Six Sigma Example
Project Report Presentation
Project Number: ABC-123
Project Name: Company New Business Improvement
Project Team Leader: Tom Jones
Project Sponsor: Sally Run
Six Sigma Roadmap
Define
Measure
Analyze
Improve
Control
Company New Business Improvement 2 .PPT
All Rights Reserved, Juran Institute, Inc.
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
Company New Business Improvement 3 .PPT
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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 account
Proposal management process for Cat 5 proposals
Items Out of Scope:
Cat 1-4 proposals
Database process
Other accounts
Company New Business Improvement 4 .PPT
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Financial Impact: Business Case or COPQ Calculation
Calculation of potential Cost reduction and Revenue increase
Assumptions:
1.
2.
3.
Reduction of wasted effort for declined proposals leads to cost savings
Reduction of declined proposals leads to increased revenue
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, …)
Item
Current
Cost of declined, annual
Total Proposal Income Lost, annual
Goal
Delta
$79,654
$10,644
$69,000
$2,650,329
$1,325,164
$1,325,164
Convert 50% to won
662,582
Potential Cost Reduction of $69,000 and
Revenue Increase of $662,582
Company New Business Improvement 5 .PPT
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High Level Process Map (SIPOC)
Complete
Commercial
Qualification
Complete
Technical
Qualification
Confirm
Customer
Requirements
Design
Project/
Solution
Conduct
Internal
Reviews
The scope of this project covers the Company steps of the Bid and
Proposal process
Company New Business Improvement 6 .PPT
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Voice of the Customer—CTQ
Company New Business Improvement 7 .PPT
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Six Sigma Roadmap
Define
Measure
Analyze
Improve
Control
Company New Business Improvement 8 .PPT
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Translate Ys From CTQs
VOC quotes could be translated into 2 Ys
Company New Business Improvement 9 .PPT
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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)
Company New Business Improvement 10 .PPT
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Detailed Process Map: Proposal Management Cat 5
Commercial
Qualification
often rushed
Requirements
often not well
understood
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
Company New Business Improvement 11 .PPT
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Data Collection
Process Measures Defined
Input 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
Company New Business Improvement 12 .PPT
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Data Collection (continued)
CTQs and Specifications
CTQ #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%
Company New Business Improvement 13 .PPT
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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?
Company New Business Improvement 14 .PPT
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Plan for Data Collection (continued)
Company New Business Improvement 15 .PPT
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Measure Process Capability
Y2 Proposal Delivery Time
Proposal Delivery Time (Business Days)
350
300
Proposal 123984: confirmed outlier
Business Days
250
200
Proposal 124286: confirmed outlier
150
100
50
0
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
Proposal Delivery Time displays two outliers
Company New Business Improvement 16 .PPT
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Measure Process Capability (continued)
Boxplot of Delivery time
70
60
Delivery time
50
40
30
20
10
0
Plots of Proposal Delivery Time (2 outliers removed)
Company New Business Improvement 18 .PPT
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Measure Process Capability (continued)
Proposal Delivery Service Level
(Proposals delivered in agreed Timeframe
35
90%
80%
30
No of Proposals
60%
20
50%
15
40%
30%
10
20%
5
% delivered within SLA
70%
25
Process Capability
(12 mth average)
Total Proposals
Delivered:
230
Delivery SLA met:
130
On Time Ratio:
57%
DPMO:
435,000
Y2 Sigma:
1.66
10%
-
0%
Jan-07
Feb-07
Mar-07
Proposals delivered
Apr-07
May-07 Jun-07
Jul-07
Proposals delivered in agreed time
Aug-07 Sep-07
Delivery Time Ratio
Oct-07
Nov-07 Dec-07
Linear (Delivery Time Ratio)
