CONTENTS List of abbreviations..2 List of tables and figures...3 Introduction.......................................................................................................................4 1.

The philosophy and basic content of the Six Sigma .....6 1.1. Really focus on customer.6 1.2. Improving management cycle DMAIC8 2 .The process of applying Six Sigma at OJB in period of 2004-2006.16 2.1. Business situation of OJB..16 2.2. Implementation of Six Sigma ...18 2.3. The results obtained when applying Six Sigma at OJB22 3. Some measures to raise the credit quality at OJB (Conclusion).... ..23 3.1. Building business strategies...26 3.2. Diversification of credit activities27 3.3. Efficient implementation of credit activity processes29 3.4. Enhancing inspection activities of credit loans29 List of References.30

List of abbreviations

SMEs Small and medium sized enterpirses OJB Ocean joint stock commercial bank TQM Total Quality Management SBV The State Bank of Vietnam APO Asian Productivity Organization VPC Vietnam Productivity Centre APQC The American Productivity and Quality Center HR Human Resource

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List of tables and figures

Figure 1. DMAIC management cycle....8 Figure 2. OJBs lending process . 20 Figure 3. OJBs documentation rotating process.. 21 Table 1. Levels of Sigma ..7 Table 2. Define phase descriptions...10 Table 3. Measure phase descriptions.....11 Table 4. Analysis phase descriptions.....13 Table 5. Improve phase descriptions.....14 Table 6. Control phase descriptions.......15 Table 7. OJB capital mobilization situation...17 Table 8. Summarized result of Six Sigma projects....22 Table 9. Analyzed quotients of credit quality over 3 years....24

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Introduction
It is true that banking sector has been facing with more and more competition as well as other in Vietnam. Especially, as a new official member of WTO, joining in an equally ground, Vietnam will have many opportunities as well as risks at the same time that should be well prepared for. It is very popular to hear about enhancement for competitive competence in doing business or manufacturing as a guideline toward world trading orientation. Banking and Finance activities receive most attention from the government due to its importance and impacts on the structure of nation economy. If these activities, most importantly the Credit Operation, are under rational management, it obviously makes positive contribution in ameliorating and stabilizing macroeconomics, eliminating inflation factor, keeping up the promising growth rate of the economy. In addition, the indispensable change-over in Banking is being attended by a large number of citizens who had sat down under multiform crisis in credit operation from pretransaction period. The obsession made from domino effect falling down of Credit found for people series or imperious manner, overbearing attitude of bank clerk in 1980s still be the faith barrier, though less and less in progress economy transaction. Currently in Vietnam quality management is along with growing business enterprises in Vietnam. The integration of quality into all elements of management activities to be operational is common and indispensable for any organization to survive and grow. But quality is not naturally born nor whether it is an accident that results as a result of the impact of a series of all factors that are closely related, is the result of a process that processes synchronization is also the factor of all: people, management systems, methods, tools that support the manufacturing process to produce a quality product. Quality and opportunity are as well as challenge. With increasing customer demand for products, businesses need to continuously improve product quality. Quality improvement is to enhance performance to create more benefits for the company and customers. There is one method to enhance product quality called Six Sigma. Six Sigma is a methodology for process improvement to reduce to the lowest defect rate of products. The application of Six Sigma program will help reduce production costs, management costs, increase customer satisfaction, reduce excess time in the process, ensure delivery, expand production, and help enterprises (banks) be more confident to achieve higher goals.

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Within 2 years of application of Six Sigma, OJB have obtained good results in the goal of improving the quality of services, especially credit operation. This essay describes Six Sigma approaches that OJB has applied to improving service quality projects. The results are encouraging, and Six Sigma has proven the effectiveness of the application of scientific methods in the management process. Based on data in annual credit reports from 2004-2006 of OJB, this context focuses the analysis on a typical result through OJB's credit quality to be improved by applying Six Sigma process.

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1. The philosophy and basic content of the Six Sigma

1.1. Really focus on customer In the 80s and 90s of the 20th century, when the total quality management (TQM) was developed, a series of companies proposed the policy and quality objectives to best meet the requirements and expectations of customers ". Unfortunately, some enterprises have a real effort to run short-term requirements of customers in a short period that ignores the construction of business-oriented system, not customer-oriented as it should be, to serve the needs of human. In Six Sigma method, customer orientation is a top priority. For example, performance measures of Six Sigma start with the identification of customer requirements. The Six Sigma improvement is determined by the impact of customer satisfaction. We will examine why and how to identify customer requirements, measure performance and become a leading development company and meet customer needs. Six Sigma is not a quality management system such as ISO-9001, or a quality certification system. Instead, this is a methodology for reducing defects based on process improvement. For the majority of enterprises in Vietnam, this means that instead of focusing on quality initiatives which prioritize the error checking on the product, it moves the focus onto improving production processes so that defects do not occur. Six Sigma is a methodology based on process improvements to reduce statistical error rate or disability to a rate of 3.4 defects per million defect opportunities by identifying and eliminating the source provides the knife dynamic (unstable) in the business process. In defining disability, Six Sigma focuses on establishing a thorough understanding of customer requirements and is, therefore, highly customer oriented. The goal of Six Sigma is only 3.4 defects (or errors) per one million defect opportunities. In other words, it is 99.99966% perfection. It should also be noted that Sigma measures defect rather than product defects. A more complex product will be more likely to be error free. For example, to the unit of product defect, there are more in a car more than in a paperclip.

