Six Sigma Example

Six Sigma ExampleProject Report Presentation

Project Number: ABC-123 Project Name: Company New Business ImprovementProject Team Leader: Tom JonesProject Sponsor: Sally Run

All Rights Reserved, Juran Institute, Inc. Company New Business Improvement 2 .PPT

MeasureMeasure

AnalyzeAnalyze

ImproveImprove

ControlControl

DefineDefine

Six Sigma Roadmap


Operational Definitions of Key Terms

Cat 5: Category 5 proposals

COPQ: Cost of Poor Quality

Delivery SLA: Deliver proposal within agreed time frame, default: 10 business days

IS: Infrastructure support

On Time delivery: Proposal delivery within agreed timeframes, either to agreed service level of 10 business days between requirement confirmation date and first delivery date or as otherwise agreed

RFP: Requirements for Proposal Form, to communicate project

PMO: Proposal Management Office


Project Goal & Scope

Problem Statement:

The Company Bid & Proposal process requires improvements in the low proposal approval rate (67% overall proposal approval rate), slow delivery speed (only 64.6% of proposals are delivered in the agreed timeframe) and cost (overspend forecasted against FY08 B&P budget).

Goals/Objective(s):

Improve delivery speed to 95% of Cat 5 proposals delivered in agreed timeframe and approval rate to 94% of Cat 5 proposals approved by the end FY08 (Mar 2008).

In Scope: Company accountProposal management process for Cat 5 proposals

Items Out of Scope: Cat 1-4 proposalsDatabase processOther accounts


Financial Impact: Business Case or COPQ Calculation

Calculation of potential Cost reduction and Revenue increaseAssumptions:

1. Reduction of wasted effort for declined proposals leads to cost savings2. Reduction of declined proposals leads to increased revenue 3. Half the avoided declined proposals can be won

Data: Cat 5 only, source: Database, P/L cost report Proposal data for Apr06 – Aug07 hourly cost only (no allocations, leave pay, …)

Potential Cost Reduction of $69,000 and Revenue Increase of $662,582

Item Current Goal Delta

Cost of declined, annual $79,654 $10,644 $69,000

Total Proposal Income Lost, annual $2,650,329 $1,325,164 $1,325,164

Convert 50% to won 662,582


High Level Process Map (SIPOC)

The scope of this project covers the Company steps of the Bid and Proposal process

Complete CommercialQualification

CompleteTechnical

Qualification

Confirm Customer

Requirements

Design Project/

Solution

Conduct InternalReviews


Voice of the Customer—CTQ


MeasureMeasure

AnalyzeAnalyze

ImproveImprove

ControlControl

DefineDefine

Six Sigma Roadmap


Translate Ys From CTQs

VOC quotes could be translated into 2 Ys


Project Y (or Ys) in Y=f(x)

Y1: Proposal Acceptance Rate

= accepted Cat 5 proposals / all Cat 5 proposals accepted and declined x 100; calculated monthly

Y2: Delivery in SLA timeframe

= Cat 5 proposals delivered in agreed timeframe / total Cat 5 proposals delivered x 100; calculated monthly, as calculated by Database system (see operational definition)


Detailed Process Map: Proposal Management Cat 5

Requirements often not well understood

Commercial Qualification often rushed

Handovers often via Database system, not

via verbal comms

Even small Cat5 proposals are reviewed

Often Rework is not captured

properly

Work often delegated to inexperienced

Solution Designers

Final Reviews by PM and Architects are

often missed

Process workshop immediately identified key issues


Data Collection

Process Measures DefinedInput Measures:

Proposal Requests: Number of proposal requests per month

Process Measures: Withdrawn Proposals: Number of proposal requests withdrawn per month Commercial Qualification: Number of proposal requests with completed

Commercial Qualification documentation Customer Requirement Confirmation: Business Days between Proposal Request

Date and Confirmation Date Proposal Reviews: Number of Proposal Reworks Delivery Time: Days between Customer Requirement Qualification and Proposal

delivery

Output Measures: Approvals: Number of proposals accepted Declines: Number of Proposals declined Proposal cost: Labor cost per Proposal Proposal Revenue: Expected Revenue per Proposal


Data Collection (continued)

