Lean Six Sigma


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Lean Six Sigma

  1. 1. 6 IOMA BROADCASTER March–April 2009 Improving Customer Satisfaction with Lean Six Sigma By Hermann Miskelly Director of Quality and Six Sigma Master Blackbelt Matheson Tri-Gas, Inc., Irving, TX I n today’s economic environment many companies are turning to provider’s ability to meet the need and the Y-axis representing the Lean Six Sigma for the first time. Others are reinvigorating their customer’s degree of satisfaction, as shown in Figure A. Starting current Lean Six Sigma programs. With its focus on bottom line with this model of the customer’s needs can focus Lean Six Sigma financial benefit through sustainable productivity and efficiency efforts on those needs that will significantly impact the customer’s improvements obtained by minimizing process waste and varia- satisfaction. Significantly increasing customer satisfaction will lead tion, Lean Six Sigma is the perfect tool for to increased sales and market share. reducing your operating costs as the market Basic needs are those that are expected by retreats. While this is an obvious necessity, “Lean Six Sigma can be a the customer to be fulfilled by the product or now is a good time to remember that the ulti- service provider. As shown in Figure B, meet- mate goal of Lean Six Sigma is not simply principal tool to increasing ing a customer’s basic needs has a neutral reducing operating costs but rather increas- market share, revenue impact on satisfaction. Failure to meet basic ing customer satisfaction through sustainable needs, however, has a significant negative breakthrough performance improvements. and earnings.” impact on satisfaction. When the pie shrinks, you don’t just want to Here is an example to which we can all increase the number of cherries in your slice, relate; windshield wipers are expected to be you also want a bigger slice of the pie. Lean Six Sigma can be a included in the price of a new automobile. Having the salesman principal tool to increasing market share, revenue and earnings. tell you that windshield wipers are optional on a particular model will promptly lead you to question his real desire to sell the car. Linking Customer Satisfaction to Meeting the Customers’ Examples of basic customer needs in the industrial gas business Needs include DOT shipping compliance, failure to leak, correct labeling, Customer satisfaction is achieved by giving the customers what and on-time delivery. The ability to meet these needs is taken as a they want – meeting their needs. When addressing customer satis- given by the customer and required for companies to stay in busi- faction with Lean Six Sigma, the Kano model of customer satisfac- ness. tion can be helpful. Developed by Professor Noriaki Kano in the Failures to meet a customer’s basic needs are, therefore, to be 1980’s, this model places customer needs into three categories: avoided because of the immediate and significant impact of these basic, performance, and excitement. failures on customer satisfaction. Thus, Lean Six Sigma efforts are Needs are graphically plotted with the X-axis representing the frequently focused on fixing these failures. There is usually abun-
  2. 2. March–April 2009 IOMA BROADCASTER 7 dant historical data available since failures to meet basic needs are days will probably not have a very large impact on overall satis- typically documented through quality and corrective action sys- faction. The second problem is that incremental improvements in tems. Assigned Lean Six Sigma teams can quickly begin finding performance can be, and will be, very quickly matched by com- root causes, implementing process improvements to correct the root petitors, thus eliminating any competitive advantage a company causes, and putting controls in place to ensure that the improve- might have had. This leads to new targets and new Lean Six Sigma ments are maintained and the failures eliminated or significantly projects. So on it goes. reduced. Breakthrough, game-changing improvements in the ability to Performance needs, the second category of customer needs, are meet the customer’s needs are required to achieve significant those where the ability to meet the need has a proportional impact improvements in customer satisfaction. Breakthrough improvements on customer satisfaction. For performance needs, as shown in to products or services will minimize competition, significantly Figure C, more (or less) is better. increase sales and market share, and – if the Going back to the windshield wiper exam- improvement excites the customer enough – ple, one performance need is price; the lower the price, the greater the satisfaction with the “Improving the ability to meet allow the breakthrough improvements,price! Generally, provider to name the espe- windshield wiper. Conversely, as the price performance needs is also a cially if derived from patented or protected increases, so does the dissatisfaction. processes or methods, take longer for the Performance needs are the customer’s needs frequent Lean Six Sigma competition to copy. Thus, the market lead on which companies generally compete. project. The desired outcome associated with breakthrough improvements Within the industrial gas business, companies typically compete on performance needs is easily measured: lower cost, tends to be longer lasting. category of cus- This leads us to the third such as price, lead times, purity, etc. shortened lead times, or tomer needs, called excitement needs. Improving the ability to meet performance Personally, I prefer the term latent needs for needs is also a frequent Lean Six Sigma proj- increased purity.” this category since these are needs that the ect. The desired outcome is easily measured: customer does not know a given provider can lower cost, shortened lead times, or meet or, in many cases, the customer is not increased purity. Improvement targets for specific needs must be set even aware of the need. and Lean Six Sigma teams must be tasked with hitting the targets. I also like the term Tom Peters uses for this category of needs: These targets are generally set by halving the difference between WOW! Failure to meet a latent requirement has no impact on a cus- where the company currently is and what they think is possible. The tomer’s satisfaction since he is not aware of the need in the first teams start studying the current processes used to meet these place, to say nothing of anyone’s inability to fill it. But, as shown needs, identifying and eliminating the