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Sigma Level One Sigma Two Sigma Three Sigma Four Sigma Five Sigma Six Sigma

Million defect 690000 308000 66800 6210 230 3.4 Table 1. Level of Sigma (*)

Hundred defect 69% 30.8% 6.68% 0.621% 0.023% 0.00034%

While the majority of private manufacturing enterprises in Vietnam have about Three Sigma level or even lower in some cases, a process improvement project to apply Six Sigma principles can be targeted first Four or Five Sigma to the capital has also resulted significantly reduce defects. Customer emphasis is a top priority of business applications of Six Sigma. Enterprises must understand the customer requirements and expectations . "The voice of the customer" needs to be heard, recorded, stored and analyzed continuously. Six Sigma introduces the concept of "management based on real data" which brings about a lot of effective management activities. In recent years, the focus has been placed on the measure, improved information systems, knowledge management ... Six Sigma system also aims to build a system for organizing "a decision based on data. " The implementation of Six Sigma principles begins with the measurement to assess the current status of the organization to operate the company based on which to build a management system effectively. In fact, Six Sigma helps managers answer two questions needed to support decision making and to provide practical solutions on realization: 1. Which kind of information and data does your organization really need ? 2. How does your company use materials and information to maximize profits? ---------------------------------------------------------------------------------------------------------(*) "Sigma" means the standard deviation (standard deviation) in statistics, so Six Sigma means six standard deviation units.

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1.2.

Improving management cycle DMAIC

In Six Sigma, "process" is where the activity occurs. In any case of the design of products services, measuring performance, improving efficiency and customer satisfaction or even the management of the Six Sigma business improvements are all directed at the regulation workflow. Many organizations fall into a loss of control and are unsure in selecting management priority. Managers tend to want to achieve all the results in sales, growth rate, the quality criteria, indicators of human resources, the socio-political goals, ... Placing too many items organizational objectives makes distributed resources, do not focus on the key stages. Eventually lead to wastes of time, money and manpower Six Sigma-oriented methodologies for managers to focus on the key objectives, aimed at finding and addressing the root causes of problems causing waste, failure, does not meet the customer requirements. Six Sigma system indicated for the management principle is "prioritize targets is the way to go up" .

Figure 1 . DMAIC management cycle

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Firstly, the Six-Sigma projects focus on the key issues associated with strategic nature and they have significantly affected the level of customer satisfaction, and essential for business results in the form of bringing quick financial performance and large (high income, lower costs, etc ...). DMAIC process is the focus of the project Six Sigma process improvement. The following steps introduce problem-solving process in which the specialized tools are employed to turn a real problem into a statistical formula, a solution built on statistical models and then move change it to a real solution.

DEFINE PHASE: Determination phase aims to clarify issues to be addressed as well as requirements and objectives of the project. The objectives of a project should focus on the key issues associated with the business strategy of the company and the customer's requirements. The Define phase includes: Identification of customer requirements related to improvement projects. The clarification request from the client side is called the Essential Quality characteristics (Criticalto-Quality); Construction of the definition of disability as accurately as possible; Conduct a baseline study (through a general measure of the level of performance before starting improvement projects); Organizing the project team with a sponsor (Champion); Estimate the financial impact of the problem; and Approval of senior management to proceed with the project.

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DEFINE PHASE Questions need to be answered What is important for customers? Whatre types of to reduce? So how much we can do? When will we complete the improvements? How much does defect cost presently? Who will be involved in the project? Who will sponsor, or do support this project? Most commonly used tools The Project Summary (Project Charter)-A document describing the issues clearly, defines a disability, information about members of the project record the commitment to support the implementation of those involved. Trend chart (Trend Chart) - Indicates the trend of visual defect appear after some time. Pareto Chart (80/20) - Indicates the level of visual impact and negative between the input factors to output or level of disability. Process flow chart (Process Flow Chart) - to understand how it works and the sequence of steps of the current processes.

errors / disability we are working team, the goal of the project will conduct and

Table 2 . Define phase descriptions

MEASURE PHASE Objectives of the Measure phase are to fully understand the level of performance in the present by identifying the best way to assess current capabilities and begin measuring. The measurement system should be useful and relevant to the identification and measurement of sources of variation. This phase includes: Identify the specific performance requirements related to the Essential Quality Characteristics ; Establish the process diagrams (process map) associated with the inputs (Input / X)and output (Output / Y) were identified in which, at each step of the process, to express alignment of the input factors can affect output factors; A list of potential measurement system;

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 Analysis of the measurement system and establish a baseline capability of the process; Identify areas where errors in the measurement system may occur; Take measurements and data collection of input factors, processes and outputs; Verifying the existence of the problem based on the measurement system; Clarify issues or objectives of the project.