CTQs and SpecificationsCTQ #1: Proposals delivered in individually agreed timeframe Specification: Proposals are delivered to the customer before or on the agreed delivery date

(SLA or individually agreed delivery time) Defect: Proposal delivery date later than agreed delivery date Upper barrier: 100%, LSL: 85%CTQ #2: Customer Requirements confirmed Specification: Proposals are confirmed with the customer on the agreed Customer

Requirements Confirmation date Defect: Proposals are not confirmed with the customer on the agreed Customer Requirements

confirmation Date Upper barrier: 100%, LSL: 95%CTQ #3: Commercial Qualification Specification: Proposals are fully commercially qualified Defect: Proposals are not fully commercially qualified Upper barrier: 100%, LSL: 95%CTQ #4: Proposal Reviews Specification: Proposals are reviewed by the required people Defect: Proposals are reviewed too often or not by the right people Upper barrier: 100%, LSL: 95%


Plan for Data Collection

Questions to be answered:

Y1: Withdrawn proposals

1. How often is a proposal withdrawn before delivery to the customer?

2. What are the reasons for the withdrawals?

3. How much effort/cost is wasted on withdrawn proposals?

Y1: Declined proposals

4. How often are proposals declined?

5. What are the reasons a customer declines a proposal?

6. How much effort/cost is wasted on declined proposals?

Y2: Delivery timeframe

7. How long does the delivery of a proposal take?

8. How long does it take to deliver a proposal after the requirements are confirmed with the customer?

9. How often is a proposal late, eg delivered after the agreed delivery date?

Y2: Proposal rework

10.How often are proposals rejected by the customer and need to be reworked?


Plan for Data Collection (continued)


Proposal Delivery Time (Business Days)

0

50

100

150

200

250

300

350

Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07

Bu

sin

ess

Day

s Proposal 124286: confirmed outlier

Proposal 123984: confirmed outlier

Y2 Proposal Delivery Time

Proposal Delivery Time displays two outliers

Measure Process Capability


Measure Process Capability (continued)D

elivery

tim

e

70

60

50

40

30

20

10

0

Boxplot of Delivery time

Plots of Proposal Delivery Time (2 outliers removed)


Measure Process Capability (continued)

Process Capability (12 mth average)

Total Proposals Delivered: 230

Delivery SLA met: 130

On Time Ratio: 57%

DPMO: 435,000

Y2 Sigma: 1.66

Proposal Delivery Service Level: 10 days from Requirements confirmation or as agreed

Proposal Delivery Service Level(Proposals delivered in agreed Timeframe

-

5

10

15

20

25

30

35

Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07

No

of

Pro

po

sa

ls

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

% d

eli

ve

red

wit

hin

SL

A

Proposals delivered Proposals delivered in agreed time Delivery Time Ratio Linear (Delivery Time Ratio)

The Proposal Delivery to an Agreed Date is getting worse



Process Cycle Time Analysis

Analysis of a sample of 26 proposals: 13 accepted, 13 declined 3 key process steps: Request Qualification, Proposal Development, Reviews

Rework analysis– 46% (12 or 26 proposals) of the sampled proposals had at least 1 rework step

(data not shown)

Reviews

Duration (Business

Days)

Hand overs

Duration (Business

Days)

Hand overs

Duration (Business

Days)

Hand overs

Duration (Business

Days)

Hand overs

Average 26 samples 6.0 3.2 9.2 1.6 3.0 2.4 18.1 7.2 Average 13 Accepted proposals 7.2 3.1 8.5 2.2 2.6 2.6 18.3 7.8 Average 13 Declined proposals 4.8 3.4 9.8 1.0 3.3 2.2 17.8 6.5

TotalQualify Phase Development phase Review Phase

Proposal DevelopmentQualification

CommercialQualification

TechnicalQualification

CustomerRequirementConfirmation

Project/Solution Design

InternalReviews

Delivery to Customer

Many handovers in the Request Qualification and the Review phases as well as the Rework amount appear to be a cause for delay



Y1 Acceptance Rate

Accepted ProposalsAccepted + Declinded + Withdrawn Proposals

Overall Success Rate (3 month average)

