Chapter 8: Six Sigma Applied in Non-Manufacturing

Overview

Six sigma focuses on translating requirements to the functionality needs and expectations of the customer. In manufacturing the process is quite simple because the outputs are tangible and long lasting. On the other hand, in service organizations this is not as easy, as the outcome is very short lived and intangible. Therefore, if we are to apply the six sigma methodology in non-manufacturing organizations, we must reexamine some of the issues and concerns that contribute to dissatisfaction as well as satisfaction.

First, in service organizations we must recognize early on (preferably in the Kano or QFD stage) that there are words or phrases that provoke the customer into negative behavior. Therefore, we must plan and recognize our procedures so that these words or phrases are avoided. Some of the words or phrases are:

• Sorry, there is nothing I can do.

• I can't do anything about that.

• I am not authorized to ...

• Wrong.

• Why?

• Impossible.

• No, absolutely not.

• Should have.

• Wait.

• Listen.

• What?

• Our policy is ...

Obviously, we all know that language is important in the service domain, so how do we plan for a particular service for a six sigma performance? To begin the process and apply either the DMAIC or DCOV models, we must plan and/or design with trust in mind.

Stephen R. Covey, author of the best-selling business book, The Seven Habits of Highly Effective People, is encouraging organizations to examine the impact trust has on the bottom line:

"Trust—or the lack of it—is at the root of the success or failure in relationships and the bottom line results of business, industry, education and government," says Covey. "If you have no or low trust, how are you going to manage people? When you don't have trust, you have to control people. But if you have high trust, you don't supervise them—they supervise themselves."

The six sigma methodology helps suppliers, employees and customers to develop and sustain trust. This trust, especially in the service domain, becomes the key to high performance, as well as increased productivity, increased satisfaction and increased in profitability.

According to The Loyalty Effect by Frederick Reichheld, U.S. corporations, on average, now lose half of their customers within five years, half of their employees within four years and half of their investors within less than one year. Disloyalty at current rates stunts corporate performance by 25 to 50 percent. Reichheld found that firms earning superior levels of customer, employee and investor loyalty and retention, also earn consistently higher profits.

When trust is low, organizations decay, relationships deteriorate and divisive politics, turf wars and in-fighting escalate. The results are low profitability and dissatisfaction. An employee's commitment to his or her organization's vision and strategy plummets, product quality declines, customers leave, employee turnover skyrockets and noncompliance increases. The following are some ways six sigma can help in the service sector:

1. Keep promises and honor commitments. If you promise something, deliver it. Period!

2. Share information, both positive and negative, with the people who need it. Do not be afraid of the truth. People can take it! There is nothing worse than a cover up.

3. Don't talk with co-workers about other co-workers who are not present. Gossip will act as a negative force to improvement. If you have something to say go to the source. However, make sure that the organization has implemented the "elimination of fear," and remove the "retaliation and intimidation" principles from its culture.

4. Acknowledge and apologize for mistakes. No one is perfect. When mistakes are made, own up to them and try to correct them. Honesty is always the best policy and it works. People will understand and appreciate your efforts to make amends.

5. Involve people in decisions that affect them. This is of great importance in service organizations espcially. Make sure everyone has a say in the expected outcomes. Try to explain the reasoning behind the decision. Some people have talked about "insight" into the customer, which is to say that it is your obligation to find out how and why employees and customers behave toward a particular program and or purchase.

6. Give credit where credit is due. We all like recognition. In fact, psychologists have found that recognition is the number one motivator, followed by challenging work and money. Recognition is the credit we all long for. However, that credit may be in many forms including but not limited to monetary rewards, publishing your photograph in the corporate newsletter or local newspaper, and so on. Recognition goes a long way toward building trust and as a consequence it will have a direct influence on many items including but not limited to:

   • Improved quality of products and services.

   • Increased commitment to the organization's strategy and vision.

   • Better client relations and enhanced customer loyalty.

   • More effective, cohesive work teams.

   • Decreased employee turnover.

   • Decreased frustrations caused by dysfunctional relationships.