MEASURE PHASE Questions need to be answered What is current process we are in? How to compare the levels of performance ? Most commonly used tools Fishbone diagram - to show the relationship between inputs and output s.

How output characteristics are likely to Process Mapping - to understand the current affect the most essential quality (CTQ)? processes and facilitate the project team Are input factors likely to affect output (affecting CTQ) by the most? Ability to measure / detect vibrations of the system was sufficient, was not? Hows the capacity of the current process? Hows current active process? How well the current process can be if everything is running smoothly? The current process may be perfect that whichs according to the design? can identify potential waste. Matrix of cause effect - to quantify the impact of each factor input to the variation of the outputs. analyze the status of errors and Impact - use this tool in the measurement step will help us identify and implement remedial measures to reduce temporary disability and save money charges as soon as possible. Assessment Reliability of Measurement System- is used to analyze the variation of the components of the measurement system which will reduce the mistrust of the measurement system. Table 3 . Measure phase descriptions

ANALYSIS PHASE

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In the Analyze phase, the parameters collected in the Measure phase are analyzed for the author theories about the root causes of variations in the parameters can be generated and then proceed to verify. Is at this stage, the real business issues to be switched on statistical issues, including: Generate hypotheses about the root causes underlying causes of variation and essential inputs (X); Identify a few factors and inputs the most significant impact, and Validate these hypotheses by multivariate analysis (Multivariate). ANALYSE PHASE Questions need to be answered Is inputs that have the greatest impact to the quality of the basic output characteristics (based on actual data)? How much the extent should be? Is the combination of the variables affecting the ou tcome? With changing inputs, is outputs corresponding changes a s expected? How many observations can be conclusions? How much the reliability of the conclusions is? 5 Why (Five Why's) - use this tool to understand the root causes of defects in a process or product, and to be able to break the default wrong before about the causes. Assess the distribution characteristics (Descriptive Statistics, Histograms) - This tool is used to determine the characteristics of the collected data are normal or abnormal to help us choosing the tools of statistical analysis appropriate later. Analysis of correlation / regression (Correlation / Regression Analysis) - To determine the relationship between the inputs of the process and the outputs or the relationship between the two groups of data variability. Dynamics of the main actors (Main Effect Plot) - Displays the main agents of the studied ones. Analysis of variance (ANOVA) - this is inferred statistical tool is designed to test for significant differences between the mean value (mean) between two or more samples. Complete the table FMEA (Failure Mode and Effect Analysis) - application tools on current processes helps us to determine the appropriate action to improve the disability prevent recurrence. Methods to verify the hypothesis (Hypothesis testing methods) - this is the set of tests aimed at determining the source of Most commonly used tools

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variation using the data in the past or present to provide objective answers to questions that were previously often a subjective answer. Table 4 . Analysis phase descriptions This step allows us to analyze the methods used and the specific statistical tools to separate the main factors that are critical to a comprehensive understanding of the causes of defects.

IMPROVE PHASE Improve phase focuses on developing solutions to eliminate the root causes of variation, proven and standardized solutions. This step includes: Identify ways to eliminate causes of variation; Validation of the input factors; Explore the relationship between the variables; Establishing tolerances for the process, also known as upper and lower limits of the specifications or customer requirements for a process to evaluate the response of a specific characteristic, and if stable process operation within these limits will help create the product or service quality expected; Optimizing the input factors or reconfigure the parameters of the processes involved.

IMPROVE PHASE Questions need to be answered Most commonly used tools

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 When will we know the inputs that have the greatest impact to the outputs? How do we have to control them? Is that we need to try many times to find out and determine the operating mode / regulation, optimal inputs for this major? The old process should be improved and what is the new process will be like ? How much has reduced Defects Per Million Capacity (DPMO)?

Flowchart (Process Mapping) - This tool helps to represent the new process was implemented after the improvement. Process Capability Analysis - to test the capacity of the process after implementation of improvement actions to ensure that we achieve a real improvement in the prevention of disability Experimental Design - the set of tests were planned to determine the mode /operating parameters to achieve optimum output as expected and confirm the improved progress

Table 5 . Improve phase descriptions

CONTROL PHASE The objective of the Control phase set the standard measures to maintain performance and fix problems as needed, including issues of measurement systems. This step includes: Improve the measurement system; Proven long-term capacity of the process; Implementation of process control by control plans to ensure problems do not reoccur by continually monitoring the processes involved.

CONTROL PHASE Questions need to be answered Most commonly used tools

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 When the defects have been reduced, how can we ensure that improvements are sustained? What systems should be applied to test the implementation of improved procedures? Whatre measures to maintain the results even when things change that we need to establish? Whats the lesson can be improved for everyone to share in the company any way?

