Service industry – implementing six sigma

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    Simon Bodie

    I am involved in a discussion regarding implementing Six Sigma in the service industry. The discussion focussed on the often-intangible processes of the Financial Services industry.
    I think they can pose a number of issues to the Six Sigma practitioner, manifesting themselves beyond the technical application of tools and techniques to include, building support for initiatives, the ability to communicate and realise benefits, and ultimately the business rationale for the whole six-sigma program. These challenges can increase complexity in the world of financial services if not managed well.
    For example some concepts are more difficult to understand and use relative to say manufacturing. The concept of WIP, raw material management, finished goods inventory and flow (queue) management are issues that in manufacturing are re-enforced by physical space taken for storage, the visual impacts of queues of material waiting to be processed, the cost of the materials and by the physical damage that can occur.
    In service industries these issues are not often managed well but are often just as significant on the performance of the business as they are in manufacturing.
    Every queue, every delay, every handoff every piece of inventory is by definition waste!
    For example prior to using Six Sigma at Citi Australia we had a very time consuming credit card application and issuing process. Because the process was fairly invisible no one knew how long the process actually took, no one knew how that timeframe impacted upon customer behavior; no one knew the true cost of the queues and delays in the process, or of holding that quantity of, finished goods. The only driver to change being infrequent feedback from customers suggesting we might be a little slow.
    Once properly understood, these issues started to receive priority attention. The financial impact being so great that resolution was driven to the very top of a demanding, overcrowded management agenda.
    Every day a credit card remains un issued means:-
    ·         The customer is not spending with your card so therefore not generating revenue
    ·         The customer can find alternative ways to meet their credit needs
    ·         The customer is more likely to pull out of the process and cancel the application
    ·         The customer is more likely to never use the product when it is delivered
    ·         The customer forms opinions about how efficient and effective you are to deal with
    ·         The customer is more likely to call to enquire about status
    ·         The organization has to store the application in its systems
    Etc etc. This all adds up to become very significant!
    No doubt the same will be true in every service business
    How long is spent negotiating a deal (missing out on income)?
    How long does it take to develop the product (missing out on income)?
    What is your inventory?
    What is the level of  WIP in your business?
    What is your cycle time (from a customers perspective?)
    Etc etc…
    I wondered what other people think and if they are interested in adding to this discussion?


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