Proposal Delivery Service Level: 10 days from Requirements confirmation or as agreed
The Proposal Delivery to an Agreed Date is getting worse
Company New Business Improvement 19 .PPT
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Measure Process Capability (continued)
Process Cycle Time Analysis
 Analysis of a sample of 26 proposals: 13 accepted, 13 declined
 3 key process steps: Request Qualification, Proposal Development, Reviews
Commercial
Qualification
Technical
Qualification
Qualification
Average 26 samples
Average 13 Accepted proposals
Average 13 Declined proposals
Customer
Requirement
Confirmation
Project/
Solution
Design
Internal
Reviews
Proposal Development
Reviews
Delivery to
Customer
Qualify Phase
Development phase
Review Phase
Total
Duration
Duration
Duration
Duration
Hand
Hand
Hand
Hand
(Business
(Business
(Business
(Business
overs
overs
overs
overs
Days)
Days)
Days)
Days)
6.0
3.2
9.2
1.6
3.0
2.4
18.1
7.2
7.2
3.1
8.5
2.2
2.6
2.6
18.3
7.8
4.8
3.4
9.8
1.0
3.3
2.2
17.8
6.5
 Rework analysis
– 46% (12 or 26 proposals) of the sampled proposals had at least 1 rework step
(data not shown)
Many handovers in the Request Qualification and the Review phases
as well as the Rework amount appear to be a cause for delay
Company New Business Improvement 20 .PPT
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Measure Process Capability (continued)
Y1 Acceptance Rate
Acceptance and Overall Success rates
100%
90%
80%
Process Capability
Proposal Acceptance
70%
60%
50%
Proposals Accepted
189
Proposals Declined:
33
Acceptance Ratio:
85%
DPMO:
150,000
Y1 Sigma:
2.54
40%
Jan-07
Feb-07 Mar-07
Apr-07 May-07 Jun-07
Acceptance rate
Acceptance Rate =
Overall success rate
Jul-07
Aug-07 Sep-07
Linear (Acceptance rate)
Oct-07
Nov-07 Dec-07
Linear (Overall success rate)
Accepted Proposals
Accepted + Declined Proposals
Overall Success Rate
(3 month average)
=
Accepted Proposals
Accepted + Declinded + Withdrawn Proposals
The high number of declined proposals over the last 12 months
indicates lost efforts
Company New Business Improvement 21 .PPT
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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 Analysis
2 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.
Company New Business Improvement 22 .PPT
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Potential Xs: XY Prioritization Matrix
Possible X's
X1 Poorly understood Requirements
X2 Poor Commercial Qualification
X3 Missing Communication (due to Transact workflow)
Missing Proposal reviews by Project Managers
X4 Too much rework
BSL Pricing information not readily available
X5 Missing contact with the customer
X6 Lack of proposal ownership
Too many financial and commercial reviews for small
X7
proposals
Price too high
Duplicate proposals
Proposal request without BSL Business Case
Weight of Project Y (0=low, 5=-high)
5
5
5
9
9
3
9
3
9
3
9
5
1
5
1
5
9
9
0
5
5
9
5
5
9
5
5
L
TO
TA
Pr
op
Re osa
du l C
cti ost
on
De
Y2
P
Tim ropo
sa
e
l
Y1
P
Ac ropo
ce
pta sal
nc
e
Ra
te
Ratings of X's :
0-no relationship
1-a little
3-moderate
5- High
9-Extremely High
liv
ery
X Y Prioritization Matrix - BlueScope Steel New Business Improvements
Rank
105
105
85
35
115
50
95
95
2
2
6
11
1
9
4
4
0
9
5
70
7
9
1
9
0
1
1
0
3
3
45
25
65
10
12
8
The team agreed on seven potential causes to be analyzed further
Company New Business Improvement 26 .PPT
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Potential Xs: Selection of Xs
Seven potential causes will be analyzed further
Company New Business Improvement 27 .PPT
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Potential Xs—Theories To Be Tested
Seven potential causes will be analyzed to identify the Root Causes
(vital few Xs)
Company New Business Improvement 28 .PPT
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Six Sigma Roadmap
Define
Measure
Analyze
Improve
Control
Company New Business Improvement 29 .PPT
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Theories To Be Tested
Theories for Causal Relationships to be Analyzed
X1
Poorly understood
requirements
X6
Lack of Proposal
Ownership
A survey was
considered but not
used due to political
and timing reasons
X2
Poor Commercial
Qualification
Y1
Poor Proposal
Acceptance
X3 Missing
Communication
in Company
X5 Not enough
contact with
the customer
Y2 Proposals
are delivered late
X4
Too much
Rework
X7 Financial &
Comm. Reviews
not needed
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).
