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Rejects reduction in a retail bank using Lean Six Sigma

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Rejects reduction in a retail bank using Lean Six

Sigma

Vijaya Sunder M.

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using Lean Six Sigma, Production Planning & Control, 27:14, 1131-1142, DOI:
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Production Planning & Control, 2016
VOL. 27, NO. 14, 1131–1142
http://dx.doi.org/10.1080/09537287.2016.1187312

Rejects reduction in a retail bank using Lean Six Sigma

Vijaya Sunder M.a,b 
a
Department of Management Studies, Indian Institute of Technology-Madras, Chennai, India; bThe World Bank, Chennai, India

ABSTRACT ARTICLE HISTORY

Lean Six Sigma (LSS) is a majestic process improvement methodology that has been proved to be a powerful Received 7 May 2015
management strategy across services. The influential synergy of Six Sigma and Lean aims at improving the Accepted 2 May 2016
processes, focusing on both rapid and robust improvements, reducing waste and variation in the process.
KEYWORDS
LSS generates successful results in key performance indicators (KPIs) based environments, where process Lean Six Sigma; retail
data gets measured and leveraged for making essential management decisions. The aim of this paper is banking; rejects; DMAIC; key
to highlight the importance of LSS in banking industry through a real-time process improvement study. performance indicators
The article establishes the literature for the need for LSS in banks detailing on customer facing metrics and
process KPIs. An action-research study conducted in a retail bank is presented in LSS DMAIC methodology
which reaped a benefit of INR 1.6 million and is a classic example of how LSS can bring bottom-line impact
to an organisation, alongside contributing to the process improvement mind-set in employees.

1. Introduction • The senior executives in the business understand the criti-

Process improvement (PI) is defined as an important aspect of
organisational development, in which a series of activities are
taken by a process owner to identify, analyse and improve exist-
ing business processes within an organisation to meet the goals
and objectives (Cook 1996). Research shows instances how
both manufacturing and service organisations benefited from
process improvements. Plan Do Check Act (PDCA), Statistical
Process Control (SPC), Total Quality management (TQM), Six
Sigma, Lean and Lean Six Sigma (LSS) are few of the Process
improvement methodologies which subsist in usage at the cur-
rent juncture. The advantage of LSS methodology over other PI
approaches is that LSS puts the Six Sigma methods and tools
in the service of a critical goal, and at the same time uses lean
principles to reduce cycle times in the processes, that chiefly
drive customer satisfaction (Immelt 2006). LSS has been success-
fully implemented across services, and banks are no exception.
Banking and Financial Services has changed the ways of working
using LSS concepts. Bank of America, HSBC Holdings, American
Express, Standard Bank Group, Bank One are few of the market
players who published their success stories post adopting LSS.
Below mentioned are few of the prerequisites which an organ-
isation needs to acclimatise for successful LSS implementation
(Antony 2014)
• 
The goals of LSS should be measurable, relevant and
aligned with corporate goals.
• 
The organisation should have relevant process perfor-
mance metrics or key process indicators that all employees
understand and use.
cal business processes and the key performance indicators
(KPI) associated with them.
• The organisation should imbibe the culture of collecting
relevant data which determines the process performance.
From the above discussion, it is palpable that the KPIs are very
important for instilling process improvement culture, especially
in LSS deployment. This is because KPIs enable measurement of
data and helps in determining the process performance. They also
stand as directional indicators for the organisational leadership
to make appropriate strategic decisions. Upon establishing the
KPIs, it then becomes important to improve the current process
performance to the desired level. The objective of this paper is
to demonstrate the power of LSS project management in a retail
bank, and to understand the intricacies and takeaways from the
case study. The paper also aims at highlighting how LSS can bring
impact to the bottom line of the bank by delivering tangible
results alongside instilling process thinking mindset amongst the
employees. For the benefit of the readers, the paper is organised
as follows. The paper introduces different KPI in banking industry,
and demonstrates the power of LSS methodology for improv-
ing the process level KPIs in banks. Case study methodology is
adapted in the paper to showcase how LSS project management
can bring significant change in a retail bank. Leadership takea-
ways are also discussed as part of the paper.
2.  Key performance indicators for banks
For improving quality excellence, banks need the underlying
capabilities that enable them to progress consistently. These