=

Acceptance Rate = Accepted + Declined Proposals

Accepted Proposals

Process CapabilityProposal Acceptance

Proposals Accepted 189

Proposals Declined: 33

Acceptance Ratio: 85%

DPMO: 150,000

Y1 Sigma: 2.54

Acceptance and Overall Success rates

40%

50%

60%

70%

80%

90%

100%

Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07

Acceptance rate Overall success rate Linear (Acceptance rate) Linear (Overall success rate)

The high number of declined proposals over the last 12 months indicates lost efforts


Measurement System Analysis

Risk of poor Data Data Generation: Low risk: All data is entered into Database, workflow is automated and all Entries are

time stamped. Data extraction: All data extracts are carried out via automated Database and SAP reports Data manipulation: All manipulation of data is carried out in EXCEL

MSA Incorrect count of delivered Proposals (calculate business days, exclude ‘on hold’ days): based on

Extract from Database (801 line items), remove Requests for Change, Budget advices, proposals delivered before Jan 07 or after Aug 07, Cat 1-4 proposals)

Error in Database functionality: 2 proposals didn’t have a delivery date, even though they were delivered

Measurement System Analysis2 operators calculating the total category 5 proposals delivered during Jan-Aug 07 from Database Extracts

Trial 1 results

Operator 1: SE 165

Operator 1: SE 173

Operator 2: SG 162

Operator 2: SG 164

Exact value 164

MSA failed due to wide variance in the calculated number of proposals. Work instructions were created to remove variance.

Calculations were not re-tested, due to a changed procedure and staff changes.


Potential Xs: XY Prioritization Matrix

X Y Prioritization Matrix - BlueScope Steel New Business Improvements

Ratings of X's :0-no relationship1-a little3-moderate 5- High9-Extremely High

Y1

Pro

posa

l

Acc

epta

nce

Rat

e

Y2

Pro

posa

l Del

iver

y

Tim

e

Pro

posa

l Cos

t

Red

uctio

n

TOTA

L

RankWeight of Project Y (0=low, 5=-high)Possible X's

5 5 5X1 Poorly understood Requirements 9 9 3 105 2X2 Poor Commercial Qualification 9 3 9 105 2X3 Missing Communication (due to Transact workflow) 3 9 5 85 6

Missing Proposal reviews by Project Managers 1 5 1 35 11X4 Too much rework 5 9 9 115 1

BSL Pricing information not readily available 0 5 5 50 9X5 Missing contact with the customer 9 5 5 95 4X6 Lack of proposal ownership 9 5 5 95 4

X7Too many financial and commercial reviews for small proposals

0 9 5 70 7

Price too high 9 0 0 45 10Duplicate proposals 1 1 3 25 12Proposal request without BSL Business Case 9 1 3 65 8

Weight of Project Y (0=low, 5=-high)

The team agreed on seven potential causes to be analyzed further


Potential Xs: Selection of Xs

Seven potential causes will be analyzed further


Potential Xs—Theories To Be Tested

Seven potential causes will be analyzed to identify the Root Causes (vital few Xs)


MeasureMeasure

AnalyzeAnalyze

ImproveImprove

ControlControl

DefineDefine

Six Sigma Roadmap


Theories To Be Tested

Theories for Causal Relationships to be Analyzed

X7 Financial & Comm. Reviews

not needed

Y1 Poor Proposal

Acceptance

Y2 Proposals are delivered late

X4 Too much

Rework

X1 Poorly understood

requirements

X2 Poor Commercial

Qualification

X3 Missing Communication

in Company

X5 Not enough contact with the customer

X6 Lack of Proposal

Ownership

A survey was considered but not

used due to political and timing reasons

Seven potential causes leading to nine theories to be tested. The team decided against using X6 for further analysis (covered in X1, X2,

X3, x5).


Data Collection Plan for Analyze Phase


Test of Theories

Y1 Acceptance Rate=f(X1 Understanding of Customer Requirements)Theory: No difference in Proposal Acceptance Rate after introduction of customer requirement confirmation date

Ho: No difference in Proposal Acceptance rate due to customer requirement date

Ha: Significant difference in Proposal Acceptance Rate due to customer requirement date

Analysis:

Test and CI for Two Proportions

Difference = p (1) - p (2)

Estimate for difference: -0.0793651

95% CI for difference: (-0.284933, 0.126203)

Test for difference = 0 (vs not = 0): Z = -0.76

P-Value = 0.449

NOTE * The normal approximation may be

Inaccurate for small samples.

