Service Process

Improvement
MD254
Service Operations
Professor Joy Field

Foundations of Continuous
Improvement

Customer satisfaction
Focus on customer needs
Management by facts
Formal data gathering and statistical
analysis
Respect for people
Assumptions about employees
Customers as co-producers
Support and engagement

Plan-Do-Check-Act (PDCA) Cycle

Plan

Do

Implementing the process change on a trial basis and

collect data on performance measures

Check

Documenting the current process, selecting the

problem, determining possible root causes, and
developing an action plan

Review and evaluate the effect of the change

Act

If the experiment is successful, standardize the process

change, provide training on the new process, and codify
learning from the improvement process

Basic Tools for Quality and

Productivity Improvement

Check sheet
Run chart
Histogram
Pareto chart
Flowchart
Cause-and-effect diagram
Scatter diagram
Control chart

Process Improvement Challenges

in Services

High input and process variation

Poor tracking of flow, especially of customers in the

process

Customers cannot be treated like inventory

A tradition of individuality and employee discretion

Lack of meaningful data and data-based decisionmaking

Variation reduction is a more complicated and sensitive

issue than in manufacturing

Quality metrics are often subjective (although time is an

example of an objective metric in transactional services)

Employees and customers cannot be controlled

like machines

Six Sigma for Services Principles

Six Sigma:

Emphasizes the need to recognize high-impact, financially

quantifiable opportunities and eliminate defects as defined by
customers
Recognizes that variation hinders the ability to reliably deliver
high-quality services
Requires data-driven decisions using a comprehensive set of
quality tools
Provides a highly prescriptive cultural infrastructure for aiding
implementation
When implemented correctly, promises and delivers $500,000 of
improved operating profit per Black Belt per year

The Define-Measure-Analyze-Improve-Control (DMAIC)

improvement process used in Six Sigma is analogous to the
PDCA cycle

Six Sigma Organization Roles

and Responsibilities
Own vision, direction,
integration, results
Lead change

Executive

Champion

Project Member

All employees

Green Belts

Understand vision
Apply concepts

Project owner
Implement solutions
Black Belt managers

Master Black
Belts
Full-time
Train and coach Black and Green Belts
Statistical problem solving experts

Part-time
Project-specific

Part-time
Help Black Belts

Black Belts
Devote 50%-100% of time to Black Belt activities
Facilitate and practice problem solving
Train and coach Green Belts and project teams

Sources of Variation in Services

Customer introduced variability

Arrival variability
Request variability
Capability variability
Effort variability
Subjective preference variability

Internal process variability

Process design
Employees
Equipment

Reduction of Variation in Services

Due to the involvement of the customer in the service process

and the more intangible nature of service products, services tend
to have more uncertainty (i.e., variation) than manufacturers.

Process standardization in services often involves defining a

framework for action and customer interaction rather than a rigid
sequence of steps. Any standard that causes failure demand
(e.g. strictly limiting the length of customer service calls) is an
inappropriate application of variation reduction.

Standard operating procedures provide a basis for evaluating

service processes and assessing the impact of process changes.

Many service processes can be more standardized than they

currently are, making services more efficient and effective (e.g.
best-practice bundles in healthcare, separate processes for high
and low complexity services such as insurance applications and
grocery store checkout, Mandarin Orientals LQEs).

Lean Services Principles

The lean approach to process improvement

includes:

A focus on customers (both internal and

external)
Maximizing process velocity (i.e., flow)

Tools focused on analyzing process flow and delay

times at each activity in a process

Eliminating waste

Separating value-add from non-value-add and

addressing the root causes of non-value-add
activities
Reducing unnecessary complexity and its costs

Throughput Time and Process

Speed
Amount of work - in - progress

Littles Law: Throughput time

Average completion rate

Throughput time is the amount of time an item (e.g.

customer) takes to complete the process
Work-in-process is the number of items in progress
Average completion time is the number of items
completed per unit time
If two of the three quantities are known, the other two
can be calculated
Increasing process speed requires either reducing the
WIP or increasing the completion rate

Services Wastes

Overprocessing

Transportation

Any delay between when one process step/activity ends and the next
step/activity begins

Defects

Any WIP in excess of what is required to produce for the customer

Waiting time

Needless movement of people

Inventory

Unnecessary movement of materials, products or information

Motion

Trying to add more value to a service than what your customers want
or will pay for

Any aspect of the service that does not conform to customer needs

Overproduction

Production of outputs beyond what is need for immediate use

Lean Six Sigma for Services

Lean Six Sigma combines the emphasis on

maximizing flows and reducing waste from
Lean with variation reduction and an
organizational infrastructure and specific
improvement process from Six Sigma.
Lean Six Sigma for services focuses on
improving the customer experience and
service outcomes by addressing poor flow
and excess waste and variation in the service
delivery process for both the firm and
customer co-producers.

Lean Six Sigma DMAIC Tools

(Lean tools in bold)
Define
Project selection
tools
PIP management
process
Value stream map
Financial analysis
Project charter
Multi-generational
plan
Stakeholder
analysis
Communication
plan
SIPOC map
High-level process
map
Non-value-added
analysis
VOC and Kano
analysis
QFD
RACI and quad
charts

Measure
Operational
definitions
Data collection plan
Pareto chart
Histogram
Box plot
Statistical sampling
Measurement
system analysis
Control charts
Process cycle
efficiency
Process sizing
Process capability

Analyze
Pareto charts
C&E matrix
Fishbone diagrams
Brainstorming
Details As-Is
process maps
Basic statistical tools
Constraint
identification
Time trap analysis
Non-value-added
analysis
Hypothesis testing
Confidence intervals
FMEA
Simple & multiple
regression
ANOVA
Queuing theory
Analytical batch
sizing

Improve
Brainstorming
Benchmarking
TPM
5S
Line balancing
Process flow
improvement
Replenishment pull
Sales & operations
planning
Setup reduction
Generic pull
Kaizen
Poka-yoke
FMEA
Hypothesis testing
Solution selection
matrix
To-Be process maps
Piloting and simulation

Control
Control charts
Standard operating
procedures (SOPs)
Training plan
Communication plan
Implementation plan
Visual process
control
Mistake-proofing
Process control
plans
Project
commissioning
Project replication
Plan-Do-Check-Act
cycle

Examples of Lean Six Sigma Tools

Poka-yoke (mistake-proofing)

A poka-yoke device is a simple, often inexpensive, device that

prevents employee and customer mistakes from becoming
defects (e.g. e-commerce order forms, hospital wrist bands,
spellcheckers).
A poka-yoke device undertakes 100% automatic inspection and
prevents defects and/or stops or gives a warning when a defect
is discovered.
Poka-yoke steps include: elimination (possibilities for accidents
or errors are eliminated), replacement (replacing human actions
by automated actions for safety and error reasons), facilitation
(make the work easier to carry out and less error prone),
detection (identifying mistakes before they become defects), and
mitigation (reduce the effects of an error).

Design of experiments (DOE)

DOE is a method for simultaneously investigating anywhere from

a handful to dozens of potential causes of variation in a process.
Experiments are conducted by varying a number of factors
according to a statistically-based plan.