CONTACT  Vijaya Sunder M.  mvijayasunder@gmail.com

© 2016 Informa UK Limited, trading as Taylor & Francis Group
1132    Vijaya Sunder M.
include process performance, complexity management, and
continuous improvement and collaboration between front and
back offices (Christophe et al. 2012). Amongst these, process
performance management is the most important and critical
element of the bank, which highlights the process complexities
leading to continuous improvement and thus creating a culture
of collaboration. Hence KPI become important. According to
FinPa New Media, KPIs are defined as quantitative and qualita-
tive measures used to review an organisation’s progress against
its goals. These are broken down and set as targets for achieve-
ment by departments and individuals. The achievement of
these targets is reviewed at regular intervals (FinPa New Media
2009). KPI, in the EFQM Excellence Model (Muchiri et al. 2010)
are defined as “What the organisation is achieving in relation
to its planned performance.” Essentially, “the results document
the relationship between what organisations do in terms of
quality management practices and the results they achieve in
several types of outcomes” (NIST 2010). The starting point for
choosing which performance indicators are key to a particular
company should be those that the Board uses to manage the
business (Hirst 2007). In banking industry, few of the KPI include
customer retention, customer penetration, asset quality, capi-
tal adequacy, assets under management, loan loss etc. (Source:
www.corporatereporting.com). Traditionally, a common metric
used to measure performance has been Net Income. According
to a study conducted by PwC (2011), this metric does not totally
serve the purpose of measuring how effectively a bank is func-
tioning in relation to its size and does not truly reflect its asset
efficiency. Another important KPI used often in banking indus-
try is Net promoter score (NPS). It is important to consider other
KPI in order to measure a retail bank’s performance. Current
ratio, working capital, returns on equity, debt to equity ratio,
net profit margin, inventory turnover, accounts receivable turn-
over are few of the critical metrics. Several studies highlighted
the importance of KPIs in retail banking set-up. Knott, Hayes,
and Neslin (2002) used a Next-Product-to-Buy (NPTB) model
to assist a retail bank with identifying the customer KPIs who
were likely to purchase a specific loan product. Du, Kamakura,
and Mela (2007) use data from a major US bank with informa-
tion about its customers’ account balances within and outside of
the bank to identify cross-selling and up-selling KPIs. According
to Szűts and Tóth (2008), devising standards and metrics for
measuring the customer loyalty in retail banks has been another
challenge. He argues that retail banks have limited their loyalty
KPIs to product-specific programmes or simple date-based rec-
ognition programmes. Alfaro, Ortiz, and Poler (2007) proposed
a performance measurement model to effectively measure KPIs
for business processes. From the back office banking operations
perspective, most of the KPIs get established in service level
agreements (SLA). With the globalisation and increase in the
business process outsourcing opportunities in banking indus-
try, the documentation of KPI as part of SLA has increased. SLAs
commonly include segments to address: a definition of services,
performance measurement, problem management, customer
duties, warranties and disaster recovery features (Source: http://
www.sla-zone.co.uk/).
Delivering a defect free accurate output to the customers with-
out compromising on the turnaround time of delivery becomes
critical for the banking back offices (Vijaya Sunder and Antony
2015a). Measuring data and process performance is an essential
element for any organisation. This becomes specifically important
for banks as they maintain huge databases of customer confi-
dential information and all processes deals with involving money
transactions. The KPI measurement provides a direction to the
bank, highlighting the areas for improvement. The quality level
of the bank cannot be improved by merely measuring KPIs. This is
where, the Quality Excellence methodologies like Six Sigma, Lean
etc help in improving the KPI levels as per the defined customer
conformance standards. Hence, it becomes a prerequisite for any
organisation to mature as a metric-based organisation in order
to imbibe any Quality methodology for process improvements.
3.  Lean Six Sigma
Six Sigma being a structured problem-solving methodol-
ogy brings in required configuration to the process improve-
ment by providing a more detailed outline of Deming’s
plan-do-check-act cycle by guiding the initiative through a
five stage cycle of define-measure-analyse-improve-control
(DMAIC) (Pande, Neuman, and Cavanagh 2000). Irrespective of
industry or application, Six Sigma methodology has brought
several influential factors such as management commitment
and open communication into light of success, which are con-
sidered as critical elements for successful implementation of
any continuous improvement programme. Having originated
from manufacturing industry, Six Sigma emphasises on continu-
ous improvements for improving process efficiencies aiming to
exceed the customer expectations. In success, Six Sigma was not
rationed to manufacturing sector. Non-manufacturing organi-
sations from service sector such as Citibank, Bank of America,
American Express, Caterpillar, Mount Carmel Health System and
Baxter Healthcare in USA, Europe and worldwide registered suc-
cess using Six Sigma implementation (Chakrabarty and Chuan
2009). While Six Sigma techniques help in identification of pro-
cess variation, Lean focuses on sources of waste and improve-
ment plans to eliminate them (Gibbons et al. 2012). Lean
encourages incremental improvement of an activity to eliminate
waste, variation, and overburden and helps to create more value
(Ohno 1988; Womack and Jones 1996). As per Lean, the seven
different types of waste are – overproduction, waiting, transpor-
tation, inappropriate processing, excess inventory, unnecessary
motion and defects (Endlsey, Magill, and Marjorie 2006). Lean
philosophy believes that identifying many small opportunities
leads to large overall change (Tapping and Shuker 2003). There
are few studies which highlight the eighth waste of unutilised
skill set in organisations. The Lean approach to process improve-
ment is based on mapping and analysing the activities in the
processes, called as value stream mapping (Worley and Doolen
2006). Similar to Six Sigma, various studies concluded that Lean
principles could be translated to service sector organisations
for efficiency generation and improving the ways of working
through process improvement (Ahlstrom 2004; Fillingham
2007; Hanna 2007). Strategically speaking, Lean is a bottom-up
approach, and Six Sigma is a top-down approach in organisa-
tions (Vijaya Sunder 2013). In this context, Snee (2010) argues
that comparing Lean to Six Sigma is not productive, in fact they
complement each other. It was further stated that when devel-
oping and using a common approach for improvement it is