Fisher's exact test: P-Value = 0.683

Statistical Conclusion: alpha = 0.05. P is greater than 0.05 fail to reject Ho

Practical Conclusion: The Proposal Acceptance rate does not change due to customer requirement date.

Sample X N Sample p

Date OK 3 27 0.111111

Date not OK 4 21 0.190476


Test of Theories (continued)

Y2 Delivery SLA=f(X1 Understanding of Customer Requirements)Theory: No difference in Proposal Delivery SLA performance due to customer requirement date

Ho: No difference in Proposal Delivery SLA performance due to customer requirement date

Ha: Significant difference in Proposal Delivery SLA performance due to customer requirement date

Analysis:


Difference = p (1) - p (2)Estimate for difference: 0.21164095% CI for difference: (-0.0667272, 0.490008)Test for difference = 0 (vs not = 0): Z = 1.49 P-Value = 0.136


Practical Conclusion: There is no difference in Proposal Delivery SLA performance due to customer requirement date.

Sample X N Sample p

Date OK 16 27 0.592593

Date not OK 8 21 0.380952



Y1 Acceptance Rate=f(X2 Commercial Qualification)Theory: No difference in the Proposal Acceptance Rate after introduction of Commercial Qualification meetings (Commercial Qualification meetings were introduced Sept 2007)

Ho: No difference in Proposal Acceptance Rate after introduction of CQ meetings

Ha: Significant difference in Proposal Acceptance Rate after introduction of CQ meetings

Analysis:


Difference = p (1) - p (2)Estimate for difference: 0.063898595% CI for difference: (-0.0522402, 0.180037)Test for difference = 0 (vs not = 0): Z = 1.08 P-Value = 0.281


Practical Conclusion: There is no difference in the Proposal Acceptance rate after the introduction of Commercial Qualification meetings.

Sample X N Sample p

CQ Meetings 11 56 0.196429

No CQ Meetings 22 166 0.132530



Y1 Acceptance Rate=f(X3 Missing Communication Within Company)Theory: No difference in the Proposal Acceptance Rate due to RFP document usage.

Ho: No difference in Proposal Acceptance Rate due to RFP document usage

Ha: Significant difference in Proposal Acceptance Rate due to RFP document usage

Analysis:




95% CI for difference: (-0.509869, -0.0276799)


P-Value = 0.029

Statistical Conclusion: alpha = 0.05. P is smaller than 0.05 reject Ho

Practical Conclusion: There is significant difference in the Proposal Acceptance rate after introduction of good documentation of requirements in RFP documents.

Sample X N Sample p

RFP OK 7 22 0.318182

RFP not OK 27 46 0.586957



Y2 Delivery SLA=f(X3 Missing Communication Within Company)Theory: No difference in Proposal Delivery SLA performance due to RFP document usage.

Ho: No difference in Proposal Delivery SLA performance due to RFP document usage

Ha: Significant difference in Proposal Delivery SLA performance due to RFP document usage

Analysis:



Estimate for difference: 0.0135135


Test for difference = 0 (vs not = 0): Z = 0.10

P-Value = 0.922

Statistical Conclusion: 0.05. P is greater than 0.05 fail to reject Ho

Practical Conclusion: There is no difference in Proposal Delivery SLA performance due to the use of RFP document for requirement documentation.

Sample X N Sample p

RFP OK 10 20 0.500000

RFP not OK 18 37 0.486486



Y1 Acceptance Rate=f(X4 Rework)Theory: No difference in Proposal Acceptance Rate because of Proposal Rework

Ho: No difference in Proposal Acceptance Rate due to the occurrence of rework

Ha: Significant difference in Proposal Acceptance Rate due to the occurrence of rework

Analysis:






P-Value = 0.581


Practical Conclusion: There is no difference in the Proposal Acceptance rate due to the occurrence of Proposal rework.

