The Six Sigma Problem Statement
It is widely believed in the Six Sigma fraternity that a problem statement may make or break a Six Sigma project. True and for all those of you who have not understood the impact of a problem statement on the outcome of a Six Sigma project, you just have to take a look at the cases of all the projects that have failed.
Not surprisingly, you would find most of them having poorly written problem statements.
This is the meaty portion of the DMAIC cycle. Actually, it all really starts from here. A lot of Six Sigma practitioners call this, “Confession time”. That’s because they feel that by stating the problem statement, they are confessing that we have a problem.
Are problem statements necessary?
The first question that gets asked is --- Are problem statements necessary? If a company is working on its processes, wouldn’t they know where their pain-points are? Then in that case, ladies and gentlemen, let me point this question in another way --- If you knew what the problem was why haven’t you fixed it yet?
So, yes problem statements are necessary. Not only are they necessary, but defining the problem statement in the best possible manner does three things – 1) It tells your top management that you mean business, 2) It also gives some kind of information on the kind of garbage you are looking into at this point of time and 3) Most importantly, it paves the way for your sponsor to authorize the project.
How to define a problem statement for the process?
Here is a step-step process for you to define a problem statement.
- Speak to your top management and ask inputs on any possible revenue leaks/overhead costs.
- Map first level Y that impact the Key Business Outcome. The Y that we refer to often in a Six Sigma DMAIC approach is known as KPOV or Key Process Output Variable.
- Draft a SMAT problem statement
SMAT --- Smart, Measurable, Actual and Time bound
Example 1 --- Problem Statement
The company has been producing a lot of defects.
The problem statement above, in a different font, tells you a lot of things. But, at the same time, it doesn’t tell you everything you need to know. One thing is for sure, the company this problem statement represents is raking up defects and that by the lot.
But that’s it. What is the gravity of the impact? How much do the defects cause the company to lose in terms of revenue? And did we not say, Customer Satisfaction? For long did you measure the data?
Example 2 --- Problem Statement
Measured over the last 6 months, year on year, the defective rate of products (TV sets) from the factory have increased by 50% resulting in a loss of $10,000 for 6 months cumulative.
The problem statement above, in different font, tells you a lot of things. And it certainly does conceal very little. All the facts have been presented before you. Let’s analyze the problem statement. Tells you clearly the time period over which the number of defective products were measured (Data was collected). Information should be provided on the current status of the process performance. The information needs to be numerical to be specific. Stay away from ordinal ratings.
This is the probably the most critical number in the problem statement. This tells the business owner on how much his company has been losing over the last some months.
I have to drive home a point here. You are at the Define stage. If you are able to define a problem that results in the company to lose revenue, you would have done a good job.
A lot of Six Sigma practitioners try going for the full bravado and end up with causes and sometimes, even solutions if not apparent. They approach CEOs with the problem statements and their causes and ask permission from them to initiate the project.
The response is immediate, “If you know the causes, just go and hit them. Why do you need to do Six Sigma?”
Another note then --- Do the Six Sigma approach on a problem only when you know what the problem is. You don’t know what is causing the problem and you definitely don’t know what the solution to the problem is. All that would be taken care of by a well implemented Six Sigma initiative.
So, back to Example 2! Clearly, Example 2 tells us that the company is losing revenue due to defective products. Now, a defective product is the problem area. In other words, defective products are your y or KPOV.
Of course, you are also able to summarize how much the company is losing. My bet --- Any business owner who sees he is losing money would want to know more. Hold on to your guns --- Your job is to get Sponsor Authorization!
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