During the improvement phase of a DMAIC project, Six Sigma teams brainstorm possible solutions for the root causes identified in the analysis phase and rank those solutions according to costs, how effective the solution would be, and how likely the solution could be implemented. Analytical rankings are used to prioritize and select solutions for implementation. Teams pilot solutions through beta tests or small rollouts, collect data on the solution and verify that the solution is working as expected via statistical analysis. Once the team is confident that the solution works to address the problem, it plans and implements a full rollout of the solution.
Solutions Selection Matrix
A solutions selection matrix is an analytical tool that lets teams propose and rank solutions for any of the root causes identified in the analysis phase. While teams can work simultaneously on multiple solutions if multiple prioritized root causes are found, Black Belt and other team leaders must remain cognizant of timelines, resources, scope, and the project’s purpose. If a single solution provides enough positive impact to reach project goals, then other solutions might be saved for future improvement projects. If one solution would reach results, but another solution would be especially easy to implement and provide additional positive results, the team is likely to decide to implement both.
A solutions selection matrix can be created in Excel, and teams should work on the document together in a brainstorming capacity. It’s a good idea to include the entire team as well as relevant subject matter experts and stakeholders during solutions brainstorming. This ensures the solutions the team comes up with are more likely to be a realistic fit for the process and business; once solutions are selected using the matrix, teams will also likely have to get sponsor, champion, or leadership council support before a partial or full implementation is possible. This is especially true where solutions require expenditure or will impact processes and people outside of the project’s scope.
An example solutions selection matrix is pictured below.
The matrix is completed by:
- Entering the problem statement in the first column. This should be the final problem statement that was arrived at during the measure phase if the team decided that the statement should be altered after gathering data. Otherwise, this can be the problem statement from the define phase.
- Entering a priority validated root cause from the analyze phase. If the team is going to attempt to solve more than one root cause during the improve phase, it should create a solutions selection matrix for each root cause.
- Brainstorming potential solutions in column three. During the brainstorming process, teams should not question or attempt to analyze solutions, but should record any solution suggested that seems at all viable. The only solutions that might be ignored are those that are clearly out of scope or impossible, but the Black Belt leading the brainstorming exercise will have to use his or her own discernment about such suggestions.
- Noting, at a very high level, the practical methods by which a solution could be implemented. In one example used in the analyze chapter, a commercial bakery had a problem that was caused by lack of baking instructions. In this case, the Six Sigma team might propose that staff be provided with proper instructions. The method by which that solution occurs is written documentation and training.
- Rating solutions. After a list of possible solutions and practical methods is created, the team rates each possibility on effectiveness, feasibility, and cost-benefit. Each category is given a rating between 1 and 10.
a. Effectiveness is the measure of how well a solution will eliminate a root cause for a problem, with 1 being not effective and 10 being highly effective.
b. Feasibility is the measure of effort required to implement the improvement, with 1 being not feasible because of the effort or resources required and 10 being highly feasible.
c. Cost-benefit is an estimated measure of how the costs of a project compare to the savings expected. This rating is not a formal cost benefit analysis, but is a high-level estimation. If savings are expected to outweigh the costs associated with a project, the team ranks the solution as high. Otherwise, the team ranks the solution low. - The scores for effectiveness, feasibility, and cost-benefit are multiplied to calculate an overall score. The overall score can be used to prioritize solutions and select the solution that features the best overall effectiveness, feasibility, and cost-benefit rating.
Consider a possible solutions selection matrix created regarding the medical claims denial example used
in the analyze chapter.
During the analyze chapter, a Pareto analysis indicated that timely filing issues were a root cause for high claims denials. In the solutions selection matrix above, a team has identified and prioritized four possible solutions after discovering that claims were not filed on time because claims billing staff didn’t have all the proper information in time.
The first solution is to require the front desk to collect as much information as possible. The team gave this solution a mid-range rating for effectiveness because it doesn’t address the fact that clinical information can still be missing from the claim. But, the process would be effective at gathering demographic information and would not require large expense or effort to implement, so the team rated it high for the other categories.
Next, the team considered creating and requiring a patient email or portal system so billing staff could communicate quickly with patients when information was missing. Because not all patients have email and many would be unlikely to use such a system, the team ranked this solution as low for feasibility and effectiveness.