Sample X N Sample p

No Rework 24 50 0.480000

Rework 10 18 0.555556



Y2 Delivery SLA=f(X4 Rework)Theory: There is no difference in Proposal Delivery SLA performance because of Rework

Ho: No difference in Proposal Delivery SLA performance due to Rework

Ha: Significant difference in Proposal Delivery SLA performance due to Rework

Analysis:






P-Value = 0.196


Practical Conclusion: There is no difference in the Proposal Delivery SLA performance because of the occurrence of Rework.

Sample X N Sample p

No Rework 19 50 0.380000

Rework 10 18 0.555556



Y1 Acceptance Rate=f(X5 Missing Customer Contact Before Proposal Delivery)Theory: No difference in Proposal Acceptance Rate due to customer contact before proposal delivery.

Ho: No difference in Proposal Acceptance Rate due to customer contact before proposal delivery

Ha: Significant difference in Proposal Acceptance Rate due to customer contact before proposal delivery

Analysis:






P-Value = 0.862


Practical Conclusion: There is no difference in the Proposal Acceptance rate due to customer contact before the delivery of the proposal.

Sample X N Sample p

Effective contact 12 28 0.428571

No effective contact 22 49 0.448980



Y2 Delivery SLA=f(X5 Missing Customer Contact Before Proposal Delivery)Theory: No difference in Proposal Delivery SLA performance due to customer contact before proposal delivery.

Ho: No difference in Delivery SLA performance due to customer contact before proposal delivery

Ha: Significant difference in Delivery SLA performance due to customer contact before proposal delivery

Analysis:




95% CI for difference: (-0.662759, -0.416606)


P-Value = 0.000

Statistical Conclusion: alpha = 0.05. P is smaller than 0.05 reject Ho

Practical Conclusion: Customer contact before the delivery of the proposal does significantly improve the Delivery SLA performance.

Sample X N Sample p

Effective contact 0 14 0.000000

No effective contact 34 63 0.539683



Y2 Delivery SLA=f(X7 Financial/Commercial Reviews)Theory: No difference in Proposal Delivery SLA performance due to Financial and Commercial review (F&C review) steps

Ho: No difference in Delivery SLA performance due to F&C Review steps

Ha: Significant difference in Delivery SLA performance due to F&C Review steps

Analysis:

Sampled proposals: 53

Average Duration of Financial and Commercial reviews:

0.98 business days






P-Value = 0.155


Practical Conclusion: There is no difference in the SLA performance because of the Financial and Commercial Review steps.

Sample X N Sample p

No F&C Review 23 53 0.433962

F&C Review 16 53 0.301887


Summary of Testing Results

Potential Cause X Theory Analyze Results Team Decisions

X1 Understanding of Customer Requirements

Requirement Confirmation meeting impacts Proposal Acceptance rate

FalseNo statistical evidence

No relevance

X1 Understanding of Customer Requirements

Requirement Confirmation meeting impacts Delivery SLA performance


Understanding of requirements speeds up the process

X2 Commercial Qualification

Commercial Qualification meetings impact on Proposal Acceptance rate


Commercial Qualification avoids wasted effort in withdrawn and

declined proposals

X3 Missing Communication within Company

Good RFP documentation impacts on Proposal Acceptance rate

TrueStatistical evidence

Documented requirements confirm customer expectations


Good PRFP documentation impacts on Delivery SLA performance


Documented requirements improve internal communication

X4 ReworkOccurrence of Rework impacts on Proposal Acceptance rate


Little relevance

X4 ReworkOccurrence of Rework impacts on Delivery SLA performance


Rework is waste

X5 Missing customer contact before delivery

Customer contact impacts on Acceptance rate


Little relevance


Customer contact impacts on Delivery SLA performance

TrueStatistical evidence

Customer contact is important for expectation management

X7 Too many reviewsFinancial and Commercial reviews impact on Delivery SLA performance


On average 1 business day is lost in F&C reviews

The team decided to continue looking for solutions for the proven causes X3, X5, and also for causes X1, X2, X4, and X7.


