Financial Impact of Completed Projects: Update 2018 – Part 2
Posted: April 2018
In Part 1 of this blog we provided a summary of the financial impact reported by Green Belts and Black Belts who submitted projects for certification [Part 1]. As noted in that blog, the reported financial results are on an annual basis, contain a mix of hard and soft savings, include both GB and BB projects, and are across a variety of industries. These results are for a total of 415 projects submitted for certification review over the period from 2003 until March 2018. In Part 2 of this blog we are breaking down the reported results into different segments based on two criteria: Project Type and Industry.
First – a little background on our approach: When projects are submitted for certification they are assigned to one of TMAC’s MBBs for review. In addition to the Powerpoint documentation some students submit Excel files, Before-After photos, drawings of floor layouts, etc. And we always expect to receive a letter of support from the Project Sponsor. In performing the project review our staff have four basic questions:
- Did the belt follow the DMAIC process?
- Did the belt use appropriate LSS tools and methods?
- Did the project result in measurable results?
- Was the project sponsor happy with those results?
Once the certification review is completed we add the pertinent project information into a database. Information tracked in the database include the belt’s name, company, date of certification, project type, industry, and financial results. Project type includes: Lean, Six Sigma, Kaizen, and Design for Lean Six Sigma (DFLSS). This last project type – DFLSS – is rare, and therefore not included in the table below.
Table 1: Financial Results by Project Type – 2003-2018
Some items of note on this table:
- The designation of Project Type is based on a detailed review of the project documentation. Obviously, many projects combine a mix of Lean and Six Sigma tools. Our staff choose one of the three project types based on our understanding of the primary approach used.
- In addition to Mean and Median this table contains a third measure of central tendency: Trimmed Mean. The Trimmed Mean is simply the Mean of the sample after removing the top 5% and bottom 5% of the data. In other words, all of the outliers are thrown out.
- Six Sigma projects were most common (50%) and also had the highest reported results (median – $137.5k). And the trimmed mean for such projects ($337k) was quite strong. These results should help allay any fears of the demise of Six Sigma.
We also examined financial results by industry. Over the past 14+ years we have certified belts working in a wide variety of industries, including manufacturing and service companies. Here are the results reported after segmenting by industry, and sorted by number of projects:
Table 2: Financial Results by Industry – 2003-2018
The highest trimmed mean is for manufacturers of Oil & Gas Equipment. This isn’t surprising given the high prices for equipment used in drilling wells, especially ‘downhole equipment’ such as sensors, fracking devices, drill bits, etc. Somewhat surprising is the result that Healthcare (trimmed mean – $280.6k) is in a tie with Aerospace ($281.2k) for second highest results reported. In third place is Continuous/Chemical ($241k) followed by Service ($155k). Put differently, financial results indicate that two of the top five industries were not manufacturers.
If you have questions about this analysis please let us know.