What is Six Sigma?
Six Sigma is a business process improvement methodology designed to improve business processes by decreasing variability and defects. The term Sigma is used to describe the quality of a business process. An organization that is operating at Six Sigma produces 3.4 defects per million opportunities. Six Sigma projects are implemented following the Define, Measure, Analyze, Improve, and Control (DMAIC) methodology.
What is a project charter?
A project charter outlines key details, goals, intentions, and many other essential components of a project. For a Six Sigma project, the project charter is an output of the Define Phase and contains high-level information on the project stakeholders, project scope, project risks. etc. as outlined in more detail below. The purpose of a project charter is to authorize the project manager to start the project and use organizational resources to accomplish the project objectives. Here are eight steps to creating a project charter.
1. Identify project stakeholders
This involves identifying individuals, departments, or other organizations that will affect or be affected by the Six Sigma project. It is important to identify and analyze key stakeholders early during the project to minimize the chances of them developing resistance during the project implementation. Some of the key stakeholders for a Six Sigma project include the project sponsor, project manager, customers, suppliers, and project team members such as the Champion, Black Belts, Green Belts, etc.
2. Define the problem statement
The problem statement helps to clarify the current undesirable situation by stating the problem, its severity, its location, its timeframe, and its financial impact. It also serves as a communication tool in terms of obtaining the necessary support from key stakeholders, such as the company’s top management. The problem statement should be very clear and help to answer questions such as where are the problems in the production process, why there are so many defects, etc.
3. Outline the project objectives
There is a need to outline the project objectives to ensure clarity on how the project fits into the organization’s goals and ensure that everyone is aligned towards the same. The objectives should address the problems stated in the problem statement and should contain certain key information such as the financial benefits, i.e., what will be different after implementation versus the current setup. The objectives should also be Specific, Measurable, Achievable, Realistic, and Time-Bound (SMART).
4. Prepare the business case
The business case explains why there is a need to undertake the project and outlines the cost-benefit analysis hence justifying why it is worth it to undertake the project. By clarifying the benefits of the project and how it supports the overall business objectives, stakeholder support can be obtained for the project. Calculations such as Payback Period, Net Present Values, and Return on Investment can be used to determine whether the project is viable or not as part of the cost-benefit analysis.
5. Define the project scope
The project scope is defined at a high level and helps to clarify what will be included and excluded from the Six Sigma project. During the scope definition, the business process that will be covered and not covered will also be specified by making use of a high-level Work Breakdown Structure (WBS) to show the project deliverables. The project scope will also outline the high-level assumptions and constraints related to the Six Sigma project.
6. Identify the project risks
Risks are unexpected events that could have a positive or negative effect on the development of a Six Sigma project. Opportunities and threats that could impact the Six Sigma project are identified at a high level for analysis during the implementation stage to plan for the strategies to deal with them. Examples of threats during a Six Sigma implementation include lack of executive support, poor organizational structure, lack of manpower, lack of training, and lack of clear business processes.
7. Outline the implementation plan
The Implementation plan shows the description of the major tasks to be performed as allocated to project team members. It also shows the resources needed to support the implementation effort, i.e., labor and materials. Key project milestones are also identified for the completion of the phases as per the Six Sigma DMAIC methodology. The overall project start and end dates, as well as the estimated project budget, are also specified in the implementation plan.
8. Facilitate charter approval
Approval of the project charter is the granting of formal authority for the project to proceed to the implementation stage. It is important to have clarity on what items will need to be approved for the Six Sigma project, who will sign off the project charter, and what constitutes the project’s success. The project charter is normally signed off by the project sponsor who is also responsible for providing funding for the project.