Vital Few Xs

Y=f(X1,……Xn)

Vital Few Xs are: X1: Confirmation of Customer Requirements

X2: Commercial Qualification

X3: Missing Communication Within Company (proven cause)

X4: Rework

X5: Missing customer contact before delivery (proven cause)

X7: Too many reviews


MeasureMeasure

AnalyzeAnalyze

ImproveImprove

ControlControl

DefineDefine

Six Sigma Roadmap


Improvement Strategies for Proven Xs

Proven Xs (Causes): Strategies:

X1 Confirmation of Customer Requirements To improve Customer Requirement Confirmation, we need to involve Company staff in the planning discussions

X2 Commercial Qualification To improve Commercial Qualification process, we need to install qualification metrics

X3 Missing Communication within Company (proven cause)

To improve Company-internal communication we need to ensure better documentation of confirmation of customer requirements and remove process handovers where possible.

X4 Rework To avoid proposal rework we need to ensure confirmation of customer requirements and standardize the proposal process.

X5 Missing customer contact before delivery (proven cause)

To better manage Customer expectations, we need to ensure that Company staff informs BlueScope if the proposal is expected to be delivered late.

X7 Too many reviews To reduce internal reviews, we need to remove those that don’t add value.

The team decided to continue looking for solutions for the proven causes X3, X5, and also for causes X1, X2, and X7.


Solution Alternatives

Cause X Solutions from Workshops

X1 Confirmation of Customer Requirements

Involve Service Manager in bid process Rotate people on sites to sit in planning meeting Confirm each proposal within 48 hours (meeting or phone)

X2 Commercial Qualification

Create and implement qualification metrics to review the CQ performance (actual vs. planned: effort, confirmation date).


Confirm customer requirements Request sufficient RFP documentation for each proposal Remove process handovers

X4 Rework

Confirm customer requirements, Request sufficient RFP documentation for each proposal Create a pricing database.


Proposal Owner/Solution Developer to contact the customer before the delivery of a proposal, especially if the proposal is expected to be delivered late

X7 Too many reviews Remove the mandatory Financial and Commercial review steps for Cat 5

proposals

The team workshopped alternative solutions for the various causes X


Possible Solutions Matrix (vs. Proven Xs)


Selection Criteria

The team felt that alternatives selected should fulfill the following criteria’s:

A. Must Criteria (Weighting)

Has an impact on Y1 or Y2 Y/N

Accepted by relevant stakeholders (Account Management, Architects, New Business, Finance, Commercial and PMO)

Y/N

B. Want Criteria (Weighting)

Improve delivery on time 10

Reduces Bid and Proposal cost 10

Improve Commercial Qualification 8

Improve proposal review process 7

Increase proposal acceptance rate 10

Improve Requirements Confirmation 10


Selected Solution and Selection Process

Selected SolutionAll solution alternatives proposed by the team have been accepted by the Champion.

Selection ProcessTools Considered:

Pugh Concept Selection matrix (shown on next slide) Criteria Based Selection matrix

Given that all “must” criteria were met, the Pugh matrix was the preferred tool.

The team felt that all solution alternatives satisfy the Must criteria, and a Pugh matrix process was chosen to select the strongest solutions.


Evaluation Using Pugh Concept Selection Matrix

Quick Win

Phase 2 Solution

Phase 1 solutions

The team selected five improvement alternatives based on the Pugh matrix process and one other improvement as a quick win. Five improvements will be

implemented in the first project phase and one in a separate project.


Pay-off Matrix of Selected Solutions

Confirm each request within 48 hours

Contact customer if proposal is late

Request sufficient RFP documentation

Rotate Company staff on site

New Commercial Qualification metrics

Remove Financial and Commercial review steps for Cat 5 proposals

Cost/Effort

Low

Low

High

High

Benefit

Key: Brown Solutions are Phase II

All low cost solutions were identified as suitable for quick

implementation

The high cost/ high effort solutions involve significant customer negotiations.

One of them will be implemented in Phase 2.


Testing and Validation X1 Confirmation of Customer requirements: It was agreed that multiple changes were required to

ensure better understanding of the customer’s needs: Involve staff in planning processes, requesting better documentation, confirmation of requirements after Company started working on the proposals. These changes were validated with the PMO prior to implementation as valid to improve customer requirements understanding.

X2 Commercial Qualification: PMO confirmed the need to have a strong qualification process in place. The new qualification process is closer to the model used on other accounts.

