Relevance and Application of Six Sigma in Services Sector

 | April 09,2010 02:04 pm IST

Context

For any economy, the ultimate stage of evolution is its majority of the revenues coming from services. On a cursory observation, it can be seen that Indian economy structure is slowly moving towards the same stage.

Today services sector constitutes almost 50% of the total GDP. Forces of globalization like increasing mobility of factors of production or pervasion of the communication technologies have enabled growth of the sector.

 

However, services have its own idiosyncrasies owing to which achieving the desirable quality is totally different from manufacturing. Few of them include additional dependence on human skills & knowledge, and variation in service delivery due to the interplay of the various human variables. In such a scenario, relevance and application of six sigma principles to achieve customer delight becomes all the more high.

 

Scope of the Paper

This paper specifically pins the areas in services where six sigma principles can be applied to attain those elusive high improvement figures because of the increased intangibility in these areas. It also risks touching upon the issues relating directly to marketing angle of the services’ operations. Finally, it restricts to the 'define' phase for area of applicability as right initiation and definition is half the work. Rest of the six sigma process is almost mechanistic and, therefore, not discussed in detail.

 

The Services Sector

About the Services

Services industry is typically characterized by perishability and variability of its product, i.e., the benefit bundle. Due to the intangibility factor of the services, customer satisfaction is difficult to judge and measure. On top of this, human resources make up a large part of all service organizations, and the human element in serving the customers adds to the variability and unpredictability in the overall delivery.

 

Lastly, to continue improvement on the services, most organization grapple with the issue of efficient knowledge management. This is critical in view that business processes need to be mature to design the service and to deliver the customer.

 

Finding the Gaps: Servqual Revisited

One of the frameworks used to evaluate the gaps between the delivered and expected quality of service is one given by Parasuraman et al in 1988. Following is a brief of various sources of gaps: -
 

Gap 1: Customers' expectations versus management perceptions as a result of the lack of a marketing research orientation, inadequate upward communication and too many layers of management.
 

Gap 2: Management perceptions versus service specifications; as a result of inadequate commitment to service quality, a perception of infeasibility, inadequate task standardization and an absence of goal setting.
 

Gap 3: Service specifications versus service delivery as a result of role ambiguity and conflict. Poor employee-job fit and poor technology-job fit, inappropriate supervisory control systems, lack of perceived control and lack of teamwork.
 

Gap 4: Service delivery versus external communication as a result of inadequate horizontal communications and propensity to over-promise.
 

Gap 5: The discrepancy between customer expectations and their perceptions of the service delivered as a result of the influences exerted from the customer side and the shortfalls (gaps) on the part of the service provider. Customer expectations are influenced by the extent of personal needs, word of mouth recommendation and past service experiences.
 

Gap 6: The discrepancy between customer expectations and employees’ perceptions; as a result of the differences in the understanding of customer expectations by front-line service providers.
 

Gap 7: The discrepancy between perceptions and management perceptions as a result of the differences in the understanding of customer expectations between managers and service providers.

 

   

 

What is difficult regarding quality in services? It is objective, meaningful and relevant data collection (especially of key performance indicators), as we will shortly see that if the collection is also done corresponding to the gaps, it is worthwhile the efforts for six sigma and have significant and relevant impact on quality improvements.

 

The Service Encounter

In services, there are three interactions levels, viz., Customer-Organization, Employees-Organization and Employees-Customer. The five dimensions on which customer will in general weigh the service are: -
 

Tangibles: Physical facilities, equipment and appearance of personnel.
Reliability: Ability to perform the promised service dependably and accurately.
Responsiveness: Willingness to help customers and provide prompt service.
Assurance: (Including competence, courtesy, credibility and security) Knowledge and courtesy of employees and their ability to inspire trust and confidence.
Empathy: Including access, communication understanding the customer caring and individualized attention that the firm provides to its customers.

 

How to manage knowledge gained in serving the customers? And how this should effectively be utilized to train new inducts so that service quality is unaffected and remains unchanged in the perceptions of the customers inspite of new recruits?

 

Core Issues

The main difference between services and manufacturing is that in service delivery, the main factor used is specialized labor instead of machines. Due to this very reason, expectation of standardization or exact replication of the delivery is completely utopian. Also, as it happens in manufacturing, most of the key performance indicators of quality are quantifiable, whereas in services, it might be difficult to objectively do so if not impossible. So, how do we ensure the uniformity in service delivery to the customer? How do we introduce element of tangibility and, hence, measurability in the quality management?

 

These are a few questions that need to be answered if we are to solve the puzzle of the service quality measurement as glibly as it happens in manufacturing. As we will see in subsequent sections that how uncertainty regarding the services’ quality definition and measurement can be reduced naturally with six sigma method of improvement.

 

Six Sigma Revisited

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