DMAIC Six Sigma Case Study: Streamlining Proposals at Avidco Corp.

This case study examines Avidco, a large engineering firm, and its challenges with a slow proposal process that negatively impacted market share and profitability. To address this, Avidco formed a Steering Team and a Six Sigma improvement team to implement the DMAIC (Define, Measure, Analyze, Improve, Control) process. The company's goal was to reduce proposal turnaround time to under 55 days, as the current average was 65 days. The case outlines the formation of the Proposal Management Department (PMD), its struggles with revisions and overtime, and the team's efforts to define the problem, understand customer needs (CTQs), and map the proposal process using a SIPOC diagram. The preliminary project charter, business case, problem statement, goal statement, project scope, and team resources are also detailed, setting the stage for a comprehensive process improvement initiative. Desklib offers similar case studies and resources for students.

A DMAIC Six Sigma
Improvement Story

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A DMAIC Six Sigma
Improvement Story
The Company Background
Avidco is a large engineering firm that provides engineering, technical design,
and construction services to its clients. Clients include energy utilities and
companies that develop and produce chemicals, pharmaceuticals, foods, and
beverages. Houston, Texas, is headquarters for 250 engineers and 50
administrative staff. Six small regional offices are found in major metropolitan
locations scattered across the U.S. Each region has five to six engineers and a
manager responsible for sales and service of local clients.
Avidco reorganized six months ago to address its major business challenges.
The following chart shows Avidco’s organizational structure.
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AVIDCO ORGANIZATION CHART
CEO
President
Engineering
Services
Construction
Services
Research &
Development
Regional
Offices
Technical
Services
Finance &
Administration
Sales &
Marketing
Proposal
Management
Dept.
Avidco Corporation: A DMAIC Six Sigma Improvement Story does not reflect every
step of Juran’s Six Sigma Breakthrough Process. Nor is this abbreviated case study
meant to demonstrate all of the possible tools of analyses.
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A DMAIC Six Sigma
Improvement Story
The departments’ responsibilities are outlined below:
 Senior Management: CEO, President, and six Senior Vice Presidents who
head each major Avidco department.
 Engineering Services (ES): Engineers in this department work day-to-day
with clients and are responsible for project delivery. Most of the Avidco
professionals and support staff are in this department.
 Construction Services (CS): Responsible for overseeing the client’s
construction project once a proposal has been accepted.
 Research and Development (R&D): Engineers in this department create
new, state of the art products that anticipate clients’ future needs and
develop new products and services that are not standard client offerings.
 Technical Design Services (TS): Engineers in this department translate
client needs into a technical design and work plan. This department works
with the Research and Development department when requirements fall
outside the standard services offered by Avidco.
 Finance and Administration (F&A): Manages all financial and investment
matters for Avidco.
 Sales and Marketing (S&M): Focus is on new business development with
both current and potential clients.
 Proposal Management Department (PMD): This six-month-old department
reports to Finance and Administration and coordinates the proposal
development process for Avidco. The department includes a Manager,
desktop publisher, an administrative assistant, two writers, and a
reproduction and photocopy operator.
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A DMAIC Six Sigma
Improvement Story
The following chart shows the PMD organizational structure.
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PROPOSAL MANAGEMENT
DEPARTMENT (PMD)
Organization Chart
Proposal
Management
Manager
Desktop
Publisher
ReproductionWriterAssistant
Writer
The Company Goals and
Challenges
Avidco has faced rapid growth over the last decade, especially during the past
two years. The number of Avidco clients has more than doubled; projects have
become more complex, and regional offices have been added to respond more
rapidly to clients. The engineering staff has grown from 120 in the past year to
250 in this year, and the support staff has also doubled. Avidco has been able to
expand the firm by at least 20 percent each year and maintain profitability
levels of 15 percent. Along with this desired growth, however, have come
problems.
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A DMAIC Six Sigma
Improvement Story
Identify Project Ideas; Draft
Charter
Steering Team
To deal with their problem, the company has recently formed a Steering Team,
composed of the president and direct reports, along with their newly trained
Black Belt. They meet twice per month, as they are eager to identify the best
opportunities to improve business performance and make improvements.
The Situation
Historically, the Avidco engineers wrote all client proposals. Engineers heard
about client needs either from the Sales and Marketing department, or through
their own work with a current client who wanted to expand or start a new
project. While responsive to customer needs, this had resulted in many different
proposal formats, varying pricing structures, “reinvention of the wheel,”
inconsistent work methodologies, and staffing problems. A prior study
completed last year indicated that a more effective method for handling
proposals led to the creation of the Proposal Management Department (PMD) to
coordinate the proposal process for all of Avidco. Additionally, the Sales
Manager for each region had to “sign off” before proposal work was begun.
Unfortunately, today the proposal management process at Avidco is not proving
to be as effective as it was envisioned. While the goal of PMD was to simplify
the process and reduce the time associated with developing a proposal, they
have been unable to meet their goal of 55 workdays per proposal. Avidco’s
average cycle time is 65 days. This means that many of the proposals arrive at
the potential client’s location late, i.e., longer than the 55 days Avidco has
quoted in their estimates to clients. Many times, this has resulted in the loss of a
contract. Market research has discovered that Avidco’s competition is able to
turnaround a proposal in 45 days or less and is often awarded the contract when
Avidco has submitted a late proposal. In addition, overtime and related costs
have skyrocketed and threaten to have a significant impact on Avidco’s
profitability. Annual overtime costs have escalated.
These added costs and loss of business have contributed to Avidco’s loss of
market share and profits. Plans to take the company public have had to be put
on hold.
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A DMAIC Six Sigma
Improvement Story
Initial interviews have revealed that few in Avidco understand the proposal
management process, and all underestimate how long it takes to develop a
proposal. Some engineers expect the manager of the Proposal Management
Department (with a few words of guidance) to develop all segments of a
proposal, including creative segments that outline and address the client’s
specific needs. Others do not want PMD’s help, except to insert standard
segments.
The Proposal Management Department is increasingly frustrated with the
Finance and Technical Services departments. Both departments make constant
revisions to proposals that then require major rework by the Proposal
Management department. PMD also receives last minute changes from Senior
Management, but these are relatively easy to implement since they generally
only require reformatting. All this rework is causing significant overtime, which
is hurting the department’s morale.
Members of PMD are:
 feeling as though they are blamed for the late proposals while they have no
control over revisions that take time
 late in picking up children from day care and missing parent-teacher
conferences
 missing company social functions, such as the bowling league
A Six Sigma improvement team was formed by the Steering Team to improve
the timeliness of responses to client’s requests for proposals.
The processes for developing a proposal are quite complex. Proposals make
several different stops along the development route, and the route is different,
depending upon the type of proposal.
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A DMAIC Six Sigma
Improvement Story
Before sending the Six Sigma team out to begin its work, the Vice President of
Sales and Marketing, who is also a member of the Steering Team, described the
broad problem that the Council wanted the team to focus on:
“Six months ago, we created the Proposal Management department as a means
for Avidco to more efficiently write client proposals. We established our goal of
responding to client requests for proposals within 55 days from the time that we
receive the inquiry. The studies we did at that time indicated that this was an
achievable goal, and I remain convinced that we can accomplish this.”
“But there are just too many instances when we have missed this goal and have,
in fact, missed the client’s deadline. Our competition is being awarded too
many of the projects that should have been ours; we responded to our clients
too late. We are all worried that if this trend continues, Avidco will lose its
leadership position and will no longer be a major player in the construction
engineering field. This will allow the competition to become even stronger.”
“My charge to you is simple. Improve the timeliness of our proposals.”
The Vice President of Sales and Marketing also emphasized that the team was
to solve this problem using the Six Sigma Process. The V.P., who is their
project champion, encouraged the team to be “true to the process” and not
attempt to skip any steps, noting that she was convinced that the results would
be worth it.
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A DMAIC Six Sigma
Improvement Story
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Test Hypotheses
List Vital Few Xs
Identify Control Subjects
Develop Feedback Loops
Develop Process Control Plan to Hold the Gains
Document
Implement, Replicate
Select the Solution
Design Solution, Controls, for Culture
Prove Effectiveness
Develop Project Charter
Determine Customers & CTQs
Map High-Level Process
Control
Improve
Analyze
Measure
Define
Measure Y(s)
Plan for Data Collection
Validate Measurement System
Measure Baseline Sigma
Identify Possible Xs

