Six Sigma Service at the Speed of Lean

Why Services are Special

The Ubiquity of Services:
We encounter services everywhere, from health care, hospitality, and transport to government, retail and financial services. Even within manufacturing organisations, a significant portion of the activities are service related.

The Visibility Challenge:
While services are everywhere, the steps involved in the processes are difficult to visualise. For instance where on a production line, you can directly see the amount of work in process, or measure lead time by following a work piece from one end of the process to the other, the same is not always possible with services. An observer would be hard pressed to say how much work in process a data analyst working mainly with his computer has.

The Prevalence of Waste:
Services are generally prone to waste. A major reason is that there is usually too much work in process. These may be sales orders, reports on a desk awaiting review or approval, emails to be responded to, or customers waiting to be served. Up to 90% of the time work spends in process it is just waiting.

Substantial work in process makes services slow, which drives up costs and makes them prone to poor quality.

Other common wastes include people moving around chasing information, documents looping back and forth where items are being clarified, interruptions etc.

The High Variation in Demand:
Services, particularly those dealing directly with customers generally face highly variable demand. Consider the case of hotel clerks checking in guests. There will be periods of low activity and at other times many guests will be in queue, waiting to be checked in. The situation is similar in a restaurant or shopping mall. The impact of such variation on WIP is significant.

The Relative Absence of Hard Data:
Service personnel are not accustomed to the same level of rigor in collecting and analysing data as their manufacturing counterparts.

Applying Lean Six Sigma to Improve Services

Define Improvement Targets on the Basis of VOC:
Use reactive and proactive means to listen to the voice of the customer.

Reactive methods are those where the customer takes the initiative through complaints, compliments, enquiries, web page hits, emails and the like. Reactive methods are good at detecting service weaknesses as customers will most likely contact you when they have problems.

Proactive methods are those where you take the initiative to gather customer information and include surveys, questionnaires, focus groups etc. This information ensures that improvement targets you set are based on customer needs.

Make the Relevant Processes Visible:
The relevant processes target for improvement should be observed and mapped. This is not very easy to do, considering the nature of services. However with the cooperation and involvement of stakeholders and process operators, a lot can be achieved.

For each activity in the process, information required in creating the value stream map include estimated cost per activity, process time, queue time, change over time, demand rate, complexity (number of different services processed at the activity), uptime and defects/rework. This data should be collected based on at least one week of observation. The resulting map is known as a complexity value stream map.

Determine the Time Traps (to prioritise projects):
Using a complexity value stream mapping software, the activities which contribute most to non-value added time will be visible. These are the time traps. Following from the Pareto law, usually 80% of the non-value added time can be accounted for by 20% of the activities.

Analyse the Time Traps to Determine their Causes:
A further output from the complexity value stream mapping software is the cost driver analysis. This specifies whether the source of the major time traps are primarily quality related, making them amenable to Six Sigma tools, operations related, which can be taken care of by Lean tools or complexity related which requires a streamlining or optimisation of the variety of service offerings.

Apply Appropriate Tools to Improve the Process:
The foregoing analysis having already pointed out the direction of improvement efforts, it is now left to apply lean methods to reduce setup time, reduce work in process or increase completion rates and six sigma methods to reduce the defects.

Huge opportunities translating to significant cost and time savings, along with quality improvements, exist in many service operations where typical process efficiencies are below 10% as against world class levels of 25-50%.

Samuel Okoro is the CEO of Leapfrog Alliance Ltd, a management training and consulting firm that helps organisations located in the African region to improve quality and reduce costs through better business processes. His personal passion is to help move African business to world-class levels. For further details please visit http://leapfrogalliance.com