helpful to look at process from both top-down and bottom-up
approaches. This is because top-down approach helps to under-
stand how process improvement help organisations meet busi-
ness goals; and bottom-up thinking helps to contemplate on
how solving process problems improve process performance.
Hence, the key message is that the integration of Lean and Six
Sigma aims to target every type of opportunity for improvement
in organisations.
Although Lean and Six Sigma evolved distinctly, there are a
number of encouraging studies discussing the use of an amal-
gamated approach, leading to structured process improvements
(Pepper and Spedding 2010). The recent evolution of LSS is a mul-
tipart management stratagem which includes both the speed of
Lean and the robustness of Six Sigma. LSS focuses on both reduc-
tion of variation, defects and eliminating waste in the processes.
Literature shows evidence that LSS acts as an effective manage-
ment strategy for improving the KPI (Chen and Lyu 2009; Kumar
et al. 2006; Vijaya Sunder and Antony 2015b). The fact that services
are not always tangible and the process performance in services is
not usually transparent could be seen as an impediment to apply
LSS (de Koning and Does 2008). However, in light of the increasing
importance of the service sector, especially in transaction-based
environments, it becomes essential to focus on improving KPI.
According to Snee (2010), LSS is recognised as a business strategy
and methodology that increases process performance by improv-
ing KPI, resulting in enhanced customer satisfaction and improved
bottom line results. LSS uses tools from both toolboxes, in order
to get the synergetic-best of the two methodologies, increasing
speed while also increasing accuracy (Mader 2008). This integra-
tion allows the organisation to incorporate the problem-solving
and analysis tools that make the most sense within organisation
(Andersson, Eriksson, and Torstensson 2006). There have been
studies to highlight the success and application of LSS in banking
industry. Studies by Roberts (2004) indicate that LSS application
in a bank contributed to significant reduction in customer com-
plaints and increase in customer satisfaction. According to Rucker
(2000), LSS contributed to reduction of internal callbacks by 80%,
further contributing to the reduction in credit processing time
in a banking call centre operations. Another study reveals that
the defect rate of returned renewal credit cards reduced from
13500 DPMO to 6500 DPMO using LSS (Keim 2001). Excessive
market losses on trading errors in an investment banking unit
were improved through LSS methodology contributing to several
million dollar savings (Stusnick 2005). Alongside these, there are
several other publications evidencing the application of LSS in
banking services (George 2003; Hayler and Nichols 2006; Hensley
and Dobie 2005). However, there is no publication found in the
reviewed literature, which demonstrates the application of LSS in
retail banking set-up. Taking this as a valuable opportunity, this
paper presents an action research study of effectively applying
LSS in a retail bank. Leadership takeaways and lessons learned
from the LSS application are also discussed as part of the paper.
4. Methodology
In the interest of thoughtfulness for academicians, researchers
and corporate professionals, an action-research study is adapted
in this paper, to present the organisational views of solving
high reject rate in a retail bank. Action research is defined as
Production Planning & Control   1133
an approach in which the researcher and a client collaborate in
the diagnosis of a real-time problem and in the development
of a solution based on the diagnosis (Bryman and Bell 2011).
According to, action research is generally designed to look into
a particular situation, policy or scenario in order to change it or
improve it using focused analysis methods. The extent to which
generality can be claimed from a single study though is limited,
by documenting organisational experiences in the light of exist-
ing literature, each case adds to the body of knowledge avail-
able for future practitioners and researchers (Antony, Gijo, and
Childe 2012). According to Lee (1999), the unit of analysis in a
real-time study is the phenomenon under study and deciding
this unit appropriately is central to a research study. The action-­
research study presented as part of this paper helps the readers
to understand the practice of Lean Six-Sigma for reducing rejects
in a bank’s account opening process. The article illustrates the
underlying problem of higher customer application reject rate
in a retail bank, leading to customer dissatisfaction. According
to Commonwealth Association for Public Administration and
Management (2010), an illustrative is a descriptive account of
the main characteristics of a real world example to clarify an idea
or reinforce an argument. The key features of such a study are
its scientific credentials and its evidence base for professional
application. Feigin, Orum, and Sjoberg (1991) state that irre-
spective of the purpose, unit of analysis, or design, rigour is a
central concern for research. Hence, in this article, a single case
is preferred over multiple caselets, in order to convey rigorous
in-depth analysis for a specific organisational problem.
As part of the action research study, LSS Define-Measure-
Analyse-Improve-Control (DMAIC) problem solving methodology
is used. The DMAIC methodology is preferred as it synergises the
Six Sigma and the Lean tools and techniques at the appropri-
ate stages for process improvement (George 2002; Snee 2010).
According to Thomas, Barton, and Chuke-Okafor (2008), DMAIC
methodology is considered as the most effective for implemen-
tation of LSS in organisational context for process improvement.
Accordingly, the main phases of the LSS DMAIC methodology are:
(1)  Define – What is the problem? Does it exist?
