Six Sigma Problem Statement: Examples & Template

Instructor: Brianna Whiting
In order to run efficiently, companies need to identify any problems with production. One way to do this is to implement Six Sigma. In this lesson we will learn how to express a problem through the use of a problem statement.

The Basics of Six Sigma

Meet Jack! Jack has decided to take a course in Six Sigma so that he can be a better asset to his company. The first day he learns that Six Sigma is the method of removing defects in all of the company's processes. But before a company can actually begin to remove the defects, they need to know what the problem is. What is causing these defects? How bad is the problem? This is when Jack learns that he must then write a problem statement to define the problem, the severity, the location, and the financial impact. Come along with Jack as he tries his hand at a few possible Six Sigma problem statements.

Problem Statements

Jack first learns that when a problem statement is done well, the goal you are trying to reach is very clear. A good problem statement tells everyone what you want to do and highlights a clear problem. It also needs to be convincing enough that others support finding a solution and management wants to provide any resources needed. When a problem statement is done correctly, it should provide a description of the problem, identify where it is happening, explain how long the problem has been happening and specify the size and scope of the problem.


So Jack wants to know where do you begin when writing a Six Sigma problem statement? Well, there is a good template that can assist you in the process: Problem, Location, Severity, and Financial Impact. Let's take a look.

Problem: What is the production problem?

Location: Where is the problem occurring during production?

Severity: What is the problem doing to the company?

Financial Impact: How much money has the problem lost the company?

Let's apply this to an example.

Here is Jack's first problem statement:

Our company has been making too many products with defects.

This statement would be considered a poor problem statement because it leaves out too many important details. Jack has failed to explain how these defects affect the company, how much money these defects lose the company, and how long this problem has been occurring.

Here is Jack's second statement using the template:

Problem: Too many products with defects.

Location: The warehouse in Texas.

Severity: Computer defects have increased 25%

Financial Impact: The defects have caused the company to lose $12,000.

So, when we put it together we have:

Over the last three months at the warehouse in Texas, the amount of defective computers has increased 25% which has caused the company to lose $12,000.

This problem statement tells you all you need to know about the problem. It tells you how much the defects have increased (25%), where the defect is occurring (computer defects), and, it tells you the time period that the problem has been occurring (three months).

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