Success in today’s ever-changing and complex business environment requires organizations to drastically rethink how they deliver products and services to customers. Lean Six Sigma is a business process improvement methodology that can be used by various industries to address some of the operational challenges that they face, including enhancing customer satisfaction, maximizing shareholder value, increasing operational efficiency, and reducing complexity and costs.
Increasing Customer Satisfaction and Shareholder Value
Customers are becoming more value-savvy and more demanding than ever before. They can shop for services and rates on the Internet, they expect to conduct business across multiple channels, they are mobile and willing to switch relationships quickly, they prefer one point-of-contact for service issues and they expect problems to be resolved quickly and correctly, the first time.
This probably comes as no surprise, but many organizations have limited visibility into their customers’ service experiences. But failing to consider the customer perspective in the design of transactional processes and services is a mistake. Customer satisfaction is key to customer loyalty, and customer loyalty is a necessity for organizations that are committed to creating sustainable value for shareholders.
Lean Six Sigma tools provide a means to continually analyze and integrate customer requirements into products and services by translating the “voice of the customer” into critical-to-quality features (“CTQs”) against which the company can execute. Examples of common tools include:
· Kano Analysis – Framework for categorizing and prioritizing the different performance features of a product or service. Incorporates Voice of the Customer (VOC) and identifies the “must haves”, “more is better” and “delighters.”
· House of Quality – Matrix that helps correlate customer requirements with product or service capabilities in order to ensure that a product or service delivers real value to the customer (not just compliance).
· SIPOC – High Level Process map that helps ensure everyone understands the core process.
· Conjunct Analysis. Allows an organization to determine the relative importance that a customer places on different features by comparing subsets of possible combinations.
Increasing Operational Efficiency
Identifying defects and waste is vital to increasing operational efficiency within an organization. Lean Six Sigma provides several useful tools and techniques to help identify, reduce and eliminate defects and waste, including:
· Pareto Chart – Chart that ranks problem areas in order of relative importance.
· Fishbone (Cause and Effect) Diagram – Used during brainstorming to identify root causes. Can also be used to structure thoughts.
· Value Stream Map – Advanced form of process mapping which depicts how value flows through a process to the customer and identifies the associated time for all steps.
· Spaghetti Diagrams – Tool that highlights process waste by mapping the actual route of a particular resource through a physical environment.
· 5 Why Exercise – Used to investigate a specific failure to find the real root cause of a problem.
· Failure Mode & Effect Analysis (FMEA) – Risk analysis tool that highlights the aspects of a product or service that should be targeted for improvement.
· Seven Wastes Exercise – Structure for identifying, eliminating and preventing waste (Overproduction, Waiting, Transporting, Over Processing, Unnecessary Inventory, Unnecessary Motion, Defects/Errors, Delay in Provision, Incorrect Inventory, Duplication.)
Reducing Complexity and Costs
Scale is a common theme in a today’s business environment, but with scale comes complexity. Establishing and maintaining an end-to-end core process perspective helps organizations focus on what truly creates value for their customers as businesses scale up and become more complex.
Six Sigma offers organizations a powerful way to view the efficiency of transactional processes that cut across multiple functional areas and entities using a tool called Throughput Yield (First Pass Yield), which calculates the number of units coming out of a process divided by the total number of units going into that process (i.e. number of good units that make it through the end-to-end process without rework or revision).
In summary, Lean Six Sigma tools and techniques help organizations create more value for customers and shareholders by identifying and eliminating defects and waste, streamlining operations, and ensuring customer requirements are incorporated into products and services.