Company New Business Improvement 30 .PPT
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Data Collection Plan for Analyze Phase
Company New Business Improvement 31 .PPT
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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
Sample
X
N
Sample p
Date OK
3
27
0.111111
Date not OK
4
21
0.190476
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.
Company New Business Improvement 32 .PPT
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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:
Test and CI for Two Proportions
Sample
X
N
Sample p
Date OK
16
27
0.592593
Date not OK
8
21
0.380952
Difference = p (1) - p (2)
Estimate for difference: 0.211640
95% CI for difference: (-0.0667272, 0.490008)
Test for difference = 0 (vs not = 0): Z = 1.49
P-Value = 0.136
Statistical Conclusion: alpha = 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 customer
requirement date.
Company New Business Improvement 33 .PPT
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Test of Theories (continued)
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:
Test and CI for Two Proportions
Sample
X
N
Sample p
CQ Meetings
11
56
0.196429
No CQ Meetings
22
166
0.132530
Difference = p (1) - p (2)
Estimate for difference: 0.0638985
95% CI for difference: (-0.0522402, 0.180037)
Test for difference = 0 (vs not = 0): Z = 1.08
P-Value = 0.281
Statistical Conclusion: alpha = 0.05. P is greater than 0.05  fail to reject Ho
Practical Conclusion: There is no difference in the Proposal Acceptance rate after the introduction of
Commercial Qualification meetings.
Company New Business Improvement 34 .PPT
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Test of Theories (continued)
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:
Test and CI for Two Proportions
Sample
X
N
Sample p
RFP OK
7
22
0.318182
RFP not OK
27
46
0.586957
Difference = p (1) - p (2)
Estimate for difference: -0.268775
95% CI for difference: (-0.509869, -0.0276799)
Test for difference = 0 (vs not = 0): Z = -2.18
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.
Company New Business Improvement 35 .PPT
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Test of Theories (continued)
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:
Test and CI for Two Proportions
Sample
X
N
Sample p
RFP OK
10
20
0.500000
RFP not OK
18
37
0.486486
Difference = p (1) - p (2)
Estimate for difference: 0.0135135
95% CI for difference: (-0.258433, 0.285460)
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.
Company New Business Improvement 36 .PPT
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Test of Theories (continued)
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:
Test and CI for Two Proportions
Sample
X
N
Sample p
No Rework
24
50
0.480000
Rework
10
18
0.555556
Difference = p (1) - p (2)
Estimate for difference: -0.0755556
95% CI for difference: (-0.343644, 0.192533)
Test for difference = 0 (vs not = 0): Z = -0.55
P-Value = 0.581
Statistical Conclusion: 0.05. P is greater than 0.05  fail to reject Ho
Practical Conclusion: There is no difference in the Proposal Acceptance rate due to the occurrence of
Proposal rework.
Company New Business Improvement 37 .PPT
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Test of Theories (continued)
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:
Test and CI for Two Proportions
Sample
X
N
Sample p
No Rework
19
50
0.380000
Rework
10
18
0.555556
Difference = p (1) - p (2)
Estimate for difference: -0.175556
95% CI for difference: (-0.441630, 0.0905194)
Test for difference = 0 (vs not = 0): Z = -1.29
P-Value = 0.196
Statistical Conclusion: 0.05. P is greater than 0.05  fail to reject Ho
Practical Conclusion: There is no difference in the Proposal Delivery SLA performance because of the
occurrence of Rework.
Company New Business Improvement 38 .PPT
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Test of Theories (continued)
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:
Test and CI for Two Proportions
Sample
X
N
Sample p
Effective contact
12
28
0.428571
No effective contact
22
49
0.448980
Difference = p (1) - p (2)
Estimate for difference: -0.0204082
95% CI for difference: (-0.250612, 0.209796)
Test for difference = 0 (vs not = 0): Z = -0.17
P-Value = 0.862
Statistical Conclusion: 0.05. P is greater than 0.05  fail to reject Ho
Practical Conclusion: There is no difference in the Proposal Acceptance rate due to customer contact
before the delivery of the proposal.
