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All Access Why YOU Need Lean Six Sigma – Part 5
The vital importance of Lean Six Sigma in non-manufacturing sectors
Lean Six Sigma’s importance should be familiar, given the volume of information about the application of Lean Six Sigma to the services, Health Care, and financial sectors.
Did you know that up to 50% of service cost is non-value-added work from your customer’s perspective?
In other words, about 50 per cent of the costs associated with delivering service of the things the customers do not want to pay for. The need to reexamine an application for completeness, the need to double-check whether an amount is correct, and the need to verify an account type are all activities that customers consider unnecessary, as they expect the work to be done correctly the first time.
Much of service work is invisible and invisible work is hard to improve.
This is particularly true of the service sector and supports the fact that the work being performed is not visible.
You may be working on data entry, making judgements on applications, or responding to customer requests online. These are all activities that do not involve visual observation of a product.
All you are doing is manipulating information and data on a customer application rather than, for example, observing the manufacture of a car or mobile phone.
It is far easier to identify the defects when you can observe, for example, a food blender as it goes to manufacturing, than when we process an application for Home Mortgage.
In the case of the mortgage, once the applicant triggers their request, the information is in the pipeline. It must pass through several silos within the organization before the response is delivered back to the customer.
Most often, there is minimal communication between the silos, so an application can easily get held up. The work environment must be made visible, either by process mapping or by the development of daily process metrics to identify improvement or risk reduction opportunities.
The end product or service-added value is typically just 10% of the time.
As an example of this poor 10% metric, imagine your organization is processing an application for a customer’s new health insurance policy. While processing the application, we only add a value of 5% to 10% of the time.
The other 90% plus of the time is considered waste and includes things such as checking, rechecking, waiting for information, waiting for approval, re-entering information, and all of these activities had added no value to the final product.
This 90% of the time is usually for our internal purposes such as regulatory and compliance, or because of our internal process structure in terms of system limitation, organizational structure, or poor process design, we have this inefficiency and redundancy.
The 80/20 rule is at work here!
Take a closer look at my diagram above as it highlights something vital for your organization – inputs/outputs, causes/consequences and effort/results.
Because it has always been so, we have got used to delays in the service sector. Examples are waiting for a debit card to arrive or a business owner’s line of credit renewal getting caught up in a paper shuffle.
The truth is that these delays do not have to be a problem, and the fact is that more than 80 per cent of delays are caused by less than 20 per cent of activities.
Read that again.
Think of the leverage that would give an organization because you can achieve far-reaching improvements by tackling a small segment of business processes. Also, you will know that competition is fierce and customers are more informed nowadays.
These two factors lead directly to a decrease in your customer’s loyalty.
Best-in-class and forward-thinking businesses will challenge their staff members and force them to make tough decisions based on data, not intuition or gut instinct.
Lean Six Sigma provides a platform that allows organizations to combat this hostile environment; it encourages an organization to listen to the customer’s demands and then use the information to change for the better.
Lean Six Sigma Masterclass – Everything you ever wanted to know about DMAIC
Boosting the core fundamentals of L6S
Lean Six Sigma takes the features of Lean ( speed), and combines them with Six Sigma (stability and accuracy). This Lean Six Sigma Green Belt Masters Series will teach you how to streamline processes, improve business performance and supercharge your career