The third solution considered by the team was requiring clinicians to include all information necessary for billing as they charted during the visit with the patient. The team thought this solution would be fairly effective, but that clinicians would be unlikely to take the time to be so thorough when dealing with patient issues. The solution might also slow physician visits, resulting in a negative impact to revenue.
Finally, the team considered a solution that put certain staff members in charge of claims with missing information. Because those staff members could concentrate on missing claims and would work through a new workflow built by the team, they would be more likely to file claims on time. Overall, the team ranked this solution highest, but they decided to implement both solutions one and four because solution one required so little effort and would actually help drive the success of solution four.
Cost Benefit Analysis
When teams include the appropriate individuals in the process, a solutions selection matrix is very adept at identifying the best possible solutions for implementation. Leadership councils and executive sponsors often want more information about the costs and benefits expected for a solution, though, so teams should be prepared to create a cost benefit analysis. Black Belts often have many of the elements required for such an analysis after the measure and analyze phases, but teams might also need to work with accounting, finance, or business planning departments to gain accurate financial details required.
The goal of a cost-benefit analysis is to compare the costs of implementing a solution with the monetary benefits expected from the solution. Costs include expenses such as software development or purchase, equipment purchase, building development or renovation, additional labor or hiring, training expenses, additional supplies, and any losses associated with disruption as the solution is implemented. Benefits might include increased product margin, revenue, cost savings or avoidance, and intangible benefits such as increased staff morale or customer retention.
Six Sigma teams usually aren’t in a position to handle detailed cost-benefit analyses, such as might be completed by a certified accountant, but they can create an idea of cost-benefit relationships via the payback method of analysis. This is the simplest way to approach such an analysis and provides leadership with an estimated time before a project “pays off.”
Payback, or Pay Off, Analysis
To conduct a payback analysis, Six Sigma teams must have an estimated cost for the project as well as the estimated financial benefit per year. Remember, financial benefits don’t just include increases in revenue. Cost savings, new customers, or mitigation of customer loss can all be considered as contributing to benefits each year. The team also needs to understand the estimated operating costs of an improvement for each year.
The formula for this analysis is:
(Cost of implementing solution) / (Annual financial benefits – annual costs)
If a project costs $50,000 to implement and $2,000 per year in extra labor, and the team expects the project to generate $15,000 in financial benefits each year, then the calculation is:
$50,000 / ($15,000 – $2,000)
$50,000/$13,000
Or, approximately 3.84 years until the project pays for itself.
Obviously, organizational leaders are looking for payback calculations that are as short as possible, but if
the solution will solve a major problem or set a foundation for extraordinary success in the future, a
longer payback time doesn’t necessarily keep a solution off the table.
Net Present Value
A more concise way of calculating cost benefits is known as the Net Present Value or NPV. NPV adjusts benefits and costs as time passes because cash flow in the future is not as valuable as current cash flow due to inflation and other economic factors. The discount rate for various endeavors can be calculated using expected returns, interest rates, or inflation rates. Often, corporate finance departments can provide Six Sigma teams with a discount rate used for NPV in the company. A very basic NPV model is shown below.
In this model, the team spent $50,000 implementing a solution and expects a $2,000 labor expense associated with the solution each year. The estimated benefits from the solution are recorded for the first two years, and all of the benefits and costs are added up for a third-year view. The NPV is discounted by 5 percent, and the final number is seen in the bottom right cell: $2,850. The goal is a positive NPV, so this project fits that goal.
Piloting a Solution
Once a solution is selected and work done to bring it into production at a minimal level, the Six Sigma team is ready for a pilot. A pilot is a limited trial of a solution in a live environment. No matter how much analysis was completed or how well test cases were run, teams can’t know for certain how a solution will behave in the “wild.” The live production environment will always have variables that teams can’t account for, particularly when people are involved in the process.
Benefits of a limited pilot include:
- Use of resources are limited, which reduces waste if the solution turns out to be incorrect or not effective in resolving the problem
- Confirmation that expected results occur
- Allows troubleshooting of a new solution on a smaller scale to minimize disruption during full transition
- Lets employees outside of the Six Sigma team provide feedback on the solution and implementation to make the final rollout more successful
Teams don’t have to pilot every change they make. Simple or small changes can be made without piloting as long as teams document the changes well and measure results for verification. When changes are large in scope, could cause expensive or expansive consequences, or would be difficult to reverse, teams should begin with a pilot. The same is true for any solution that might be expensive to implement at a full scale.