X3 Missing communication within Company: Other accounts provided the model that was used for the new qualification review meeting on this account. Its validity is proven by the successes of other accounts.

X4 Rework: A separate green belt project investigates the occurrence of proposal rework in the IS part of Company. It was assumed that this green belt project will drive further changes in the New Business area or proposal management..

X5 Missing customer contact before delivery: This cause was debated in length, as it was felt by some that customers don’t want to be ‘pestered’ with the vendor’s calls. A cultural and attitude change is required and the implementation of this change will require a longer time to complete. Its validity was confirmed by other Company accounts.

X7 Too many reviews: Company’s E2E model doesn’t request financial and commercial reviews for Cat 5 proposals. These were implemented on request of Fin and Comm teams, who now agreed that the reviews can be removed.

Refine Solutions


Refine Solutions (continued)

Pilot Options A pilot was not required as a Risk assessment was carried out for each solution. Most of the solutions were piloted by other Company accounts in some way. The

risk of damage because of failure was eliminated and hence “Piloting” was not required.

Cost/Benefit Analysis Since the estimated cost of these solutions was not very significant,

implementation proceeded without detailed cost/benefit analysis.

The benefits were viewed as significant savings (based on COPQ analysis).

All solution alternatives proposed by the team were accepted by the Champion


Solution Details

Solution 1: Rotate staff on site at Company A roster that allows 2 Company staff to be on site every day in the computer

center will involve Company sufficiently in the planning processes and ensure more well documented proposal requests.

Cost: Wireless network cards for all staff on the roster Risks: Small risk: If on site, Company staff might miss out on Company internal

communication

Solution 2: Confirm proposal requests within 48 hours As practiced on other Company accounts, for each proposal request, a Company

person confirms the receipt, delivery and high level requirements with the customer

Detailed requirements are confirmed later if required. Cost: none Risks: Small risk: Delay, if customer is not available for discussion


Solution Details (continued)

Solution 3: Commercial Qualification metrics Metrics that outline the quality of the qualification process: actual vs estimated

spend, actual vs estimated requirement confirmation dates, likelihood of success. Cost: extra effort for PMO Risks: none

Solution 4: Request sufficient RFP documentation RFP documentation was requested from Company for the last 6 months. Here an

increased effort is required to get a better documentation of the proposal requirements.

Cost: none Risks: Slow change, un-satisfied clients if not communicated well


Solution Details (continued)

Solution 5: Customer contact for late proposals For most proposals, especially those that might be delivered late, Bid owner or

solution developer shall contact the customer and manage their expectations. Cost: none Risks: none

Solution 6: Remove Financial and Commercial reviews For Cat 5 proposals, the Financial and Commercial Review steps can be

removed Cost: none Risks: incorrect financial details and commercial terms included in the proposals.

None of the six solutions included a significant risk


Example: Selected Solutions Implementation


Proposal Management Cat 5

Updated Process Map


Updated Process Map (continued)

Proposal Management Cat 5New step: if requirement (RFP) document is not

sufficient, return to customer for more details (Solution 4)

New step: Commercial Qualification meeting for each proposal request.

(part of Solution 3)

Removed step: Financial and Commercial reviews

for Cat 5 proposals removed (Solution 6)New step: Customer contact to

manage expectation especially if the proposal is late (Solution

5)

New step: Confirm Proposal request within 48 hours (Solution 2)

New step: Confirm Proposal Requirements

within 5 days (part of Solution 2)

Five solutions include process changes


Evaluation of Financial Impact

Y1 Acceptance Rate

Improved Commercial Qualification Increased income due to focus on ‘Deals we can win’

Y2 Improved Delivery time SLA

Reduced waste, quicker proposal delivery, higher customer satisfaction Reduced proposal development cost

Financial Impact 2007 GoalPhase 3

(Mar-Apr 2008)Difference

Withdrawal Cost ratio 10% 7% 8.0% 2%Withdrawal Cost (annual) $47,277.59 $32,969.42 $ 35,990.10 $11,287.49Decline Cost ratio 18% 6% 5.9% 12%Decline Cost (annual) $83,933.17 $28,259.50 $ 25,889.06 $58,044.11 $69,331.59 Declined Income ratio 14% 6% 4.2% 10%Declined Income, annual $2,870,279.81 $1,202,266.86 $ 988,103.00 $1,882,176.8150% convertible to income $941,088.40

