Six Sigma term paper
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lecture201320-20application20of20six20sigma20in20service20operations.pptLecture 13
Application of
Six Sigma
in Service operations
Opportunity of Six Sigma
in Service organization
- Type of service organizations: Healthcare, banking, government, marketing, sales, accounting, production control, engineering, R&D etc.
- Service has a tremendous opportunity for Six Sigma projects.
- Generally, the service organizations have 30-80% waste in the processes & many activities add no value to the customers.
Example 1
- Type of the organization:
Software company
- Six Sigma project:
Improve customer order fulfillment process
- Six Sigma tools used
1) Statistical process control (SPC)
2) Pareto charting
3) Normal probability plotting
4) Design of Experiments (DOE)
Example 2
- Type of the organization:
Pharmaceutical testing company
- Six Sigma project:
Improve iterations of paperwork
- Six Sigma tools used
1) Statistical process control (SPC)
2) Pareto charting
Example 3
- Type of the organization:
Aerospace service company
- Six Sigma project:
Reduce warranty return rate after servicing products
- Six Sigma tools used
1) Statistical process control (SPC)
2) Pareto charting
Example 4
- Type of the organization:
City government
- Six Sigma project:
Evaluate the differences between city home inspectors
- Six Sigma tools used
1) Sampling techniques
2) Statistical process control (SPC)
3) Pareto charting
Example 5
- Type of the organization:
School district
- Six Sigma project:
Improve attendance in the school district
- Six Sigma tools used
Design of Experiments (DOE)
Example of Six Sigma project to improve
on-Time delivery
Data for late deliveries (61%)
SPC chart for current late deliveries
Pareto chart of late deliveries
Pareto chart of deliveries after improvement
SPC chart for new late deliveries
Example of Six Sigma project to increase
website traffic
Data on website “hit-rate”
SPC chart for website hit rates
Cause-and-effect matrix of website traffic
Steps to reduce the size of DOE
Review the list of factors from the cause-and-effect matrix.
Pare it down to factors that would yield insight into website traffic
Conduct a meeting of peers from all affected areas to consider expansion or deletion of selected factors (variables) for the experiments.
Group the input variables (factors) into two levels to represent the extreme of each setting.
Factors (variables) of website hit rate test
DOE test matrix
Results of implementing Six Sigma
Eight pages were created
Each page representing one of the trials listed in the DOE table
Hit rates were then collected on a weekly basis to determine which combination of factors produced the most traffic
Based on the results of the experiment, the team could determine which factors to focus on in order to increase traffic on the company website
Additional application of Six Sigma
A major appliance repair company used Six Sigma to improve its ability to return items to customers when promised.
A pharmaceutical company used Six Sigma to increase production capacity in its existing plants and cancelled investment of $200 million in building new facility.
A large computer company used Six Sigma to reduce late payments from customers by 50%.
A leading mortgage company used Six Sigma to save $150 million by reducing defects/errors in newly closed loans which made them unsellable in the open market.
Example of Six Sigma projects
Reducing average and variations in days outstanding of accounts receivables.
Optimizing timing of invoice payment in accounts payable.
Closing the book faster for finance
Improving the audit process to be more accurate and faster.
Improving payroll accuracy
Reducing variation in cash flow
Improving accuracy of financial forecasting
Voice of the Customer (VOC) in Service Six Sigma program
Incorporate customer information into strategic decision making
Using VOC data in product/service design
Weaving VOC data into process improvement
Shaping job descriptions and skills around customer needs
The process to determine VOC
Identify the customer (internal, external, regulatory) of the given product or service, whose needs must be met.
Perform the customer research (market research, focus groups, interviews, surveys, etc.
Analyze the information using tree diagram
Develop priorities and strategies
VOC gathering methods
Two key players in service
Six Sigma programs
Champions
Their primary responsibility is to ensure that the rest of the company executes a consistent and rapid deployment.
2. Black Belts
They are responsible for delivering the value and benefits that were determined for each project during the selection process.
Key challenges to service Six Sigma program
Tracking of flow: because service processes do not have proper mapping of process flow.
A tradition of individuality: because people are generally left to their to their own devices to structure their daily tasks.
The lack of meaningful data: because most of the data in service organization is merely raw numbers sitting in an obscure files or database.
Service people can’t be controlled like machines: because service people are dependent on interaction of people, major cause of variation, and resistant to change.
Realistic steps for process improvement
What is SIPOC?
Suppliers (S): The entities (person, process, company) that provides whatever is worked on in the process (information, forms, material). The supplier may be an outside vendor or another division or a coworker.
Input (I): The information or material provided.
Process (P): The steps used to transfer information.
Output (O): The product, service or information being sent to the customer.
Customer (C): The next step in the process, or the final (external) customer.
SIPOC process diagram
What is a dashboard?
- A “dashboard” is a visual display of a core set of metrics that provide management and process owners with a quick summary of process performance.
- They are often the result of implementing a Six Sigma process management system in service operations.
- Using dashboards helps to identify performance gaps that can be closed using DMAIC and DFSS projects.
Example of dashboards
Example of a dashboard
Steps to develop a dashboard
Develop preliminary metrics
Design the dashboard
Set up the data collection system
Make the dashboard operational
Revise the metrics
Institutionalize the process