Pilots can occur on a limited scale or for a limited time. Limited scale pilots incorporate a specific region, team, group of people, or machinery. Limited time pilots implement a temporary change; at the end of a scheduled time, the team makes a decision about whether the change should be made permanent.
Pilots can occur with either processes or products. Process pilots might feature testing specific locations, testing results with some customers, working with some employees to test new processes, or conducting dry runs of a process without impact to the end-user. Product pilots are conducted using test markets, product models, or alpha and beta testing of the product with certain end-users.
To create a pilot, a Six Sigma team must first select the audience for the pilot. Internal process pilots can be performed by a select team or a select few employees. External product pilots can be performed using a subset of customers. For the best pilot results, avoid biasing results by selecting the best possible performers or customers who are most likely to work hard to ensure a product succeeds. When the solution is implemented on a full scale, it will be used by everyone, so you want to ensure it works for everyone.
When possible, pilot at a very small level and then expand the pilot to a larger audience. This is the premise behind alpha and beta testing. A very small set of loyal customers tests the product first, because you know they will provide feedback. Next, an expanded set of customers tests the product after teams have made changes associated with feedback from the first group of users. Finally, if the limited tests are successful, teams choose to roll out the product to the entire audience.
Analyze Pilot and Test Results
Six Sigma experts can use all the tools associated with the analyze phase to test whether solutions have a positive impact during testing or pilot programs. Hypothesis testing can be used to compare data from before the solution to data after the solution, determining if there is a statistically significant and positive change. Graphical analysis can be very helpful in demonstrating for executive leaders how a solution has positively impacted a problem by reducing defects, improving production or efficiency, or reducing costs.
Planning Implementation
Once solutions have been verified through tests and analysis, teams can begin the work of implementing changes on a large scale. Teams should create and work from an action plan during this vital and active of the DMAIC process to ensure that no plans or requirements fall through the cracks. During the active part of the improve phase, the project leader will likely delegate numerous activities to members of the team, and the team will also rely on input and assistance from those outside of the Six Sigma team. Keeping an action plan document helps everyone on the team see where they are in the process, what they are responsible for, and what date work must be completed by. If the Six Sigma team is working with a project manager, he or she is likely responsible for action plan documentation and follow-up. Teams can also use a basic spreadsheet or Word document, which should be saved in a common location, to keep track of what work is to be done and who will do it. Because every project is unique, improve action plans are also unique. Most action plans will contain common tasks such as documentation, training, and transition.
Documentation
First, the Six Sigma team should have documented all of its work so far during the DMAIC process. If asked, the Black Belt or designated team member should be able to present analysis in the form of data tables, statistical calculations and explanations, and graphical analysis. All brainstorming activities and diagrams should be saved in a central file location where all team members can view them and appropriate team members can edit them as needed. Access to these documents helps team members work efficiently on additional documentation required for implementation. Almost any organization will require new processes or changes to processes to be recorded in standard operating procedures. Depending on the organizational structure of a business, Six Sigma teams might be responsible for drafting such documents or they might need to work with knowledge management resources to create SOPs in keeping with corporate branding and templates. Teams might also create general communications letting other staff members know about the upcoming changes and the reasons for those changes as well as general reference documents such as cheat sheets and Frequently Asked Questions.
Training
Strong documentation is key to the next part of implementing improvements, which is staff training. Six Sigma teams usually aren’t in charge of complete staff training on any improvement they make. Instead, teams begin the training process by working with training subject matter experts or delegates in the department impacted by the upcoming changes. The Six Sigma team trains these individuals, who then go on to train other individuals who will be impacted by the process. At some point, the process training should be integrated into regular organizational training by trainers or knowledge management departments.
Transition
During the improve phase of a DMAIC project, teams should begin to consider the need to transition a process back to the business and traditional process owner. Transition is part of the control phase, but teams should move from improve to control with a good understanding of how the process should be measured and monitored. Strong documentation and training during the improve phase helps cement the success of the control phase.
Improve Tollgate Checklist
o Solutions were reviewed and prioritized.
o One or two top solutions were selected for action.
o Solutions were implemented on a limited basis.
o Data from limited trials was analyzed and solutions appear to work as expected.
o Cost-benefits analysis was performed.
o Sponsor, champion, or executive steering committee signed off on implementing the solution completely.
o All team members agree the solution should be implemented.
o The solution is fully documented through SOPs and training materials.
o Critical staff received training on the solution and are prepared to pass that training on to others.