,000, and a DPMO of 6,210 represents a Four Sigma process, team members decided to use Four Sigma as the goal for the MSD project.

  • Question: What is the project scope? This is answered by answering the following subquestions:

  • Question: What are the process boundaries?

  • Answer: The starting point for the project is when the Purchasing Department receives purchase orders from the PSD. The stopping point for the project is when the PSD places MSDs into inventory.

  • Question: What, if anything, is out of bounds?

  • Answer: The project team cannot change the way employees handle or use MSDs.

  • Question: What resources are available for the project?

  • Answer: The budget for the MSD project is $30,000.00. This includes estimated hourly salaries of project participants. Team members Brian Mercurio and Jeremy Pressman are the only project participants who will incur additional job responsibilities as a result of the project. Budget estimates show "opportunity cost" and "hard costs" (see Table 16.5). The estimated hard costs ($10,500) and expected opportunity costs ($15,540) are less than the budget of $30,000.

    Table 16.5. Estimated Labor Costs for the Project

    Name

    Position

    Estimated salary/hour

    Expected number of hours per week

    Expected opportunity costs for 21 weeks

    Expected hard costs for 21 weeks (direct labor costs)

    Adam Johnson

    Champion

    $100

    2

    $4,200

     

    Dana Rasis

    Process Owner

    $50

    2

    $2,100

     

    Bettina Arguelles

    Green Belt

    $50

    5

    $5,250

     

    Brian Mercurio

    Team member

    $25

    10

    $0

    $5,250

    Jeremy Pressman

    Team member

    $25

    10

    $0

    $5,250

    Lindsey Barton

    Finance rep.

    $45

    2

    $1,890

     

    Mary Montano

    IT rep.

    $50

    2

    $2,100

     

    Total

         

    $15,540

    $10,500

  • Question: Who can approve expenditures?

  • Answer: Only the Process Owner, Dana Rasis, can approve expenditures.

  • Question: How much can the team spend beyond $30,000.00 without seeking additional authority?

  • Answer: Nothing.

  • Question: What are the obstacles and constraints of the project?

  • Answer: The team must work within a $30,000 budget and a 21-week time constraint.

  • Question: What time commitment is expected of team members?

  • Answer: Team members are expected to be present at weekly Friday morning meetings from 8:00 a.m. until 9:00 a.m. Team members are also expected to provide progress of project tasks at each meeting. Completion of project tasks will require additional hours of work per week.

  • Question: What will happen to each team member's regular job while working on the project?

  • Answer: If any, overtime hours will be compensated for team members and support staff. The estimated rate for overtime labor is 1.5 times normal labor. Overtime labor is not included in the budget in Table 16.5.

  • Question: Is there a Gantt chart for the project?

  • Answer: A Gantt chart is shown in Table 16.6.

    Table 16.6. Gantt Chart for the MSD Project

    Steps

    Resp.

    Week

    1

    2

    3

    4

    5

    6

    7

    8

    9

    10

    11

    12

    13

    14

    15

    16

    17

    18

    19

    20

    21

    Define

    BA

    X

    X

    X

    X

    X

    X

                                 

    Measure

    BA

             

    X

    X

                               

    Analyze

    BA

                 

    X

    X

    X

                         

    Improve

    BA

                       

    X

    X

    X

    X

    X

    X

             

    Control

    BA

                                   

    X

    X

    X

    X

    X

  • Question: What are the benefits of the project?

  • Answer: The soft benefits of the project include eliminating complaints from the PSD and increasing employee morale. The hard (financial) benefits of the project are minimizing labor costs and material costs. The hard cost benefits are estimated on page 498.

The labor costs of the current and proposed systems are presented in Table 16.7.

Table 16.7. Labor Costs

100 employees in the Paper Shuffling Department (PSD)

× 40 hours/week/paper shuffling employee

× 10% of time devoted to clipping

@ 400 hours/week devoted to clipping in PSD

× $25/hour/paper-shuffling employee

$10,000/week devoted to clipping

× 50 weeks/year

$500,000/year devoted to clipping

× 0.60 defective clips (judgment sample estimate of durability of the current system) Broken clips are not selected for use on jobs. This makes 0.6 a conservative estimate of the percentage of defective clips in the current system. [*]

$300,000/year on defective clipping for current system

× 0.0062 defective clips (durability of the proposed system) [**]

$3,100/year on defective clipping for proposed system

Hence, a lower bound on the estimated annual savings on labor costs from improving the MSD purchasing process is $296,900 ($300,000 – $3,100). The PSD incurs a 10% annual employee turnover. To capitalize on savings in labor costs, the department will now hire 4 new employees instead of 10 new employees, for a savings of 6 full-time employees ($296,900/$25 = 11,876 hours; 11,876/40 hours per week/50 weeks per year = 5.938 = ~ 6 employees saved). Alternatively, the PSD may now serve more customers with its current employee base.