non value-added work and in Figure D, successfully identifying and fulfilling a latent need has waste from the processes, designing and implementing stream- a very large impact on customer satisfaction. lined, waste-free processes, and, once again, putting controls in Relative to the automotive example, an excitement feature could place to sustain the newly achieved improved performance. be a windshield wiper blade that never wears out or one that auto- There are problems with competing on performance needs matically turns on when it rains. Think about the TiVo, the iPod, or alone, however. First, improvements in the ability to meet perform- the Boeing 707 Jetliner – all filling latent needs. Latent needs that ance needs produce generally only mild increases in customer sat- are currently going unfilled in the industrial gas business isfaction. Very significant improvements in performance are include………HA! Did you really think I was going to share that needed to drive large changes in customer satisfaction. For exam- information with you!? We all need to find these potential market ple, shortening the lead time for a product from five days to three discriminators ourselves. Continued ®
  3. 3. 8 IOMA BROADCASTER March–April 2009 Improving Customer Satisfaction with Lean Six Sigma One Lean Six Sigma tool that can help answer the first question Continued from page 5 is Quality Function Deployment (QFD), commonly called the House of Quality. Developed by the Japanese in the 1960’s for complex Achieving Breakthrough Performance Improvements engineering construction work, QFD is now extensively used in the Obviously then, companies need to be constantly searching, iden- U.S. for new product development. This tool is used to translate the tifying, and fulfilling needs that excite the customer. There are two customer’s needs into product or service requirements (using the ways to achieve customer excitement, either through a significant language of the business) and then identify the links between these improvement in the ability to meet a known, stated customer need requirements and the features or methods by which a company (breakthrough performance improvements) or through the identifi- intends to meet these needs. With QFD, holes in understanding the cation and fulfillment of an unknown, customer’s needs quickly become apparent, unstated customer need (latent performance as do any conflicting needs. QFD can be improvements). “Only once the customer’s used to quickly and fully address quality Lean Six Sigma can provide methods and issues with a customer and to identify any dif- tools that will facilitate achieving sustain- needs are thoroughly ferences in interpretation of, or subtle con- able customer-exciting performance in fulfill- understood can a flicts in, the stated needs. ing existing and unstated needs. The first Only once the customer’s needs are thor- type of needs, existing needs, is the best company set oughly understood can a company set place to start. improvement targets.” improvement targets. Of course large Companies need a detailed understanding improvements can achieve significant of what the customer expects from their prod- improvements in customer satisfaction. But uct or service. Answers to the following questions are required how much of a breakthrough improvement will excite the customer? before starting to make improvements: Equally important is identifying what is really achievable. Can • What are the customer’s stated needs? What does the cus- the target be achieved within the current processes? Can it be tomer really expect the product or service to deliver? Are we achieved within current state-of-the-art? Can it be achieved within interpreting the stated needs in a way that meets the cus- the financial limitations of the company? Setting improvement tar- tomer’s real intent? gets that are not achievable, either physically, financially, or politi- • How well do we currently fulfill these needs? Equally impor- cally, will doom Lean Six Sigma projects to failure in terms of per- tant, how well do our competitors fulfill these needs? Where formance, schedule, or budget. do we lead the market in performance and where do we trail? Again, Lean Six Sigma provides tools that can help address • What improvements in meeting these needs are reasonable? these questions and set reasonable, achievable improvement tar-
  4. 4. March–April 2009 IOMA BROADCASTER 9 Achieving Latent Performance Improvements Identifying and fulfilling latent performance improvements is difficult, but also much more rewarding. The only way to identify these unknown customer needs, so that they can be fulfilled, is to under- stand the customer. A company must intimately know how the cus- tomer procures, handles, uses, and disposes of their product or serv- ice. When they understand their product or service in the customer’s environment they identify opportunities for improvement that can also improve how the customer uses the product or service. Two tools are extremely useful in understanding the customer’s environment with respect to the product or service. One is a gen- eral marketing tool and the other is the most important Lean Six Sigma tool. The general marketing tool is a simple system for col- lecting information regarding the customer. It is important that all information is collected, no matter how the information enters the company. Experience shows that the most useful pieces of informa- gets that are significantly large enough to impact customer satisfac- tion relative to identifying a customer’s latent needs can come from tion. To determine appropriate targets for breakthrough perform- the most unlikely of sources. Companies touch customers in many ance improvements a company must understand 1) how the com- ways: sales staff, delivery personnel, quality engineers, account- petition currently performs (inside) and 2) what is “best in class” ing, on-site servicing, and many others. Each of these organiza- performance (outside) for comparable needs. Commonly called tions sees a different aspect of the customer’s environment. Latent benchmarking, both inside and outside comparisons are useful in needs can be found when all of these different “images” are establishing the minimum improvement required and the maximum brought together and combined through methods like affinity dia- improvement possible. gramming or Ishikawa analysis. The Lean Six Sigma tools most useful in The second way in which the customer’s assessing your competition’s ability to meet “Experience shows that