Company New Business Improvement 39 .PPT
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Test of Theories (continued)
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:
Test and CI for Two Proportions
Sample
X
N
Sample p
Effective contact
0
14
0.000000
No effective contact
34
63
0.539683
Difference = p (1) - p (2)
Estimate for difference: -0.539683
95% CI for difference: (-0.662759, -0.416606)
Test for difference = 0 (vs not = 0): Z = -8.59
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.
Company New Business Improvement 40 .PPT
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Test of Theories (continued)
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
Test and CI for Two Proportions
Sample
X
N
Sample p
No F&C Review
23
53
0.433962
F&C Review
16
53
0.301887
Difference = p (1) - p (2)
Estimate for difference: 0.132075
95% CI for difference: (-0.0498017, 0.313953)
Test for difference = 0 (vs not = 0): Z = 1.42
P-Value = 0.155
Statistical Conclusion: alpha = 0.05. P is greater than 0.05  fail to reject Ho
Practical Conclusion: There is no difference in the SLA performance because of the Financial and
Commercial Review steps.
Company New Business Improvement 41 .PPT
All Rights Reserved, Juran Institute, Inc.
Summary of Testing Results
Potential Cause X
Theory
Analyze Results
Team Decisions
X1 Understanding of
Customer Requirements
Requirement Confirmation meeting
impacts Proposal Acceptance rate
False
No statistical evidence
No relevance
X1 Understanding of
Customer Requirements
Requirement Confirmation meeting
impacts Delivery SLA performance
False
No statistical evidence
Understanding of requirements
speeds up the process
X2 Commercial
Qualification
Commercial Qualification meetings
impact on Proposal Acceptance rate
False
No statistical evidence
Commercial Qualification avoids
wasted effort in withdrawn and
declined proposals
X3 Missing Communication
within Company
Good RFP documentation impacts
on Proposal Acceptance rate
True
Statistical evidence
Documented requirements
confirm customer expectations
X3 Missing Communication
within Company
Good PRFP documentation impacts
on Delivery SLA performance
False
No statistical evidence
Documented requirements
improve internal communication
X4 Rework
Occurrence of Rework impacts on
Proposal Acceptance rate
False
No statistical evidence
Little relevance
X4 Rework
Occurrence of Rework impacts on
Delivery SLA performance
False
No statistical evidence
Rework is waste
X5 Missing customer
contact before delivery
Customer contact impacts on
Acceptance rate
False
No statistical evidence
Little relevance
X5 Missing customer
contact before delivery
Customer contact impacts on
Delivery SLA performance
True
Statistical evidence
Customer contact is important
for expectation management
X7 Too many reviews
Financial and Commercial reviews
impact on Delivery SLA performance
False
No statistical evidence
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.
Company New Business Improvement 42 .PPT
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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
Company New Business Improvement 43 .PPT
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Six Sigma Roadmap
Define
Measure
Analyze
Improve
Control
Company New Business Improvement 44 .PPT
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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.
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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).
X3 Missing
Communication within
Company
 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.
X5 Missing customer
contact before delivery
 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
Company New Business Improvement 46 .PPT
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Possible Solutions Matrix (vs. Proven Xs)
Company New Business Improvement 47 .PPT
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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
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Selected Solution and Selection Process
Selected Solution
All solution alternatives proposed by the team have been accepted by the
Champion.
Selection Process
Tools 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.
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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.
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Pay-off Matrix of Selected Solutions
Key: Brown Solutions are Phase II


Confirm each request within 48
hours
Contact customer if proposal is late
High

Request sufficient RFP
documentation

Rotate Company staff on site
The high cost/ high effort solutions
involve significant customer negotiations.
One of them will be implemented in
Phase 2.
Benefit


Low
New Commercial Qualification
metrics
Remove Financial and Commercial
review steps for Cat 5 proposals
All low cost solutions were
identified as suitable for quick
implementation
Low
High
Cost/Effort
Company New Business Improvement 51 .PPT
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Refine Solutions
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.
