Enhancing Service Quality: Implementing Lean Sigma

Lean Sigma for Service/Transactional
Processes
Using LSS to Improve Service Processes
847-919-6127
info@quantumassocinc.com
quantumassocinc.com
Thought Leadership
Series

Define
• In the Define step, a team and its sponsor reach
agreement on what the project is and what should be
accomplished.
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Quality is always improved project by
project, beginning with the most
significant problems (Ys).
The deficiency to be attacked must be
clearly specified and the expected
improvement defined in measurable
terms. A team is assigned to the
project and given the time and
resources it needs to be successful.

Define
Lean Elements
• Value Stream Map
• High Level Process Map
• Non-Value-Added Analysis
Six Sigma Elements
• Financial Analysis
• Project Charter
• SIPOC
• VOC
• CTQ
• Y= F (X)

Define
• Complete an analysis of the what the project should
accomplish
• Team and sponsor agree on the problem
– What customers are affected—VOC
– How the current process or outcomes fails to meet customer
needs
• Understand the project link to corporate strategy
• Agree on the boundaries for the project
• Know what indicators or metrics will be used to evaluate
success

Define
• Suggested metrics
– Customer satisfaction—usually measured through surveys to
ensure all customer segments are represented
• Speed/Lead (cycle) time
Little’s Law:
Lead Time = Amount of Work-in-Process
Average Completion Rate
If you know or can make a reasonable estimate of average completion rate and
can count the number of items in process, then just plug those values into the
equation to determine lead time.

Define
• Suggested Metrics
– Sigma level—DPMO improvement, which requires careful
definition of “defects” and “opportunities.”
– Financial outcomes—The “language of money”, focus on revenue
retention and growth, or on cost reduction and/or avoidance.

Define
• Key Define tools for service applications
– Current state value stream maps
– “As Is” process maps
– SIPOC
– Non-Value-Added Analysis
• The People Side of Define
– Make sure right people are on the team
– Make sure everyone involved in the project is “singing from the
same song sheet”, with the same expectations
– Team should develop a communication plan to proactively
provide information and solicit feedback

Leasing Equipment SIPOC
Supplier (s) Input/Req’ts Process Output/Req’ts Customers
Credit Agency Credit Report
Customer Credit
Review
Equipment
Validation
Preparation of
documents
Funding and
Filing
Lease Agreement
Equipment
Lessor
Proposed Lease
Schedule
Stanley’s Office
Products
• Response within
30 minutes
• Data current to
previous business
day
•Report can be
reviewed in 3
minutes
• Complete list
of items on
lease
• Retail price
and
manufacturer
data
• Complete in 5
working days
•Full terms,
conditions and
payout rules
•2 pages max (not
including item
list)
Payment
• Correct
amount funded
within 1 day of
delivery
• Delivered via
EFT
Stanley’s Office
Products

Measure
• The purpose of the measure phase is to collect data to
make informed decisions about the how the process
operates.
The sequence of steps in the measure
phase utilizes a series of tools which
step-by-step, gradually lead the team
to discover the most important
contributor (s) to the problem.
The Measure phase include tools like
data collection, Pareto analysis, and
Failure Mode Effects Analysis (FMEA)

Measure
Lean Elements
• 8 Lean Wastes
• Waste Analysis
Six Sigma Elements
• Operational Definitions
• Data Collection Plan
• Pareto Chart
• Histogram
• Box Plot
• Measurement System
Analysis

Measure
• Collect Data
• Some roadblocks to data collection
– The needed data have never been collected before
– The data have been collected, but for all practical purposes are
unavailable
– Too much data making it hard to separate the wheat from the
chaff
– The data doesn’t measure what it alleges to measure
• If a service process hasn’t been studied before, expect to
spend a great deal of time dealing with data collection.

Measure
• Service Process Tips
– Establish baseline metrics like:
• Work-in-Process (WIP)/Things-in-Process: The amount of work that has
entered the process but hasn’t been completed.
• Average completion rate: The average number of work items that are
completed in a given time period (usually a day).
• Cycle or lead time: How long it takes for any work item to make it through
the process from beginning to end.
• Demand variation: The amount of fluctuation in demand for the output of
the process measured in terms of units/day.
• First-pass yield: The percentage of “things in process” that make it all the
way through the process without needing to be fixed or reworked in some
way.

