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Involving Finance In Six Sigma Implementations

Mar 10, 2008
The Process

Including the finance department in Six Sigma deployment is a decision usually made at the design stage of the operation. Here, the department is treated as an associate in the establishment and operation plan. Easy said than done, many operations people are of the view that people related to accounting or anything to do with it are scorekeepers, auditors, or bookkeepers. Making them adapt to the awkward inclusion of the finance department is always a barrier.

All the ideas that had the ability of becoming Six Sigma projects have to be evaluated by the finance department before being finalized. Thereafter, the finance department authenticates the potentiality of every project to affect the result. This not only restricts process owners from pinpointing Six Sigma projects but also allows them to identify prospects. Additionally, financial evaluations act as decisive factors for business decisions and viability of an opportunity to the Six Sigma project.

Six Sigma Committees are active in the decision-making process. It is known that process owners and Belts frequently criticize the inclusion of the finance department and hold it responsible for the stagnation of profitable projects. However, later they become conscious that the projected advantages of a few projects may not even influence the result.

Finance can work with the teams for identifying the advantages of any project. There are times when some projects actually project more profits more benefits compared to what the process owners originally forecasted. The process owner and the finance department should concur on how these benefits can be premeditated after implementation of the project.

A second review of the inclusion of finance is carried out at the end of the DMAIC process. Afterwards, the ownership of the solution is immediately transferred to the process owner. The Belts are not involved with the calculation of benefits - they only concentrate on the DMAIC process.

Eventually, during first year after the implementation of the date solutions, the company records the profits. If there is a possibility of making an improvement, new Six Sigma projects are created. Whereas involving finance in a Six Sigma project generally starts before involving the Belts, it also goes on even after the Belts transfer ownership of the solution to the process owner.

Advantages of involving Finance in Six Sigma

-By recruiting a finance team to calculate the benefits, the real benefits are easily recorded with accuracy. This allows the team to focus completely on improving the KPI, without thinking about the final financial results. An improvement in the KPI can affect the bottom line.

-Inconsistencies may occur due to differences in working and handling styles. Instead, insisting on a single process that ensures proper financial calculation of every operation can offer comparable results.

-If the process of calculation remains with the owner, they may end up forgetting to calculate other processes that are affected by the calculation.

-These audits can be conducted internally or by simply inviting eternal teams to review calculations of the benefits.

Working with the finance department requires effort and a more proactive approach. Every finance team requires a single member to work on each individual project - this is required to understand the business better and influence the results of the company.
About the Author
Tony Jacowski is a quality analyst for The MBA Journal. Aveta Solution's Six Sigma Online offers online six sigma training and certification classes for professional six sigma certifications such as, lean six sigma, black belts, green belts, and yellow belts.
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