NATIONAL WORKSHOP ON INNOVATIVE QUALITY PRACTICES PLENARY SESSION-I SIX SIGMA IN SERVICE SECTOR

delivered by

&

Dr. P. Balasubramanian, Ph.D. Founder & CEO, Theme Work Analytics, Bangalore Entrepreneur in Residence at Purdue University, USA

at M.S.Ramaiah Institute of Technology, Bangalore on March 10, 2008

balasubp@gmail.com

SIX SIGMA IN SERVICE SECTOR Services Sector consists of

Transportation, logistics and warehousing Wholesale and Retail Distribution Installation, Implementation and Maintenance

Financial Services such as Banking and Insurance Health Care Hospitality and Tourism Travel Consulting Services Information Technology Services Media & Entertainment Education & Training Government Services such as RTO. Registrar of Properties And more.

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Distinguishing characteristics of Service Sector

People intensive Process intensive Skill/Knowledge intensive

Hence Face the challenge of

Motivation and retention of staff Customer focus to maintain Performance and Quality Continuous Learning for Performance Improvement Knowledge sharing and knowledge management

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Six Sigma is a philosophy that underlies efforts to improve business performance and customer satisfaction
Using facts and data to eliminate waste and variation Eliminating activities that dont add value

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Six Sigma is
a Statistical measure of performance an aspirational goal for quality an approach and methodology for continuous improvement of quality

Performance is also a dimension of quality !

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6 Sigma = 3.4 defects per million 5 Sigma = 230 defects per million 4 Sigma = 6,210 defects per million 3 Sigma = 66,800 defects per million 2 Sigma = 308,000 defects per million 1 Sigma = 690,000 defects per million

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There is no known or documented Service Organization that has reached the Six Sigma level of quality ( 3 defects in million deliveries) anywhere in the world except the Mumbai Dabbawallas.

However Six Sigma Concepts and Methodology ,as a means to improve quality and Performance , are applicable in almost all organizations.

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Define Measure Analyze Improve Control the problem current process capability root causes of variability process capability to sustain improvements
Document As is Where is Processes Choose appropriate paths for improvement Implement, Monitor & Control

Set benchmarks Align Performance measures to Goals. Let PMs be measurable

Six Sigma in action

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WORK IS WORSHIP
Nutan Mumbai Tiffin Box Suppliers Association

Tiffin baskets weight: 75-80 kgs.

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Mumbai Dabbawallas
     

(NMTBSA)

History : Started in 1890 Charitable trust : Registered in 1956 Avg. Literacy Rate : 8th Grade Schooling Total area coverage : 60 Kms to 70 Kms Employee Strength : 5000 Number of Tiffin's : 2,00,000 Tiffin Boxes i.e 4,00,000 transactions every day. Time taken : 3 hrs

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The Flow Logic

Zones for destination Grant Road (12) Point of Aggregation And Sorting A B C D E Lower Parel (14) Churchgate (1-10)
1 2 3 4 5 6 7

Collection from home

Distribution By Carriers at lunchtime To offices

Coding System
VLP : Vile Parle (suburb in Mumbai)

9EX12 : Code for Dabbawalas at Destination EX : Express Towers (building name) : Floor no. : Code for Dabbawala at residential station : Code for destination Station eg. Churchgate Station (Nariman Point)

12 E

Dsouza

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Zero % fuel Zero % modern technology 99.9999% performance

Zero % investment Zero % Disputes 100 % Customer Satisfaction

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Working of NMTBSA

    

Error Rate : 1 in 16 million transactions

Six Sigma performance (99.999999) Technological Backup : Nil. Cost of service - Rs. 300/month ($ 6.00/month) Standard price for all (Weight, Distance, Space) Rs. 36 Cr. Turnover approx. [6000*12*5000=360000000 i.e Rs. 36 crore p.a.] No strike record as each one a share holder Earnings -5000 to 6000 p.m. Diwali bonus: one months from customers.

