THE_EFFECTIVENESS_OF_SIX_SIGMA_IN_SERVICES_SECTORS-libre.pdf

Nottingham University Business School

MBA Programme

[OPERATIONS MANAGEMENT (N14M18)]

THE EFFECTIVENESS OF SIX SIGMA IN SERVICES SECTORS

HEALTH CARE SECTOR APPROACHES

[Racha Zohour Adi]; Student ID: [013142]

[Nishant Chand]; Student ID: [014153]

Original Copy [1]

Word Count: 4,269 (Excluding Table of Contents and References)

Operations Management (N14M18) | The Effectiveness of Six Sigma in Services Sectors: Health Care Sector Approaches

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Table of Contents

Table of Contents .................................................................................................................................... 2

Introduction ............................................................................................................................................ 3

Overview of Six Sigma: ............................................................................................................................ 3

Why Applying a Quality Management Tool is Necessary in the Service Industry? ..................................... 5

Why Choosing Six Sigma over Other Quality Improvement Methodologies? ............................................ 6

Six Sigma Implementation Methodologies in Service Processes: .............................................................. 7

I. DEFINE PHASE: ........................................................................................................................ 7

II. MEASURE PHASE: .................................................................................................................... 7

III. ANALYSIS PHASE: .................................................................................................................... 8

IV. IMPROVE PHASE: ..................................................................................................................... 8

V. CONTROL PHASE: .................................................................................................................... 8

Challenges in the Proposed Methodology: ............................................................................................... 9

How to Implement Six Sigma Successfully? ............................................................................................ 10

Upper Management Support and Involvement : ........................................................................ 10

Training :.................................................................................................................................... 11

Tools : ........................................................................................................................................ 11

Six Sigma in Health Care Sector ............................................................................................................. 12

Application in Health Care ................................................................................................................. 15

Selected Samples of Six Sigma Applications in Healthcare Sector: .......................................................... 17

Decreasing Waiting Time before Surgery.................................................................................... 17

Improving MRI Image Quality ..................................................................................................... 19

Decreasing Unnecessary Laboratory Tests .................................................................................. 20

Reducing Catheter Infection ....................................................................................................... 21

Conclusions: .......................................................................................................................................... 23

References ............................................................................................................................................ 24


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Introduction

In order for any organization to achieve a competitive advantage, it has to firmly adopt quality management as the most essential strategy. Total quality management TQM, Statistical quality control SQC, and Zero defects were the traditional quality methodologies until Six Sigma has been introduced. (Nonthaleerak and Hendry, 2005).

Since 1986 when first introduced and promoted by Motorola and then recognized and adopted by major corporates such as GE (General Electric) in the mid-1990’s.

Six Sigma received high recognition and spread exponentially through manufacturing industries because it enabled organizations to measure defects in units, however, until now Six Sigma implementation in service industries is limited and inadequate. The basic argument related to this limitation in implementation is the intangibility and the unmeasurably nature of the service processes, therefore these processes are not flexible to be improved using the Six Sigma methodologies. But in the recent years, and in a rebuttal to this argument, Six Sigma has been approved as an effective approach for quality improvement in service sectors especially at healthcare and financial services. (Hensley and Dobie, 2005). In this research project, the literature of definition and methodologies of Six Sigma are being exhibited, and an analysis of the need of Six Sigma in service industry over other quality management tools is presented with implementation tools and techniques, benefits, challenges and limitations with particularities in research on healthcare as a sector case study, finally, recommendations are given based on the sector challenges analysis.

Overview of Six Sigma:

The term (Sigma) refers to a scale of quality measurement in any processes such as manufacturing, and by using this scale, Six Sigma equates to 3.4 defects per million opportunities (DPMO).

There are numerous definitions of Six Sigma in literature; it is frequently defined as a methodology for quality improvement with the goal of reducing the number of defects to 3.4 units per million opportunities or 0.0003%.

It is a statistics based approach, which aims to isolate sources of errors and identify ways to exclude them.

In a business context, Six Sigma can be defined as:

A business strategy used to improve business profitability, to improve the effectiveness and efficiency of all operations to meet or exceed customer needs and expectations (Kwak and Anbari, 2006).


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Minitab terms Six Sigma as an information-driven approach to decrease waste, improve customer satisfaction along with improving processes with focusing on measurable financial results (Goh, 2002)

In contrast with three sigma, where ±3σ accepts a defect rate of 2.7/1000 or 2,700/1,000,000 opportunities. Six-Sigma ±6σ allows a 1.5σ 25 lateral alteration in the process average. The outcome is a dramatic narrowing for acceptable defect rate target to 3.4/1,000,000 opportunities. It has a rate of improvement of 70% or better. The below table shows the percentage of eliminating defects in sigma levels:

Sigma level Defects per million Defects percentage 1 691462 69% 2 308538 31% 3 66807 6.7% 4 6210 0.62% 5 233 0.023% 6 3.4 0.00034% 7 0.019 0.0000019%

Table 1: the levels of sigma DPMO

To statistically visualize the concept of defect reduction in six sigma, the below Figure illustrates the range of accepted shifts in six sigma

Figure 1: Defective items can be minimized by maintaining 6 standard deviations (6 “sigmas”) between the processes mean average and its upper and lower specification limits – Source:

<http://www.goleansixsigma.com/>

Six Sigma is an operating tool driving towards quality and organizational excellence and can be beneficially shared by customers, employees, suppliers and stakeholders. It can also be termed

http://www.goleansixsigma.com/wp-content/uploads/2012/02/infographic_sixsigmastatistic.png


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as a customer strained methodology, which aims at raising quality, limiting waste and improving financial performance of the organization (Chua, 2001)

Why Applying a Quality Management Tool is Necessary in the Service Industry?