(2)  Measure – How is the process measured? How is it
performing?
(3)  Analyse – What are the most important causes of
defects?
(4)  Improve – How do we remove the causes of the
defects?
(5)  Control – How can we maintain the improvements?
Literature shows much evidence that LSS DMAIC is the most
successful methodology for process improvements, specifically
in banking and financial services (Hayler and Nichols 2006; Keim
2001; Roberts 2004; Rucker 2000; Stusnick 2005). Figure 1 shows
the description of various activities that are carried out within
each phase of the DMAIC problem-solving methodology (adapted
from Brassard and Ritter 2002; Kaushik and Khanduja 2010).
Various DMAIC tools like project charter, swim lane process
maps, process capability tools, Gauge R-R, Cause-Effect diagram,
Statistical tests (correlation, ANOVA), graphical tests (Pareto
charts, multivari charts) are used from the LSS DMAIC toolkit, for
diagnosing and resolving the organisational problem. Microsoft
1134    Vijaya Sunder M.
Figure 1. DMAIC activities roadmap.
Excel and Minitab software are used for graphical and statistical
analysis. The leadership support and the bottom-line impact, LSS
can bring into a banking environment are further discussed as
part of the paper.
5.  Action research study
5.1. Background
A large retail bank has its centralised back office operations in
India. The operations are responsible for processing the account
opening forms which are submitted by the customers at differ-
ent branches across the country. The output expected at the
end of every transaction is a successfully opened customer
account. The bank has three regional offices (at Bangalore, Delhi
and Mumbai) to facilitate the accumulation of the documents
collected at different branches of the bank. The input docu-
ments come from the three regional offices to the back office on
daily basis, for them to process the files and open the accounts.
Account opening is a critical process for the bank because of
increasing security and to avoid any fraud by blacklisted peo-
ple. At the same time account opening process is a key process
to bank from customer perspective, as account opening is the
initial step or interaction which customer associates with the
bank, and hence plays a vital role to create an impression about
the bank to the customer. Multi-level checks are performed by
the regional offices and the central back office ensuring the
completion and correctness of the application form and the
required documentation. It was observed that approximately
10% of the account opening requests were rejected by the bank
in last one year. The bank’s management team is concerned
about this, realising that they are missing 10 out of every 100
customers approaching them to have association with the bank.
Management after looking at the problem from a strategic per-
spective strongly felt that the root cause of the problem needs
to be understood in order to find a robust fix. The improvement
on the rejects percentage metric would impact the customer
experience and also improves the customer base for the bank,
alongside providing direct bottom-line benefits. A middle level
manager with LSS skill set at black belt level was approached
by the management in order to take this business case as an
opportunity for improvement, assigning as a project leader.
The management team decided to reduce the account open-
ing rejects percentage from the current ~10% to 4.5% (striving
towards 0%) in a time frame of six months and thus the target
of the project has been arrived. The project followed LSS meth-
odology in DMAIC approach for process improvement. A project
charter was framed by the project leader which included a more
precise background of the problem. The project charter was
submitted to the bank’s senior management team for their con-
sensus to kick-start the project. A cross function project team
was formed with assigned roles and responsibilities to execute
the project as per the Define Phase of the DMAIC methodology.
Detailed project charter is presented in Table 1.
The project team then looked at the process in great detail.
Process mapping exercise was performed using swim lane
method. Swim lane process map is preferred over other tech-
niques, as it is considered as the best representation of the cross
functional processes. The name cross functional means the whole
work process crosses several functions (Robert 2011). Sequence
of steps at bank branches, regional offices and centralised back
office are documented. The process was found to be fairly sim-
ple with four decision-making steps. There are multiple handoffs
identified in the process through this exercise, which are further
looked upon to identify opportunities for process simplification.
Figure 2 shows the swim lane representation of the process map.
The benefit of using the swim lane map is that the stakeholders
who may not have complete knowledge of the process will be
able to quickly identify the factors responsible for each activity
through this way of depicting the process. This further serves as
a visual supplement for written policies and procedures of the
organisation (Richards 2010).
Measurement system analysis (MSA) is then performed using
Gauge R-R tool. This is performed as part of the Measure phase
to check whether the measurement system of the data is in-tact
for further data collection and analysis or not. From the process
mapping it is very evident that the decision to open a customer
bank account or not determines the rejects percentage of the
bank. Hence, MSA is performed on the ability of the processors
to correctly judge whether the customer application qualifies for
opening the account or a reject. The Repeatability, Reproducibility
and Accuracy of the measurement system are checked and found
to be 80, 50 and 50%, respectively. The overall Gauge score
 Production Planning & Control   1135

