A Survey on Six Sigma Implementation in Singapore Service Industries

Transcription

1 A Survey on Six Sigma Implementation in Singapore Service Industries Ayon Chakrabarty 1, Kay Chuan Tan 2 Department of Industrial and Systems Engineering, National University of Singapore Abstract: The concept of Six Sigma was initiated in 1980s by Motorola. Since then it has been implemented in several manufacturing and service organizations. Manufacturing organizations have registered success in terms of substantial bottom line results. In case of services, health care and finance were major beneficiaries till now. The application of Six Sigma is gradually picking up on other types of services like call centers, utilities and public services etc. This paper provides empirical evidence on Six Sigma implementation in service industries in Singapore. A questionnaire survey is done involving 250 service organizations. The main findings are the following. Top management commitment and cultural change emerged as the most important success factors confirming almost similar findings from literatures. Whereas attaching the Six Sigma success to financial benefits is the least important of success factors according to the respondents. Company wide commitment and customer focus are followed by organizational readiness, education and training etc to complete the list of success factors. In case of critical to quality characteristics, time (service time, waiting time and I. INTRODUCTION The increasing importance of services in the economies of developed and developing nations have necessitated the focus on service quality. So, there is a growing interest in application of Six Sigma not only in manufacturing but also in services. Traditionally, manufacturing organizations have seen high bottom line results by the application of Six Sigma. But, last decade has seen many service organizations like, Citibank, Bank of America, American Express, Caterpillar, Baxter Healthcare in US and Europe getting success by implementing Six Sigma [8], [15], [22], [29], [31], [32], [36], [43], [50]. There is a growing recognition that Six Sigma can be applied to non-manufacturing operations and also it is not limited to US-based corporations where it is developed, but it is applicable to all types of organizations [3], [41]. In case of Singapore, there are several organizations which have already applied and benefited from Six Sigma applications like, Alexandra Hospital, Singapore Power, Singapore City Gas and several public services [7]. This paper presents the results of questionnaire survey conducted on service organizations in Singapore. The purpose was to understand the status cycle time) emerged as the most important followed by response time to customer complaints. The use of tools and techniques represent similarities across services in their usage at different stages of DMAIC (Define, Measure, Analyze, Improve and Control) methodology. Efficient service and customer satisfaction emerged as most important key performance indicators followed by reduced cost and reduced variation. Surprisingly financial benefit is less preferred as performance indicator as observed from the responses. The major reasons for not applying Six Sigma which emerged from this survey of service organizations are difficulty in collecting data, difficulty in identifying process parameters and time consuming. Some service organizations also felt that Six Sigma is not relevant to their organization. These reasons will probably help in understanding the still limited application of Six Sigma in services. Finally, the survey also shows that there are certain organizations which are planning to implement Six Sigma in near future. Overall, the results help in understanding the status of Six Sigma in service organizations in Singapore. Keywords: Six Sigma, Service Industries, Survey of Six Sigma application in Singapore service organizations. The questionnaire focused on four constructs on the basis of reviewed literatures, they are: critical success factors (CSFs), critical-to-quality (CTQs), key performance indicators (KPIs) and usage of tools. The study also focused on the reasons behind the organizations which have not applied Six Sigma. This will probably help in understanding the still limited application of Six Sigma in services. II. LITERATURE REVIEW Six Sigma is a systematic quantitative approach for improving manufacturing or service processes. The strength of Six Sigma lies in its framework to facilitate the application of tools in a disciplined manner, which requires data-driven decision making [3], [7], [11]. The application of Six Sigma was predominant in manufacturing process improvement but recent developments show that its application is increasing in non-manufacturing operations like, services. In order to apply Six Sigma more broadly it is better to recognize that non-manufacturing also involve processes. Identification of process parameters (CTQs) is one of the key to implementation of Six Sigma in services [4], [36], [41]. Table 1 provides some examples of service

