Measuring Six Sigma benefits on a regular basis is necessary because it is only then that a business will be able to assess the effectiveness of the ongoing Six Sigma implementation project. Keeping the project on the right track is vital for its success, and this is why businesses need to constantly monitor its progress.
Another reason is that deviations and errors can be fixed only if they are identified at an early stage; left unchecked, such discrepancies can easily lead to the termination of the entire project.
What To Measure
Six Sigma offers a wide range of benefits, so much so that it would not be feasible or productive to measure each and every component. This is why businesses need to concentrate their efforts only on those benefits that offer the most value. For example, direct financial benefits that accrue to the organization as a result of the implementations should be given preference.
For better results, businesses should make different assessments for different financial benefits that may include components such as cost reductions, cost avoidance, increase in capacity, revenue growth, retained revenue, improved investment income, and improved risk management.
Using individual assessment plans is necessary because only then will a business be able to identify the root cause that might be preventing the implementation project from achieving the set goals and objectives.
Opting for an overall assessment plan might be relatively easier, but should be avoided because then it would become quite difficult to identify root problems, if any.
Other Important Measurement Components
Another component that requires constant monitoring and assessments is the operational performance benefit that represents the improvements made in the overall efficiency of the organization. Measuring performance benefits is necessary because it indicates efficiency improvements of both the employees as well as the existing business processes.
To make things easier, businesses can select a few Key Performance Indicators (KPIs) and concentrate their efforts on measuring these rather than wasting their time on measuring each and every individual component. For better assessments, businesses need to keep updating their KPI list on a regular basis because overall efficiency being contributed by a business process may change with time.
Inability to do this may result in faulty measurements that may not represent the true state of affairs of the organization concerned.
Measuring Six Sigma benefits may not result in any direct monetary gains, but it is still important because it functions as an effective control system, allowing the management to assess the overall progress of the Six Sigma implementation project. This is why such measurements have now become an integral part of Six Sigma implementations and are increasingly being integrated into the overall management system existing in a business organization.
Without these measurements, ensuring the success of Six Sigma implementation projects will become virtually impossible.
Defects and Metrics
The Six Sigma metrics used in the manufacturing industries are equally useful for the service sector. The metrics will change as per the service processes. The appropriate selection of the process, qualitative as well as quantitative, in the use of Six Sigma is necessary.
For example, while developing a website, certain factors like site design, color schemes, user interaction and easy navigation need to be kept in mind. When Six Sigma concepts are applied to the site development process, all these variables will be examined for their effect on the customer - and the ones that need improvement will be determined. It is a bit like carrying out a simple improvement in the manufacturing process.
Defects in the service sector can be defined as the problem in the process that leads to low customer satisfaction. Thee defects can be characterized as qualitative and quantitative. When a defect is measured quantitatively, it should also be converted into equivalent qualitative measures and vice versa.
For example, if the customer satisfaction for a service is being measured qualitatively, then it should also be converted to quantitative as "satisfaction level" on a scale of 10. Below a certain level, the process needs improvement.
Another example is defining defects in quantitative measures, such as delivery services. For example, newspaper delivery has to happen before a certain time to be effective.
Measurements of Service Processes
Level of measurement: Using the appropriate level of measurement is very important for it to be useful and meaningful. For example, there may be 20 percent processes, which may be taking 80 percent of the total time of the project. When analyzing the qualitative measures, 20 percent of the customers may account for 80 percent of customer dissatisfaction (i.e. defects).
The measurement of key areas, in contrast to detailed study, is necessary to get the larger picture of the process defects.
Accounting for variations: In service processes there are large numbers of variations that may arise, depending upon the complexity of the given task. The measurement of the typical task has to be done, as well as for special cases or situations that arise.
Emphasize quantitative as well as qualitative measures: A proper mix of the qualitative and the quantitative measures is very important to get useful results. A retailer's process, which has more personal customer contact, needs to measure the qualitative steps of the process.
A company that provides services where speed is relevant needs to concentrate more on the study of quantitative measures.
Emphasize management communication and support: In a service-based industry such as insurance, the claims process may have to be measured. There are different groups of people affected by the process who may resist any change.
Management should communicate the relevance and effect of Six Sigma with the people involved to achieve the support for it.
As Six Sigma in service processes are linked to customer satisfaction ultimately leading to increase in sales, the need to measure and improve these processes is important.
Tony Jacowski has sinced written about articles on various topics from University, Six Sigma and Information Technology. Tony Jacowski is a quality analyst for The MBA Journal. Aveta Solution's Six Sigma Online offers online and certification classes for lean six sigm. Tony Jacowski's top article generates over 90500 views. to your Favourites.