Introduction

An interesting thing happened after the publication of my previous book, Lean Six Sigma: Combining Six Sigma Quality with Lean Speed. People could easily grasp the need for Lean Six Sigma, and its fundamental truth: quality improves speed and speed improves quality. But I heard one question over and over again: How do I apply Lean Six Sigma to a service organization?

When I looked over the content of that book, I had to admit that I and my co-writers had fallen into a trap that has hobbled many Lean and Six Sigma consultants: though we had included examples of applying Lean Six Sigma in services, by and large they were discussed using a jargon that has arisen from manufacturing roots. This jargon, especially for Lean, has made translating the methods to service environments more difficult than it has to be.

This book breaks that paradigm: almost all the applications of Lean and Six Sigma are for services and transactions. The case studies demonstrate how Lean Six Sigma can be used in service organizations just as effectively as in manufacturing—and with even faster results. Here for the first time, you'll read about how classic Lean tools, such as "Pull systems" and "setup reduction," are being used in procurement, call centers, surgical suites, government offices, R&D, etc. (Those who want shopfloor manufacturing applications of these topics can find examples in Lean Six Sigma.)

During the journey that has produced this book, I've been impressed by the range of people I've met doing extraordinarily fine work in improving service functions and entire organizations using Lean Six Sigma methods.

Take Karen Rago, for example. She's been in the medical field for more than 25 years, starting out as a nurse and rising to vice president at Stanford Hospital and Clinics before moving to the University of California at San Francisco. She has only recently become aware that her work in reducing the complexity related to surgical supplies and improving patient "flow" through the hospital was groundbreaking.

And then there's Myles Burke. He's a Master Black Belt at Lockheed Martin and one of my principal collaborators on this book. Though he comes from a manufacturing engineering background, his application of Lean Six Sigma in procurement operations has helped elevate the very nature of the buyers' jobs at Lockheed Martin.

I think Mike Fischbach, Darryl Greene, and a host of others from Bank One—including their inspirational leader, Lew Fischer—are creating an industry standard in how to use Lean Six Sigma as a strategic business tool. They are routinely cutting 30–80% of the wasted time and costs from their operations and providing a model for the whole organization.

All of these people and their organizations were impressive, but it's the city of Fort Wayne, Indiana, that really amazed me—perhaps because I, like most people, had low expectations when it came to government services of any sort. Once you know that Mayor Graham Richard has spent more than a decade living and breathing "quality" in its many manifestations, it probably isn't surprising to know that he walks the talk. What's really intriguing are the dozens of city employees who are reducing lead times, streamlining processes, providing better quality service to citizens, and holding down costs.

You'll hear more about each of these organizations and their employees in this book, along with numerous case studies describing how they've been able to achieve their impressive results.

Why a Book for Service?

"Service" in this context encompasses both service organizations (healthcare, banking, government, retail) and the service infrastructure in both service and manufacturing organizations (marketing, sales, accounting, hiring, production control, engineering, R&D, and so on). In short, everything except "the making of goods and articles by hand or especially by machinery" (that is, the direct manufacturing processes). Why is a book needed for these applications in particular?

One reason is because of the huge opportunity. Empirical data have shown that the cost of services are inflated by 30–80% waste—that is, the processes are riddled with activities that add no value from the perspective of the customer.

Here's another reason why a book on service is needed: because service functions really need Lean Six Sigma tools, data skills, and process thinking. The manager of a marketing call center claimed his 40 telephone marketing people were not productive because half the incoming calls were misdirected calls unrelated to marketing. Data showed that in fact only a third of the incoming calls were misdirected, but, more importantly, they consumed less than 5% of the call center's time. This manager would have to find other improvement opportunities to find something with a significant payback in terms of increasing customer contact time.

Service departments have little or no history of using data—in fact, needed data may not exist, and most service people are not as "numerically literate" as some of their manufacturing counterparts. But this is no obstacle to success. Lean Six Sigma for Service shows how easy it is to get started with relatively simple statistical and Lean tools that can effectively remove cost and delays from processes. Learning how to capture the important data within a service process gets you more than halfway to substantial Lean Six Sigma results.