Table 1. Project charter.

Project charter
Problem statement Goal Statement:
Out of 28,497 account opening applications processed, 2720 (9.54%) of appli- To reduce the Rejects% to below 4.5% from the current 9.54% striving towards
cations have been rejected by the bank for multiple reasons in past 1 year. zero, in a time frame of 6 months
Stakeholders feel that the rejects% needs to be reduced for enhanced customer
experience.
Project scope Project metric:
The project is scoped for the applications received from three regional offices Rejects % = Number of Accounts opened / Number of account opening applica-
located at Bangalore, Delhi and Mumbai. tions received
Project timeline Project Team:
6 months Project Leader: XXXXX (LSS black belt)
Project Champion: XXXXX
Sponsor: XXXXX
Other team members: XXX, XXX.

Figure 2. Swim lane process map.

(minimum value of Repeatability, Reproducibility and Accuracy) system is not considered adequate to collect data and requires
is inferred as 50%. Hence from Figure 3, the current measurement improvement.
1136    Vijaya Sunder M.

Figure 3. Measurement system analysis.

In order to improve the measurement system the following • The chart of cumulative % defects shows that the estimate
are implemented: of the overall defective rate appears to be settling down
around 7.07%.
• Introduced a new training for regional office processors on
• The rate of defectives does not appear to be much affected
policy change, strengthening the process of first level of
by the sample size.
quality checking activity. This is further proposed to be a
• The process sigma (Z) is 1.47, and hence the short term
recurring monthly activity.
sigma is 2.97 (i.e.i.e. 1.47 + 1.5shift).
• Implementation of standardised review and feedback for-
• The rejects% is reduced from 9.54 to 7.07% by improving
mat to the central back office.
the measurement system.
• Promote usage of the exhaustive checklists at both regional
and central offices for effective quality checking. The process capability analysis further reinforced the need to
• Various changes implemented to the account opening improve the reject percentage metric for process improvement. The
form. cross functional stakeholders were then called upon for a brain-
• Streamline and revamp the reject tracking process. storming session, in order to understand the root causes of the
problem. It is important to involve appropriate stakeholders at every
Waste analysis was then performed on the process. This helped
stage of the LSS project, without which there could be bottlenecks
the project manager to understand the process from the Lean
in the project success (Vijaya Sunder 2016). It was observed that the
perspective. Overprocessing and transportation waste were iden-
participant groups were very hesitant to speak up about the process
tified to be predominant in the process. Multiple levels of inspec-
experience and observations in groups. Hence, the project man-
tion leading to overprocessing were identified as opportunity for
ager chose to perform the brainstorming using the card method.
improvement. Moving the physical account opening forms from
The card method of brainstorming encourages participants to write
different locations to central back office was another prospect for
the root cause as per their experience and observations and stick it
process improvement.
over the whiteboard without mentioning their identity. This gave
Post implementing the improvements to the measurement
the candidates an opportunity to express themselves without panic
system, MSA is performed again. The repeatability, reproducibility
or ambiguity. The ideas collected in the brainstorming session were
and accuracy score post improvement were found to be 90, 80
then categorised using cause and effect diagram (Figure 5) into four
and 90%, respectively. The overall gauge score is found to be 80%
categories – sales, process, service providers and policy. Across
and hence it is concluded that the measurement system is now
all four categories, eight potential causes of the problem were
adequate enough and trustable to collect data. Data collection
identified.
plan is then rolled out to the operations in order to collect data
Pareto analysis was performed across different reasons leading
on the rejects percentage. Binomial process capability analysis
to the higher reject percentage. The DeepDive analysis on the data
was performed on the data with 95% confidence level. Binomial
further revealed the percentage of rejects across the three regions
process capability technique is used here as the process outcome
– Bangalore, Mumbai and Delhi. Hypothesis testing and other anal-
is binary (reject or no reject). The following observations are made
ysis techniques from LSS tool kit were applied on the causes identi-
from Figure 4:
fied in the brainstorming session. The below table summarises the
• The P chart indicates that there are five points out of control inferences arrived from the Analyse phase of the project. All tests
above upper control limit. Points below lower control limit were performed with 95% confidence level (Table 2).
need not be worried upon as expectation is lower the bet- Alongside the usage of statistical and management tools of LSS
ter defectives. Overall process is found to be fairly stable. summarised in Table 2, it is equally important to look at the process
 Production Planning & Control   1137

