Which Work Becomes a Six Sigma Project - and What Counts as Savings
Arbor Metal Works ($40M revenue) reports 6.8% weld porosity on Line 2, 82% on-time delivery, and roughly $2.1M per year in scrap and rework. The VP of Operations announces a deployment: 60 Green Belts trained within six months, one project each. Three candidates sit on the table: (a) reducing weld porosity on Line 2, (b) replacing the aging ERP system, and (c) cutting finished-goods inventory. Separately, a maintenance technician has already traced 4% of Line 4's defects to a misaligned fixture; fixing it costs $1,200 and takes a week. The CFO has asked the Black Belt to confirm that the $310K of Line 2 cost of poor quality can be booked as savings in next year's budget.
1. Sort the three candidates into the project pipeline, and say what should happen to the Line 4 fixture finding.
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Selection logic - a DMAIC project needs a chronic, measurable gap between current and desired performance on an existing process, with a definable Y and a plausible cause system.
- (a) Weld porosity, Line 2 - accept. The defect rate (6.8%) is chronic, is measured at the process, has a quantifiable COPQ ($310K), and causes are not yet known. Classic DMAIC.
- (b) ERP replacement - reject as a DMAIC project. This is a technology/system implementation, not variation reduction in an existing process. It may need DFSS, requirements analysis, or a project-management track - but a Belt measuring weld defects cannot help it.
- (c) Finished-goods inventory - reject in this form. If framed as excessive variation in demand/flow it is a Lean/DFSS or value-stream problem. Forcing it into DMAIC without a Y and a baseline produces a project that never closes.
- Line 4 fixture - just do it. A known cause with a known, cheap fix is a quick win, not a project. Running it through DMAIC wastes Belt capacity, delays the gain, and signals that the deployment is a paperwork exercise. Fix it, log the benefit, and use it as a win to build sponsorship.
The pipeline should be built from the biggest COPQ and pain items first, then Belts assigned - not the reverse.
2. How should the Black Belt answer the CFO's question about the $310K?
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Separate hard savings from soft savings, and let Finance own the number.
- Hard savings are reductions in actual outlays: purchased weld wire and shielding gas not consumed, rework labor that disappears from overtime or headcount, outside rework/return freight no longer paid. These are bookable if the baseline period is documented, the volume assumption is defensible, and Finance validates them against the general ledger.
- Soft savings are cost avoidance or freed capacity: machine hours that become available, margin on would-be lost sales, avoided capital. Real, but usually not booked as a budget reduction unless someone can show what is being done with the freed resource.
- Traps to name explicitly: the $310K is a COPQ estimate, not a validated reduction; allocating full absorption cost to scrap overstates it (materials and direct labor are real, allocated overhead often is not); and if the ERP or inventory projects also claim the same recovery, the savings are double-counted.
Good answer: "Here is the validated baseline, here is the split between hard and soft, here is the tracking mechanism built into the control plan, and Finance signs it off before we book it."
3. The VP wants 60 certified Green Belts in six months. What is the deployment risk and what do you advise?
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The risk is training Belts faster than the organization can generate chartered projects - the classic 'training event, not a deployment' failure.
Sixty Belts implies at least sixty completed projects with verified results in the same window. Arbor's visible pipeline is three candidates, one of which is not a DMAIC project. Predictable outcomes of the current plan: Belts charter trivial projects to satisfy a checkbox, charters are written by the Belt rather than the process owner, sponsors never engage, and certification becomes a certificate mill that destroys credibility for the next wave.
Recommended advice:
- Build the project backlog first (champions and process owners nominate, a deployment team scores on COPQ and strategic fit). Train to the pipeline, not to a headcount.
- Run phased waves - e.g., 12–15 Belts now, with the next wave gated on completed projects and validated savings.
- Guarantee coaching capacity: a Master Black Belt or experienced Black Belt can realistically mentor on the order of 5–10 projects at a time; 60 uncoached projects stall at Measure.
- Define certification up front as project completion plus verified financial benefit, with a charter template and a tollgate review calendar.
- Pair the belts with a parallel quick-hit/Lean track so obvious fixes are not queued behind a DMAIC cycle.
Track deployment health by projects closed and dollars validated, not by Belts trained.