25 March 2008 by Michael Marx
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Naysayers in Erie County |
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Six Sigma in Erie County is seeing setbacks as skeptic county legislators put a cap on the Six Sigma budget. The initial one million dollars planned has been slashed to $120,000.
They want to pilot the initiative first, to see what happens…If only the legislators had done their research before making such a hasty decision. iSixSigma Magazine research from Nov/Dec 2005 outlines the ins and outs of starting up a Six Sigma initiative. Finding One: You get what you pay for. Fifty percent of respondents (536) from companies that invested less than 500K on Six Sigma the first two years didn’t even see their investment back. Nearly 75 percent of respondents (260) from companies that invested 500K to 1 million saw an ROI of 2x or more. As the spending increased, so did the ROI. (Finding 1, Table 1.2, pg. 34) Finding Three: Companies that begin with an enterprise-wide initiative have a higher ROI than those that start with a pilot program. Fifty three percent of respondents from companies who did not make their initial investment back the first two years worked from companies who started with a pilot initiative. Sixty percent of respondents from companies who saw an ROI of 8x or more worked for companies who started Six Sigma enterprise-wide. (Finding 3 Table 1.2, pg. 38) I’m afraid that unless Hammond can really focus his efforts under the budget constraint, the legislators have sowed their own seeds of mediocrity. Hammond and the Six Sigma team should still be able to save money despite the cuts. After all, this is a government organization, where like it or not, admit it or not, there are apples, oranges and mangoes just laying around for the plucking. |
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| posted by Michael Marx at 4:13 PM ET | comments [2] | |||||||||||||
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| posted by Ian Furst [ http://www.waittimes.blogspot.com ] | 25 March 2008 at 8:34 PM ET |
My favourite foul-up was under-investing in our first major sigma-quality initiative. It started with a new computer network which was to be the backbone to collect all the metrics, imrpove communication, blah, blah, blah. The consultant came in and I decided he was too expensive. The next one came in and same things. I got my price point on the 3rd one. Within 18months I had gone through 2 more consultants and had to rebuild the entire system to achieve stability (preformance came much later). In the end, the cost of my stuipid mistake -- 100% of the budget. There are certain things you should not look for a bargin with. www.waittimes.blogspot.com |
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| posted by Bob Yokl [ http://www.strategicva.com ] | 1 April 2008 at 9:12 AM ET |
My Take - HUGE MISTAKE if you think that way! Hey I have been in the cost management world for over 17 years now and for the most part have been a low cost player in what we call the Value Analysis/Value Engineering World. The biggest mistake that our clients have made is OVER-INVESTING up front with their major initiatives and wasting millions of dollars as a result. I am sorry to say but most consultants do not know the organization's they are about to work for and propose major projects to. The consultants have to rely on what the customers tell them and in many cases they are not going to spend a lot of time until they are getting paid to do so. Bottom line the customers do not know Six Sigma or Lean and therefore do not know exactly what they REQUIRE for the enagement. It's like buying a Stapler from Staples, Inc., you can buy the $3.69 stapler or you could go as high as the $600.00 electric ---but which one really meets your exact requirements??? Probably the $10.50 stapler. I think Erie County is taking a step back in the right direction and in reality this is what they should have done in the first place. My firm does not even offer the large contract anymore until they do the initial findings analysis first as a small fraction of the fee of a large engagement. Basically doing cost management on the original money savings/quality improvement initiative and spending only what you have to. |
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