Measure
– Establish baseline metrics
• Approvals or handoffs: Two characteristics of slow processes are (1) lots of
approvals before work can be completed or (2) a lot of handoffs back and
forth between people or functions.
• Setup, downtime, learning curves: Any delays or productivity losses that
occur when people switch tasks.
• Defects/Sigma capability: Come up with definitions that: (1) everyone on
the team will interpret the same way and (2) are consistent with other
definitions used in the organization. Focus on things that are important to
your customer (CTQs).
• Complexity: The number of different tasks an activity is called upon to
process each day/week/month. An estimate of this figure is needed to
calculate the effect of complexity related WIP on process delays.

Measure
– Observe the process
• Track emails, reports, phone calls, or inputs to screens.
• This means watching people and what they do.
• Process observation works best when trained neutral observers are used,
and you involve office staff in setting goals for the observation and in
deciding when the observation will take place, which staff will volunteer
to be observed, etc.
– Collect data by participating in the process—acting as a customer
of the service

Measure
• Key Measure Tools for Service Applications
– Process description tools
• Value stream maps
• Process cycle efficiency: relates the amount of value-added time to total
process cycle time.
• Time value-add analysis: A chart that visually separates value-added from
non-value-added time in a process.
– Focus/prioritization tools
• Pareto charts: A chart in which bars are used to represent the relative
contribution of each cause or component of a problem. The bars are
arranged in descending order—80/20 rule.
• Failure Mode and Effects Analysis (FMEA): a table relating potential types
of failure of a product, service or process to three criteria on a scale of 1
to 10—Severity, likelihood of occurrence, and the probability of detecting
the failure.

Measure
– Data collection and accuracy
• Gage Repeatability and Reproducibility: a method for studying and
adjusting measurement systems to improve their reliability. In service
situations, instrument accuracy isn’t as much an issue as whether people
gathering data are all doing it the same way.
– Quantifying and describing variation
• Control charts: A control chart shows data points charted in time order,
with calculations performed to determine whether variation seen in the
data is random variation or if something different or noticeable is
happening due to special causes. They are used in the Measure phase to
determine which type of variation is present so that you can respond
accordingly.

Measure
– The people side of measure
• Expect some level of distrust or wariness when you first begin data
collection efforts.
• Get staff involved—ask staff to help decide what type of data should be
collected and why, how it will be used, getting their help whenever
appropriate in developing data collection forms or gathering the data
itself.

Analyze
• Purpose of this phase is to make sense of all the
information and data collected in Measure and to use that
data to confirm the source of delays, waste and poor
quality.
• Stick to the data not opinions to make conclusions about
the root causes of the problem.
The Analyze phase seeks to discover root
causes of the major contributor (s) to the
problem. Theories are generated by
means of brainstorming, and organized
in a cause-and-effect diagram to identify
the root causes. Theories of root causes
are tested and cause (s) identified.

Analyze
Lean Elements
• Value Stream Maps
• Detailed “As Is” Process
Maps
• Constraint Identification
• Time Trap
• Non-Value-Added Analysis
Six Sigma Elements
• Pareto Charts
• 5 Whys Analysis
• Cause and Effect Diagrams
• Brainstorming
• FMEA
• Regression Analysis
• Scatter Diagrams

Analyze
• Key Analyze Tools for Service Applications
– Scatter plot: A simple tool that can help determine if a
relationship exists between two measures or indicators.
– Time trap analysis
• In LSS slow processes are expensive processes.
• In most processes value-added work makes up only 5% of its time. By
increasing value-add to 20%, you can reduce non-value-added work by 20-
50%.
• 80% of the delay is caused by a few time traps. By identifying these time
traps, we can identify the improvement projects that will drive the
process cycle efficiency over 20% typically improving operating profit by
5% of revenue and reducing WIP by 50%.

Improve
• The sole element of improve is to make changes in the
process that will eliminate defects, waste, costs, etc., that
are linked to the customer need identified in the Define
phase.
Once the root cause (X) is clearly established,
it is time to create improvements. An
improvement should remove the cause and
produce optimal results for both the
organizations and the customer.

