Six Sigma Financial Tracking and Reporting

The six sigma world requires an effective methodology to track and report cost, savings, expenses, profits, etc. on a project by project basis.This book shows Blackbelts how to apply financial reporting to their process improvement projects, be certain their savings are accurately reflected in corporate financial accounting, and prove the net worth of their projects. Financially track Six Sigma projects Prove the net worth of improvement projects Simplify the metrics used to measure project impact

Michael Bremer (Chicago, IL) is president of The Cumberland Group-Chicago, as well as adjunct senior consultant for Motorola University. He is a nationally-recognized speaker on process improvement, leadership, and management team effectiveness. He has over 25 years' experience, in roles including director of the information systems group for a Fortune 25 company, chief financial officer for an international association, and president of several new business start-ups.

Brian McKibben (Chicago, IL) has been a Co-Chief Executive Officer of Flow-Works, Inc., and a Vice President of the Cumberland Group, Chicago. He is a Board Member of the Association for Manufacturing Excellence and Strategic Management Association. Additionally, he is the past president of the Chicago Chapter of the Institute of Industrial Engineers.

Thomas McCarty (Shaumberg, IL) is Vice President of Consulting and Training Services at Motorola University, responsible for improving the business performance of Motorola's suppliers, partners, and customers through consulting on performance, process, and continuous improvement.

Preface

ix

Acknowledgments

xi

Introduction

1

(28)

Overview

1

(1)

Numbers Paradox

2

(3)

Performance Improvement Initiatives: Were They Failures?

5

(3)

Purpose of This Book

8

(3)

Chaos and Fractals

11

(2)

People Side of Measurement/Change

13

(3)

Profound Knowledge

16

(3)

Measurement

19

(1)

Executive Summary (Cliff Notes Version of this Book)

20

(3)

A Team Sponsor's Role and Responsibilities

23

(1)

Excellent versus Average Performance

24

(3)

Summary

27

(2)

Financial Bridge P&L Model

29

(34)

Overview

29

(4)

Six Sigma Financial Tracking and Reporting

33

(13)

Savings Analytical Guidelines

46

(8)

Lean Accounting

54

(9)

Define---Defining What Is Important

63

(34)

Overview

63

(1)

Purpose of Define

64

(1)

Define Phase Organizational Level

65

(1)

Voice of the Customer

66

(11)

Voice of the Business

77

(7)

Pulling the Voices Together

84

(4)

Actions to Avoid Metric Problems

88

(2)

What Is Great versus Average?

90

(2)

Define---Team Sponsor's Role and Responsibilities

92

(2)

Technical Business Unit Case Study

94

(1)

Tollgate Questions

95

(2)

Measure---Developing and Tracking Bridge Metrics

97

(60)

Purpose

97

(1)

Introduction

97

(2)

Overview and Background

99

(9)

Company Examples

108

(2)

Pulling It Together---Measure Phase in Bridge Process

110

(4)

Measurement System Analysis

114

(5)

Measure Substeps for Routine Bridge Process Use

119

(4)

Business Metrics Roadmap---Extended Management Horizon

123

(6)

Implementing a Bridge Model---Measure Phase

129

(2)

Tools for Doing It---Measure Phase

131

(19)

What Can Go Wrong

150

(1)

Measure---Team Sponsor's Role and Responsibilities

151

(3)

Technical Business Unit Story---Measure Phase

154

(1)

Tollgate Questions

155

(2)

Analyze---Identifying the Things That Are ``Off Track''

157

(36)

Purpose

157

(1)

Introduction

157

(1)

Overview and Background

158

(4)

Pulling It Together---Analyze Phase in Bridge Process

162

(2)

Analyze Substeps in Routine Bridge Functions

164

(8)

Implementing a Bridge Model---Analyze Phase

172

(1)

Tools for Doing It---Analyze Phase

173

(12)

Specialized Tools

185

(3)

What Can Go Wrong

188

(1)

Analyze---Team Sponsor's Role and Responsibilities

188

(2)

Technical Business Unit Story---Analyze Phase

190

(1)

Tollgate Questions

191

(2)

Improve---Make It Happen, Effectively!

