by Kennedy Smith

Six Sigma, the quality improvement methodology made famous by Motorola in the 1980s, has garnered much-deserved recognition in the last few years as more and more companies swear by its effectiveness in improving their bottom lines.

It only takes a glance at the long list of manufacturers --Ford Motor Co., General Motors, GE, Honeywell --to reveal not only Six Sigma's potential for quality improvement, but also its unprecedented success.

Many organizations, however, have taken a look at Six Sigma's track record and surmised that it won't work for them. Why? Because Six Sigma was developed in and for a manufacturing environment; so, how would it apply to a nonmanufacturing environment? Organizations such as financial service providers, health care systems and educational facilities are asking this question. Others have gone so far as to take that leap toward Six Sigma and have witnessed the results first-hand.

Often referred to as "transactional Six Sigma," the methodology is proving to be a useful tool in environments that focus more on people and less on product.

People processes

"Six Sigma's historical roots are in manufacturing," says Rick Schleusener, master consultant at Six Sigma Academy. "Without really understanding Six Sigma, someone in the service industry could think, 'this doesn't fit us because we're in service.' In fact, our recent experience has shown service companies that invest in Six Sigma are saving millions of dollars per project."

Experts agree that the most common reason service companies shy away from Six Sigma is that they see it as a manufacturing solution. One of the major hurdles service organizations must overcome is the notion that, because their company is human-driven, there are no defects to measure. This is wrong, say the experts.

"Service companies are often dependent on people processes," explains Excelsis Magno, deployment champion and Master Black Belt at Volt Services Group, the staffing business unit of Volt Information Sciences Inc. that has recently implemented Six Sigma. "Human intervention is common practice in the service sector, which results in a lot of hidden factors. However, human resources are core to service companies." To overcome this challenge, Magno and her teams train functional leaders in Six Sigma to balance their staffing expertise with statistics-based analytical tools.

Where are the numbers?

Another hurdle that must be jumped is the fear of metrics. "When some people explain Six Sigma, it sounds too techie," notes Forrest Breyfogle, president and CEO of Smarter Solutions Inc., a Six Sigma services provider and author of Implementing Six Sigma (John Wiley & Sons, 2003). "They don't appreciate the importance of creating meaningful metrics that give insight into how their business processes perform over time. This can lead to firefighting common-cause variability issues as though they were special-cause.

"High-level control charts get organizations out of firefighting mode and into fire prevention mode. When one of these charts identifies an in-control or predictable process that isn't capable of consistently producing a desired level of response, we can 'pull' for the creation of a Six Sigma project to improve the process. This is much better than 'pushing' projects that have questionable value into a Six Sigma system.

"Companies need to focus on creating Six Sigma projects that are aligned to business needs (i.e., creating more customers and cash)."

All work is a process

Schleusener urges service companies to adopt three principles of statistical thinking: All work is a process, all processes have variability and all processes create data that explains variability.

For example, if you were to apply Six Sigma to a company that provides housekeeping services, you must first understand what the work (process) involves. Using Six Sigma's definemeasure-analyze-improve-control method, a housekeeping service company can implement quality:

Define. Because Six Sigma is aimed at reducing defects, the first step is to figure out what a defect would be. For example, the company may decide that leaving streaks on the windows is a defect because it is a source of customer dissatisfaction.

Measure. The next step is to collect data to find out why, how, and how often this defect occurs. This might include a process flow map of where employees start and finish cleaning houses. Other metrics may include recording what products and tools the employees use to clean the houses.

Analyze. After the data is measured, the company's Six Sigma team realizes that a particular employee is better at cleaning windows than the other employees.

Improve. The team implements that employee's process as a standard way of cleaning windows.

Control. The company teaches new employees the correct technique to wash the windows. Over time, there's significant improvement in customer satisfaction and increased business.

It may have taken the Six Sigma team one or two brainstorming sessions to clearly define its process, but the DMIAC model remains the same for housekeeping services as it is for a window manufacturer.

Convincing the service industry

Convincing the service industry of Six Sigma's benefits is a major challenge. As noted before, many companies still conform to the idea that the methodology is only for manufacturing. An effective way to convince a service organization to implement transactional Six Sigma is to show relevant examples.

