LEAN and Six Sigma: time for a new strategy?

Is it time to re-evaluate LEAN and Six Sigma?

Many business process outsourcing (BPO) service providers have leveraged Six Sigma to optimize their operations. So can you.

Introduction: The concept of Six Sigma, as pioneered by Motorola in the manufacturing industry, was adopted by emerging BPO firms like GE Capital and American Express to elevate the performance of diverse processes. These organizations invested in training internal talent on Six Sigma methodology, conducted certification programs, aligned the certified resources to business units and thereby enhanced flow and discipline in the processes. The benefits derived from deployment of Six Sigma were perceived as the "perfect fit" to streamline processes. In fact, certified Six Sigma resources in GE Capital were considered "premium talent" and a pipeline to potential leadership roles.

In later years, many BPO providers, including captive and third-party units, jumped on the bandwagon by creating Process Excellence functions and churning out in-house "Belts" to fine-tune processes and gain efficiencies. The focus of Six Sigma initiatives in voice and non-voice processes was largely centered on minimizing defects, improving cycle time, reducing variations, and stabilizing process capability. Meanwhile, the concept of LEAN (a mapping tool that maps both material and information flows) started gaining momentum in GE when Jeff Immelt took over the leadership role. Since then, a combination of LEAN and Six Sigma has been leveraged by most BPO service providers to register productivity gains and improve customer satisfaction.

Today, the world has evolved and is increasingly moving to a dynamic state of ever increasing complexity. The networked and knowledge-based economy on a global level is challenging and adding new dimensions in offering services to a large pool of internet savvy customers. The advent and proliferation of social media along with the fast changing mobile telephony has morphed the World Wide Web into a large store that hawks multiple products. Add to that the emergence of multiple niche tools and platforms in voice and non-voice processes (examples range from customer management and cloud-based tools to scanning solutions to e-invoicing to Google analytics etc.), incorporating modules on data quality which seek to re-define the contours of managing and improving customer experience.

This prompts the following questions:

1. What are the new boundaries for Six Sigma?
2. How does Six Sigma re-position itself?
3. Does the discipline merit a self-evaluation, including the practices, standards, training methodology etc.?

Most advocates and Six Sigma professionals may dismiss these questions. Both LEAN and Six Sigma are continuous improvement methodologies with similar elements and tools and focused on diagnosis and cure. Both have flourished and thrived in an environment where productivity, predictability, conformance to rules and quality standards are of utmost importance. Yet we cannot escape the new reality where the rapidly changing technology enables process automations and efficiencies and is the new external interface.

Let us consider an example to advance this hypothesis. A customer places an online order for a mobile phone. There is a minimum turnaround time to ship the product to the customer. Meanwhile, a few hours later, the customer browses the website and changes his mind; he cancels the first order and books a new model. The customer posts his request on the website. The retailer has invested in smart back-end technology that monitors and alerts the touch points in supply chain to cater to the customer’s request. There are also other smart online tools that further segment customer requests, categorize the customers, provide forecast on stocks, and display dashboards on cycle time and successful delivery of the product and host modules to improve on the cost of poor quality.

For LEAN and Six Sigma professionals this journey would start by forming a project team, analysing data to identify the vital few, seeking solutions to overcome barriers, gaining stakeholder acceptance, and deploying the change implementation plan. The entire process might have expanded to a few months and customer management could have suffered till the change plan was a success.

However, the new multiple options bundled within today's technology stacks are re-engineering or transforming processes as well as clocking efficiencies in quick time. The ability to match up the speed and react to customer interactions is the new departure point to delight customers. An emerging trend of experimenting and deploying robotic automations in the service industry has the potential to re-define the very tenets of outsourcing.

While the old environment was based on conformance to rules and standards, the new environment is characterized by irregularity of customer behavior. The external interface, (to leverage Michael Porter's five forces strategy model) which is a critical input to shift to a new strategy, has changed. This needs to be duly recognized and evaluated by LEAN and Six Sigma professionals in order to promote customer excellence.

It's not just LEAN and/or Six Sigma that stands behind a "successful customer outcome" (to borrow a phrase from Steve Towers) in today's brand new environments. As a result, your Yellow, Green, Black and Master Black Belts need to stop, to pause, and to reflect on the best way forward.

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About the author:

Amarpreet Bhamra is business process management professional with around fifteen years of comprehensive and diverse work experience in business process outsourcing. He has held leadership roles in Service Delivery and Quality in reputed business process outsourcing firms like GE Capital, TATA Business Support Services, and Maersk Global Service Centers. Amarpreet is currently pursuing an Executive Program in Leadership and Management from Indian Institute of Management-Calcutta and is a certified LEAN Black Belt and Green Belt. He has completed his Advanced Diploma in Financial Management-Indian School of Business Management and Administration and holds two post graduate degrees in Communications-University of Hyderabad and English-Panjab University as well a graduate degree in English-Panjab University. amarpreet_tony@yahoo.com