Maximizing Financial Benefit of Lean Six Sigma Projects Through Optimized Selection Criteria

As evolving threats across the globe keep pace with increasing budget constraints, the US Army’s major subordinate commands and their sub-organizations are constantly challenged to do more with less. Resources such as human capital, information technology, facilities, and budgeted funding are stretched as thin as ever, while requirements to serve the Warfighter remain paramount. Each dollar of financial benefit gained through cost reduction efforts at the US Army can affect the Warfighter directly. Budgeted money saved or avoided is reprogrammed both locally and atop the hierarchy at the Department of Treasury to serve the Warfighter better. Ordinal Logistic Regression was performed to analyze the selection criteria and financial benefit results from Lean Six Sigma projects executed within the US Army’s Tank-Automotive and Armaments Lifecycle Management Command (TACOM LCMC). TACOM LCMC Headquarters, its depots, arsenals, Program Executive Offices, and logistics center reported over $366,000,000 in total Continuous Performance Improvement (CPI) financial benefit in fiscal year 16. Seventeen selection criteria from an array of scholarly articles, textbooks, and proprietary industry sources were analyzed retroactively against TACOM’s FY16 results. The study produced a number of organization-specific results, as well as a modular process that can be used in any industry to analyze project selection criteria and their effect on an ordinal output. In the case of all FY16 TACOM LCMC projects, it was found that projects initially selected with the factors of a predicted high financial benefit or strong internal documentation of poor performance led to the highest probability of yielding $1M or more in financial benefit. Projects selected with factors of a three month timeline or internal-only focus led to lower financial benefit results. This analysis was also performed on non-gated LSS projects executed within the TACOM LCMC’s depots and arsenals. This analysis case resulted in the significant factors of having the right non-human capital resources in place or the prediction of a high benefit corresponding to a positive odds ratio, and again the restriction of a three month timeline which corresponded to a negative odds ratio with respect to achieving the highest financial benefit. Additionally, the Army-specific output measure of readiness was analyzed across all projects. This study found that factors such as a predicted high financial benefit, strong leadership buy in, external gap-focused, and the consideration of readiness yielded a greater probability of achieving the highest levels of readiness when a given project was complete. Factors such as stretch goals and internal gap-focused decreased the likelihood of positively affecting readiness. The specific results and underlying process presented in this Praxis will enable US Army CPI leaders to make better informed decisions which will result in achieving maximum financial benefit for the betterment of the Warfighter, the Army, Department of Defense, and United States