  

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SIX SIGMA IN SERVICE SECTOR Retention

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: Indian Industries
Aravind US/UK Hospitals 2500 to 3000 200 ? 4.4 % 9.0 % anemic

Aravind Eye Hospital : Madurai

Cost Per Operation in USD Cost of IOL in USD

50 to 100 5 800 2.0 % 8.0 % Very good

1. Process Mapping and Reengineering 2. Task specialization 3. Assembly Line set up 4. Young rural women recruited as paramedics 5. Rural Eye Camp is the source (1500)

No.of operations per day average Capsule rupture & Vitreous loss Corneal edema Profitability

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Embedding Six Sigma Concepts in e Business

e Business innovators Dell
Direct reach to end customers . Elimination of the Accounts Receivable function. Met specific needs of each customer. First Virtual Store with delivery functions. Inventory Aggregation Most successful market place for buyers and sellers to meet. Fair value determination of used and new goods. Buyer ,Seller assurance. First major product innovation in internet. Revolution in Marketing. Pioneering use of internet in e Governance. Malpractices killer Internet as a channel defines the Market Segment & its Marketing Strategy Agent less Sales leading to 20 % reduction in costs. Elimination of paper and paper work

Amazon.com eBay

Hotmail Bhoomi ICICI Bank Air Deccan

Embedding Six Sigma Concepts in e Business

Challenges facing the e Business innovators. They need Six Sigma approach
Issue Innovator Dell Profitability Quality of Service Market Growth Service level Differentiation Optimal mix

Amazon.com

e Bay

Hotmail

Bhoomi

ICICI Bank

Air Deccan

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Bus, Train or Air travel 1. Time taken to book a ticket 2. Timely departure 3. Over booking 4. Revenue realized per seat km 5. Safety

SIX SIGMA IN SERVICE SECTOR Banking Services 1. Wait time in the system 2. Time taken for a transaction 3. Channel flexibility 4. Timely alerts 5. Statement regularity

SIX SIGMA IN SERVICE SECTOR Software Services 1. Defects per 1000 lines of source code 2. Cost of Quality 3. Developer, Tester Productivity 4. Cost and Time over-run 5. Recruitment Effectiveness

SIX SIGMA IN SERVICE SECTOR Education, Training Sector 1. Measure of Faculty Performance Subject wise Batch wise (Full time, Part time, Distance Learning) 2. Variance Reduction vs Mean score 3. Attendance impact

Embedding Six Sigma Concepts in e Business

Can lead to rewriting business paradigms

          Do away with a complete function such as Accounts Receivable & collections Eliminate non value adding intermediaries Reduce finished goods inventory dramatically Meet the expectation of every customer Cross sell effectively Improve operational efficiency and effectiveness by leaps & bounds Reach current information swiftly to stakeholders for their optimal use Be a fair and impartial judge Improve transparency Reduce/ eliminate leakages

Study materials on the net, Examination & Assessment, Alumni Relationship Management are some key innovations in the Education Sector widely being adopted around the world.

NATIONAL WORKSHOP ON INNOVATIVE QUALITY PRACTICES SIX SIGMA IN SERVICE SECTOR Acknowledgement
Aravind Eye Hospital Slides and Information from Dr. Aravind Srinivasan, Administrator www.iimb.ernet.in/~review/DOCUMENTS/Aravind.pdf Dr. Usha Kim, MLOP ( Mid Level Ophthalmic personnel) www.aravind.org/education/coursedetails.asp?tmpcatcode=C000000091 Mumbai Dabbawalla Slides & information from www.geocities.com/hr_era/DabbawallasofMumbai.ppt

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Thanks and Best Wishes

Dr.P .Balasubramanian Founder and C.E.O., Theme Work Analytics, Bangalore, India, 560 041 balasubp@gmail.com Ph : 91 80 4121 4297

balasubp@gmail.com