The following case studies can be found in Schleusener's paper "Jet Engines and Sales: How Six Sigma Brings Breakthrough Results to the Service Sector":

Does wining and dining prospective customers lead to sales? The conventional wisdom of a product sales team is that such entertaining is necessary to close the deal. But, a Six Sigma project that examined sales data found that although face time with customers is important, wining and dining is not. The data showed that regular face time helped close sales, but that time could be spent over a cup of coffee instead of golfing at a resort. In addition, the data showed that too much face time with customers is counter-productive. A regularly scheduled customer picnic was found to be detrimental to closing sales because it was held at a busy time of year, when customers preferred not to be away from their offices. Changing this process resulted in an increase of more than 10 percent of sales for the product.

A financial services firm believed it was paying an inordinate amount of money to provide customer service. Although using the Web-based contact approach was the least expensive, customers continued to turn to the call center to get account information. The firm wanted to keep its tradition of high customer service but needed to deliver it in a less expensive way. A Six Sigma project examined call center and Web site data. It found that if the Web site was reconfigured in a way that reflected the questions being asked at the call center, costs would decrease as the quality of customer service increased. The result was the movement of customers to the Web, rather than the phone, to get account information.

Prior to applying Six Sigma tools and methodologies, one large insurance company's cycle time for claims was 41 days. Because nearly 89 percent of past claimants deemed 14 days sufficient time for completion, customer satisfaction was at an all-time low. In less than five months, the project team not only assessed the organization's defect rate and identified the key factors involved, but it also reduced the defect rate by more than 70 percent. In addition, the company's project savings exceeded $250,000 in the first five months, and customer satisfaction increased dramatically.

A facility management company had a high level of "days sales outstanding." Initially, the company tried to fix this by reducing the term of days in its billing structure. This, however, upset customers. A Six Sigma project examined the process data and found that a large percentage of the accounts with high DSO received error-ridden invoices from the company. The project then worked to understand how the errors were produced, and process changes were made to prevent such errors in the future. The result was a better invoice process and reduction in DSO.

Schleusener also recounted his recent work with a college's janitorial crew. The key objective in the organization was to cut the amount of overtime janitors were working without compromising the quality of the service. "We collected some data and came up with a concentration diagram," explains Schleusener. "We found that there were certain parts of the classroom where trash accumulated most. So, we put a trash can in those places. We also noticed a fair amount of dirt being tracked into the classrooms, so they put mats in the doorways of each classroom." After collecting and analyzing the data, Schleusener and the janitorial crew had indeed found opportunities for reducing work time.

These examples help service organizations see the positive effects of a transactional Six Sigma system. For another example, see the case study of GE Financial Employer Services Group on page 26.

Learning transactional Six Sigma

After a company decides to tackle Six Sigma, the next step is to learn more about it. One resource is a new Transactional Six Sigma course from the Center for Lifelong Engineering Education at the University of Texas at Austin.

"In the six years that we've been teaching Six Sigma, we find more and more service organizations coming to us," comments Cath Polito, executive director of CLEE. "They say, 'What about us? How can we streamline all our paper processes?'"

The three-week course teaches basic elements of Six Sigma using a "keep it simple statistically" approach, design of experiments and knowledge-based management. It also features case studies that are specific to paper processes.

"We go into more detail in terms of improving customer satisfaction, generating business growth, and understanding and gaining knowledge about processes," Polito adds. "It gets more into the soft skills because the applications are in areas like finance, sales and marketing, and human resources."

Week one of the course is set for June 23 to 27; week two will be July 21 to 25; and week three will follow Aug. 18 through 22. So far, Polito says companies from several service sectors have signed up, including financial services, educational institutions, state agencies and high-tech companies that are interested in how Six Sigma relates to software processes.

The health care industry is one that Polito is interested in targeting. "We've had several calls, but nobody has signed up from health care organizations," she says. "But I believe there's a heightened interest in this sector."

Another resource is iSixSigma (www.isixsigma.com). The online forum for all things Six Sigma-related includes an introductory section, numerous articles on Six Sigma implementation, a forum, news, deployment tips and more.

"Service companies also are taking advantage of the expertise of outside consultants or hiring deployment champions who have led successful Six Sigma implementations at other organizations," adds Magno. "Organizations such as the American Society for Quality also provide an outstanding venue for networking and exchanging ideas."

About the author

Kennedy Smith is Quality Digest's associate editor. Letters to the editor regarding this article can be sent to letters@qualitydigest.com.