the potential latent needs can be identified is the customer’s needs (inside benchmarking) through the use of value stream mapping and are the Quality/Cost Profile and the Value most useful pieces of process mapping. Value stream mapping is a Map. Shown in Figures E and F, these tools information relative to high level look at the internal life cycle of the provide both a head-to-head comparison for product or service from receipt of the cus- each customer need and an overall value identifying a customer’s tomer’s order to delivery of the product or assessment for each competitor. With this latent needs can come from service. The value stream map includes infor- information, a company can identify those mation flow (both inside the company and needs where they lag behind the competition the most unlikely of sources.” outside to the suppliers), material flow, in- — needs that require they at least match the process inventory, and processing time infor- best competitor to eliminate a potential nega- mation. With a value stream map of the cur- tive market discriminator. More importantly, however, this informa- rent process a company can visualize a future-state map that elim- tion can be used to identify those needs where a company leads inates or minimizes waste: waiting, inventory, defects, transporta- the competition. To achieve breakthrough performance the Lean tion, motion, over production, and non value-added processing. Six Sigma teams must be applied to further increase the market This future-state map presents an idea of an optimized system that lead so that a company can leverage these needs as positive mar- minimizes production costs while “wowing” the customer. ket discriminators. A second approach is to use process mapping, which is a To determine potential “best in class” performance relative to detailed step-by-step construction of how the product or service is specific customer needs requires that the Lean Six Sigma teams procured, produced, delivered, used, and discarded. Process map- break down each specific need or group of needs into general- ping can be used to identify activities that are non value-added, ized, abstract needs. For example, specified lead time require- wasteful, or prone to mistake in the current process. A company ments to multiple locations can be abstracted to distribution needs. must particularly look for opportunities where small changes in Once abstracted into general terms, a company can identify the what they do internally have a major simplifying effect on the cus- leaders in distribution methods and technology; Federal Express tomer’s work. They also need to look for opportunities where sub- and Walmart quickly come to mind. Now the teams can study the optimization of a particular step in the process has impacted the distribution systems of the “best in class” and identify methods and overall effectiveness of the system. Construction of the customer’s technologies that can be applied to their specific industry and portion of the process map is best done with the customer’s partic- processes. After potential breakthrough performance improve- ipation, which in many cases may not be practical. In these cases, ments have been identified, it simply becomes a matter of “running a company can again fall back on the “images” obtained through the numbers” to verify that the potential increases in sales and mar- the myriad of contacts the company has with the customer. This ket share are worth the investments required to implement the new information can be used to construct the customer’s portion of the methods or technology. process map. Continued ®
  5. 5. 10 I O M A B R O A D C A S T E R March–April 2009 Improving Customer Satisfaction with Lean Six Sigma Summarizing Continued from page 9 Lean Six Sigma has been demonstrated time and time again to be the premier tool for improving internal productivity and effi- I have found that with a process map of the entire product ciency. It has also been very successfully used to improve cus- or service, production, delivery and use opportunities for tomer satisfaction by addressing failures to meet a customer’s latent performance improvements become apparent. In an basic needs. Failure to meet the customer’s basic needs is detri- example from a previous employer, a detailed process map mental to the reputation of a company and will eventually force for a particular hazardous product showed us that our cus- it out of business, if not quickly and fully corrected. Continual tomer was required to stock our product in a remote location improvement in fulfilling the customer’s performance needs is also to his facility. In his assembly process the important to ensure competitiveness. In diffi- customer subsequently removed our cult economic times such as we are currently product from the remote storage, trans- “Continual improvement in experiencing, we need to refocus Lean Six ported it to an assembly area, and Sigma efforts so that we are also addressing assembled it to another hazardous prod- fulfilling the customer’s the customer’s performance and latent uct that was stored at a separate remote performance needs is also needs. This will lead to significant growth in location. This necessitated two trips sales and market share. (transportation waste) to two different important to ensure Unfortunately, there is a fly in the oint- locations (inventory waste). We recom- competitiveness.” ment: over time what were once the cus- mended that, for a very nominal fee, the tomer’s latent needs become his basic customer have the second hazardous needs. Automatic transmissions, car radios, product directly shipped to our facility air conditioning, and CD players were all and that we would assemble it to our once latent needs in the automotive industry. product and ship the assembly to the cus- Now they are basic needs that must be ful- tomer. Once assembled together the two filled in order to compete. products could be stored at a single In today’s world, the slide from latent location. This simplified our customer’s need to basic need is ever accelerating. assembly process and greatly increased Only through the application of focused, his satisfaction with our company. (At a disciplined, data-driven methods like Lean later date we convinced the customer Six Sigma will companies be able to per- that we could produce the second haz- form with the speed and accuracy required ardous product and effectively doubled to stay ahead of the competition and the our revenue with this single customer.) customers. I