Figure 4. Process capability (before).

Figure 5. Cause and effect diagram.

1138    Vijaya Sunder M.

Table 2. Causes of the problem with validation.

Test Test statistics Inference

Pareto analysis: To identify the vital few reasons Sign related and name related mismatch of
contributing to the higher rejects percentage data are the primary reasons contributing to
60% of the rejects

Correlation test: To check the impact of volumes Pearson correlation = 0.120 The p-value is 0.59, which shows that there is
processed on rejects percentage no correlation between processed volumes
and the rejects%
p-Value = 0.593
One way ANOVA: To check the impact of calendar Source DF SS MS F P The p value is 0.06, which is just above 0.05.
week on rejects percentage Hence it is concluded that there is no statisti-
cally significant impact of week on rejects%
Week 3 11.6 3.8 2.8 0.06
Level N Mean StDev
Week1 6 6.577 1.171
Week2 6 6.924 1.145
Week3 5 5.477 1.116
Week4 5 7.571 1.240
Multivari chart: To check the impact of education - Reject % is high for Undergraduates with less
and past experience of the associates on rejects than 5 months experience in the process
percentage

- Graduates, irrespective of their past experi-

ence are performing good with less Reject %

- Amongst the <3 yrs exp agents, reject % by

undergraduates is high

by on-floor observations. Not all problems are solved in board Post understanding the process through Gemba and analysing
room; Gemba walks denote the action of going to see the actual the data using LSS toolkit, the project team is once again called
process, understanding the work, and learning through asking for the brainstorming session. The theme of the brainstorming
questions (Womack 2011). The benefits of Gemba walk includes: this time is to ideate for solutions in order to solve the problem.
The project manager called in for 12 stakeholders from respective
• On-floor observations provide the project managers with
teams and explained them the causes of the problem and encour-
firsthand information about the process problems.
aged them to ideate for solutions to eradicate the root causes, to
• Gemba Walk provides associates with psychological ben-
reduce the rejects percentage. Each improvement item is further
efits. By doing so, the manager is in a way conveying the
extended with a control plan (shown in Table 3) in order to sustain
associates that they are important for the progress of the
the improvements. The management of the bank has provided
organisation and are playing a critical role in the process.
support in order to implement the changes. Internal employees
• Saves time of learning new process for a LSS consultant.
were used to accelerate change as per the improvement plan,
• Hidden waste in the process is not generally identified in
without any substantial investment.
brainstorming or data analysis. Gemba walks help the pro-
Visual management dashboards are implemented as part of
ject managers to identify the waste in the process.
the project. The dashboards showcase the real status of the rejects
• Managers generally have an overview of the process. But it
on hourly basis displayed on the operations floor. This created
is the process associates who work on the process on day
awareness about the KPI performance against the target. This
to day basis know the process in and out. Hence, asking
also improved the work culture of the associates. There was a
right questions to associates and learning through obser-
mindset change from manager-monitoring model to self-moni-
vations is essential in understanding the root causes of the
toring model. This is because the rejects% and other key metrics
problem.
are displayed transparently to every floor against the names of