2 organizations which have implemented Six Sigma (Adapted from [7]). TABLE I. SIX SIGMA IN SERVICE ORGANIZATIONS benefits Organizational understanding of work processes to customer complaints Financial benefits Financial Services American Express Bank of America Citibank DBS Bank, Singapore HSBC JP Morgan Chase Maybank Berhad Merril Lynch Standard Chartered Healthcare Virtua Health Baxter Healthcare Bausch and Lomb Alexandra Hospital, Singapore Mount Carmel Health System Boston Medical Center Bay Medical Center Commonwealth Health Corporation Heritage Valley Health System Utilities Dominion Resources Singapore Power Hospitality Starwood Hotels and Resorts Ritz-Carlton Energy Viridian Group Singapore City Gas There are well-published success stories like Motorola, General Electric, Honeywell, Boeing, Raytheon, Texas Instruments, Seagate Technologies, etc. of Six Sigma application in manufacturing. In case of services though the cases are less but it is growing steadily [7], [12], [42], [51]. The reasons behind the success of Six Sigma depends on some critical success factors like, top management commitment; identification of process parameters i.e. CTQs; application of Six Sigma methodology, DMAIC (Define, Measure, Analyze, Improve and Control) and tools; and identification of KPIs like, quantified financial impact [11], [18], [44], [50], [51]. Table 2 provides a list of common CSFs, CTQs, KPIs and tools across service organizations as observed from the literature. CSFs Top management commitment Education and training Cultural change Customer focus Clear performance metrics Attaching success to financial TABLE II CSFs, CTQs, KPIs AND TOOLS ACROSS SERVICE ORGANIZATIONS CTQs Service time Waiting time Cycle time Cost Employee behaviour Accurate information to customers Timely information to customers Responding KPIs Efficiency Cost reduction Time-todeliver Quality of service Employee satisfaction Customer satisfaction Reduced variation Tools Histogram Pareto analysis Cause and effect analysis Brainstorming Flowchart Project charter Process mapping Root cause analysis Control charts The review of literature showed that there are similarities across CSFs, CTQs, KPIs and usage of tools across service organizations. In case of Six Sigma application these four constructs play an important role. Except one pilot study [15], no study so far has concentrated on all these four constructs combined. Also most of the study published so far is limited to European and North American service organizations. Thus there is a need to identify the industrial perspective on these factors in newly developed or developing countries. Identifying the gaps, this work answers the following questions, through a survey on Singapore s Service organizations. 1) What are the CSFs, CTQs, KPIs and tools considered in service organizations? 2) Are there similarities among these constructs across service organizations? III. Questionnaire Survey A questionnaire survey of Singapore service industries was conducted to understand the status of Six Sigma application. The questionnaire was mailed to 250 service organizations in Singapore. The list of the companies included for the survey refers to Singapore 1000 list, which is a government ranking of the 1000 best performance companies in Singapore based on their financial results. The mailed package contained a covering letter explaining the purpose and need for the study, the questionnaire and a prepaid reply envelope. A reminder letter was mailed three weeks after the first mailings to the organizations, who have not responded. The participants had the option of getting the summary report if they preferred.the questionnaire focused on the constructs CSFs, CTQs, KPIs and tools as observed from the literature. The contents of the questionnaire were reviewed by people knowledgeable in application of Six Sigma. This helped in framing the questions in a manner suitable for industries. The next section discuss about the results of analysis from the survey. A. Results And Discussion Out of 250 mailed questionnaires 84 were returned but the usable data for analysis involved 50 companies, i.e. the response rate of 20%. This response rate can be regarded as satisfactory for this

