14.5 Tools: Project Selection

Now that you’ve learned how vital pilot projects are to building momentum for lean six sigma, you may be wondering, “How do I pick the right pilot project?” Project selection is really all about comparing your options.

The Benefits-Effort Matrix

Figure 14.3 is a quick-and-dirty way to screen your options. Simply compare the expected benefits to the effort required to obtain them.

You may be tempted to look for pilot projects that don’t require much work but guarantee impactful benefits. Certainly, getting some quick hits is always nice. Harvest these projects opportunistically. Don’t, however, let these quick hits distract you from your longer-term goals. You want to do more than show off benefits. You want to define and document the proven path to implementation success. That means you need to find a showcase pilot project that gives you valuable experience in working through implementation challenges. You will find these projects in the blue and orange zones.

The Weighted-Factor Model

You can probably imagine that lean six sigma projects come in all shapes and sizes. That means you can’t make a simple apples-to-apples comparison! To get the decision right, you need a tool that helps you compare distinctly different options. Multi-criteria analysis is such a tool. Before we talk through an example, let’s discuss four reasons why you want this tool in your managerial toolkit.

1. Intuitiveness. Multi-criteria analysis is intuitive, making it a great tool for communicating your process and your results to colleagues.

2. Quantifiability. Multi-criteria analysis enables you to quantify subjective criteria. It also allows you to mesh both quantitative and qualitative issues into a cohesive story.

3. Applicability. Multi-criteria analysis is widely applicable. You can use it in any situation where you must compare alternatives (e.g., carrier, location, or supplier selection).

4. Disciplined. Multi-criteria analysis invites you to do your homework in a systematic way. It brings discipline and visibility to the comparison process.

Now, let’s offer a warning. Multi-criteria analysis is only as good as the effort you put into it. The old saying, “Garbage In, Garbage Out” or GIGO applies.

Let’s talk through the five essential steps of multi-criteria analysis.

Step 1: Decide on Criteria

Your first step is to identify the most critical criteria. Ask your team, “What makes a good pilot project?” You know you want the project to be doable. You want to create a clear win. So, you must be able to measure results. Beyond that, you want a project that people will get excited about and for which you can find a passionate project champion. Other criteria might include the following.

• Fit to company strategy

• Connection to customer experience and satisfaction

• Project cost and affordability

• Timeliness—the project can be done in a reasonable amount of time (three to six months)

For our example, let’s focus on five criteria: Scope, buy-in, documentability, timeliness, and cost. Table 14.1 provides a checklist you can use to evaluate potential lean six sigma projects.

Step 2: Set Weights

You next need to decide how important each criterion is relative to the others. One way to make this visible is to imagine you have a stack of 100 pennies. Now, allocate pennies to each of your criteria. The number of pennies you dedicate to each criterion is your weight. Be sure to put in your decimal point, i.e., 30 pennies = .30. Note: When you add up your weights, they should equal 1.0.

For our example, take a look at the second column in Table 14.2. You’ll see that we allocated 25% to our most important criteria—scope, buy-in, and documentability—but only 15% to timeliness, and 10% to cost, our least important criterion.

Step 3: Define Scoring System

You need a scoring system for each of your potential suppliers. Each supplier will be scored on the same scale. People use a variety of scoring systems, such as 1-3, 1-5, 1-10, or 1-100.

For our example, we use the 1-100 scale to “fine-tune” your assessments. Think about it this way: The difference between a 3 and a 4 on a 1-5 scale is pretty big (specifically, 4 is 33% higher than 3). If one project truly offers only slightly better buy-in than your other options, you want to be able to assign the project a few points (e.g., 80 compared to 75) without skewing your results.

Step 4: Evaluate Options

At this point, you are ready to go to work and collect the data needed to fill out your comparison matrix. Remember, the quality of your effort in the evaluation process will determine the quality of your decision.

Looking at our example, you would conclude that each of your projects is pretty good. You’ve done a nice job with your initial screening. But each project possesses distinct strengths and weaknesses.

Step 5: Calculate Results

Here, you calculate each carrier’s overall score by multiplying the score for each criterion by the associated weight and adding up the results for all the criteria.

Looking at our example, Red Hawk Line is your highest-rated project. The project is doable and documentable, and you have a passionate project leader. The only real downside is how long the project might take to deliver results. If you decide that this is a big drawback, the Buckeye Line looks like a viable alternative. Spares Inventory would even be an acceptable alternative.

Let’s conclude with an important caveat. Now that you’ve calculated the results, you may be tempted to say Red Hawk is the best choice—we’ve proven that mathematically (i.e., 95.5 is bigger than the other numbers). However, you need to ask, “How robust is your decision?” Think about it this way: You’ve made several subjective judgment calls to develop your comparison matrix. How confident are you of your assessment?

As you and your team consider likely scenarios and tradeoffs, you should perform a sensitivity analysis. That is, for each likely scenario, ask, “What if X happens . . . ?” Then change the weights or scores in your matrix to evaluate how your analysis changes. If you are using a spreadsheet, you can check out a lot of alternatives pretty quickly. When you perform a well-reasoned sensitivity analysis, you will be able to answer the question, “Is your choice robust?” You will also identify the circumstances that would lead you to select a different project.

To review the logic and mechanics of performing a weighted-factor analysis, watch the following video tutorial.