Planning and control (Control Plans) - This is a document or set of specified actions, including schedules and responsibilities necessary to control the variable input factor essential to the optimal mode of operation. Process Mapping with Control Points Includes a single diagram or set of visual diagram shows the new process. The control charts in statistical process- A set of charts to help track the process by displaying the data over time between the upper standard limit (USL) and limited standards under a center line The inspection slip (Check Sheets) - This tool allows us to store and collect a systematic way from the source data in the past, or past events arise. Accordingly, the form repeated patterns and trends can be identified and clearly presented.

Table 6 . Control phase descriptions

In short, the selection of Six Sigma projects at an early stage is very important and therefore it plays a key role for the success of the Six Sigma project organization should consider carefully the implications can affect the success of the project as well as considering the possibility of solving the problem without implementing Six Sigma project

2. The process of applying Six Sigma at OJB in period of 2004-2006

2.1. Business situation of OJB a. The main business line

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OJB obtains permission to do the operation as followings: - Capital mobilization: deposit-taking, bond financing to build up the funds from both of inbound, outbound organizations or customers. - Financing to respective organization or customers with various types of loans, discount of claims, finance leasingthat are under permission of the State Bank of Vietnam. - Performance the guarantee of funding, payment, contract implementation, performance bond and others banking guarantee forms for financier or personals that definite in relevance documentary provided by the State Bank of Vietnam. - Investing in contribution or buying stock of inward or outward companies as well as financiers from sources of charter capital and provident fund. - Inward currency exchanging and trading on foreign currencies and gold (the outwards intended to joint as soon as receiving SBVs acceptance) - Assigning and operating commission, represent in the respective banking factors. - Providing all kinds of domestic payment, safekeeping treasure, valuable document, pledge services, storehouse, and warehouse lassoers. b. Capital mobilization status First of all, capital mobilization is an indispensable operation to banks hence it makes the main resource what to be used for others such as: financing, payment services Prior to changing to Urban Commercial Joint stock bank, OJB had been operating within the limits of Haiduong civil thus, its capital mobilization was sparing with quality and quantity. Otherwise, this tragic situation also became from competence of the other big bank. So, when finish this Six Sigma changing, expanding the network along with the new friendly interest policy, its consequently to OJB raise up rapidly its capital mobilization. As a result, building up the fund of OJB is described by the Table 7

Unit : Millions VND

A

Schedule figure

Margin 2004 2005 2006 2005/2004

Amount %

Margin 2006/2005
Amount %

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2 3 4 5 6

Capital Mobilization Non-personal deposit Saving deposit Other deposit Borrowing

63.255 36 63.219 78.350

139.184 81 139.103 161.700

800.071 450.179 186.975 56.817 106.100 1.001.335

+79.929 +45 +75.884 +83.350

+120 +125 +120 +106

+660.887 +450.098 +47.872 +56.817 +106.100 +839.635

+475 +562 +34 +519

Gross resource

Table 7. OJB capital mobilization situation (Source: OJB annual reports 2004-2006) The changing situation of capital is realizable through above data sheet in the period 2004-2006. In the details, OJB capital has been promptly raising up in running, especially in 2006. In 2005, gross resource made 161.700 millions VND, an increase of 83.350 millions VND compared to 2004, respective raising rate is 106%. In 2006, gross resource (including VND and foreign currency) made 1.001.335 millions, increasing 389.635 millions VND in comparison with the year of 2005 via growth speed 519%, In more details, the non-personnel depositary had been overshooting with speed of 562% beside 2005. Inside the table, we also know that in the years of 2004, 2005, OJB primarily had build up the fund through saving depositary but in 2006 the mist mode of financing is non-personnel one. That is to say 2006 was a year in which the gross resource of OJB had been made a highest degree of thriving as much as rapidest speed compared with the same period last years. Its logically to get this encouraged progress when the speed of Haiduong urbanization in 2006 has been swiftly booming (Haiduong tends to be class 2 Urban in 2008). Thus, there are many plan of capital construction, industrial zones in the stream of establishing companies has been attracting much of outward investing monetary flow. Moreover, OJB itself has rationalized financing assignment, essential customer care policy, good-mannered, applying flexible rate, and spreading marketing operations, keep up the precise public relation for making name OJB as a strong trademark. Through all theses activates, applying Six Sigma helps OJB manage its process effectively, especially suitable with the new high requirements from customer. From hence, OJB is more and more available to catch the dormant capital from enterprises and citizen. Besides, OJB has carried out modernizations in information technology for banking process, establish the PCs network connected to the whole system to improve capacity.