Company New Business Improvement 52 .PPT
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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
Company New Business Improvement 53 .PPT
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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
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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
Company New Business Improvement 55 .PPT
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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
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Example: Selected Solutions Implementation
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Updated Process Map
Proposal Management Cat 5
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Updated Process Map (continued)
Proposal Management Cat 5
New 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)
New step: Confirm
Proposal request within 48
hours (Solution 2)
New step: Confirm
Proposal Requirements
within 5 days (part of
Solution 2)
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)
Company New Business Improvement 59 .PPT
Five solutions include process changes
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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
Goal
Withdrawal Cost ratio
Withdrawal Cost (annual)
Decline Cost ratio
Decline Cost (annual)
10%
$47,277.59
18%
$83,933.17
7%
$32,969.42
6%
$28,259.50
Declined Income ratio
Declined Income, annual
50% convertible to income
14%
$2,870,279.81
Phase 3
Difference
(Mar-Apr 2008)
8.0%
2%
$
35,990.10
$11,287.49
5.9%
12%
$
25,889.06
$58,044.11
$69,331.59
6%
$1,202,266.86 $
4.2%
10%
988,103.00 $1,882,176.81
$941,088.40
The improvements seem to generate the expected financial impact
Company New Business Improvement 60 .PPT
Cost Saving
Income
increase
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Statistical Proof of Improvement
Y1 Acceptance Rate: Three data points after implementation of changes
P Chart of Accepted by Stage
1
2
3
1.0
UCL=1
_
P=0.9583
Proportion
0.9
0.8
LCL=0.7688
0.7
0.6
0.5
1
3
5
7
9
Sample
Tests performed with unequal sample sizes
11
13
15
Changes
implemented
The Acceptance Rate goal of 94% appears achievable based on the results
after the first 3 months after the change was implemented
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Statistical Proof of Improvement (continued)
Y1 Acceptance Rate
Theory: 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:
Test and CI for Two Proportions
Sample
X
N
Sample p
Before
35
233
0.150215
After
1
24
0.041667
Difference = p (1) - p (2)
Estimate for difference: 0.108548
95% CI for difference: (0.0163748, 0.200721)
Test for difference = 0 (vs not = 0): Z = 2.31
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.
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Statistical Proof of Improvement (continued)
Y2 Delivery SLA: Three data points after implementation of changes
P Chart of New SLA met by stage
Proportion
1
2
3
1.0
_
UCL=1
P=0.966
0.8
LCL=0.814
0.6
0.4
0.2
0.0
1
3
5
7
9
Sample
Tests performed with unequal sample sizes
11
13
15
: Changes
implemented
The Delivery SLA goal of 95% appears achievable based on the first three
months after the change was implemented
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Test of Theories (continued)
Y2 Delivery SLA
Theory: 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:
Test and CI for Two Proportions
Sample
X
N
Sample p
Before
81
241
0.336100
After
1
29
0.034483
Difference = p (1) - p (2)
Estimate for difference: 0.301617
95% CI for difference: (0.212359, 0.390875)
Test for difference = 0 (vs not = 0): Z = 6.62
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.
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Six Sigma Roadmap
Define
Measure
Analyze
Improve
Control
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Control Plan
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Control Charts
Y1 Proposal Acceptance Rated
P Chart of Accepted by Stage
2
1
3
UCL=1
_
P=0.9583
1.0
Proportion
0.9
0.8
LCL=0.7688
0.7
0.6
0.5
1
3
5
7
9
Sample
11
13
15
Tests performed with unequal sample sizes
Changes
implemented
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Control Charts (continued)
Y1 Proposal Acceptance Rated
P Chart of New SLA met by stage_1
1
2
3
_
UCL=1
P=0.9655
1.0
0.9
LCL=0.8137
Proportion
0.8
0.7
0.6
0.5
0.4
0.3
0.2
1
3
5
7
9
Sample
11
13
15
Tests performed with unequal sample sizes
Changes
implemented
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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
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Project Results
Project Baseline:
Project Target:
Project Actual:
COPQ=
$131,210/a
COPQ=
$61,229/a
COPQ=
$61,879/a
Metric=
Acceptance
Rate
Metric=
Acceptance
Rate
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
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