193

(42)

People and Processes

193

(3)

Selecting a Solution

196

(2)

Open Dialog

198

(4)

Alternate Solutions

202

(4)

Action Plans (60- to 90-day Timeframe)

206

(1)

Cost and Financial Benefits

207

(6)

People and Accountabilities

213

(11)

Communications

224

(4)

Improve---Team Sponsor's Role and Responsibilities

228

(2)

Improve Close

230

(1)

Technical Business Unit---Case Study

231

(1)

Tollgate Questions

232

(3)

Control---Sustain the Gains

235

(36)

Overview

235

(1)

Pilots and Pilot Evaluation Plan

236

(3)

Implementation and Execution

239

(2)

Implementation Rollout Plan

241

(8)

Standardization and Replication

249

(1)

Clarified Roles and Responsibilities

250

(3)

Process and Performance Control Metrics

253

(2)

Financial Assessment

255

(2)

Leadership Governance and Sustaining the Gains

257

(7)

Control---Team Sponsor's Role and Responsibilities

264

(2)

Case Study

266

(1)

Control Phase---Tollgate Questions

267

(4)

Assessment Instruments

271

(24)

Malcolm Baldrige Quality Award

271

(2)

Capability Maturity Model Integration

273

(3)

People Capability Maturity Model

276

(1)

Shingo Prize for Excellence in Manufacturing

277

(1)

Baldrige National Quality Program: Criteria for Performance Excellence

278

(17)

The Role of Leadership and Governance in Driving Financial Impact

295

(30)

Overview

295

(1)

The Six Sigma Macro Model at Apex

296

(3)

The Holistic Six Sigma Model

299

(1)

Jones Lang LaSalle's Client-Driven Six Sigma Continuous Improvement Model

299

(5)

Integrating Six Sigma Techniques

304

(6)

The Collaborative Management Model

310

(3)

Annual Planning and Strategy Development Workshop

313

(2)

Collaborative Management Process Summary

315

(4)

The Guidance Center

319

(3)

Conclusion

322

(3)

Shareholder Value and Business Profitability

325

(22)

Shareholder Value

326

(3)

Strategic Business Planning Metrics

329

(1)

The One-Page Strategic Growth Model

330

(7)

Customer Profitability

337

(3)

Supply Chain Profitability

340

(1)

Cost of Quality

341

(2)

Shareholder Value and Profitability Summary

343

(4)

Support Systems---People Side of Bridge Process

347

(24)

Purpose

347

(1)

Introduction

347

(2)

Overview and Background

349

(14)

Pulling It Together---Bridge Structure and Usage

363

(7)

Tools for Doing It

370

(1)

What Can Go Wrong

370

(1)

Tollgate Questions

370

(1)

Continuous Improvement Processes

371

(20)

Purpose

371

(1)

Introduction

371

(1)

Overview and Background

372

(6)

Pulling It Together---Bridge Structure and CI Process

378

(5)

Tools for Doing It

383

(6)

What Can Go Wrong

389

(1)

Tollgate Questions

389

(2)

Multipurpose and Next-Gen Tools

391

(44)

Value-Stream Mapping

391

(1)

Value-Stream Mapping Methods

392

(15)

MRP for Logistics and Supply Chain Management

407

(5)

Operations Planning Models

412

(3)

Optimizing Customer-Configured, Mixed-Model Manufacturing

415

(13)

Real-Time Analysis of Complex Process Variability Causes

428

(5)

In Closing---A Bridge Span: In-Process Analysis of Variation Causes

433

(2)

Bridge Process Outlines

435

(6)

Routine Bridge Functions: Day-to-Day Use of a Bridge System by Process Operators and Owners

435

(3)

Bridge Implementation Steps

438

(3)

Index

441

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Six Sigma Financial Tracking and Reporting Measuring Project Performance and P&L Impact

Summary

Author Biography

Table of Contents

Supplemental Materials