Table 3. Improvements and controls.
Improvement
Smart tips: An initiative to circulate one pager weekly knowledge sharing material
over email which explains the simple ways of working to generate effective
output.
Check list: A check list is prepared for the associates to help them perform the
decision-making of accepting or rejecting the account at the central back office.
Only few critical fields are mentioned as part of the check list, eliminating the
non value added activities.
Signature mismatch: Signature matching software implemented at the branches,
which helps in reducing the rejects relating to signature mismatch
Name mismatch: Changes incorporated in the name mismatch policy to reduce the
rejects.
Electronic applications: The customer account opening forms at branches are re-
placed by online application forms with critical information as mandatory fields.
The customer is further encouraged to initiate an electronic account opening
process without coming to the branches.
Training: Quarterly training analysis was made part of the back office employee
appraisal goals and all associates are trained in all critical decision-making steps
of the process.
Elimination of cover letter: Process enhancements performed eliminating the cover
letter. All applications and documents are scanned and sent electronically to the
back office, without cover letter.
Figure 6. Process capability (after).
the associates who rejected them. This created the responsibility
towards the employees to express more accountability towards
work, creating a significant behavioural change. Management
team comprising of senior colleagues in the bank evaluated the
project and found to be delightful. The project savings were
documented as 1.6 million INR per year. The sigma value of the
process is calculated post improvements in order to validate the
process capability (Figure 6). Binominal process capability study
is performed with the improved process. As shown in Figure 6,
the reject percentage has reduced to 3.4% post improvement. The
Production Planning & Control   1139
Control
A team leader is responsible for composing and circulating the email
A physical checklist is pasted at every workstation in the central back office. The
check sheets are reviewed and updated on quarterly basis by the team leaders.
Software maintenance team was made responsible to upgrade ad maintain the
application
Policy review board to review the policy and make updating on half yearly basis
Net banking automated system is implemented to sustain the process
Training agenda was created which becomes part of the annual appraisal goals
and evaluation of the employees.
Manual cover letter requirement eliminated, hence no control required.
P chart indicates that there is only 1 point out of control above
UCL. Points below LCL need not be worried upon as expectation
is lower the better defectives. The chart of cumulative percent-
age defects shows that the estimate of the overall defective rate
appears to be settling down around 3.40%. The rate of defectives
does not appear to be much affected by the sample size. The
process Z is 1.82, and hence the short term sigma is 3.32 (i.e.i.e.
1.82 + 1.5shift). Hence, the project successfully reduced the rejects
percentage from ~10 to 3.4%. The project closure and success is
communicated to all the stakeholders in the board meeting and
1140    Vijaya Sunder M.
the project learning and the DMAIC approach were documented
and circulated to the concerned parties via email.
6.  Leadership takeaways
LSS could be a successful business strategy for offshore banking
centres if leaders are committed to the process improvement
(Vijaya Sunder and Antony 2015). Right from the strategy build-
ing to realising benefits, organisation leaders play a vital role in
LSS deployment. As the LSS implementation in organisations
require thoughtful investment, planning, rigorous execution
and timely governance, the leadership plays a very critical role
throughout the DMAIC flow. From the case study, it is evident
that the power of synergetic LSS approach can bring bottom
line benefits to the organisation, alongside bringing process
improvements. The importance of continuous improvement,
total employee engagement and process thinking were appar-
ent from the success of the project. The project was well rec-
ognised by the bank’s leadership team and the project team
was awarded with a special award as part of the employee
recognition programme of the bank. Financially speaking, the
investment which the bank has made on the project was very
minimal. The black belt personnel were part of the bank and no
extra cost was involved in hiring him. The burning problem of
higher rejects percentage was resolved with well thought of LSS
methodology. Research shows that for successful implementa-
tion of LSS in organisations the following factors are important
for investigation as prerequisites (Zhang et al. 2015):
• Full participation: All employees of the organisation should
be encouraged to participate in the improvement pro-
gramme. Basic knowledge on Lean/Six Sigma methodol-
ogy and tool kit could be imbibed through formal training
programmes.
• Organisation structure: The organisation structure should be
empowered at four different levels for a successful Six Sigma
deployment. The first level encompasses quality-­related
teams or projects, related to complete processes, systems
and long-term activities. The second level comprises ‘con-
tract’ project teams aiming at solving specific quality prob-
lems and optimisation of management processes; team
members consist of technical and management specialists
and experts. The third level comprises ‘Quick Six Sigma’
teams with projects focusing on existing problems and
quick improvements. Depending on the depth and breadth
of the study, projects are categorised into those for Black
Belts (BB), Green Belts (GB) and Yellow Belts. The fourth level
is based on LSS projects, addressing work standardisation
as well as operations quantification and control.
• Continuous improvement: Ideas across different levels of
the organisation should be welcomed for analysis. The
multi-level structure of Six Sigma implementation teams is
formed to solve business problems at both strategic and
operational levels to promote continuous improvement.
The key takeaways for the leaders from the case study are:
• Participative leadership is critical for success of LSS projects.
In the case study the leadership team was part of the pro-
ject from initiation, by staging the tollgate reviews and
governance • Data analytics combined with on-floor obser-
vations are equally important for identifying the causes of
the problem. Most of the root causes which were ideated
through the brainstorming were validated using statistical
tool kit alongside Gemba.
• Leveraging the employee skill set helps in process improve-
ments. Training, software maintenance and checklist
creation are few of the examples of the successful improve-
ments implemented leveraging the employee skill set. If a
particular skill is not currently being used as a major deliv-
erable to the project, it could help in some other piece of
delivery without investing new resources. This also helps
reduce lean’s eighth waste.
• Measurement system readiness is important for any process,
as the metric in the above case study improved by ~2% just
by correcting the measurement system. This was achieved
promptly without using any analysis or improvement tools.
• Promoting ideation through employee engagement is essen-
tial as part of continuous process improvements. In the
case study all the ideas for improvement were result of
brainstorming sessions.
• LSS is a management strategy for positively impacting the
bottom line results. The project presented in this paper is a
classic example, where the bank saved INR 16,00,000 from
a single LSS project.
• The power of LSS not only improves the existing process,
but also instils and leverages the process thinking mindset
in the organisation. The project attracted both leadership
and the process owners to initiate several such LSS projects
to improve other critical metrics in the organisation.
7. Conclusion
The upcoming synergetic approach of LSS is catching fire across
industries. LSS has made a significant impact on how both the
manufacturing and service organisations handle process-related
problems. LSS becomes more helpful in Banking and Financial
Services offshore centres as every defect could have a significant
financial impact leading to customer dissatisfaction, damaging
the overall reputation of the bank. Hence LSS leads building
and retaining customer relationships for Banks by delivering a
defect-free practice. The banking industry with offshore opera-
tions such as transaction-based back offices, call centres, equity
research, transcription services etc., has the obligation to main-
tain the service levels by improving the KPI at optimum levels.
This is essential for the banks to create impression and the brand
in the minds of the customers. The case study presented is a
classic example how LSS methodology can transform a process
and the mindset of the frontline workers and the management.
In the case study, the project was directed on two important
attributes. The first attribute being the leadership participation,
and the second was the project execution. It is evident from the
case study that the change acceleration process with propor-
tionate level of project governance would facilitate the organi-
sational change. Alongside building the improvement mind-set
across the operations the project brought in saves worth INR 1.6
million. Hence, it is recommended to implement LSS in bank-
ing operations, especially in offshore transaction bases services

