Implementing Six Sigma in a Co-operative Bank

Implementing Six Sigma in a Co-operative Bank J. P. Singh Professor,Jagan Institute Of Management Studies, Guru Gobind Singh Indraprastha University, New Delhi Abstract Ramgarhia co-operative Bank( RCB), a Delhi based bank is functioning in the area PaharGanj, Delhi. It is in the vicinity of the offices where it usually performs all the function which generally every bank does. But for the past two years the bank has not been able to retain its customer and it has been noticed that it has been losing its customer at an average rate of 4% per year. This paper reviews the application of Six Sigma Methodologies over Ramgarhia Cooperative Bank with an objective to minimize the time involved in during the process of Cash Deposits, Cash withdrawal, Cheque deposits etc. This paper studies a period of two months from April to May 2016. This study uses primary data on Cash Deposits, Cash Withdrawal, Draft Preparations, Cheque Deposits and others. DMAIC ( Define, Measurement, Analysis, Improved and Control Phase) approach and paired t-test have been used for analysis.there has been not only a decrease in service time for services like cash withdrawal (45.8%), cash deposit (43.5%), draft preparation (44.7%) and deposit of cheques (58.3%) but also in service time for Other services (11.1%). Keywords: Six Sigma, DMAIC, DPMO, Critical Factors Introduction The word sigma was derived from Greek alphabet, which today has become the statistical symbol as well as metrics for process variation and is used to denote standard deviation in statistics while six is the number of sigma measured in the process. Motorola had created the Six-Sigma concept in mid 1980s to enhance and improve the performance and quality of its processes. It is a systematic management framework to improve the quality of process outputs by identifying and removing the causes of defects (errors), barriers and minimizing variation in the output. It uses a combination of quality management methods and statistical methods for creating a special infrastructure within the organization to quantified targets in quality. The end goal of Six-Sigma is to value creation through quality management. The objective of six sigma quality is to reduce process output variations such that it will result in no more than 3.4 defects parts per million( DPMO). Six-Sigma was originally institutionalized in manufacturing sector as quality improvement strategy to find and eliminate causes and defects in manufacturing process with focus on outputs. In manufacturing, it is a rigorous, data driven methodology that uses various statistical tools to identify and eliminate the defects in the process. It uses the DMAIC (Define, Measure, Analyze, Improve and control) methodology. But these days it is applicable in almost every type of industry. Objective of the study Following are the objectives of implementation: 1. To have all measurable outcomes of processes operate at Six Sigma Level. 2. To have all attribute outcomes of the processes operate at Zero defect. 3. To provide a complete knowledge of various fundamental concepts related to Six Sigma. 279 J. P. Singh

4. The research theory suggested by the researcher will help other researchers and encourage the management representative to do the implementation in the desired field / working area / performing area of engineering services. The key to achieving the Six Sigma level is the application of the Design of Experiments (DOE) tools. Six Sigma and Banking Sector Six Sigma proves to be perfectly suited to the needs of the service industry, which is in constant contact with customers and has customer delight as its top priority. The banking sector has found the benefits to be reduced cycle times, better cash management, reductions in complaints due to defects and overall customer satisfaction from improved performance. Financial institutions like Citibank, Bank of America in Wichita and many more have achieved great results from Six Sigma initiatives DMAIC Methodology for Banking Six Sigma initiatives help banks provide customers with speedy handling of their requests, such as cash withdrawals and timely providing demand drafts without much delay. Let's take a look at the steps of the DMAIC methodology for Six Sigma initiatives that are significant for achieving great customer satisfaction levels. Define: The customer is king and customer satisfaction is the deciding factor to companies' efforts to achieve higher profits. Six Sigma projects involve defining objectives and opportunities in consultation with bank employees, as well as top management. There may be an opportunity to improve, based on customers' feedback or complaints received. Unless project definition is done correctly, taking further steps would be a waste. Measure: The measure phase requires Six Sigma professionals to collect data regarding bank operations in consultation with top management. This data is important and helps the team to understand the impact of the process on customer satisfaction. Interviews and feedback from employees and customers can be very useful in understanding stages where processes slow down. These could help to find solutions to problems caused from different situations. These processes can be marked for immediate changes or improvements. Analyze: The analyze phase entails making an in-depth study of data that has been measured. The data collected helps teams understand the aspects affecting customer satisfaction levels. Steps that are timeconsuming and need reconsideration or rearrangement are identified and sent for approval. Improve: This phase involves undertaking actual changes and improvement in the process in consultation with staff. These measures are taken based on the data collected according to the guidelines from top management. Before the changes are finally made, tests are undertaken to ensure that any changes do not affect customers adversely for any reason. Control: There has to be some control mechanism to ensure that the changes made achieve results as expected. If the changes do not bear results, then they need to be reconsidered again. To ensure processes do not have drawbacks leading to errors, some measures, such as mistake proofing of the process can be taken, using electronic applications. This ensures that the data entered or provided is correct in the first place. If awareness is created among customers about the provision of correct data, then every time they approach the bank, it makes it simpler to provide faster service. There could be areas or processes that may have needed customer contact too many times, leading to customer dissatisfaction. Six Sigma tools and techniques can help eliminate overlapping processes - and in turn, prove easier and beneficial to the customer. Faster processing and reduced cycle times can help banks to provide best services to their customers, which in turn means good profits. 280 J. P. Singh

