Chapter 15: Fundamentals of Finance and Accounting for Champions, Master Blacks, and Black Belts

OVERVIEW

This chapter is unique in the context of the six sigma and design for six sigma (DFSS) methodology. Our intent is not to present a complete course in financial management, but to introduce some key financial concepts for the Black Belt and Master Black Belt in dealing with projects, Champions, and management in general.

As we have repeated many times, the intent of six sigma/DFSS is to satisfy the customer and make a profit (however defined) for the organization. Well, for Black Belts as well as Master Black Belts, that may be a goal, but the truth of the matter is that the majority of them have no clue about accounting or financial issues. In this chapter, we hope to sensitize all those individuals who are about to fix or improve or even contemplate a change in the system of operations with some understanding of the consequences of their recommendations to the organization as a whole. We do not pretend to have covered the topic exhaustively, but we believe that this is the minimum information that Champions, Shoguns (Master Black Belts), and Black Belts must have to be effective not only in selecting their projects but also in evaluating their outcome.

We hope that the reader will understand that the discussion here is very broad and covers small and large organizations. As a consequence, not everyone pursuing six sigma/DFSS will encounter all the issues presented here. However, regardless of the organization, regardless of the project, somebody, somewhere, somehow in the organization will be asking or being asked the questions addressed in this chapter.