The entitlement trap
The Concept of Process Entitlement
Entitlement is one of the most important concepts in process improvement, and is particularly useful in project selection. It is defined as the best performance that you can reasonably expect to get from a process (Harry and Schroeder [2000]). As the term implies, leadership is essentially entitled to this level of performance based on the investments they have already made.
Knowing the process entitlement defines what's possible. If entitlement is 500 units per day and the baseline performance is 250 units/day, you can easily see that there is a lot of room for improving this process. On the other hand, if current baseline performance is 480 units/day there is little room for improvement. If higher production rates are needed, a search for a totally new process may be in order (i.e., reengineering or DFSS).
As an analogy, the concept of par for a golf hole is intended to represent the entitlement for a very good golfer. That is, for such a golfer par represents what score is possible and reasonable to expect. On one hole a golfer may score less than par, but it is unrealistic to expect such performance on every hole, or even on average. Of course, all golfers have their own unique capability, so the official par doesn't represent process entitlement for the average duffer. Proper analysis and/or calculations would reveal the appropriate individual entitlement, which for professionals would be better than par, and for most golfers much worse. Note that standard golfing handicaps are usually based on average performance, which is not the same concept as entitlement.
It is not uncommon to learn in situations where capital is being requested to increase capacity that baseline production is not near entitlement, once it is carefully calculated. Six Sigma projects are subsequently instituted to increase the capacity of the current process with solutions that don't require capital. Most companies deploying Six Sigma have been able
Entitlement is one of the most important concepts in process improvement, and is particularly useful in project selection. It is defined as the best performance that you can reasonably expect to get from a process (Harry and Schroeder [2000]). As the term implies, leadership is essentially entitled to this level of performance based on the investments they have already made.
Knowing the process entitlement defines what's possible. If entitlement is 500 units per day and the baseline performance is 250 units/day, you can easily see that there is a lot of room for improving this process. On the other hand, if current baseline performance is 480 units/day there is little room for improvement. If higher production rates are needed, a search for a totally new process may be in order (i.e., reengineering or DFSS).
As an analogy, the concept of par for a golf hole is intended to represent the entitlement for a very good golfer. That is, for such a golfer par represents what score is possible and reasonable to expect. On one hole a golfer may score less than par, but it is unrealistic to expect such performance on every hole, or even on average. Of course, all golfers have their own unique capability, so the official par doesn't represent process entitlement for the average duffer. Proper analysis and/or calculations would reveal the appropriate individual entitlement, which for professionals would be better than par, and for most golfers much worse. Note that standard golfing handicaps are usually based on average performance, which is not the same concept as entitlement.
It is not uncommon to learn in situations where capital is being requested to increase capacity that baseline production is not near entitlement, once it is carefully calculated. Six Sigma projects are subsequently instituted to increase the capacity of the current process with solutions that don't require capital. Most companies deploying Six Sigma have been able