Service Process Improvement

Professor Joy Field

 Foundations of Continuous Improvement

Customer satisfaction
Focus on customer needs

Management by facts
Formal data gathering and statistical
analysis
Respect for people
Assumptions about employees

Customers as co-producers

Support and engagement

 Plan-Do-Check-Act (PDCA) Cycle

Plan
Documenting the current process, selecting the
problem, determining possible root causes, and
developing an action plan
Do
Implementing the process change on a trial basis and
collect data on performance measures
Check
Review and evaluate the effect of the change
Act
If the experiment is successful, standardize the
process change, provide training on the new process,
and codify learning from the improvement process
 Basic Tools for Quality and
Productivity Improvement
Check sheet
Run chart
Histogram
Pareto chart
Flowchart
Cause-and-effect diagram
Scatter diagram
Control chart
Process Improvement Challenges in Services
High input and process variation
Variation reduction is a more complicated and sensitive
issue than in manufacturing
Poor tracking of flow, especially of customers in the
process
Customers cannot be treated like inventory
A tradition of individuality and employee
discretion
Lack of meaningful data and data-based decision-
making
Quality metrics are often subjective (although time is an
example of an objective metric in transactional services)
Employees and customers cannot be controlled
like machines
 Six Sigma for Services Principles
Six Sigma:
Emphasizes the need to recognize high-impact, financially
quantifiable opportunities and eliminate defects as defined by
customers
Recognizes that variation hinders the ability to reliably deliver
high-quality services
Requires data-driven decisions using a comprehensive set of
quality tools
Provides a highly prescriptive cultural infrastructure for aiding
implementation
When implemented correctly, promises and delivers $500,000 of
improved operating profit per Black Belt per year
The Define-Measure-Analyze-Improve-Control (DMAIC)
improvement process used in Six Sigma is analogous to the
PDCA cycle
 Six Sigma Organization Roles
and Responsibilities
Own vision, direction, Part-time
integration, results Executive Project Member Project-specific
Lead change

Champion All employees Green Belts

Project owner Understand vision Part-time

Implement solutions Apply concepts Help Black Belts
Black Belt managers

Master Black Black Belts

Belts

Full-time Devote 50%-100% of time to Black Belt activities

Train and coach Black and Green Belts Facilitate and practice problem solving
Statistical problem solving experts Train and coach Green Belts and project teams
 Sources of Variation in Services
Customer introduced variability
Arrival variability
Request variability
Capability variability
Effort variability
Subjective preference variability
Internal process variability
Process design
Employees
Equipment
 Reduction of Variation in Services
Due to the involvement of the customer in the service process
and the more intangible nature of service products, services tend
to have more uncertainty (i.e., variation) than manufacturers.
Process standardization in services often involves defining a
framework for action and customer interaction rather than a rigid
sequence of steps. Any standard that causes failure demand
(e.g. strictly limiting the length of customer service calls) is an
inappropriate application of variation reduction.
Standard operating procedures provide a basis for evaluating
service processes and assessing the impact of process changes.
Many service processes can be more standardized than they
currently are, making services more efficient and effective (e.g.
best-practice bundles in healthcare, separate processes for high
and low complexity services such as insurance applications and
grocery store checkout, Mandarin Orientals LQEs).
 Lean Services Principles
The lean approach to process improvement
includes:
A focus on customers (both internal and
external)
Maximizing process velocity (i.e., flow)
Tools focused on analyzing process flow and delay
times at each activity in a process
Eliminating waste
Separating value-add from non-value-add and
addressing the root causes of non-value-add
activities
Reducing unnecessary complexity and its costs
 Throughput Time and Process Speed
Amount of work - in - progress
Littles Law: Throughput time
Average completion rate

Throughput time is the amount of time an item (e.g.

customer) takes to complete the process
Work-in-process is the number of items in progress
Average completion time is the number of items
completed per unit time
If two of the three quantities are known, the other two
can be calculated
Increasing process speed requires either reducing the
WIP or increasing the completion rate
 Services Wastes
Overprocessing
Trying to add more value to a service than what your customers
want or will pay for
Transportation
Unnecessary movement of materials, products or information
Motion
Needless movement of people
Inventory
Any WIP in excess of what is required to produce for the customer
Waiting time
Any delay between when one process step/activity ends and the
next step/activity begins
Defects
Any aspect of the service that does not conform to customer needs
Overproduction
Production of outputs beyond what is need for immediate use
 Lean Six Sigma for Services

Lean Six Sigma combines the emphasis on

maximizing flows and reducing waste from
Lean with variation reduction and an
organizational infrastructure and specific
improvement process from Six Sigma.
Lean Six Sigma for services focuses on
improving the customer experience and
service outcomes by addressing poor flow
and excess waste and variation in the service
delivery process for both the firm and
customer co-producers.
 Lean Six Sigma DMAIC Tools
(Lean tools in bold)
Define Measure Analyze Improve Control
Project selection Operational Pareto charts Brainstorming Control charts
tools definitions C&E matrix Benchmarking Standard operating
PIP management Data collection plan Fishbone diagrams TPM procedures (SOPs)
process Pareto chart Brainstorming 5S Training plan
Value stream map Histogram Details As-Is Line balancing Communication plan
Financial analysis Box plot process maps Process flow Implementation plan
Project charter Statistical sampling Basic statistical tools improvement Visual process
Multi-generational Measurement Constraint Replenishment pull control
plan system analysis identification Sales & operations Mistake-proofing
Stakeholder Control charts Time trap analysis planning Process control
analysis Non-value-added Setup reduction plans
Process cycle
Communication efficiency analysis Generic pull Project
plan Hypothesis testing commissioning
Process sizing Kaizen
SIPOC map Confidence intervals Project replication
Process capability Poka-yoke
High-level process FMEA Plan-Do-Check-Act
map FMEA
Simple & multiple cycle
Non-value-added Hypothesis testing
regression Solution selection
analysis
ANOVA matrix
VOC and Kano
analysis Queuing theory To-Be process maps
QFD Analytical batch Piloting and simulation
sizing
RACI and quad
charts
 Examples of Lean Six Sigma Tools
Poka-yoke (mistake-proofing)
A poka-yoke device is a simple, often inexpensive, device that
prevents employee and customer mistakes from becoming
defects (e.g. e-commerce order forms, hospital wrist bands,
spellcheckers).
A poka-yoke device undertakes 100% automatic inspection and
prevents defects and/or stops or gives a warning when a defect is
discovered.
Poka-yoke steps include: elimination (possibilities for accidents or
errors are eliminated), replacement (replacing human actions by
automated actions for safety and error reasons), facilitation
(make the work easier to carry out and less error prone),
detection (identifying mistakes before they become defects), and
mitigation (reduce the effects of an error).
Design of experiments (DOE)
DOE is a method for simultaneously investigating anywhere from
a handful to dozens of potential causes of variation in a process.
Experiments are conducted by varying a number of factors
according to a statistically-based plan.