Data Analysis Data has been analyzed using DMAIC approach. The various steps of the analysis have been shown below using charts and tables. MS excel was used for data analysis. Define Phase Ramgarhia Co-operative Bank( RCB) is a major bank which is functioning in the area PaharGanj, Delhi. It is in the vicinity of the offices where it usually performs all the function which generally every bank does. But for the past two years the bank has not been able to retain its customer and it has been noticed that it has been losing its customer at an average rate of 4% per year. It s an alarming sign for the bank because goodwill is an attractive force which not only attracts the new customer but also retains the old one. The primary objective of this study is to find out the reasons which forced the existing customers of the bank to quit from the bank. At the same time to improve the satisfaction level of the existing customers. When the study was started, few useful historical data were available, so the first step was to collect and select these data to understand RCB s service processes and problem areas in better manner. On the base of the collected data decision about selection of process for improvement should be made, all service areas should be screened and appropriate action plan for minimizing variability within the process as well as reduction of dissatisfaction level of customers. Measurement Phase One of the objective of the process is to identify the major variables which are responsible for the old customers to move from bank under study. For this purpose data was collected from the customers with the help and prior permission of the senior management of the RCB. For this purpose a questionnaire was specially designed consisting of following questions: How long have you been associated with this bank as a customer? How frequently do you visit RCB? Purpose of visit?average service time?satisfaction level on likert scale? Planning to switch over from RCB? If Yes then specify reasons. A random sample of 100 customers visiting to the banks for day to day transaction was taken. The careful study of questionnaire filled by these 100 customers was carried and it revealed that the customers who are visiting to bank have a very large dissatisfaction level in respect of time involved in at cash deposits counter, cash withdrawals counter, draft preparations counter, Cheque deposit counter and several other small problems like time involved in pass book entries, locker operating etc. The critical variables for implementing Six-Sigma were identified from the literature review and brainstorming process sessions with the experts and the bank employees. So it was decided to concentrate at mainly three core areas where almost all the customers showed their dissatisfaction. These include time wastage of customers at cash deposit counter, cash withdrawal counter and the draft preparation counter. Pareto chart for various problems heads shows that all the problem heads except Others are major reasons for dissatisfaction of customers. Based on Pareto chart (See Figure -1) it was decided to analyze and make improvement in these heads. Also, it was noticed that the quality improvement and reduction of quality time within the process are achievable. The significant improvement could be accomplished by Reducing service time of cash receipt Reducing service time of cash withdrawal Reducing service time of cheque deposit Reducing service time of draft preparation This paper studies a period of two months from April May 2016 281 J. P. Singh

Table 1: Problem Heads and percentage of dissatisfied customers Problem % of dissatisfied customers Cash deposits 41% Cash withdrawals 24% Draft Preparation 16% Cheque deposit 11% Others 8% Total 100% Figure 1: Pareto chart representing percentage of dissatisfied customers %age of Dissatisfied cumstomers 45% 40% 35% 30% 25% 20% 15% 10% %age of Dissatisfied cumstomers 5% 0% 282 J. P. Singh

