1. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Financial Workshop – Part 2 August, 2006

2. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 1 General Topics What is Six Sigma? Role of Finance FA Training Modules Chartering Support Project Support Reporting & Auditing Results 6Sigma Overview Module 1Module 2Module 3Module 4 General Topics What Makes a good project What does a well written Charter look like? Getting Data? Hard vs. Soft Benefits? General Topics DMAIC Map with Finance Tollgates Gatekeeper vs. Business Partner General Topics Project Closure Process Auditing & Reporting Techniques Example Matrix Existing Reports & Dashboards Key Deployment Metrics Understanding 6Sigma and the Financial Analyst’s Core Responsibilities Core Job Responsibilities

3. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Introduction To Lean Six Sigma

4. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 3 Customers are expecting 1000 Upper Specification Limit Lower Specification Limit …but will allow some variation within the Spec Range 1000 No Less Than 950 No More Than 1050 Measure Of Quality

5. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 4 Process Characteristics Big Variation Problem…Equals Scrap or Rework Upper Specification Limit No Less Than 950 Lower Specification Limit No More Than 1050 Defects Measure Of Quality

6. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 5 Six Sigma Lingo Unit: Each Measurement Defect: Measurement out of Spec Defect Opportunities per Unit: 1 Quality expressed as DPMO (Defects Per Million Opportunities) Upper Specification Limit Lower Specification Limit 4444 SpecStandardSigmaDPMO % WidthDeviationLevelIn Spec 100 25 2308,500 69.1 100 17 3 66,800 93.3 100 12 4 6,200 99.4 Measure Of Quality

7. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 6 Measure Of Quality Process Capability needs to be better than you think! Activity Defects @ 99% Defects @ 99.9997% (3.8 Sigma) (6 Sigma) Mail 20,000 lost articles 7 lost articles Delivery of mail per hour of mail per hour Drinking Unsafe drinking water Unsafe drinking water Water for 15 mins per day for 2 mins per year Hospital 5000 incorrect 2 incorrect Surgery procedures per week procedures per week Air 2 abnormal landings 1 abnormal landing Travel at most airports each day every 5 years Sometimes 99% is just not good enough.

8. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 7 Upper Specification Limit Lower Specification Limit SpecStandardSigmaDPMO % WidthDeviationLevelIn Spec 100 25 2308,500 69.1 6666 100 17 3 66,800 93.3 100 12 4 6,200 99.4 100 10 5 233 99.98 100 8 6 399.9997 Measure Of Quality Sigma Level is a Measure of Process Capability Not all projects should target Six Sigma Six Sigma Lingo Unit: Each Measurement Defect: Measurement out of Spec Defect Opportunities per Unit: 1 Quality expressed as DPMO (Defects Per Million Opportunities)

9. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 8 Variation Reduction Improving Process Performance Off-TargetVariation On-Target Center Process Reduce Spread X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X

10. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 9 The Goal: Breakthrough Time Defects and Unnecessary Steps Six Sigma Breakthrough Current State Future State Improvement Period

11. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 10 12 Steps Of The Breakthrough Strategy (Example Project with 12 Steps in Appendix) 1.Select Output Characteristics 2.Define Performance Standards 3.Validate Measurement System 4.Establish Process Capability 5.Define Performance Objectives 6.Identify Variation Sources 7.Screen Potential Causes 8.Discover Variable Relationships 9.Establish Operating Tolerances - Implement Improvements 10.Validate Measurement System 11.Determine Process Capability 12.Implement Process Controls

12. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 11 Define MeasureAnalyze ImproveControl DMAIC Process For Operational Excellence On Average the Process Meets Customer CTSs… But it’s not Stable…not Predictable Obtain client requirements Scope projects (aligned to business strategy) Mistake Proof the solution Standardize process Validate the solution design Validate and pilot solution Implement improvement plan Identify and quantify root causes Establish improvement targets Measure existing process Quantify process performance Calculate sigma level Conduct Measurement Systems Analysis

13. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 12  Significantly Higher OI…Direct Productivity  Efficient Processes…Speed everywhere True Focus on What the Customer Wants  True Focus on What the Customer Wants  Improved Employee Satisfaction It’s about Getting Results What Is Six Sigma?

14. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Deployment Roles

15. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 14 Chartering Roles and Responsibilities Champion MBB Black Belt Process Owner Steering Committee Identifies areas of opportunity within span of control Works with Champion to write charter Used as needed on a limited basis supports Champion in charter writing (data collection & analysis) Handed finalized charter Directs Company project focus Approves final charters Supports Champion with the technical aspects of the charter Helps validate assumptions Writes charters based upon business needs Works with Process Owners and MBB to identify projects Financial Analyst Works with Champion on financial metrics Validates first pass financial benefits of projects Finance Champion Works with Financial Analysts to ensure consistency of approach 6Sigma Exec Team Manages Project Pipeline Encourages Champions to fulfill deployment goals

16. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 15 Charter Flow Champion MBB Process Owners Business Leaders Finance Development of Project Ideas Focus on Best Charter Opportunities Steering Committee Approval Write the Formal Charter Handoff to Blackbelt Charter ideas developed from assessment activities with process owners, business leaders and finance Filter the list of possibilities based upon agreed project guidelines: Financials Business Priorities Data Speed … Champion pulls together required elements to write charter Involves MBB, Process Owners and Financial Analysts where needed Steering committee reviews charters for proper business focus and completeness Cancels or sends back for rework charters which are inadequate Charters handed to Blackbelts based upon agreed criteria Project officially kicks off into the Define Phase Champion MBB Process Owners Financial Analysts Champion MBB 6Sigma Exec Team Champion Steering Committee 6Sigma Exec Team Champion MBB BB Process Owners

17. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 16 The Evolution Of A Project vs. Level Of Responsibility Level of responsibility Black Belts Team/Process Owner Time Project Hand-off MeasureAnalyzeImproveControl/Sustain Define

18. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 17 What is a Project? A discrete well scoped planned activity that is focused on fixing a customer or subset of a business problem within 4 – 6 months A project is defined by a written project charter approved by a Steering Committee -Finance has approved an initial financial estimate of the project value It is led by a Black Belt who facilitates a team of employees that are familiar with the process where the problem appears to be occurring The Black Belt is mentored by a -Project Champion - who breaks business and resource barriers and ensure the project is moving to completion -A Master Black Belt – who breaks technical and resource barriers and ensures the project is moving to completion

19. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 18 What is not a Project? A project is not a large Business Problem, for example: -Reduce Inventory for North America -Increase sales in the Northeast Region -Reduce Defects for the Nashua Plant These are “boil the ocean” issues, which are influenced by many factors Asking a Black Belt to solve a large Business Problem could result in extremely long project cycle times and incomplete solutions – results do not last! The goal - breakdown these business problems into their discrete factors until the project is identified. Typically, many projects are required to solve a large business problem – Increase Gross Margin – Improve Working Capital – Improve Customer Satisfaction Project Champions will be responsible for translating Business Problems into Projects

20. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 19 What is a Project Charter? The “Project Charter” is a document used to clearly describe the problem. It is structured, quantified, and contains the following elements: -Problem Statement Quantifies, baselines the issue, how long has it been a problem -Project Objective When will the problem be solved and by how much -Primary Metric, “Y” Definition of the defect - agreed to by customer and business -Defect Definition The metric or measure used to determine project success -Financial Benefits A written calculation as to the financial benefit based on project success -Scope of Project“Right sizes” the project to be successful in a give timeframe -Team Members Those who assist the Black Belt in achieving success The Project Charter is a contract between the Team and the Business Leaders to solve the identified issue

21. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 20 Why Do We Care About Well Written Charters? Writing project charters is not a trivial exercise, developing well written charters requires focus, data, and involves several iterations. A well written charter is easily understood by all – even those not involved in Lean Six Sigma It has been proven, time after time, that well written project charters have a much higher probability of success – shorter cycle times and minimal, if any, degradation of financial benefit.

22. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 21 What Does a Project Charter Look Like? (Reference Excel file of Project Charter – “Charter” tab) Not a trivial exercise... Gets better with experience Champions are primarily responsible for creating Project Charters for our Black Belts We will learn A LOT about creating well written charters during our training Reference the upcoming section on developing charters

23. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 22 Benefits Calculation

24. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 23 Benefits Calculation

25. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 24 Benefits Calculation

26. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 25 Benefits Calculation

27. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 26 Project Selection Checklist (Additional Info. for Each Criteria in Appendix) This checklist can serve as a guide when thinking through potential projects. If we don’t align with 1 or 2 criteria, we may still be OK to proceed. If we don’t align with several criteria, there is valid concern about the project succeeding.

28. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 27 Project Example

29. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 28 Project Example

30. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 29 Project Example

31. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved FA Project Support

32. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 31 Topics Covered 1.The role Finance during the DMAIC Process What are the generally accepted Tollgates and financial requirements during the DMAIC phases How to question and support the Blackbelt projects and their financial assumptions 2.Typical hurdles Financial Analysts face during the DMAIC steps What problems analysts typically face when gaining financial validation. (Data Assumptions, Business Metrics and Baseline Performance) 3.Benefit calculations and expectations for Blackbelts Using a case study format, interactively work through the financial tollgates with a hypothetical Blackbelt project.

33. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 32 Define Measure Finance Analyst  BB Reviews project assumptions and estimates w/ FA  Help BB Identify appropriate sources & uses of financial data to measure, estimate & validate as project progresses  Consider up- stream/down-stream Financial effects  Review measurement proposals  Send Approval Notice to Finance Champ. BB, PC Analyze Improve Control  Review project fundamentals  Understanding of how financial benefit will be calculated and realized  Approve or re-direct  Engaged by BB as needed to:  Re-define and validate financial Impact (2 nd, 3 rd, 4 th Pass)  Understand Measurement and Tracking Systems if changed throughout project  Think through any potential actions needed to re-allocate/eliminate resources & materials to realize financial benefits  Communicate feasibility / hurdles to Process Owner & Blackbelt  Sit in Project Reviews as requested by Process Owner / Blackbelt  Check approval at each step through Tollgates (If appropriate for specific deployment)  Validate actual benefits impacting Cost Centers / GL Accounts with BB/MBB  Work with Process Owner to insure future budget adjustments are made to impacted Cost Centers / GL Accounts  Review with Finance Champion  Sign-off Project  Tracking of benefits for deployment (Often by FC’s analyst team)  Initiate and monitor audit sampling plans Project Level: DMAIC Checklist – Finance Finance Champion  Final Financial Arbitration of Decisions / Changes / Savings  Training of Finance Community (Financial Analysts) – Cultural Change Agent  Controllership of Six Sigma Financial Rigor & Savings  Validate Baseline Performance  First Pass Benefit Calculation  Categorize and agree to hard/soft benefit calculations to specific GL Account and Cost Center (1st Pass)  Finalized Benefit Calculation Method  Completed Benefit Tracking “Benefits Calculator”  Completed Benefits Calculator reviewed including COPQ assumptions with BB and Project Sponsor  Benefit Calculation example “walk through” and agreed upon  Agreement on benefit tracking  Project Sign-Off  Ensure first benefit period properly recorded

34. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Supporting the DMAIC Steps

35. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 34 To Complete Define - FA Deliverables Deliverables Confirmation / clarification that the project will deliver hard benefits. The BB has a conceptual understanding of how benefits will be derived from this project. Questions for the FAs to ask Are you comfortable with the financial benefit assumptions as written by the project sponsor? -Have you had a chance to validate any of the original COPQ assumptions ($/unit, percentages assigned)? -Has the project sponsor provided and reviewed with you the financial assumptions? -At this point, do you still feel comfortable with the amount of savings estimated in the charter? Have you identified any existing reports which may be used to verify financial benefits? Does your project involve improving employee productivity? If so … -Are you planning to remove FTE’s from the business? And if yes, have you had this discussion with your project sponsor are received their agreement? -If you are not planning on removing FTE’s but gaining benefits through productivity how will you “prove” improvement? (existing overtime reports, reports showing hourly scheduling reductions?) How can I help you understand better the financial aspects of your project or its assumptions?

36. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 35 Case Study – Damaged Shipments - Define Problem Statement During FY 2005 the Retail Warehouse Distribution Manager noticed on his quarterly damage report an increased of 2.6% in the number of damaged units for SKU Item #123456. (A commonly sold electronic gadget in the companies 50 retail stores on the East Coast). The total number of damaged units in 2005 was 7,551 representing lost sales of $1,3921,000. Project Goal is to reduce damaged units by 70% resulting in $925,000 in increased sales to the business. (see attached data file) Financial File

37. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 36 To Complete Measure - FA Deliverables Deliverables Baseline Performance - Finalized First Pass Benefit Estimate Calculation (Conceptual) Questions for FAs to ask Please tell me how you established the baseline performance of your process? -What Baseline Control / Run Chart or Process Capability Report was used to establish current performance? -How many data points were used to establish your Baseline? -Over what time period was this baseline established? -What risks do you feel are associated with this baseline and are you comfortable with them? Has your MBB discussed the statistical assumptions with you and have you in tern presented them to your project sponsor? -Based on current information, do you think we may have to change the Baseline calculation method during the analyze phase? Conceptually, how will we use this baseline to calculate the benefits for this project? For Example… -(Multiplying the Delta between Baseline vs. Improvement * $per defect) -(Baseline Improvement on a metric which allows for FTE reduction) -(Baseline improvement will be compared with a financial account which should decrease in parallel) -Balance Sheet account adjustment based upon reduced risk associated with metric improvement What assumptions are you planning to use for your Defect to Dollar calculations (%s, $s, Ratios, Assumptions).

38. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 37 Case Study - Measure The Baseline Taking your advice … the Blackbelt identified a Weekly Damage Report which detailed by store location the number of damaged units weekly. The damaged units coupled with the weekly shipment report result in a % of shipments damaged per week. The Blackbelt was able to aggregate the two reports for the past 52 weeks and has created the following baseline control chart. The Control charts shows an average of 12.8% of all shipments being damaged upon arrival. Conceptual Financial Calculation The Blackbelt suggests we subtract the 52 Week Average Number of Damaged Units form from the Actual Number of Damaged Units and multiple the difference by the COGS.

39. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 38 To Complete Analyze - FA Deliverables Deliverables Finalized Benefit Calculation Methodology Blackbelt “Benefits Calculator” Support Document Complete Questions for FAs Please walk me through the financial benefit calculation for your project. -What are the assumptions for COPQ? -How did you arrive at these … %s, $s, Ratios, Assumptions -Could you please show me the back-up methodology for these assumptions (Blackbelt should provide supporting documentation for all assumptions either statistically or from Project Sponsor previously validated information). Questionable assumptions need to be reviewed with the Finance Champion. Walk through an example of how benefits will be calculated for one reporting period of your project. -FA and BB should “walk” through and example calculation of benefits to determine if this calculation method is financially feasible to record benefits for 24months.

40. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 39 Case Study - Analyze Assumptions COGS = $75 / unit Percent of units damaged equals 12.1% The Calculation Method (Expected Number of Damaged Goods “Volume Adjusted” - Actual Number of Damaged Goods per reported period) * COGS Example 70 units damaged during the weekly shipments 1,000 units shipped 121 units would be the expected number of damaged units based on the 12.1% Weekly Benefits Equal = (121 – 70) * $75 = $3,825

41. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 40 To Complete Improve & Control Deliverables FA Completed “Benefits Calculator” (Document or Database to record period benefits) Review Finalized Benefits Calculator & COPQ Assumptions with BB Project Sponsor reviews Benefits Calculator and understands how benefit calculations will be tracked Walk through example of how to record benefits Questions for FAs Can you please provide me with an updated control chart or process capability analysis? -If not, can you tell me how the performance of the process was improved and what the improvement result is? Does the MBB feel comfortable with the improvements? Is the project sponsor comfortable with the data entry requirements? -Do you feel that they will complete these tracking requirements for the next 24months? -Have they delegated the data recording responsibilities to someone else? If so, what is their position and are they comfortable tracking and reporting the data?

42. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 41 Case Study - Improve Statistical Proof of Improvement The Blackbelt returns with 15 weeks worth of improved results in the form of a Control Chart. Are you ready to sign-off on the project financially?

43. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 42 Case Study - Control The Process Owners starts reporting benefits on a weekly basis based upon our agreed upon calculation method ….

44. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Six Sigma Closing, Reporting and Auditing

45. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 44 Topics Covered 1.Discuss existing Deployment Metrics 2.Provide Financial reporting examples and their context 3.Provide client examples of Project Closure 4.Work through an first cut dashboard and reporting cycle for your business. What gets measured, gets done.

46. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Closure and Auditing 6Sigma Projects

47. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 46 Closure and Auditing 1.Clients, based upon their allocated resources and business requirements have taken different approaches to project closure and auditing results Typically more control and accountability requires greater expenditure of financial resources A business must decide which mix is appropriate 2.Finance resources outside of 6Sigma are highly recommended to be part of the validation process Part of the Internal Audit schedule FP&A reviews of business critical projects

48. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 47 Formal Sign-Off Required – Currently eMail … future Kintana Typical Closing Process Flow ImproveControlLeverage Continue Development of Process Ownership of Leverage Plan Begin Recording Financial Benefits for 12Month Period When Appropriate Continue Monitoring Performance ** Project Director Schedules Report Out and Format Multi-generational Projects? Defect Reduc ed Implement Control & Reaction Plan Monitor Performance Finance Analyst Sign Off Deployment Leader Sign- Off MBB Sign-Off Close In Database - Project Complete Implement Leverage Plan No Yes Leverage? Executive Sponsor / DC Sign-Off ** Transfer Ownership & PS Sign Off Implement Improvements Develop Working Control Plan 1 2 3 4 5

49. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 48 Step 1 – Proven Reduction of Defect Typically looking for an control chart and statistical test Control Chart Plus Statistical Proof

50. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 49 Process Hand-off – Contract Project Number ______ Project Name __________________________ Date:______________________________ The Black Belt assigned to this project has reviewed the process improvements with me. The Black Belt has also reviewed process controls with me and I understand all aspects of the Control Plan. As of the date of this document, I am accepting responsibility for maintaining improved process performance levels and have an understanding regarding steps to take should process performance drop below prescribed levels. ________________________________ Project Sponsor/Client Black Belt: __________________________________ Deployment Leader: ____________________________ Step 2 – Transfer Of Ownership (Project Champion Approval)

51. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 50 The Control Plan Signals when process is deteriorating. If the process deteriorates what follow-on actions will be taken. Step 3 – Control & Reaction Plan in Place (MBB Approval)

52. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 51 Step 4 – Finance Analyst Approval Quantifying Actual Monthly Benefits based upon Pre-Approved Benefit Calculation Method (Determined During Define Phase) 1.Calculation Based Upon Agreed Upon Method from Define Phase 2.Uses Actual Results 3.Updated into Project Tracking System

53. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 52 Typical Material Uploaded into Project Tracking Repositories as Part of Final Project Documentation Process Owner Sign-Off Document (or eMail if logistically constrained) Final Control Plan (Excel Control Plan Template) Final Reaction Plan (MS Document, often part of SOP / Manual) Final SOP or New Process Manual (Typically a MS Word Document) Final Power Point Slide Deck / Storyboard (As Used in BB Class Report- Outs) Financial Benefit Calculation Methodology (Templates, Excel File) (Often Project Specific) Leverage Plan (Only necessary if project is planned to be cloned in other areas of the Country) Step 5 – Database Closure & Final Documentation

54. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 53 Closure & Audits - Client Examples

55. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Reporting 6Sigma Results to the Business

56. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 55 Benefit Reporting A 6Sigma deployment is a start-up business within your own company. How and with what frequency will you communicate your results to internal and external shareholders? What Financial and Deployment Metrics are critical to your business? Narrowing down to scope of possible metrics Reporting Automation (where many deployments fall short) Standardizing the Format Actual vs. Forecasted Values Project Pipelines Holding business leaders accountable to performance goals Many Different Metrics and Possible Formats

57. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 56 Benefit Reporting – Deployment Metrics Planned Benefits ($s) Forecasted Benefits ($s) Actual Benefits ($s) Currently Active Charters New Charters generated per period Charters not assigned Total Project Closures Project Closures per period Number of Blackbelts Number of Greenbelts Actual Project Benefits Which make sense for your business … and how should they be presented?

58. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 57 Six Sigma Performance – Spreadsheet Format Excel Based Tracking

59. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 58 June YTD $’000 Total Year $’000 Budget EBIT Cash Actual or Forecast EBIT Cash Highlights / Issues 7,500 9,375 12,417 13,766 12,000 15,000 12,100 16,200 # of Projects 242774172018 # Projects# Finance Approved# Not Approved Started695019 Closed18 0 Six Sigma Performance – Dashboard Format Actuals as of June Closed includes 1 project from Sept. ‘03 for $2.7M Continued momentum in EBIT/Cash Savings 33 projects generate $3.2M EBIT & $1.9M Cash (MTD) Launched 3 rd Wave of 15 BBs & 2 Waves of 25 GBs 3 additional BBs nominated for certification (5 YTD) Financial ResultsProject Pipeline Dashboards

60. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 59 Six Sigma Performance – Traditional P&L Aggregating Total Business Actual and Forecasted Results

61. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 60 Six Sigma Performance – Business Unit Accountability Individual business regions are allocated resources and held accountable for results

62. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 61 Six Sigma Performance – Individual Accountability Individual Metrics Champion 6 Champion 1 Champion 2 Champion 3 Champion 4 Champion 5 Champion 7 Champion 8

63. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Project Benefits Calculator

64. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 63

65. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 64

66. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 65

67. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 66

68. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 67 Define Measure Finance Analyst  BB Reviews project assumptions and estimates w/ FA  Help BB Identify appropriate sources & uses of financial data to measure, estimate & validate as project progresses  Consider up- stream/down-stream Financial effects  Review measurement proposals  Send Approval Notice to Finance Champ. BB, PC Analyze Improve Control  Review project fundamentals  Understanding of how financial benefit will be calculated and realized  Approve or re-direct  Engaged by BB as needed to:  Re-define and validate financial Impact (2 nd, 3 rd, 4 th Pass)  Understand Measurement and Tracking Systems if changed throughout project  Think through any potential actions needed to re-allocate/eliminate resources & materials to realize financial benefits  Communicate feasibility / hurdles to Process Owner & Blackbelt  Sit in Project Reviews as requested by Process Owner / Blackbelt  Check approval at each step through Tollgates (If appropriate for specific deployment)  Validate actual benefits impacting Cost Centers / GL Accounts with BB/MBB  Work with Process Owner to insure future budget adjustments are made to impacted Cost Centers / GL Accounts  Review with Finance Champion  Sign-off Project  Tracking of benefits for deployment (Often by FC’s analyst team)  Initiate and monitor audit sampling plans Project Level: DMAIC Checklist – Finance Finance Champion  Final Financial Arbitration of Decisions / Changes / Savings  Training of Finance Community (Financial Analysts) – Cultural Change Agent  Controllership of Six Sigma Financial Rigor & Savings  Validate Baseline Performance  First Pass Benefit Calculation  Categorize and agree to hard/soft benefit calculations to specific GL Account and Cost Center (1st Pass)  Finalized Benefit Calculation Method  Completed Benefit Tracking “Benefits Calculator”  Completed Benefits Calculator reviewed including COPQ assumptions with BB and Project Sponsor  Benefit Calculation example “walk through” and agreed upon  Agreement on benefit tracking  Project Sign-Off  Ensure first benefit period properly recorded

69. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Appendix

70. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 69 Roles And Responsibilities Black Belt A person who solves a difficult business problem for the last time Full time dedication working on Lean Six Sigma projects Lead teams through the completion of projects Progressing projects to completion - tenacious Communicating progress, issues, and barriers to Champions, Mgt. Learning, teaching and mentoring Communicates the vision of Lean Six Sigma Proven Performers Who Solve 8-10 Difficult Business Problems over 2 year tour of duty

71. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 70 Process Experts who “touch” the process every day Black Belt can’t be successful without team members – Can’t do it alone Support characterizing the process and maintaining controls Provide insight to the “as is” process and assist in developing the “to be” process Keep project progressing while Black Belt is in training After project is complete, they become owners of the process Process Owners must provide the right team members to ensure project success. Roles And Responsibilities Team Members

72. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 71 Roles And Responsibilities Green Belt Part Time working on Lean Six Sigma projects Projects typically smaller in scope Projects completed in their business area Receive less training (2 Weeks for GB vs. 4 Weeks for BB) Lead teams through the completion of projects Progressing projects to completion Communicating progress, issues, and barriers Communicates the vision of Lean Six Sigma A Critical Mass Working Projects – Impacting The Business

73. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 72 Roles And Responsibilities Master Black Belt Expert in the tools and methodology Provides technical advice and mentors Black Belts and Green Belts Understand the business Supports Deployment Champion in Strategic Project Selection Trains Black Belts and Green Belts Create policy setting decisions regarding Lean Six Sigma deployment and execution Initially SSA Master Black Belts

74. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 73 Roles And Responsibilities Functional Champions Finance Functional Champion Determine how project costs and savings will be defined and reported Lead finance participation in project selection, approval and closure processes Define process to audit project savings

75. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 74 Roles And Responsibilities Financial Analyst Sign off on projects at various points in the life of the project indicating: -Savings estimate calculations were made in good faith -The assumptions made in the calculations are appropriate -Financial templates, for tracking project results, are sound Work with the Black Belt team’s to increase their understanding of financial savings Realistic Projections And Consistent Calculations

76. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 75 Roles And Responsibilities Functional Champions Training Functional Champion – if applicable Establish training logistics and schedules for all participants Provide supplemental training opportunities for Black and Green Belts Communications Functional Champion Ensure consistent messages are delivered on Why and How we are implementing Lean Six Sigma Publicize team project successes Create a consistent external communications plan in accordance with timing provided by management

77. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 76 Roles And Responsibilities Functional Champions Information Technology Functional Champion Provide hardware and software support for Black and Green Belts Provide data gathering support for project teams For projects requiring IT support as part of solution, provide the technical guidance with a sense of urgency Human Resource Functional Champion Function as a single point of contact for all Lean Six Sigma Human Resource Issues Work with leadership to determine how reward and recognition will be handled with regard to Lean Six Sigma successes Act as a liaison to integrate Black Belt selection with the Talent Management process

78. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 77 Role Of Finance – Overview Support Project Identification, Chartering and Selection Assisting Deployment Team in Charter Identification Setting and validating initial hard dollar benefit estimates within Charters Prioritization of selected projects DMAIC Finance Project Support Ensure financial deliverables are being met at each DMAIC stage 6Sigma Financial Reporting & Auditing Reporting overall Six Sigma initiative level costs and benefits (monthly) Track individual project benefits as required Ensure agreed upon 6Sigma project audits are conducted

79. Copyright © 2001-2005 Six Sigma Academy International, LLC All Rights Reserved Voith Finance WorkshopPg 78 The following are trademarks and service marks of Six Sigma Academy International, LLC: Breakthrough Lean ®, Breakthrough Strategy ®, Breakthrough Value Services ®, Breakthrough Change Strategy SM, Breakthrough Design SM, Breakthrough Diagnosis SM, Breakthrough Execution SM, Breakthrough Sigma Lean SM, Breakthrough Six Sigma SM, Breakthrough Software Design SM, FASTART SM, Six Sigma Gold Belt TM, SOLVING YOUR BUSINESS PROBLEMS FOR THE LAST TIME SM. Six Sigma is a federally registered trademark of Motorola, Inc. MINITAB is a federally registered trademark of Minitab, Inc. SigmaFlow is a federally registered trademark of Compass Partners, Inc. VarTran is a federally registered trademark of Taylor Enterprises. Six Sigma Academy International, LLC 8876 East Pinnacle Peak Road, Suite 100 Scottsdale, Arizona 85255 Tel. (480) 515-9501 Fax (480) 515-9507 www.6-sigma.com