Improve
Lean Elements
• 5S
• Queuing Theory
• Line Balancing
• Process Flow Improvement
• Pull Systems
• Set-up Reduction
• Kaizen
• Poka Yoke
• Future State VSMs
Six Sigma Elements
• Brainstorming
• Benchmarking
• “Should Be” Process Maps
• FMEA
• Solution Selection Matrix
• PICK Chart

Improve
• Key Improve Tools for Service Applications
– Setup reduction: Eliminate anything that interrupts or hinders
productivity
• Identify and tabulate any process-related work that fit into one or more of
the following categories
– Delays the start of value-added work
– Causes interruptions to value-added activities
– Takes people time to get up to full speed
– Similar or identical to another task in the process
• See if any of the interruptive/delaying tasks can be offloaded
– Handle preparatory work outside of the main process flow so the information
or material ends up waiting for you.
– Focus on any activity where you have to stop the process. Ask yourself why
those problems appear, and determine how to eliminate the source of
interruptions or delays.

Improve
• Streamline or automate any interruptions/delaying tasks that cannot be
offloaded
– Be creative in trying to find ways to either eliminate or drastically reduce the
amount of delays that these tasks inject (example, many pizza restaurants
just ask for your phone number the first time you order. They have
eliminated the task of asking for your name , address a second time).
• Bring the process under statistical control
– Ensures that the output of the process is in specification and under statistical
control—the amount of variation in lead time is within predictable limits of
±3.

Improve
– Queuing methods for reducing congestion and delays
• Pooling: Cross training staff to step in during times of peak demand
• Triaging: Sorting jobs into categories that reflect different levels of effort
required. Typical schemes include; fast service times vs. medium service
times vs. slow service times; easy and small problems vs. real problems vs.
catastrophic problems. Then develop different routings, strategies, or
resources to deal with each category.
• Backup Capacity: To deal with sustained peaks, cross train any
operators/staff in the work area that have high demand fluctuations. By
juggling scheduled downtimes (such as lunch, coffee breaks, etc.) you can
usually provide sufficient coverage to effectively add 20% more capacity.
• Reduce the variation in processing time

Improve
– 5S +1—Workplace Organization
• Remove clutter and disorganization from the workspace to prevent
wasted time looking for documents or materials
Before 5S After 5S

Control
• The purpose of control is to make sure that any gains
made will be preserved, until and unless new knowledge
and data show that there is an even better way to operate
the process.
• The team hand off what is learned to the process owners
• Ensure everyone working on the process is trained in
using any new documented procedures
An improvement team’s work is not complete until
there is a procedure in place to sustain the gains. All
the work that goes into correcting a problem can be
lost if there are no effective controls in place.

Control
Lean Elements
• Visual management
• Mistake Proofing
• Standard work
Six Sigma Elements
• Control Charts
• Training Plan
• Communication Plan
• Implementation Plan
• Process Control Plans
• PDCA

Control
• Key Control Tools for Service Applications
– Four areas of control
• Make sure improved process is documented and that the documentation
is used
– Service processes rely on the habits that staff develop as they perform their
work therefore document the new steps with written procedures.
• Always turn results into dollars
– Verify project improvements and quantify their financial impact.
• Verify the results at a later point in time
– Perform a check two to three months after the project is officially complete
to verify sustainability.
• Set up automatic alert system
– Establish manual or electronic monitoring systems to provide warnings if
something goes wrong.

Control
• Key Control Tools for Service Applications
– Six areas of control
• Piloting implementation
– Conduct a pilot before full scale implementation
• Develop a process control plan
– Usually builds on the future state process map, indicating who is responsible
for what in the mew process
– Identify critical metrics for the ongoing process and how the data will be
captured and displayed
– Control charts for costs, revenues, productivity levels or customer
satisfaction data are common
– Create a process management team to monitor ongoing performance post-
implementation

Overall Reference
• Nash, M.A. Poling, S.R. Ward, S (2006) Using Lean For Faster Six Sigma Results—A
Synchronized Approach, Productivity Press, New York, NY
• Carter, W (2008) Process Improvement for Administrative Departments—The Key to
Internal Customer Satisfaction, Booksurge, Charleston, SC
• George, M. L. (2003), Lean Six Sigma For Service—How to Use Lean & Six Sigma Quality to
Improve Service and Transactions, McGraw Hill, New York, NY
• Sarkar, D (2007), Lean For Service Organizations and Offices—A Holistic Approach for
Achieving Operational Excellence and Improvements, ASQ Quality Press, Milwaukee, WI
• Association for Manufacturing Excellence, Lean Administration—Case Studies in Leadership
and Improvement, Productivity Press, New York, NY

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DO NOT BE
AFRAID, MY
FRIEND

Enhancing Service Quality: Implementing Lean Sigma

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