Cost Saving

Income increase

The improvements seem to generate the expected financial impact


Statistical Proof of Improvement

Y1 Acceptance Rate: Three data points after implementation of changes

15131197531

1.0

0.9

0.8

0.7

0.6

0.5

Sample

Pro

port

ion

_P=0.9583

UCL=1

LCL=0.7688

1 2 3

P Chart of Accepted by Stage

Tests performed with unequal sample sizes Changes

implemented

The Acceptance Rate goal of 94% appears achievable based on the results after the first 3 months after the change was implemented


Statistical Proof of Improvement (continued)

Y1 Acceptance RateTheory: No difference in Proposal Acceptance Rate due to project changes

Ho: No difference in Proposal Acceptance Rate due to project changes

Ha: Significant difference in Proposal Acceptance Rate due to project changes

Analysis:




95% CI for difference: (0.0163748, 0.200721)


P-Value = 0.021

Statistical Conclusion: alpha = 0.05. P is smaller than 0.05 reject Ho.

Practical Conclusion: The Proposal Acceptance rate has significantly improved because of project changes.

Sample X N Sample p

Before 35 233 0.150215

After 1 24 0.041667


Statistical Proof of Improvement (continued)

Y2 Delivery SLA: Three data points after implementation of changes

15131197531

1.0

0.8

0.6

0.4

0.2

0.0

Sample

Pro

port

ion

_P=0.966UCL=1

LCL=0.814

1 2 3

P Chart of New SLA met by stage

Tests performed with unequal sample sizes : Changes implemented

The Delivery SLA goal of 95% appears achievable based on the first three months after the change was implemented



Y2 Delivery SLATheory: No difference in Delivery SLA Performance due to project changes

Ho: No difference in Delivery SLA Performance due to project changes

Ha: Significant difference in Delivery SLA Performance due to project changes

Analysis:




95% CI for difference: (0.212359, 0.390875)


P-Value = 0.000

Statistical Conclusion: alpha = 0.05. P is smaller than 0.05 reject Ho.

Practical Conclusion: The Delivery SLA Performance has significantly improved because of project changes.

Sample X N Sample p

Before 81 241 0.336100

After 1 29 0.034483


MeasureMeasure

AnalyzeAnalyze

ImproveImprove

ControlControl

DefineDefine

Six Sigma Roadmap


Control Plan


Control Charts

Y1 Proposal Acceptance Rated

15131197531

1.0

0.9

0.8

0.7

0.6

0.5

Sample

Pro

port

ion

_P=0.9583

UCL=1

LCL=0.7688

1 2 3

P Chart of Accepted by Stage

Tests performed with unequal sample sizes

Changes implemented


Control Charts (continued)

Y1 Proposal Acceptance Rated

15131197531

1.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

Sample

Pro

port

ion

_P=0.9655UCL=1

LCL=0.8137

1 2 3

P Chart of New SLA met by stage_1

Tests performed with unequal sample sizes

Changes implemented


Project Benefits

Financial (Hard) Benefits Increased Acceptance Rate: 96%

– Extra annual revenue: $941,088/a Reduced Decline cost rate: 6% Proposal cost savings: $69,331/a

Total financial impact: $1,010, 420/a

Soft Benefits Accepted proposal ownership Improved SLA performance leading to improved customer satisfaction with

Company’s proposal generation Improved communication within Company Less waste


Project Results

Project Baseline: Project Target: Project Actual:

COPQ= $131,210/a COPQ= $61,229/a COPQ= $61,879/a

Metric= Acceptance Rate



DPMO= 150,000 DPMO= 60,000 DPMO= 42,000

Sigma Level= 2.54 Sigma Level= 3.05 Sigma Level= 3.25

Metric= Delivery SLA Metric= Delivery SLA Metric= Delivery SLA

DPMO= 435,000 DPMO= 50,000 DPMO= 34,483

Sigma Level= 1.66 Sigma Level= 3.14 Sigma Level= 3.32

Documents

Six Sigma Example