for improving the KPI. This helps organisations through higher
customer satisfaction, reducing cost and improving process
productivity.
Acknowledgement
The author dedicates this work to Sri Sathya Sai Baba, who taught him the
value of Man Management. The author is thankful to Prof. L S Ganesh (IIT,
Madras) for his guidance in the author’s research work.
Disclosure statement
No potential conflict of interest was reported by the author.
Notes on contributor
Vijaya Sunder M. is the Head of Business Process
Excellence at World Bank, Chennai, India. He is a LSS
Leader with experience in leading cross-functional pro-
grammes for process improvements and operational
effectiveness. Vijaya Sunder is a Six Sigma Master Black
Belt (from Indian Statistical Institute) and Lean facilita-
tor. He has led and mentored various reengineering and
process improvement programmes that helped improve
service quality, customer experience, employee satisfac-
tion, eliminate process defects, increase productivity and
reduce costs across service organisations. He is a LSS Trainer – trained more
than 1000 people in LSS Yellow, Green and Black Belts till date. He also is
certified in Business Process Modelling and Six Thinking Hats. He is a dis-
tinction holder in Master of Business Administration from the Sri Sathya Sai
Institute of Higher Learning (Puttaparthi), and gold medallist in Bachelor of
Engineering from the Anna University, India. He is a keynote speaker and
has publications in several international journals on topics relating to LSS.
Alongside corporate job, Vijaya Sunder practises teaching for MBA students
in subjects like Six Sigma and Total Quality Management, as a visiting faculty
at the Business Schools. He is currently pursuing his doctoral research for
PhD from Indian Institute of Technology-Madras, India.
ORCID
Vijaya Sunder M.   http://orcid.org/0000-0002-7095-7743
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