The material costs of the current system are shown in Table 16.8.

Table 16.8. Material Costs

100 employees in the Paper Shuffling Department

× 60 projects/week/paper-shuffling employee

× 50 weeks/year

@ 300,000 projects/year requiring 3,000,000 MSDs (10 clips per project on average)

× 0.60 defective clips (judgment sample estimate of current system).

7,500,000 [*] clips must be used to complete 300,000 projects

× 0.01/clip

@ $75,000/year on clips in current system

× 0.0062 defective clips (proposed system)

3,018,000 [**] clips must be used to complete 300,000 projects

× .01/clip

@ $30,180/year on clips in proposed system

Hence, the annual savings on material costs from improving MSD purchasing process is $44,820 ($75,000 – $30,180). This yields a lower bound on the estimated annual total hard benefit savings of $341,720.00.

  • Question: What are the roles and responsibilities of team members?

  • Answer: The roles and responsibilities of team members are shown in Table 16.9.

    Table 16.9. Roles and Responsibilities

    Project Name: MSD Purchasing Process

    Role

    Responsibility

    Stakeholder

    Supervisor's signature

    Signature

    Date

     

    Champion

    Adam Johnson

    AJ

    9/1/2003

     

    Process Owner

    Dana Rasis

    DR

    9/1/2003

     

    Green Belt

    Bettina Arguelles

    BA

    9/2/2003

     

    Team member 1

    Bryan Mercurio

    BM

    9/3/2003

     

    Team member 2

    Jeremy Pressmen

    JP

    9/3/2003

     

    Finance rep

    Lindsey Barton

    LB

    9/4/2003

     

    IT rep

    Michelle Montano

    MM

    9/4/2003

     

Do A SIPOC Analysis

The second part of the define phase requires that team members perform a SIPOC analysis. A SIPOC analysis is a simple tool for identifying the suppliers and their inputs into a process, the high-level steps of a process, the outputs of the process, and the customer segments interested in the outputs. A SIPOC analysis of POI's Purchasing Department is shown in Figure 16.3 on page 500.

16fig03.gifFigure 16.3 SIPOC Analysis

Conduct a "Voice of the Customer" Analysis

The third part of the define phase involves team members collecting and analyzing VoC data. VoC data is verbal or written information collected from a sample of users in a selected market segment. The questionnaire used to collect data from users of MSDs in the PSD is shown in Table 16.10 on page 501.

Table 16.10. Voice of the Customer Questionnaire

Questions [*]

What emotions come to mind when you think about MSDs?

What needs and wants come to mind when you think about MSDs?

What complaints or problems would you like to mention about MSDs?

Team members analyze the "Voice of the Customer" (VoC) data by market segment (see column 1 of Table 16.11 on page 502). Next, they use all the raw VoC data points (see column 2 of Table 16.11) to create affinity diagram themes [see References 3 and 5 and Chapter 15], called focus points (see boldface numbers linking columns 2 and 3 in column 3 in Table 16.11). Next, team members identify the engineering issue underlying each focus point, called cognitive issues (see column 4 in Table 16.11). Then team members convert each cognitive issue into one or more quantitative engineering variable, called critical-to-quality (CTQ) variables (see column 5 in Table 16.11). Finally, team members develop technical specifications for each CTQ (see column 6 of Table 16.11).

Table 16.11. Analysis Table for Voice of the Customer Data

1

2

3

4

5

6

Selected market segment

Raw VoC data

Affinity diagram theme (focus point)

Driving issue (cognitive Issue)

CTQ

Tech specs

Paper organizing managers

 

Variation in durability 1

Durability

Ability to withstand bending

≥ 4 bends without breaking

"My employees are frustrated about the MSDs. They complain that they break too fast." 1 & 2

Variation in color 2

Color

Number of different MSD colors

= 1 color of MSDs

"My employees are complaining that the MSDs are not holding up during the organizing process." 1

Variation in functionality 3

Functionality

Number of broken MSDs in a box

≤ 5 broken MSDs in a box

"The employees are also complaining that the color of the MSDs change from one day to the next. It seems to be confusing them." 2

       

"My employees are very unhappy with the purple and blue MSDs. They would prefer only one color of MSDs be used consistently." 2

       

"My employees say that more than five MSDs per box arrive broken." 3

       

"I've heard from numerous employees that the MSDs coming straight from inventory are already broken." 3

       
 

.

