March 31, 2009

Six Sigma and Service industry

I was talking to dad today and the topic of what I have learnt over the past 5 months came up. I told him business improvement is a underlying theme throughout most of our modules. In particular, I bring up Six Sigma telling him how I am doing a dissertation on it. Then I was surprised when he said he heard about it while citing the success GE had with it. But he didn't know exactly what it is except that it is being used in many large corporations.

Then I went into a bit of effort explaining (poorly) the bell shaped curve and the DMAIC methodologies . And he suddenly throw a question at me "So how will it help my company?". I was a bit taken aback because I wasn't expecting it. So I fumbled a few words like "Well, your company is a importer of milk powder, and your main customer are pharmacies... but six sigma is more suitable to manufacturing... but it may be able to help with the admin side of the business...". It was easy to see I was totally unprepared for his question.

Later that night, I spent some time reading an article on application of six sigma in Seagate UK (PC hardrive manufactuer) and it made the following comment

"Thus, the case findings, consistent with the literature, conclude that six sigma lacks evidence of success when applied outside the mass manufacturing environment" (McAdam & Lafferty 2004; p546)

So it had me wondering how useful Six Sigma is outside the manufacturing industry. I remember during the PIUSS module, the question of "Six Sigma in Service" came up several times, and the general idea at the time was "Yes! Six Sigma can work in non-manufacturing (service) industry too". But now I am less convinced and would like to see some evidence of that statement somewhere.

McAdam, R. and Lafferty, B. (2004). A Multilevel case study critique of six sigma: statistical control or strategic change? International Journal of Operation & Production Management. Vol24. (5). p530-549.

- 3 comments by 1 or more people Not publicly viewable

  1. According to a book I have, there have been many benefits for Six Sigma in service organizations and I believe that too. Just because you can’t see products and reduction of defects in products in service organizations doesn’t mean it cant be effective.

    I was reading one of the Six Sigma books I bought and the author said that any service that is not delivered as the customer wants is defected.

    So in your father’s company, it is possible that there are issues of delays in delivery of Milk for example that needs a DMAIC approach to reduce the defects in this service. Maybe there are a lot of variations in the delivery process?

    One more thing that is important is controlling the process even if it is in a service organization so that it always perform as planned.

    Hopefully this explained a bit of how it could be helpful in Service organizations :).

    02 Apr 2009, 00:26

  2. Online Consultancy

    Sigma six is incredibly helpful

    09 Apr 2009, 13:45

  3. Hi Kang, hope you’re well. I’ve been applying Six Sigma in service industries for the past 5 years and probably saved the various companies in excess of £10m probably double (if only I was on a %...).

    The phrase that sums up Six Sigma for me (I think it was from Graham Knowles) is “old wine in a new glass” – Motorallo cleverly packaged a load of tools and techniques that had been around for years e.g. Shewhart SPC and made it work, chuck in a few ‘lean’ tools and and you’ve a potent receipe for making imporvements. The key to “sustainable” Six Sigma is Leadership. If it’s not bought into by the Execs – hearts and minds – it will not be sustainable – you cannot be half pregnant with a full scale six sigma deployment.

    make no mistake if you have leadership, customer requirements, processes and data, Lean Sigma is a powerful imporovement methodology which works and I would even stick my neck on the block and say some of the tools and techniques are better suited to a process transactional (service) environment…

    15 Apr 2009, 12:17

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