Six Sigma was first only applied in production and manufacturing industry. Here, the focus lies on removing or avoiding errors during manufacturing or assembly of a physical product in order to increase customer satisfaction and to reduce costs. Reducing costs and increasing customer satisfaction is not just of interest for production and manufacturing industry, but also for service industry such as banks, insurances or Internet service providers. Therefore, in this article I summarize how Six Sigma is applied in service industry.
Today, if you are looking at the Internet service providing market, you will notice many very similar products, which all have the same price tag. Some companies even just rebrand products of other companies and resell them with the exact same service conditions. In such a market, the service offering and the price tag itself are not a differentiator anymore. However, many customers of such products complain about poor customer support, problems while getting connected, billing problems, etc.
In case of banks and insurances, customers are also often more interested in service quality, because in recent years the product portfolio of banking institutes and insurances converged, too. Quality and time-to-execution becomes a key differentiator. Customers are not willing to wait several days to open a new bank account. Any operational errors are not acceptable in the banking domain at all. Here, a clear focus on quality is needed.
Practical experience shows that Six Sigma can be successfully applied in service industry to monitor and continuously improve processes, for example Llyods TSB and GE capital. In service industry, Six Sigma is usually not applied to ensure quality for all kinds of processes. Instead, it is used only for standardized processes with a high transaction volume. Typical examples are opening a new account at a banking institute or approving consumer loans. Another difference is that in production industry, Six Sigma is often combined with lean management methods, which does not necessarily happen in service industry.
In the end you can say Six Sigma is a tool for production industry and service industry to improve product and process quality. In the next article, I will show you how ARIS supports you in your Six Sigma effort.