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Customer orientation is to serve customer promptly and effectively. As a result, the opening transaction account number to be increased more and more. Particularly, one more competence development comes from a Six Sigma project for the big client of OJB is in progress. In the case of clients who have very big dormant capital, OJB has been providing various priority methods over usual to harmoniously ensure the valuable benefit for both sides of consigning and purchasing parties. OJB upholds to appoint credit clerks to the every big client for updating related vouchers, set up the particular mobilized workgroup that stand by clients office. In addition, OJB has essentially applied the interest rate within permission of SBV to build up a stable and solid situation in banking performance. 2.2. Implementation of Six Sigma at OJB In 2004, Asian Productivity Organization (APO) to approve the project Six Sigma in OJB to promote the effectiveness of Six Sigma in improving yield and quality of the organization / enterprise. The project started out in OJB from 1/2004, and was successfully concluded on 12/2006. The purpose of the APO project is selected as the concept model for OJB application of Six Sigma in Vietnam, through which the effect of promoting the application of Six Sigma in Vietnam and other countries in the APO zone, simultaneous transfer of knowledge and experience in Six Sigma for IT professionals by Vietnam Productivity Centre (VPC) . Six Sigma is a very effective tool in reducing waste, improving productivity, reducing product defects, improves customer satisfaction. The project launched with the participation of three partners: APO +VPC + OJB. At that time, OJB was about Three Sigma level, according to studied survey that carried out before. The bank is striving to improve operational efficiency and quality customer service to become the first class bank in Vietnam. During the recent challenges of the global economy, OJB increasingly need to accelerate process improvement systems and processes to adapt to. The pilot projects were selected to apply the Six Sigma process improvement are: Project 1: Improving the management and operation of ATM Project 2: Improving the lending process Project 3: Improving the process of document rotation Project 4: Reducing the processing time to the customer portfolio

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Six Sigma experts from APO undertook to guide the project team of OJB by below methods: TRAINING PRACTICING CHECKING. Phase identification (Define): The group identified the problem, given the context of the project, analyzing the benefits the project may bringing, pointing out the roadmap, project scope and project team list. Phase measurement (Measure): The problem is identified, the focus group analysis found the factors affecting the objectives of the project and start measuring, collecting data to clarify issues . Phase analysis (Analyze): The purpose is to use statistical tools, analysis tools to find the root cause of the problem. Improve phase (Improve): This phase groups offer solutions to the root cause of the problem to eliminate or minimize the causes. Phase control (Control): The group implemented the solution on a pilot scale, measure and provide procedures to maintain the achievements of the project a long-term and stable. In this essay, only improvement related to credit factors would be collected and described as an example result of Six Sigma enhancement. In each operation process of OJB, project team work in group try to find the root cause that may perspective takes improvement with suggested changes. The cycle PLAN DO CHECK ACT has been used to adjust every activity until they agree with a fully work-out proposal. However, every improvement should be enhanced by the times, applying Six Sigma process at OJB also abide by this rule as well.

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Receiving document

Verification

Rescreening Ratifying Inform to customer

Leader approving

Loan

making

decision

Inform to customer

Disbursement procedure

Post-release control

fund

Figure 2. OJBs lending process

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Customers

Credit Clerk

Re-screening Manager

Credit document

Director

General director

Credit board

Figure 3. OJBs documentation rotating process

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2.3. The result obtained when applying Six Sigma at OJB With many difficulties to overcome both the objective and subjective, but after 48 months of pilot projects ended with many positive results. Project 1 IMPROVEMENT Reduce the 3 steps in the process of ATM funds and increase machine uptime from 95% -> 97%, Project 2 Savings VND 111,286,666 / year. The average time steps of process were reduced from 120 minutes to 80 minutes (~ 25%) of Disbursement procedure to Post-release fund control. Project 3 Down 47% on-time error detection of Receiving document. Down from 18 days to 5 days to minimize the risk of Ratifying steps. Reduce the 7 sub-steps and 4 signatures of approval procedures Increase the Sigma level from 1.6 to 2.5, 20% saving transaction time for customers (from 198minutes to 162 minutes); Improve customer satisfaction (from 48.2% to 68.7% customer said Satisfy in service feedback form).

Table 8. Summarized results of Six Sigma projects (Sources: Quoted from OJB reports) Over the Six Sigma methodology can draw the lessons learned are: Commitment of the leadership-management key to success Six Sigma started from the top down and top management department will have to commit sufficient resources. Six Sigma will not be successful without the support from top management department The participation of all employees: Six Sigma requires a change in culture, it changes the way we work. All member companies must participate and we are committed to make them change. The active participation of all employees at all levels will ensure the success of the project

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 Start from small things. We should focus on small projects to be able to achieve success quickly. If a project seems massive, break it into smaller projects to be sure to use resources efficiently. Continuous Training All employees must be continuously updated techniques solve this problem continuously. Its important to create equal educational opportunities for all members of the company. Make decisions based on facts Six Sigma goals of working with data. All decisions should be based on reliable data.