       
 

.

       
 

.

       

Hourly employees

         

"The MSDs are falling apart before we are ready to file the papers into binders. An MSD should be able to take at least four bends." 1

       

"The MSDs aren't helping us to do our work efficiently." 1 & 2

       

"I would prefer if we used only one color of MSDs." 2

       

"I don't understand why we use different colors of MSDs." 2

       

"The MSDs just break when trying to bend them over the paper stacks. They should take at least four bends." 1

       

"It is very frustrating when you open a brand new box of MSDs and find that more than five of the clips are already broken." 3

       

"It is very time-consuming to sift out the broken MSDs from a brand new box coming straight from inventory." 3

       

A Kano questionnaire (see Table 16.12 on page 504) is a tool used by team members to classify a set of CTQs (see column 1 in Table 16.12) into an appropriate Kano quality category (see columns 2 and 3 in Table 16.12) from a large sample of regular users of a product, service, or process (see Chapter 4). There are six common Kano categories:

  1. One-way (O)— User satisfaction is proportional to the performance of the feature; the lower the performance, the lower the user satisfaction; the higher the performance, the higher the user satisfaction.

  2. Must-be (M)— User satisfaction is not proportional to the performance of the feature; the lower the performance, the lower the user satisfaction, but high performance creates feelings of indifference to the feature.

  3. Attractive (A)— Again, user satisfaction is not proportional to the performance of the feature; low levels of performance create feelings of indifference to the feature, but high levels of performance create feelings of delight to the feature.

  4. Indifferent (I)— User does not care about the feature.

  5. Questionable (Q)— User response does not make sense (e.g., delighted if feature is present and delighted if feature is absent).

  6. Reverse (R)— User offers responses opposite the responses expected by individuals conducting the Kano survey (e.g., "do not like it" if feature is present and "delighted" if feature is absent).

Table 16.12. Kano Questionnaire for MSDs

CTQs

How would you feel if the following CTQ were present in the product?

How would you feel if the CTQ were not present in the product?

What percentage of cost increase, over current costs, would you be willing to pay for this CTQ?

Ability to withstand ≥ 4 bends

Delighted [ ]

Expect it and like it [ ]

No feeling [ ]

Live with it [ ]

Do not like it [ ]

Other [ ]

Delighted [ ]

Expect it and like it [ ]

No feeling [ ]

Live with it [ ]

Do not like it [ ]

Other [ ]

0%

[ ]

10%

[ ]

20%

[ ]

30%

[ ]

40% or more [ ]

= One color of MSDs

Delighted [ ]

Expect it and like it [ ]

No feeling [ ]

Live with it [ ]

Do not like it [ ]

Other [ ]

Delighted [ ]

Expect it and like it [ ]

No feeling [ ]

Live with it [ ]

Do not like it [ ]

Other [ ]

0%

[ ]

10%

[ ]

20%

[ ]

30%

[ ]

40% or more [ ]

≤ 5 Broken MSDs in a box

     

Delighted [ ]

Expect it and like it [ ]

No feeling [ ]

Live with it [ ]

Do not like it [ ]

Other [ ]

Delighted [ ]

Expect it and like it [ ]

No feeling [ ]

Live with it [ ]

Do not like it [ ]

Other [ ]

0%

[ ]

10%

[ ]

20%

[ ]

30%

[ ]

40% or more [ ]

Additionally, team members use a Kano questionnaire to classify CTQs into their appropriate Kano cost category (see column 4 in Table 16.12). There are three common Kano cost categories:

  1. Approximately, 80% of users are willing to pay at least a 10% cost increase for a new feature or a new product or service, above current offerings of products or services.

  2. Approximately, 60% of users are willing pay at least a 10% cost increase for a new feature or a new product or service, above current offerings of products or services.

  3. Approximately, 10% of users are willing to pay a 10% cost increase for a new feature or a new product or service, above current offerings of products or services.

The questionnaire in Table 16.12 was given to the 100 paper shufflers in the PSD. Table 16.13 is used to classify the survey responses from each of the 100 paper shufflers for each of the CTQs into their Kano categories.

