By Nari Kannan
Service processes play integral roles in almost every company – loan processing in the case of banks, mechanical services in an automobile dealership, recruitment or new employee orientation in a human resources department, accounts payable in an accounting department. Service processes can consume a large portion of a company's operating margin. So it is not surprising that Six Sigma efforts are often directed at these processes in an effort to model, measure, modify and improve them.
Typical problems in the use of Six Sigma in service processes arise in the selection of qualitative and quantitative measures appropriate to the business and the service process being improved. For example, quantitative measures related to time taken for completion may be very important in a fast food restaurant. However, in a gourmet restaurant the same fast service may be seen as a negative indicator. The gourmet restaurant wants to provide its customers with a relaxing dining experience, rather than be seen as trying to rush clients through as quickly as possible.
When trying to measure qualitative aspects, one problem is balancing the variety of qualitative aspects being measured with the response rates which realistically can be expected from customers. People do not have patience for long surveys. They may abandon them or decline to participate if they are too long.
Careful Characterization of Defects
Another practical issue in Six Sigma measurement of service processes is the careful characterization of what a defect is – qualitative or quantitative. The measurement data can be discrete or continuous depending upon the context. Customer satisfaction when measured qualitatively needs to be converted into an equivalent quantitative measure such as "overall satisfaction on a scale of 1 to 7." Any score below 6 could be considered a defect in the case of a strong customer service-critical process, while in a less customer service-oriented process a lower score could be acceptable.
When considering quantitative measures, the definition of a defect is even more context-sensitive. Newspaper delivery in the morning is expected before a certain cutoff time. Beyond that time, it may not be useful to have morning newspapers delivered. On the other hand, mail that shows up in the mailbox may only need to be timely as in the context of today versus tomorrow. For most Postal Service customers, delivery may not need to be tied to a specific time during the day.
Four Ways to Sensible Measurements
Sensible Six Sigma measurement in service processes will be useful and meaningful. Four ways to help ensure sensible measurements are:
- Use Appropriate Level of Measurement - The measurement needs to be at the right level for it to be meaningful. There are usually many end-to-end processes across organizations. The right level of abstraction is usually necessary for measurement to be meaningful. There could be many intermediate steps and manual steps. Measurement of these process steps at very low levels of detail may not add much value to what is being measured. As in other areas in life, the 80/20 rule applies to service processes – 20 percent of the steps may contribute 80 percent of the time taken to execute service processes, 20 percent of the customers may account for 80 percent of the customer dissatisfaction when qualitative measures are used. Focusing only on some key elements may get you a large percentage of the payoff. Getting into more detail than that usually does not add significant incremental value.
- Account for Variability - Service processes may have significant variations in how they are executed, depending upon the complexity of the tasks they handle. For example, in the case of automobile insurance underwriting, the underwriter could be considering a run-of-the-mill case such as a regular passenger car for a driver with no accidents on his record. Or it could be a motor home or a customized vehicle that needs to be handled as a special case. Six Sigma assessments of these cases could be significantly different, and the usual measures may not be applicable across both cases. Adjustments may have to be made as to what is being measured and how.
- Put Strategic Emphasis on Quantitative Versus Qualitative Measures - The right mix of quantitative and qualitative Six Sigma measures is important to get meaningful results. Nordstrom, the apparel store chain, prides itself on the service it provides customers. Qualitative measures may be more important in customer-facing service processes there. Quantitative measures are more important in a company that specializes in quick service, such as a speedy oil change business.
- Emphasize Management Communication and Support for Change - Service processes, especially on a large scale like insurance claims processing, involve so many different groups of people inside and outside the company that any Six Sigma process improvement could face significant resistance. People involved in executing the same process step for a long time may not know how they fit in the bigger picture. If Six Sigma practitioners suggest process changes, the status quo may be threatened and therefore may need significant management support for implementing changes. This is where information sessions that provide the bigger picture to all those who may be affected by the process changes will help.
Conclusion: Pay Attention to Measures
Six Sigma efforts in service processes can increase customer satisfaction and, consequently, increase sales. They also have the potential to increase operating margins by reducing processing time and/or human resources needed. Both of these have the effect of boosting revenues and profits for any company. To realize the full potential, it is essential to pay attention to sensible and wise measurement in the application of Six Sigma to service processes.
About the Author
Nari Kannan is president and CEO of Ajira, a company that designs and develops service process management tools. He has 18 years of experience in information technology. He started as a senior software engineer at Digital Equipment Corp. and has since served as vice president of engineering or chief technology officer of five Silicon Valley startup companies. Mr. Kannan has dealt with problems in IT consulting, automotive claims processing, human resources and logistics applications. He can be reached at nkannan@ajira.com.