3. Some measure to raise the credit quality at OJB

Even though the government has provided guidelines for commercial bank to have certain autonomy in their lending decision and responsibility for those decisions, but in reality, banks do not always have such autonomy. Often times, banks suffer influence from multiple sources (from local authority or person of influence) the banks lend to businesses that in all fairness should not be able to procure loans. Heightened risks are due to situation such as these. A reality that we have come to terms is that presently in Vietnam, an independent credit ranking bureau has not established. This is an important factor that one must not over clock. Banks lack

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unbiased information in the process of examining, understanding and valuing potential customers in order to accept or refuse a loan application. This limits the ability to expand credit because banks are not willing to take risks with businesses that they are uninformed about. Two components that go hand in hand with credit are risk and profit. If the bank is only interested in pursuing profit but lack necessary caution in risk management, then the probability of the risk is high, but instead, if there is not too much spotlight on risk and very cautions in terms of lending, then the bank may face the possibility of loosing valuable customers and much profit. This is an issue of balance that not only OJB but all national banks are facing. Undue stress is placed on safety of fund that the trend is that most banks limit lending to independent business. Admittedly, lending to private business in the recent past is risky, nevertheless, not all international entrepreneurs are created equal, they are aware of their roles in economics. This is what banks, including OJB, need to focus on in the near future. No 1 2 3 4 Quotients Mobilized capital/Outstanding Lending revenue/Outstanding Receiving interest from creditivities/Outstanding Receiving interest from creditivities/Total returns 2004 0.98/1 0.84/1 6.4% 92% 2005 1.26/1 0.87/1 14% 96% 2006 1.21/1 0.83/1 6.4% 89.7%

Table 9 . Analyzed quotients of credit quality over 3 years The banks marketing activities have not really been studied. This kind of work has only been done cosmetically, a kind of public relation and propaganda that does not come from vigorous research, therefore unable to grasp fully the need of market in order to satisfy that need. Previously, the banks marketing activities has been considered duties of marketing agents, but in fact, it is the duties of all banking staff. This weak point is not only seen at OJB but almost all banks in Vietnam. OJBs debt over proportion still be ideal but its customer relation is not really, as they always put forward My role is your partner. The mainly supports to companies of OJB operations just has been debt adjustment, debt extent, added lending capital, so not yet performed consulting orient role to help companies solving their difficulties in business.

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First and foremost, thoroughly OJBs lending followed economic sector structure; lending proportion of public sector still is at high volume. The state-own is very high-risk potential customers because of small capital owned, lacking of mortgage and much more problems belong to its essence. The private sector has been not oriented as proper as it should be. In other sides, a professional skill in appraising has been not qualified in fact, especially in big size projects such as: construction, heavy industry, trading.Therefore, quality of credit appraising has still lowed, namely determining practicability of projects, lending projects, specifying accruement source, borrowings aim using, disbursement time, puzzle in defining and applying lending modalityEach of these problems all together made an adverse effect into OJB operations and miss the business opportunities of its customers. Human resources this is concentrated matter among others. In credit sector, if creditors have no possibilities to analyze project/plans, to evaluate the marketthen they can not access the practicability these projects/plans as a mistaken appraising that may lose investing opportunities of their customers. Additionally, in information collecting, if creditors lack of necessary skills, they will not fulfill needed information for projects/invested plans. Even completing information phase, they could not use or analyze sensibly without level of ability. Its certainly that Six Sigma not to be the magic key for all problems that OJB have. So it may help to reliably reduce the defects in every operation process. In the last part of this essay, we attempt to look inside some processes that Six Sigma appliance could get the positive result as it done before. One of the main and fundamental types of risks in banking activities are the irrecoverableness of debts that have negative impacts on the business efficiency, reducing profit, limiting the growth speed of debt balance and capital rotating speed; depriving the bank of payment capability of the bank at the higher level. Therefore, restriction and minimization in business risks are always the top priorities and the highest goals of banks administrators, requiring banks in particular and banking system in general to implement the effective professional measures in business activities with a view to improving banks credit quality. 3.1. Building business strategies Business strategies are always the expressions of the long term basic goals of a bank; selection of operating directions and allocation of necessary resources to achieve these goals. Thus, business strategies are first and foremost very essential and of decisive meaning to the existence