And here's a final reason for this book: because of the factors just listed, service functions have a harder time applying Lean and Six Sigma principles and tools. The manufacturing roots of Lean and Six Sigma have made it unclear how to apply these tools to services, and this book makes that translation. For example, you'll find descriptions in Chapters 2 and 10 of one of the most important Lean tools for accelerating the speed of a process: the Four Step Rapid Setup Method. In manufacturing, this tool is used to reduce the changeover time from producing product A to product B. Many people in a service environment aren't aware that they have "setup" time and have no idea how the concept applies to their

process. But Lockheed Martin's System Integration Business Area (SIBA) MAC-MAR procurement center credits this tool with being a key enabler for cutting procurement costs by 50%—and this is a place where people sit at computers and talk on the phone the majority of the time.

What Lean Six Sigma for Service Can Do for You

This book provides real-world examples from situations where the critical determinants of quality and speed are the flow of information and the interaction between people. Here are some other important features of the book that will make reading it worth your while:

1) Discover how to apply Lean tools to achieve greater speed in service processes. Many books claim that Six Sigma can reduce cycle times and make the company more responsive and faster. This is merely wishful thinking unless Lean tools are integrated within Six Sigma—a statement based on a combination of theory, empirical observation, and data, all of which you'll see in Chapter 2. Lean principles, such as the need to improve process speed, apply to all processes in an organization. This book discusses Lean principles, not Lean manufacturing. It provides the necessary analytical framework needed to apply Lean to any process.

2) Discover how to integrate Lean and Six Sigma. Few books address Lean Six Sigma as an integrated methodology applied to service applications, and none to our knowledge show that Six Sigma and Lean must be applied side by side, not as independent improvement or "first one then the other" approaches. The fact is that Six Sigma is limited to process quality tools and does not have the process speed tools. Nowhere was this made more evident than by Jack Welch's famous assessment of the shortcomings of the Six Sigma implementation at GE, which initially contained no Lean. After three years he lamented:

"We have tended to use all our energy and Six Sigma science to move mean [delivery time] to…12 days. The problem is, 'the mean never happens,' and the customer is still seeing variances in when the deliveries actually occur—a heroic 4-day delivery time on one order, with an awful 20-day delay on another, and no real consistency…Variation is evil."

Similarly, Lean does not possess the tools to bring a process under statistical control, nor does it define a sustaining infrastructure or emphasize customer focus as does Six Sigma. Thus, achieving the goals of your enterprise—ultimately to improve Return on Invested Capital (ROIC) by gains in customer satisfaction and waste reduction—requires both Lean and Six Sigma.

3) See how you can use shareholder value to drive project selection—without needing an MBA. Most experts will tell you that Lean Six Sigma reaches its full potential only when projects are linked to the CEO's strategic objectives and used to drive the most basic of business goals, such as shareholder return. Yet most books on Lean or Six Sigma do not even have metrics like ROIC and Net Present Value (NPV) in the index. They are written by very competent quality or manufacturing specialists whose experience is remote from the challenges faced by a CEO. This book brings these metrics and the underlying methods within the capability of managers, Champions, and Black Belts who often lack an MBA or other financial training. The result: The CEO's strategy drives tactical execution through Lean Six Sigma.

4) Discover how Lean Six Sigma can cut costs by reducing complexity. The internal and external diversity and complexity of your services/products is a major cost cutting opportunity for all organizations. Reducing the cost of complexity adds a third dimension to Lean and Six Sigma in opening new vistas for higher growth of ROIC. The quantitative value of complexity reduction versus traditional process improvement is presented in this book for the first time (see Chapter 5, which discusses methods for reducing complexity).

Structure of Lean Six Sigma for Service

This book is intended both for those who have never heard of Six Sigma or Lean as well as those who might already be using one or both of these methods:

Part I: Using Lean Six Sigma for Strategic Advantage in Service makes the case that Lean Six Sigma is an essential tool for driving shareholder value, and all that entails (such as increasing customer satisfaction, and simultaneously improving quality, speed, and costs, not to mention reducing complexity).

Part II: Deploying Lean Six Sigma in Service Organizations describes the basic elements of successful deployments. It include insights from corporate leaders who have already "walked the talk," which will accelerate your own journey.

Part III: Improving Services shows how Lean Six Sigma methods and tools work in service applications in the real world. It includes several chapters on using DMAIC effectively on existing processes (including numerous frontline case studies) and one on using Design for Lean Six Sigma to invent new services/processes.