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Ebook for Six Sigma for Managers

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To be a making Business plan in chemical engineering

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									What are some of the metrics used by                   Q: Should Six Sigma metrics be distinct from
companies that are successful with Six                 the rest of the business metrics? If so, for how
Sigma?                                                 long?

A: The
easy           Innovative, as well as                                  As organizations strive to
                                                       A: Ideally,
answer        classical/typical metrics make up                        manage with data, Six Sigma
                                                       Six Sigma
would be      successful measurement                                   metrics should be fully integrated.
                                                       metrics
to review a frameworks.                                should not       Improvement projects,
list of        Vanguard translates                                    business operations and
                                                       be distinct
              performance "voices" into drivers
classical                                              from the rest leadership forums all leverage a
and/or        and ultimately CTQs, for a unique                        common measurement
                                                       of the
typical Six focus on clients, business and             business        framework.
Sigma         crew.
                                                       metrics, but
metrics.                                               rather one and the same. Practically speaking,
Classical measures of quality such as timeliness,      however, this is often a work-in-progress,
accuracy, ease of doing business and cost are          especially in the early stages of a Six Sigma
important and often abundant on most companies'        implementation.
Six Sigma measurement framework. Other typical
Six Sigma measures such as rolled-throughput           Consolidating Six Sigma metrics with business
yield, sigma and DPMO tell a good story, when          metrics is an exercise in change management.
applied properly.                                      The saying "never solve a problem before its time"
                                                       applies. Forcing a business (and its culture) to
Still, simply collecting and calculating these         change to a new set of metrics can lead to
measures are not enough to be successful.              resistance.
Successful businesses apply these metrics in the
right context and in innovative ways to solve client   So what to do? Effectively managing a continuous
opportunities. Companies that are successful with      improvement initiative, such as Six Sigma, will
Six Sigma tailor metrics to align with core            produce a waterfall effect on metrics by not only
processes and its critical-to-quality (CTQ)            identifying new ways to consider and measure
characteristics. Understanding clients' CTQs and       what's important to the business, but also creating
ensuring they are measured and addressed are           better data the current business metrics are based
paramount.                                             on.

Another element of success is ensuring measures        As continuous improvement initiatives are
are "leading" rather than "lagging." Leading           executed, more actionable and relevant business
measures focus on the process, its inputs and          data is produced. Business operations are
suppliers, whereas lagging metrics focus on            motivated by results to incorporate Six Sigma
results or outcomes. Ultimately, the truly             metrics. With leadership leveraging better
successful companies understand the cause-and-         business data, a more informed strategy can be
effect relationship between the leading and            put in place that better addresses client needs and
lagging measures.                                      how the company can more effectively address
                                                       them.
At The Vanguard Group, feedback from clients,
business leaders and the crew is collected,
utilizing both proactive and reactive means. By
translating these "voices" into drivers and
ultimately CTQs, a measurement framework is
constructed that has a unique focus on the client,
business and crew.
Q: How can companies ensure they are                   Q: What are some of the ways that these
measuring the "right" things?                          metrics can be effectively displayed to upper
                                                       management?

A:               Fundamentally understanding          A: How
Arguably        clients' processes is a cornerstone.   the           Examples of effectively displayed
the most         Prioritizing strong CTQs and         metric is metrics include dashboards and
critical step metrics (though correlation or           derived      balanced scorecards, digital or low-
in ensuring causation) focuses on adding               and          tech.
a company value.                                       used is       The metrics displayed should
measures                                               importan represent the most critical drivers and
the "right" things is to understand its clients'       t. First,    outcomes identified for a business.
needs. Fundamental understanding of a client's         regardle
processes or value chain allows a company to           ss of the tool, the metric must be based on data
gain critical knowledge of a client's needs and        that is sufficient, relevant, representative,
therefore CTQs, enabling definition of business        contextual and timely. Without the data
processes from the client's point of view.             possessing these attributes, the metric based on
                                                       this data can lead upper management to bad
A common challenge in identifying client-focused       assumptions and wrong conclusions.
CTQs and metrics is the sheer number identified.
Complex business processes often deliver a             Second, the metric must be actionable. An
lengthy list of CTQs, and therefore metrics. While     actionable metric is one that is accompanied by
all CTQs are important, the right things to measure    specification limits of some sort. "Actionability"
are those that are most critical. It is usually        allows upper management to assess current levels
impractical to measure every CTQ or metric             and determine whether or not those levels are
identified due to limited time and resources.          acceptable.

At this point, a company must develop and utilize      Third, metrics should be presented in a format that
an effective means of separating strong from weak      establishes a clear "line of sight," cutting through
CTQs and metrics. The means of prioritizing CTQs       the business' core processes and, therefore,
depends on the business, its clients and the           process owners. Establishing clear accountability
nature of its processes. In most cases, a              not only for the quality of the metric, but also the
correlation or (hopefully) causation link can be       action taken to improve the metric is critical to the
established between an input and an outcome            success of the dashboard, and the business.
through quantitative and/or statistical means. In      Upper management should be able to consider a
other cases, it may be as easy as asking the client    high-level metric and drill down into the business
and utilizing a prioritization tool such as pairwise   to gain a better understanding of where the
comparison or a prioritization matrix.                 problem originates (drive to root cause).

However the CTQs are prioritized, ensuring that        Last, metrics should be presented in a simple
metrics are focused on successfully adding value       manner. Do not crowd as many metrics onto the
to the client is the way of ensuring you are           dashboard as possible, but rather present the
measuring the right things now and in the future.      most critical seven-to-twelve metrics required to
                                                       run the business successfully.

								
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