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and development of any banks. Business strategies have significant influences on the quality of banks operations especially the quality of credit. So, if a strategy is not built in compliance with the real ability of the bank and the market demands, then that bank shall have the wrong steps that affect the efficiency of its operations. But if there are not business strategies, the bank can not foresee the possible changes. Thus, it does not have overcoming measures. Additionally, competitiveness between banks have become increasingly fierce in the economy market nowadays. And that is the reason why it is a must to have a business strategy suitable with the market practice and the banks capability. To follow this goal, the bank should simultaneously carry out measures as follows: -First, enhancing and developing regular customers. Ocean Joint Stock Commercial Bank needs to simplify its loan procedures for enterprises that are its regular customers based on assurance of safety, satisfying the enterprises demands in a timely and quickly manner within its ability, creating comfortable, trustful and secure psychology and feeling for the customers. For customers of long-lasting good relations, it is essential for the bank to shorten the appraisal time as well as other loan-guarantee stipulations. -Second, for customers of non-state owned enterprises such as joint stock companies, private companies, Ocean Joint Stock Commercial Bank needs to have specific policies aimed at promoting the potential of this customer group. In practice, the number of customers of nonstate owned enterprises accounts for a high percentage of its customer base. Although these enterprises enjoy high possibility of risks objectively and subjectively, not all non-state owned enterprises have the same way of doing business. Many enterprises do business efficiently, make profits and repay the full loans for the bank. In the transitional period of the economy, the number of non-state owned enterprises being established has gone up significantly. If the current situation still remains unchanged, the bank shall miss such a huge source of benefits and the competitiveness in the area is certain to be reduced. -Third, selective expansion is done for the new groups of customers. The bank must be dynamic to take all necessary measures to attract customers in the state owned area to make closed loans compatible with production process. At the mean time, setting and improving the efficiency of credit information processing based on the fact that the bank must select customers through various and essential measures to heighten its market share of the customers being the general corporations.

- Improve the quality of credit services with Six Sigma 26 process at Ocean Bank in Vietnam -

Through building customer strategies, the bank can manage its customers more practically. Owning to this, the bank can participate into new projects of enterprises actively and directly at the very initial stages, not having to wait until these enterprises ask for loans. Obviously, through this, the bank can have deeper understanding of the projects. 3.2. Diversification of credit activities Diversification is one of the operating guidelines of the bank with a view to decreasing risks, assuring safety both for the bank itself and the depositors. Diversification of credit activities consists of the diversification of loan methods and loan for trading fields. -Diversification of loan methods: it is necessary for the bank to supply loans under commercial paper discount. It is a specialist skill of low risk because discount allows banks to have the right of recourse when it fails to collect debts from the issuer. Moreover, discount does not make the banks capital frozen due to short duration. Because it is possible to rediscount, capital of banks can be rapidly cleared, the liquidity of banks assets is improved. Furthermore, the bank can use other different lending measures such as: lending through the issuance and usage of credits, rotation lendingThe bank can combined different lending methods at the same time. For the new lending methods, the bank should make clear and thorough explanations to the customers in terms of methods, advantages and disadvantages of each type so that the customers can carry out their borrowings conveniently the next times. After each time of new method application, it is very pivotal for the bank to gather and summarize opinions from the customers to bring into full play the strengths and minimize weaknesses of each method. -Diversification of loan for trading fields: In economic industries, Ocean Joint Stock Commercial Bank lends in various trading fields such as tourism commerce, capital constructionThis is quite suitable with the banks role. However, the bank should also attach importance to lending in the traditional trading fields of customers, concentrating on loans for trading fields that are not considerably influenced by globalization process and schedule of Vietnams accession to the WTO By this way, the bank can disperse and divide risks and raise profits. To perform this well, Ocean Joint Stock Commercial Bank must focus more on seeking and exploitation of customers in this fields; improving appraisal activities of the projects; enhancing the professional knowledge of credit staff about this field. 3.3. Efficient implementation of credit activity processes Process of credit activities includes the basic professional contents, implementation steps from

- Improve the quality of credit services with Six Sigma 27 process at Ocean Bank in Vietnam -

the beginning to the end of a loan which main points are appraisal stages regarding financial efficiency of the loan; inspection of the borrowed capital usage of the customers, reminding them of the loan and loan interest payment duration so that they have payment plans This is necessary work for credit staff when carrying out their lending aimed at restriction of capital loss and minimization of risks. To lend effectively, it is a must to follow and execute fully and strictly the lending process especially perform well the appraisal activities on the project finance, seizure of information about the customers, business and production situation of the customers, capital using purposes, perform well the appraisal activities for each phase of lending process in order to the lending quality, decrease the risks for the bank, accelerating the production because if the projects borrowing method is feasible, the customers use their capital efficiently, then their creditworthiness is very solid and reliable. The more effective the appraisal and inspection stages are, the higher the capital recovery possibility of the bank is and this assures the credit quality of the bank. Therefore, improvements of professional knowledge during credit process are extremely essential.

3.4. Enhancing inspection activities of credit loans Banking activities are the ones of closed relation with business production activities of fields in the national economy. Economic fields want to develop and expand their sizes, capital sources needs to be added by borrowing from the bank. If business production activities of enterprises are inefficient, it leads to credit risks. Therefore, commercial banks in general, Ocean Joint Stock Commercial Bank in particular lending enterprises should inspect stringently and closely the capital using process of enterprises. Inspection before lending: inspection of the validity, legality of loans and the related peoples signatures; the match of date and figures of papers and relevant documents, whether involved credit staff and leaders implementing the lending process in accordance with the stipulations or not.

