1. Service Process Improvement
MD254
Service Operations
Professor Joy Field

2. 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

3. Plan-Do-Check-Act (PDCA) Cycle
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

4. Basic Tools for Quality and Productivity Improvement
Check sheet
Run chart
Histogram
Pareto chart
Flowchart
Cause-and-effect diagram
Scatter diagram
Control chart

5. 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

6. Six Sigma for Services Principles
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

7. Six Sigma Organization Roles and Responsibilities
Executive
Project Member
Own vision, direction, integration, results
Lead change
Part-time
Project-specific
Champion
All employees
Green Belts
Project owner
Implement solutions
Black Belt managers
Understand vision
Apply concepts
Part-time
Help Black Belts
Master Black
Belts
Black Belts
Full-time
Train and coach Black and Green Belts
Statistical problem solving experts
Devote 50%-100% of time to Black Belt activities
Facilitate and practice problem solving
Train and coach Green Belts and project teams

8. 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

9. 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 Oriental’s LQEs).

10. 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

11. Throughput Time and Process Speed
Little’s Law:
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

12. Services Wastes Overprocessing Transportation Motion Inventory
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

13. 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.

14. Lean Six Sigma DMAIC Tools (Lean tools in bold)
Define
Measure
Analyze
Improve
Control
Project selection tools
PIP management process
Value stream map
Financial analysis
Project charter
Multi-generational plan
Stakeholder analysis
Communication plan
SIPOC map
High-level process map
Non-value-added analysis
VOC and Kano analysis
QFD
RACI and quad charts
Operational definitions
Data collection plan
Pareto chart
Histogram
Box plot
Statistical sampling
Measurement system analysis
Control charts
Process cycle efficiency
Process sizing
Process capability
Pareto charts
C&E matrix
Fishbone diagrams
Brainstorming
Details “As-Is” process maps
Basic statistical tools
Constraint identification
Time trap analysis
Non-value-added analysis
Hypothesis testing
Confidence intervals
FMEA
Simple & multiple regression
ANOVA
Queuing theory
Analytical batch sizing
Brainstorming
Benchmarking
TPM 5S
Line balancing
Process flow improvement
Replenishment pull
Sales & operations planning
Setup reduction
Generic pull
Kaizen
Poka-yoke
FMEA
Hypothesis testing
Solution selection matrix
“To-Be” process maps
Piloting and simulation
Control charts
Standard operating procedures (SOPs)
Training plan
Communication plan
Implementation plan
Visual process control
Mistake-proofing
Process control plans
Project commissioning
Project replication
Plan-Do-Check-Act cycle

15. 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.