8 Elements of the Six Sigma Project Charter

In today's world, companies need to innovate and improve their processes constantly. This is where Six Sigma comes into play. Six Sigma is an approach that helps companies become more efficient by reducing defects in the products they produce. It involves creating a culture of continuous improvement within your organization.

The goal of a Six Sigma project is to reduce costs or increase revenues.

Creating the Project Charter and getting the management's buy-in is the first step in a Six Sigma project. It is made during the Define phase of DMAIC (Define, Measure, Analyze, Improve and Control). The charter should be written with the following points in mind:

1) What are you trying to achieve?

2) How will you measure success?

3) Who will manage this project?

4) What resources do you have available?

5) When can it start?

6) How much time do you have to complete it?

7) Who will be involved?

8) What is the budget for this project?

9) Will there be any risks associated with this project?

10) Is there anything else you want to include in the charter?

 

Elements of a Charter

1. Business Case

This section describes why you are doing this project. You must justify what you are going to do and how you will benefit from it. If you don't know the answer to these questions, you shouldn't be doing the project.

This section should also describe how this project is linked to company strategy?

For example, we are not meeting the goal of a maximum 1% repair rate in our welding shop. Weld repairs and retesting are costing us $300,000 per year.

 

2. Problem Statement

Here you define the problem statement. A problem statement is a concise description of the issue or the problem you want to solve. It might also include the magnitude of the problem, when and where this problem is occurring etc.

For example, in our welding shop, the average weld repair rate for the last three months has been 4.5% against the maximum target of  1%. This is adding to the cost and delaying production.

Bad Examples of problem statements:

Poor weld quality leads to losses. (This is too vague)

In our welding shop, the average weld repair rate for the last three months has been 4.5% against the maximum target of  1%. Poor quality welders are adding to the cost and delaying production. (At this stage, you do not want to jump to the cause of the problem.)

 

3. Project Scope

What specific problem do you want to solve in this project?

A good scope definition is critical. It gives you a clear idea about what you are going to accomplish. It defines the project's starting point and ending point. It also explains what is included in the project scope and what is not included.

If the scope is too broad, you might consider doing Pareto Analysis and selecting the "vital few." A typical Six Sigma project should be doable in 2 to 3 months' time.

Make sure that the project scope is of just the right size. You do not want to start a project that is too big (solving the world hunger issue) or too narrow that it is not justified to assemble a team for that.

 

4. Goals and Objectives

These are the desired outcomes of the project. They are measurable and achievable. For example, if your goal is to reduce the number of defects by 10%, you need to set up a measurement system to track defect reduction.

The project goals need to be SMART (Specific, Measurable, Achievable, Relevant, and Time-bound).

Example: To reduce the weld repair rate from the current level of 4.5% to 0.5% by the end of Dec 2016.

Set milestones for each phase of the project. These help you keep track of progress. At the simplest level, create a plan showing the planned start and end date of each of these five project stages. When creating the plan, consider the time required for the gate reviews as well.

5. Project Performance Measures

You can use any performance measure that you feel is appropriate for your project. The most common ones are:

 Monetary Benefits

• Increased sale and revenue
• Reduce cost
• Avoid cost
• Avoid investment
• Cycle time reduction
• Reduced inventory

Non-monetary Benefits

• Customer satisfaction
• Employee satisfaction
• Reputation

 

6. Charter Review

Review the charter and make necessary changes. Make sure that appropriate stakeholders are involved in the review of the charter.

 

7. Plan – DMAIC start/end

DMAIC stands for Define - Measure - Analyze - Improve - Control.

Set milestones for each phase of the project. These help you keep track of progress. At the simplest level, create a plan showing the planned start and end date of each of these five project stages. When creating the plan, consider the time required for the gate reviews as well.

 

8. Team members commitment

It is essential that all team members commit themselves to the success of the project. If they don't, then it will take longer than expected to complete the project.