- Improve the quality of credit services with Six Sigma 28 process at Ocean Bank in Vietnam -

Inspection during lending: Inspection during delivery of loans, if transfer of payment to the counterparts of the borrowing customers is done correctly and suitable with the borrowing purpose or not, having adequate legal and valid evidences or not. When loans are signed and approved for disbursement, the credit staff must keep capital borrowing dossiers and other supplemented documents during observation duration of debt collection until the debt is fully repaid and transfer of documents archived as stipulated. Inspection after lending and debt recovery: After granting loans for customers, the tight inspection and observation on the customers of the bank shall reduce their needs and intentions of misusing the loans.

- Improve the quality of credit services with Six Sigma 29 process at Ocean Bank in Vietnam -

List of References
1. Craig Gygi,, Neil De Carlo, Bruce Williams, Stephen R. Covey, Six Sigma For Dummies, March 4, 2005, Wiley Publishing, Inc. Indianapolis, Indiana, USA. 2. Diane Ritter, Francine Oddo, Janet MacCausland, The Memory Jogger 2: Tools for Continuous Improvement and Effective Planning, Michael Brassard, March 16, 2010, GOAL/QPC, 12 Manor Parkway, Salem, USA. 3. Gerhard Plenert, Strategic Continuous Process Improvement, October 24, 2011, The McGraw-Hill companies, New York, USA. 4. George Eckes, Sandra Derikson Six Sigma Team Dynamics : The exclusive key to process John Wiley&Sons, Inc, Hoboken, New Jersey, 2003. 5. George Eckes Six Sigma for everyone John Wiley&Sons, Inc, New Jersey, 2003. 6. George Eckes General Electrics Six Sigma Revolution: How General Electric and others turned process into profits John Wiley and Son, Canada, 2001. 7. Lewis, M.A Analysing Organisational Competence: Implications for the management of operation International journal of Operations and Production management, 1999. 8. Mark O. George, The Lean Six Sigma Guide to Doing More With Less: Cut Costs, Reduce Waste, and Lower Your Overhead, February 8, 2010, John Wiley&Sons, Inc, Hoboken, New Jersey, USA. 9. Martin Mulder Creating Competence: Perspectives and Practices in Organisations Paper presented at AERA, New Orleans. Enschede: University of Twente. Faculty of Education Science and Technology, 2000. 10. Michael George - Lean Six Sigma for Service : How to Use Lean Speed and Six Sigma Quality to Improve Services and Transactions - The McGraw-Hill companies, June 27, 2003. 11. Michael L. George, John Maxey, David Rowlands, Mark Price - The Lean Six Sigma Pocket Toolbook: A Quick Reference Guide to 100 Tools for Improving Quality and Speed - The Mc Grow-Hill Companies, George Group, New York, USA, August 1, 2004 .

- Improve the quality of credit services with Six Sigma 30 process at Ocean Bank in Vietnam -

12. Michael Brassard, Diane Ritter, Francine Oddo, Janet MacCausland - The Memory Jogger 2: Tools for Continuous Improvement and Effective Planning -,GOAL/QPC, 12 Manor Parkway, Salem, USA, March 16, 2010 13. Mike Rother, John Shook, Jim Womack, Dan Jones - Learning to See: Value Stream Mapping to Add Value and Eliminate MUDA - The Lean Enterprise Institute, Inc, One Cambridge Center, Cambridge, USA, June 1, 1999. 14. Neil De Carlo, The Complete Idiot's Guide to Lean Six Sigma, Breakthrough Management Group, Penguin Group Inc. 375 Hudson Street, New York, USA. 15. Parahalad,C.K and G.Hamel The core competence of the corporation Harvard Business Review, May, June, 1990. 16. Peter S. Pande (et al), Robert P. Neuman, Roland R. Cavanagh - The Six Sigma Way: How GE, Motorola, and Other Top Companies are Honing Their Performance, Mc Graw-Hill, USA, April 27, 2000. 17. Phillip Slater, A New Strategy for Continuous Improvement: 10 Steps to Lower Costs and Operational Excellence, January 1, 2007, Industrial Press, Inc.989 Avenue of the Americans, New York, USA. 18. James P. Womack, Daniel T. Jones - Lean Thinking: Banish Waste and Create Wealth in your cooperation - Second Edition, a Division of Simon and Schuter, Free Press 2003.Inc, New York, USA. 19. Thomas Pyzdek, Paul Keller - The Six Sigma Handbook, Third Edition - McGraw-Hill companies, USA, September 21, 2009. 20. Richard Lynch, Kelvin Cross, Measure Up!: Yardsticks for Continuous Improvement, Second Edition, November 23, 1995, Blackwell Publishers Ltd, Oxford, UK. 21. Warren Brussee Statistics for Six Sigma make easy Mc Graw-Hill, New York, 2004. 22. Ocean Bank annual reports 2004/2006, The State bank of Vietnam, October, 2005.

- Improve the quality of credit services with Six Sigma 31 process at Ocean Bank in Vietnam -