   • Drastic reduction or elimination of office politics or infighting.

   • Reduction in the cost of customer complaints

To somewhat repeat ourselves, six sigma can and does provide the methodology for improvement. For example, the New York State Electric and Gas company some years ago found that the following costs were related to customer complaints:

• Phone complaint: $10.00

• Written complaint: $20.00

• Meter check: $80.00

• High bill investigation: $125.00

• Public Service Commission complaint: $400.

Eliminate just one Public Service Commission complaint a day would save $146,000 (365 400) a year (and these figures are old, savings would be even more today). How much are customer complaints costing you?

Six sigma prides itself on supplying the customer with what they want. However, we must be careful, especially in the service sector, because the intangible aspects of the service itself may make the difference. For example, customers expect accuracy, a service representative who is not rude and thanks for their purchase. Provide these three aspects of customer service and you have done nothing unusual. That is what is expected and that is what is delivered. To astonish customers and build their loyalty, consider the following:

• Speed. Saving the customers time is very important. Time savers include express lanes, pre-approved credit, databases that already hold key customer information and order history, free assembly and overnight or same-day delivery. If you serve a customer in his or her physical presence, visibly hustling shows you clearly respect the value of the customer's time.

• Sincerity. Many customer service reps act like drones, speaking in a mechanical voice. When you hold eye contact for several extra seconds, smile and use the customer's name, you have sent a clear message showing sincerity. When speaking over the phone, put a smile in your voice and speak to the person as if he or she was a member of your own family.

• The unexpected. Offer unexpected services like a free upgrade, free information, free delivery or free assembly and installation. Customer extras need not even be tangible. Provide a joke of the day, an interesting newsletter clipping or the latest industry chatter. When you give something unexpected, you are telling the customer you really value him or her.

Obviously, there is a cost associated with these three elements, but with the aid of the six sigma methodology, we can optimize the service, satisfaction and profitability. After all, the aim is to correct and/or improve service mistakes. A prerequisite to implementing the six sigma methodology is to:

• Admit. Immediately tell the customer what went wrong and why. Accept responsibility and sincerely apologize for the problem.

• Inform. Tell the customer what you are doing to repair the situation and what actions and time frames are expected during the recovery.

• Mitigate. Show empathy for the customer's inconvenience, correct the situation and offer a significant extra to help dim the memory of the original error.

Once these preliminary steps are taken, pursue the investigation with rigor to find out if there is a systematic problem and, if so, begin the process of six sigma. Always remember that some problems are unique and happen so infrequently that perhaps no action is necessary. If the problem is systematic and recurring, or is of high impact (e.g., a government regulation or safety issue) then six sigma will be worth the effort.

If a service organization is committed to six sigma, they have to meet or exceed the expectations of their customers, which are demanding. They must want their customers to enjoy a premier ownership experience in addition to a premier product. To be committed to such aims, one must have the right attitude. It begins with simple things: always tell the truth, keep your word, do not make any promises you personally cannot keep and treat the customer as you would treat yourself. These basic characteristics will lead to the following philosophy: no customer inquiry or problem will go unanswered. When this philosophy is internalized in any organization then unique and effective solutions are the result.

Six sigma forces the organization to challenge everything. The world we live in is changing rapidly and is very complicated. You have to keep asking what your customer wants and constantly question the procedure. Is there a way we could simplify things for the customers? Are we servicing customers on their terms?

Six sigma allows an organization to constantly explore new, better and more creative ways to satisfy customer needs and requests. The way to challenge and probe is to make it very clear to employees that you encourage dialogue with customers. Make it easy for customers to contact you. Provide an 800-number and Internet access. Send relationship marketing mailings and surveys to solicit customer input. Finally, always encourage your representatives to make sure they can deliver on any promise they make.

Success is measured in many ways depending on the goals of the organization, however, one sure way to be successful is to make sure that your customers become the ambassadors and advocates of your products and or services. They will do that if they are satisfied with the product, service and experience. There is no need to elaborate on the difference between ambassodor and advocate. The distinction is inherent in their functions and approach: One is benevolent the other aggressive.