3 kind of surveys [17]. This survey was directed mainly at master black belts and black belts who are well accustomed with the application of Six Sigma. Respondent s Profile: The profile of the respondents (refer Fig. 1) show that majority of the respondents are from top management like, directors, deputy directors and vice presidents (34%) followed by managers (2). In case of organizations which have implemented Six Sigma the respondents mainly are black belts or top management, which confirms the top-down approach of its implementation. Critical Success Factors: The analysis on critical success factors showed that clear performance metrics is the most preferred, having an average score of 4.6, followed by top management commitment (4.5), cultural change (4.43), organizational readiness (4.25), customer focus (4.15) and education and training (4.05). This analysis confirms with the literature where top management commitment and cultural change are cited as the most important for application of Six Sigma along with education and training, customer focus, etc [18], [23], [51]. Education and Training Not Specified 20% Black Belt 8% Director 10% Customer focus organizational readiness HR C S F s Cultural change Deputy Director/Vice President 24% Top management commitment Manager 2 General Manager Clear performance metrics Fig. 1. Distribution of the respondent s profile Profile of the organizations: The types of service organizations participated includes, public services (32%), transport (12%), consultancy (8%), education, insurance, logistics, utilities (each ), others (24%). Others involve organizations like, finance, healthcare, distribution, real estate, telecommunication, tourism, travel and engineering services. Utilities Logistics Others 24% Insurance Education Consultancy 8% Transport 12% Public service 32% Fig. 2. Distribution of the service organizations Fig. 3. Common critical success factors considered in service organizations Critical-to-Quality Characteristics: The most common CTQs considered among the service organizations for implementing Six Sigma are: Time: service time, waiting time and cycle time Information provided to customer Employee behaviour Time to respond to customer complaints Time to restore customer complaints Key Performance Indicators: The benefits from Six Sigma application is generally expressed in terms of financial benefits as it is an easier metric to follow [50]. The survey analysis however presented a different preference by organizations involved in Six Sigma. Efficient service is the most important of performance indicators followed by customer satisfaction, reduced cost, reduced variation, timely delivery and employee satisfaction. The figure (Fig. 4) below presents the distribution of KPIs as observed from the survey.

4 difficulty in collecting data (20% of the respondents). Others being difficulty in identifying process parameter, time consuming (both 17%), too complex to use and not relevant (both 1) and unknown to us (14%) Unknown to us 14% Difficlty in Collecting Data 20% Not relevant Efficient service Customer satisfaction Reduced cost Reduced variation Timely delivery Employee satisfaction KPIs Difficulty in Identifying Process Parameter 17% Fig. 4. Distribution of key performance indicators Tools: The success of Six Sigma lies in its systematic methodology of DMAIC (Define, Measure, Analyze, Improve and Control). Each stage of this methodology involves application of various tools [17]. Some of these tools are common across stages, while some are specific to particular stage(s). Brainstorming, Pareto analysis, flowchart, histogram, work flow diagram, cost of quality, relations diagram, control chart and process capability are the most commonly used tools across the services participated in the survey. The table below shows the mean score of these commonly used tools and also the stages in which they are used. TABLE III. FREQUENCY OF TOOLS USAGE AS PER STAGES Tools Mean Score Stages Brainstorm 4.71 D, M, A, I, C Pareto analysis 4.46 D, M, A, C Flowchart 4.31 D, M, A, I, C Histogram 3.70 D, M, A, I, C Work flow diagram 3.66 D, M, A, I, C Cost of quality 3.42 D, M, A, I, C Relations diagram 3.35 D, M, A, I, C Control chart 3.15 D, M, A, I, C Process capability analysis 3.10 D, A, I, C The analysis of tools usage has some similarities with similar kind of survey conducted in UK service organizations where brainstorming, Pareto analysis and control charts were among the most commonly used tools [15]. Reasons for not applying Six Sigma: There are 40 organizations which have not applied Six Sigma. The most cited reason for not applying Six Sigma is Too Complex 1 Time Consuming 17% Fig. 5. Reasons for not applying Six Sigma IV. CONCLUSION The manufacturing organizations has already benefited by application of Six Sigma. Now its application is growing in services slowly and steadily. This survey provides an insight on the status of Six Sigma in Singapore service organizations. The study also confirms the inclusion of constructs CSFs, CTQs, KPIs and tools as found from the literature. It was found that there are some common CSFs, CTQs, KPIs and usage of tools across service organizations. This is an important finding as this framework can act as an important guide for services planning to apply Six Sigma. The reasons for not applying Six Sigma provide some common (difficulty in collecting data, difficulty in identifying process parameters, time consuming, etc.) and some interesting revelation like not relevant and unknown to us. This show that much work is needed to be done by practitioners and academicians in case of Six Sigma application in services. The study also has some inherent limitations. First, difficulty in identifying the organizations involved in Six Sigma and inaccuracy of the list in terms of address of organization or name of concerned person. Second is the small sample size involved in the analysis of the study. Finally, the low response rate restricts in generalizing the findings. These limitations can be overcome by conducting in-depth case studies involving different types of service organizations. Overall the findings from the study provide a basis for future research to help generalize the findings and also to widen and deepen the Six Sigma application in services.

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