Analysis and Interpretation phase Further attempt was made to compare data during April 2016 and May 2016. The data on average service time has been presented in Table 2. The data for the month of April (before improvement) and May 2016 (after improvement) has been shown in the Pareto chart (see figure -2 and 3). Table 3 shows average time of different service heads before improvement and after improvement and percentage change in service time. The comparison reveals that there is consistent improvement in service time of different services during May2016 when compared to April2016. This was supported by the results of the test of significance shown in table 4 which indicates that the service times during May 2016 are significantly lower than the service times during April 2016. Table 2: Average service time for the month of April 2016 (before improvement) and May 2016 (after improvement) Cash Deposit Cash Withdrawal Draft Preparation Cheque Deposit Others S N tavg.(bi) tavg.(ai) tavg.(bi) tavg.(ai) tavg.(bi) tavg.(ai) tavg.(bi) tavg.(ai) tavg.(bi) tavg.(ai) 1 24 15 25 14 66 49 11 5 17 15 2 24 13 26 13 81 37 10 3 18 15 3 20 12 22 14 61 47 14 5 20 15 4 24 13 27 12 78 52 15 5 17 16 5 25 15 22 15 74 48 10 4 18 14 6 22 12 27 12 83 44 10 3 19 17 7 22 12 25 12 76 35 13 4 20 18 8 20 15 26 13 82 37 10 3 19 18 9 22 12 23 10 69 47 13 3 15 15 10 21 14 23 12 77 47 15 4 15 18 11 22 12 25 10 80 40 10 5 20 17 12 24 11 26 10 84 48 13 5 16 15 13 22 13 22 13 90 36 11 4 15 15 14 20 12 26 12 60 43 13 5 17 14 15 24 10 20 10 68 33 13 3 16 18 16 23 13 27 13 85 49 11 5 17 18 17 24 11 22 11 77 39 12 5 20 15 18 25 14 27 14 85 45 12 5 15 16 19 25 12 25 12 67 40 10 5 20 14 20 20 13 23 15 64 45 11 4 16 18 21 23 10 21 12 86 47 12 3 19 18 22 23 12 21 14 78 37 10 3 17 14 23 21 10 20 12 74 36 13 5 18 17 24 21 10 26 11 88 40 12 5 20 16 25 23 14 25 15 75 36 14 4 18 17 26 23 13 26 13 70 41 13 4 17 18 27 25 14 22 12 83 51 14 3 15 16 28 25 12 21 13 69 47 12 5 17 14 29 22 15 25 15 62 41 10 3 17 14 30 20 12 20 12 78 32 15 5 17 14 t avg.(bi) represents Time (Before Improvement) tavg(ai) represents Time ( After Improvement) 283 J. P. Singh

Table 3: Average time of different service heads before improvement and after improvement and percentage change Avg. Time Taken Avg. Time Taken %age Factors (Before Improvement) (After Improvement) Decrease decrease Cash Deposit 23 13 10 43.5% Cash Withdrawal 24 13 11 45.8% Draft preparation 76 42 34 44.7% Cheque Deposit 12 5 7 58.3% Others 18 16 2 11.1% Figure 2:Service Wise time (in minutes) in April 2016 (before improvement) and May2016 (after improvement) 80 70 60 50 40 30 20 10 0 Avg. Time Taken (Before Improvement) Avg. Time Taken (After Improvement) Figure 3: Percentage change inservice Wise time (in minutes) after improvement %age decrease 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% %age decrease 284 J. P. Singh

Table 4: Results of test of significance Test Results April 2016 May 2016 Mean 30.6 17.8 Variance 666.8 199.7 Hypothesized Mean Difference 0 Observations 5 df 4 P(T<=t) one-tail 0.040738 Level of significance 5% or 0.05 Recommendations: Improved Phase As reflected from figure 2 and table 3, there has been not only a decrease in service time for services like cash withdrawal (45.8%), cash deposit (43.5%), draft preparation (44.7%) and deposit of cheques (58.3%) but also in service time for Other services (11.1%). Reasons for improvement or decrease in service time are Installation of Cheque collecting machine: results in freeing of an employee who was deployed to care of single window cash counter. Opening of additional single window cash counter: resulted in reducing the waiting time of customers by shifting the queue Drafts worth Rs 40,000 were issued at the counter accepting cash The Control Phase To encourage the continuous improvement there is need to systematically monitoring and assessment of the impact of the quality management initiatives to justify investments in the improvement process. To have a systematic monitoring, a team of personnel was trained to act as mentor and supervise the whole process. In this final phase of DMAIC methodology, control plan was developed to ensure that the service processes consistently meet customers requirement. The time saved due to six sigma application can be used to provide other services which are still untapped. It would further increase the reputation and customer base of the Ramgarhia co-operative Bank. Conclusion Six sigma is an effective way to find out where are the greatest process needs and which are the softest points of the process. Also, Six Sigma provide measurable indicators and adequate data for analytical analysis. Systematic application of Six Sigma DMAIC tools and methodology in Ramgarhia co-operative Bank s different services results in several achievements. As discussed above, the achieved results are: Reduction in cash withdrawal average time by 45.8% Reduction in cash withdrawal cash deposit by 43.5%, Reduction in average time for draft preparation by 44.7% Decrease in average time for deposit of cheques by 58.3% and also in service time for Other services by 11.1%. 285 J. P. Singh

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