How do you describe the value of Lean Six Sigma projects? They are more tangible than receivables so clarifying their worth helps organizations plan for growth. This webinar will discuss a proven strategy to create predictable cash flow from Lean Six Sigma projects. It will demonstrate how to build a project pipeline and engage a team of Black Belts to harness the full power of Lean Six Sigma.

1. CREATING PREDICTABLE ONGOING CASH FLOW
WITH LEAN SIX SIGMA PROJECTS
Presented by Bill Eureka
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2. FEATURED SPEAKER
Bill Eureka
• Master Black Belt
• Senior Consultant,
GoLeanSixSigma.com
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3. LEARNING OBJECTIVES
• Identify necessary conditions for sustainable cash flow
• Understand what makes projects meaningful
• Identify sources of project Ideas
• Recognize how searching broadly adds to financial
impact
• Identify drivers for timely project completion
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4. AGENDA
• Necessary conditions for predictable cash flow
• Building the project pipeline
• Rigorous financial assessment
• Ensuring timely project completion
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5. LEAN SIX SIGMA PROJECTS ARE MONEY CAPSULES
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$$$$Financial Gains
Directly Traceable
to the Bottom Line
Many Projects
Project
Define Measure Analyze Improve Control
Money Spent Investigating
Money
Generated
$
Ongoing Financial Gains

6. LSS PROJECTS AS A STRATEGIC CORPORATE ASSET
• GAAP recognizes Accounts Receivable as an asset
• Banks recognize this
• Collection depends on customer
• Well-defined Lean Six Sigma projects more tangible
• Gains within our control
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7. NECESSARY CONDITIONS FOR PREDICTABLE
ONGOING CASH FLOW
• Steady Stream of Meaningful Projects
• Reliable Assessment of Financial Impact
• Timely Completion of Projects
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8. MEANINGFUL PROJECTS
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• Addresses a Verifiable Problem
• Problem objectively observed, or
• Objective data confirms problem
• Best if the process continues many years
• Process Containing the Problem Has Short Duration
• Long-duration processes slow to show results, so
• Longer to prove results, and
• Project can drag on
• Option: Break long duration projects into pieces

9. MEANINGFUL PROJECTS (CONTINUED)
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• Significant Activity Level
• Higher transaction volume → more data, so
• Easier to spot unusual behavior & clues to causes
• Desirable: several results per day, per week or per month
• Undesirable: a few results per quarter or per year

10. POLL #1
A.Finding good projects
B.Estimating project value
C.Finishing projects on time
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WHICH OF THE FOLLOWING IS MOST
CHALLENGING?

11. STEADY STREAM OF PROJECTS
A pipeline of projects at various stages of development assures a steady
stream of improvement work, and financial benefits
Raw Project
Ideas
Defined
Projects
Validated
Projects
Active
Projects
Finished
Projects
• Unevaluated ideas
• From anywhere in the organization
• Target: ≥5x number of problem solving
teams
• Potentially viable LSS projects
• From Review of Raw project ideas
• Begin gathering data and financial assessment
• Target: ≥2x number of problem-solving teams
• Ready to be worked
• Target: ≥1x number of problem-solving teams
• Charter, historical performance and financia
assessment complete
• Being worked by
problem solving teams
• Delivering ongoing
benefits
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12. SOURCES OF PROJECT IDEAS (PROCESS FOCUS)
• Your Strategic Planning: What processes need improvement?
• Paradigm Shift Question: What about your business is
impossible to do today, which, if possible, would fundamentally
change your business?
• Competitive Benchmarking: Where to strengthen position?
• Capacity Constraints: What prevents you from doing twice as
much?
• Known Problems: What keeps you awake at night?
• The Workforce: Employee suggestions–focused on process
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13. PROJECT PRIORITIZATION
Difficulty of Project
ImpactofProject
HIGH
LOWHIGH
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7
31
Impact / Difficulty Matrix
2
5
LOW
8
4
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• All projects which appear to be
worth doing are consolidated
into a numbered list
• Knowledgeable Leadership
judge relative difficulty and
impact of each project, posting
its number
• Focus on high impact projects
• Don’t rule out high difficulty
• Low difficulty might be quick
wins

14. RIGOROUS EXPLORATION OF FINANCIAL IMPACT
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• Problem: Our process yield is too low
• So?: There are too many defects, creating excessive scrap (or wasted effort)
• Ask: What other problems happen because of low yield?
• Rework of output that is defective, but salvageable
• Overtime to replace scrap (or wasted effort)
• Wasted process capacity (making scrap or wasting effort)
• Late shipments (waiting for replacements)
• Premium transportation (to avoid/reduce late deliveries)
• Lower quality (because some bad output gets shipped)
• Customer returns of bad output
• Customer dissatisfaction
• Possible reduced revenue (from loss of future business)
• Use Future Reality Tree to Guide the Exploration

15. POLL #2
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A.None of them
B.Less than half
C.More than half
D.All of them
WHAT PROPORTION OF YOUR PROJECTS
HAVE FINANCIAL IMPACT?

16. Yield↑
Scrap↓
Defects↓
INITIAL FINANCIAL IMPACT
$
16Future Reality Tree

17. Yield↑
Scrap↓
Rework↓
Overtime↓
Prem Trans↓
Late Ship↓
Defects↓ Quality↑
Capacity↑
Cust Sat↑ Revenue↑
ALL POTENTIAL FINANCIAL IMPACTS
Returns↓
$
$
$
$
$
$
17Future Reality Tree

18. Yield↑
Scrap↓
Rework↓
Overtime↓
Prem Trans↓
Late Ship↓
Defects↓ Quality↑
Capacity↑
Cust Sat↑ Revenue↑
FACT CHECKING – DOES THIS REALLY HAPPEN?
Returns↓
$
$
$
$
$
$
18Future Reality Tree

19. Yield↑
Scrap↓
Rework↓
Overtime↓
Defects↓ Quality↑
Cust Sat↑ Revenue↑
CONFIRMED IMPACT
Returns↓
$
$
$
$
$
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20. ESTIMATE FINANCIAL VALUE
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• Scrap $13,000/month
• Rework $3,000/month
• Overtime $5,500/month
• Returns $10,250/month
• Total $31,750/month
$381,000/year
Note: Revenue impact not estimated

21. TIMELY PROJECT COMPLETION
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• Don’t let projects linger
• Keys to ensure progress
• Only well-defined, vetted projects
• Active leadership support
• Resourced
• Active coaching by MBB
• Handoff to Process Owner

22. PUTTING IT ALL TOGETHER

23. QUESTIONS?
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24. CONTINUE THE DISCUSSION ON LINKEDIN!
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