Table 16.13. Classification Table for Responses to a Kano Questionnaire

 

Not present question response (see column 3 in Table 16.12)

Present Question Response (see column 2 in Table 16.12)

 

Delighted

Expect it and like it

No feeling

Live with it

Do not like it

Delighted

Q

A

A

A

O

Expect it and like it

R

I

I

I

M

No feeling

R

I

I

I

M

Live with it

R

I

I

I

M

Do not like it

R

R

R

R

Q

For example, if one of the paper shufflers answered the Kano survey about durability as is shown in Table 16.14, the CTQ would be classified as "attractive" for that paper shuffler (see Table 16.13 for classification table).

Table 16.14. One Paper Shuffler's Kano Questionnaire for MSDs

CTQs

How would you feel if the following CTQ were present in the product?

How would you feel if the CTQ were not present in the product?

Durability: Ability to withstand ≥ 4 bends

Delighted [X ]

Delighted [ ]

Expect it and like it [ ]

Expect it and like it [ ]

No feeling [ ]

No feeling [X ]

Live with it [ ]

Live with it [ ]

Do not like it [ ]

Do not like it [ ]

Other [ ]

Other [ ]

The responses for the 100 paper shufflers are tabulated in Table 16.15.

Table 16.15. Tabulated Responses to Kano Questionnaire

CTQs

Kano quality category

Kano cost category

Durability: Ability to withstand four or more bends

M = 80

 

O = 20

0% = 100

M = 35

 

Color: Only 1 color per box

O = 15

 

I = 50

0% = 100

Functionality: Less than or equal to five broken MSDs in a box

M = 10

 

O = 90

0% = 100

Durability is a must-be quality characteristic, and its presence is required to achieve employee indifference. Its absence creates employee dissatisfaction. The PSD is not willing to pay more for durable MSDs. Functionality is a one-way quality characteristic. Its absence is related to employee dissatisfaction, and its presence is related to employee satisfaction. The PSD is not willing to pay more for functional MSDs. Color is an indifferent quality characteristic. PSD employees do not care about it and are not willing to pay more for MSDs that are uniform in color.

The final step of a VoC analysis is to define each CTQ (see Table 16.16).

Table 16.16. Definition of CTQs

CTQ

Definition of unit

Definition of opportunity for defect

Definition of defect

Kano Category

Durability: Ability to withstand bending

MSD

MSD

Break < 4 bends

Must-be: Fundamental to the delivery of the most basic level of customer satisfaction.

Color: Number of different MSD colors

1 box of MSDs

MSD

MSD colors in one box > 1

Indifferent: Far less critical than durability to paper shufflers.

Functionality: Number of broken MSDs in a box

1 box of MSDs

MSD

Broken MSDs in one box > 5

One-way: Improving the number of functional MSDs in a box will improve employee satisfaction in a linear fashion.

Returning to the first part of the Define phase, team members can now define the project's objectives.

Project Objective 1

Decrease (direction) the percentage of MSDs that cannot withstand four or more bends without breaking (measure) bought by the Purchasing Department (process) to 0.62% (goal) by January 1, 2004 (deadline). Go for Four Sigma!

Project Objective 2

Decrease (direction) the percentage of boxes of MSDs with more than five broken clips (measure) bought by the Purchasing Department (process) to 0.62% (goal) by January 1, 2004 (deadline). Go for Four Sigma!

A correlation exists between the project objectives. A broken MSD cannot withstand four or more bends because it is already broken. Improving the percentage of functional MSDs per box will increase the percentage of MSDs that can withstand four or more bends.

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This web site contains links to other sites. Please be aware that we are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of each and every web site that collects Personal Information. This privacy statement applies solely to information collected by this web site.

Requests and Contact


Please contact us about this Privacy Notice or if you have any requests or questions relating to the privacy of your personal information.

Changes to this Privacy Notice


We may revise this Privacy Notice through an updated posting. We will identify the effective date of the revision in the posting. Often, updates are made to provide greater clarity or to comply with changes in regulatory requirements. If the updates involve material changes to the collection, protection, use or disclosure of Personal Information, Pearson will provide notice of the change through a conspicuous notice on this site or other appropriate way. Continued use of the site after the effective date of a posted revision evidences acceptance. Please contact us if you have questions or concerns about the Privacy Notice or any objection to any revisions.

Last Update: November 17, 2020