Six Sigma

PLAYBOOK
Topic 29

Entitlement
An entitlement is usually understood as some-
thing that one has a right or a claim to. Social
Security and Medicare are sometimes thought of
as entitlements for citizens of the United States.
In the language of Six Sigma, processes, prod-
ucts, factories, even whole businesses have
something called entitlement.
Entitlement is the level of performance a
process, a product, a factory or a business
should be able to achieve without substan-
tial investment/re-engineering.
You might think of it as a quality birthright. It
is the level of quality that the business is entitled
to expect when improvement efforts have been
completed and controls are in place, but no sig-
nificant investment or reengineering has oc-
curred. To improve beyond its entitlement
level, a business would have to acquire new
technology and/or undertake major business
process reengineering.
Why is it important?
Knowing the entitlement level of a process,
product, factory or business is essential for sev-
eral reasons:
How do you do it?
Reaching entitlement involves two major steps:
1) determining your current entitlement level,
and 2) making the improvements required to
consistently perform at that level.
Step 1: In order to determine your entitlement
level, you must first identify major sources of
variation. The output of any process is a func-
tion of the many independent process steps that
go into producing that output. Another way of
saying that is:
Y = f { x1 , x2 ,... xn 1 , xn }
where Y is the process output and the xs are the
many process variables.
There are generally only a few process variables
that are important in the variability of the proc-
ess outcome, almost always six or fewer. If you
were to make a Pareto diagram [see Playbook
issue 3] of the contribution of the various xs to
the variation in the process output, the result
might look something like the chart below.
April 1-30
200 100
180 90

Percent distribution
1. It allows you to better understand the capa- 160 80
Number of defects

bilities of your process or product, which en-

140 70
ables you to align more closely with your
customers needs or expectations. 120 60
2. It helps you estimate the transition point at 100 50
which additional performance capability will
require substantial process change and/or in- 80 40
vestment.
60 30
3 It requires asking the right questions in any
improvement effort and, therefore, reaching 40 20
that improvement in the fastest, least expen-
20 10
sive manner.
0 0
D B F A C E Others
Pareto chart showing major sources of variation

Playbook Topic 29 Page 1

Estimating where your process would be when
this variation is eliminated will give you your
entitlement.
Step 2: Now that you know your entitlement
level, you must reduce the major causes of
variation to attain this process capability on a
long-term basis.
Begin by attacking the major xs individually,
using the various Six Sigma tools to reduce the
variation of those xs effectively to zero. In gen-
eral, reducing this variation does not require
significant investment or reengineering. (The
illustration below shows a process that has
variation that must be reduced before the proc-
ess reaches entitlement.)
Get Assemble
components components
A, B, C
A, B, C
One or more Assembling
components equipment
missing unavailable
Sample process operating below its entitlement level
After the major sources of variation are elimi-
nated, the remaining sources of variation --
Others in the Pareto chart on page 1 -- usually
demand exceptional cost or effort to reduce or
eliminate them.
This variation is like persistent white noise or
background radiation in the process. When the
only sources of variation in the process output
are hidden within this white noise, the process is
said to have reached entitlement level. (See be-
low.) When all the processes in a factory have
reached entitlement, the factory can be said to
be operating at its entitlement level.
Get Assemble
components components
A, B, C A, B, C
The same process operating at its entitlement level
Playbook Topic 29
Now what?
Reaching entitlement does not mean that a proc-
ess or a factory is producing the highest quality
product or service. As illustration, suppose
Business A has the capability to produce world-
class levels of quality, but is not currently oper-
ating at its entitlement level. Business B, on the
other hand, is operating at its entitlement level
using a process that is not capable of producing
world-class quality. In this scenario, products
produced by Business A may still be better than
those produced by Business B.
In other words, reaching entitlement says noth-
ing about the acceptability of the process, prod-
uct, factory operation or business results to a
customer. An entitled process could be operat-
ing at two sigma or at seven sigma.
What reaching entitlement does say, however, is
Release
completed that further improvement will require funda-
product
mental changes such as new equipment or a
reengineering of major business processes.
Rework
or While entitlement is something that can be sta-
Variation
tistically calculated, accurate calculation usually
requires a relatively large volume of continuous
data. (Continuous data are those that can be ex-
pressed in values that are infinitely divisible,
such as time, length, current, pressure, etc., as
opposed to attribute data which are of the yes-
no, on-off variety.)
The concept of entitlement is important, how-
ever, even if the exact entitlement level of a
process cannot be statistically calculated. This
is because knowing your entitlement level can
lead you to ask the right questions before mak-
ing any changes. In circumstances in which
there is not a large amount of continuous data,
here is another way to look at entitlement:
The entitlement level can be thought of as
the process output when everything works as
planned.
Release
completed
product
Page 2
 A process-level example
A certain group produces a number of elaborate
proposals with extensive data and complex cost
commitments that are sent to customers and,
therefore, may affect the competitive position of
the business. If everything goes right, they can
produce one proposal in five business days at a
cost of $7,000.
Recently, the group faced a situation which de-
manded a delivery time of two days instead of
the five days needed by the entitled process. The
group met the delivery requirement, but to do so
they had to alter their process and accept a high
cost of quality. On this occasion, because they
produced multiple proposals to ensure they had
at least one that best met the needs of the busi-
ness, the cost of the ultimately delivered pro-
posal was $29,500.
In this instance, operating at their entitlement
level would not have satisfied this customer, but
delivering future proposals at more than four
times their normal cost was not acceptable ei-
ther.
As the group considered what to do in the fu-
ture, they examined three questions:
Should they make a major investment to
reduce their cycle time to two days? The
group rejected this option because most
customers were satisfied with the five-day
turn time and were unwilling to pay the ad-
ditional cost it would take to get the process
to a new entitlement level of two days.
Should they risk disappointing customers
with short-fuse requirements? They re-
jected this option because the needs of the
business demanded that they deliver on
time.
Should they accept that they would have
special requirements now and then, and that
those requirements might necessitate occa-
sional additional resources? The group pre-
sented this option to their manager, pointing
out that their process was operating at its
entitlement level and, therefore, could not
be improved without significant investment.
Their manager accepted their evaluation to util-
ize additional resources occasionally. This so-
lution brought them as close as possible to their
entitlement level, without additional investment.
A business-level example
Just as knowing the entitlement level of an indi-
vidual process is valuable, so also is knowing
the entitlement level of a business or product
line. Consider that an engine has a known spe-
cific fuel consumption (SFC) that is the result of
a large number of interrelated processes from
the design through the manufacture.
Consider that an important customer is asking
for a guarantee of a two percent improvement in
SFC before committing to a large purchase. De-
ciding whether to give that guarantee as a con-
dition of the sale demands knowledge of the
entitlement level of the product with regard to
SFC.
If the guarantee is made, and the engine is al-
ready at entitlement for SFC, the cost to meet
the guarantee by reengineering the combination
of processes producing this characteristic may
far exceed the income to be made from the sale.
If, on the other hand, the engine is below its en-
titlement for SFC, the characteristic may be able
to be improved without a large additional in-
vestment, making the sale profitable.
In this same way, understanding entitlement
gives a particular work group, a product line or
an entire business the perspective necessary to
make decisions based on data and to understand
the tradeoffs required to meet new requirements
or respond to various opportunities.

1997, The General Electric Company. Playbook is published by GE Aircraft Engines Executive Communication and edited by Janet Flaherty.
For further information or for assistance in using Six Sigma tools contact the Master Black Belt for your organization.

Playbook Topic 29 Page 3