A DMAIC Six Sigma
Improvement Story
The VP of Sales and Marketing gave the team a preliminary project charter,
which had been worked out between herself, the Black Belt, and the
Steering Team.
Avidco Six Sigma Project Charter
Business Case/Expected
Benefits
Proposals have taken well in excess of the original 55 days to deliver to the
client. Overtime costs, rework, loss of morale, loss of market share, and client
dissatisfaction are having a negative impact on the business. In addition, the
company has had to delay its Initial Public Offering (IPO).
Problem Statement
Proposal turnaround time exceeds the 55-day target.
Goal Statement
Improve the timeliness of proposals.
Project Scope
The team will focus on the proposal writing process, which starts from the date
when the sales manager’s approval signature is obtained and ends when the
proposal is sent in the mail by PMD. Sales calls and subsequent follow up are
out of scope.
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A DMAIC Six Sigma
Improvement Story
Team/Members/
Resources
Champion/Sponsor, Black Belt, 6 Team Members, PMD Process Owner. The
team will meet on a weekly basis for 2 hours to check progress and plan the
next steps and out-of-meeting assignments. Team members are expected to
work outside of the team meetings to move the project along; supervisors have
been alerted to shift work to accommodate the project. The Black Belt will meet
with the council on a biweekly basis to report team progress. The Black Belt
will attend meetings to provide mini-training modules when the team
needs extra help. The Champion will meet with the team at reviews.
All team members will be DMAIC trained.
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