Presentation on theme: "Service Process Improvement"— Presentation transcript:
1 Service Process Improvement MD254Service OperationsProfessor Joy Field
2 Foundations of Continuous Improvement Customer satisfactionFocus on customer needsManagement by factsFormal data gathering and statistical analysisRespect for peopleAssumptions about employeesCustomers as co-producersSupport and engagement
3 Plan-Do-Check-Act (PDCA) Cycle Documenting the current process, selecting the problem, determining possible root causes, and developing an action planDoImplementing the process change on a trial basis and collect data on performance measuresCheckReview and evaluate the effect of the changeActIf 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 sheetRun chartHistogramPareto chartFlowchartCause-and-effect diagramScatter diagramControl chart
5 Process Improvement Challenges in Services High input and process variationVariation reduction is a more complicated and sensitive issue than in manufacturingPoor tracking of flow, especially of customers in the processCustomers cannot be treated like inventoryA tradition of individuality and employee discretionLack of meaningful data and data-based decision-makingQuality 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 customersRecognizes that variation hinders the ability to reliably deliver high-quality servicesRequires data-driven decisions using a comprehensive set of quality toolsProvides a highly prescriptive cultural infrastructure for aiding implementationWhen implemented correctly, promises and delivers $500,000 of improved operating profit per Black Belt per yearThe 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 ExecutiveProject MemberOwn vision, direction, integration, resultsLead changePart-timeProject-specificChampionAll employeesGreen BeltsProject ownerImplement solutionsBlack Belt managersUnderstand visionApply conceptsPart-timeHelp Black BeltsMaster BlackBeltsBlack BeltsFull-timeTrain and coach Black and Green BeltsStatistical problem solving expertsDevote 50%-100% of time to Black Belt activitiesFacilitate and practice problem solvingTrain and coach Green Belts and project teams
8 Sources of Variation in Services Customer introduced variabilityArrival variabilityRequest variabilityCapability variabilityEffort variabilitySubjective preference variabilityInternal process variabilityProcess designEmployeesEquipment
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 processEliminating wasteSeparating “value-add” from “non-value-add” and addressing the root causes of non-value-add activitiesReducing 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 processWork-in-process is the number of items in progressAverage completion time is the number of items completed per unit timeIf two of the three quantities are known, the other two can be calculatedIncreasing 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 forTransportationUnnecessary movement of materials, products or informationMotionNeedless movement of peopleInventoryAny WIP in excess of what is required to produce for the customerWaiting timeAny delay between when one process step/activity ends and the next step/activity beginsDefectsAny aspect of the service that does not conform to customer needsOverproductionProduction 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) DefineMeasureAnalyzeImproveControlProject selection toolsPIP management processValue stream mapFinancial analysisProject charterMulti-generational planStakeholder analysisCommunication planSIPOC mapHigh-level process mapNon-value-added analysisVOC and Kano analysisQFDRACI and quad chartsOperational definitionsData collection planPareto chartHistogramBox plotStatistical samplingMeasurement system analysisControl chartsProcess cycle efficiencyProcess sizingProcess capabilityPareto chartsC&E matrixFishbone diagramsBrainstormingDetails “As-Is” process mapsBasic statistical toolsConstraint identificationTime trap analysisNon-value-added analysisHypothesis testingConfidence intervalsFMEASimple & multiple regressionANOVAQueuing theoryAnalytical batch sizingBrainstormingBenchmarkingTPM5SLine balancingProcess flow improvementReplenishment pullSales & operations planningSetup reductionGeneric pullKaizenPoka-yokeFMEAHypothesis testingSolution selection matrix“To-Be” process mapsPiloting and simulationControl chartsStandard operating procedures (SOPs)Training planCommunication planImplementation planVisual process controlMistake-proofingProcess control plansProject commissioningProject replicationPlan-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.