The researches and statistics showed that most service processes such as in banking, healthcare or call centre have a performance with a defect rate of over 23,000ppm or yield 97.7 per cent which equals less than 3.5 sigma quality level with a (Yilmaz and Chatterjee, 2000). This affects the financial revenues dramatically. If the sigma level in quality has been improved to higher level it will have a significant positive affect on the organization’s financials, for example, there will be a significant drop in the defect rate to 6,210ppm if the process level has been enhanced just to four sigma (By reducing the defect rate, the number of customers’ complaints will be reduced and the level of satisfaction will be elevated),

It is powerful to promote the Six Sigma thinking to service industries by explaining the three primary ideologies of statistical thinking promoted by Hoerl and Snee (2002). Which are:

1) Work takes place in a system of intersected processes 2) Processes are exhibited to variability 3) Data generated from these processes will explain the variability which has happened and

it is our obligation to recognize the sources of variability and then develop effective schemes to decrease or exclude variability

When espousing Six Sigma by a service sector company, it will result the following benefits (Jiju Antony, 2006)

Improving service quality will gain better customer satisfaction and loyalty relying on data-driven framework will generate effective decisions by top management harmonising internal operations by spreading information and awareness of many tools

and practices will lead to employee job satisfaction and consequently to more profitability and better market position

eliminate non-value added operations will result in faster service delivery unifying service level to be consistent and more predictable, transform the mind set in the company to proactive thinking Enhanced cross-functional teamwork through the organisation.

The below table (table 2) can describe some areas where Six Sigma can be implemented in diverse services sectors: (Jiju Antony, 2006)


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Service sector Areas where Six Sigma can be implemented Airlines Number of mistakes in reservations, number of

lost baggage’s, waiting time in boarding check in counters

Accounting and Finance Inaccurate reporting of financial operations, payment and invoicing errors

Banking Number of ATM machines malfunction, wire transfer errors

Healthcare Number of errors in medical operations, waiting time at the reception, number of wrong diagnoses

Table 2: Examples in Services Sectors Functions Where Six Sigma Can Be Implemented- (Jiju Antony, 2006)

Why Choosing Six Sigma over Other Quality Improvement Methodologies?

There are aspects of Six Sigma approaches which are not emphasized in other traditional quality improvement methodologies such as: (Jiju Antony, 2006)

1. Six Sigma scheme unprecedentedly stresses on the importance of top management and leadership commitment to generate successful implementation.

2. Six Sigma has the human infrastructure from green belts to master black belts to deploy the processes and lead the project into success in a harmonic implementation by practitioners.

3. As a problem solving methodology, Six Sigma integrates human elements such as cultural change, and process elements of development.

4. Six Sigma employs the perception of statistical thinking and embraces statistical tools for defect decrease through process inconsistency reduction methods (e.g. the tool of statistical process control SPC).

5. Six Sigma strictly focuses on achieving financial revenues to the organization. 6. Every tool in Six Sigma has its own precise role which plays as a vital factor in the

success or failure of the project.

Total quality management TQM which is the traditional and widely used quality management initiative share some important elements of Six Sigma such as focusing on customer and using statistical and financial data for problem solving, but there are multiple differences shows Six Sigma as a more powerful methodology than TQM, such as the management style in TQM is a bottom up while in Six Sigma is a top-down leadership, the measurement of outcome as financial


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concerns is missing in TQM while it’s the strongest aspect of Six Sigma, the role of leadership is weak in TQM while its very much emphasized in Six Sigma. (Jiju Antony, 2006)

Six Sigma Implementation Methodologies in Service Processes:

According to (Jiju Antony, 2006), In order to solve a problem, Six Sigma follows a pattern of well-defined steps. The steps are termed as DMAIC process: 1. D: Defining the problem. 2. M: Measuring the problem. 3. A: Analysis of the data. 4. I: Improvement in processes. 5. C: Controlling and regulating processes to stop errors.

I. DEFINE PHASE: The steps that constitute Define Phase are as follows:

The problem must be defined both in a nutshell and with an overview. The partners are needed to be identified.

Understanding the link of the concern or issue and its importance from point of view of the customer.

To carry out a grading process in both the ways to determine the root cause of the problem.

The controlling of the processes for controlling the input and outputs. Forming of a project framework which clearly mentions roles and responsibilities of

employees. It should also mention resources required and time period of completion. The framework should also show limitations and benefits to both employees and customers.

Finding the funding source and shareholders and also check with cost-benefit test if it is really worth it.

Analyse and determine all the customers and find a relation of problem with customer satisfaction.

II. MEASURE PHASE: When practising Six Sigma, the below points should be considered in the measurement phase:

Evaluate and document the current performance level of the process.

It is important to determine on what to measure and how to measure.

Focussing on simple measurement and calculating tool. Studying on how well our process performs in comparison to other tools present.


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Discovering and selecting strengths and weaknesses to find out areas of improvement. III. ANALYSIS PHASE: The below critical points should be looked at this phase:

Display the integral root cause of glitch in the process.

Understanding the root cause which results in defects and formulate them for further research.

Finding the nature, characteristics and patterns of available data. Determining the crucial process of service and showing them with financial benefits, i.e.

on how the cost would be reduced. IV. IMPROVE PHASE: The phase of improvement constitutes of below issues:

Development of impeccable solutions to fix glitches and preventing them from happening again.

Measuring the impact of every solution by using a proper matrix of criteria and decision.

Tools which result in high customer satisfaction and root level savings to the company need to be examined as to how cost, time and manpower would be incurred to run it.

Measure the risk associated with every alternative.

Documenting and proving improvement is an important aspect before implying Six Sigma.

Timely evaluation of effect of every solution is critical.

V. CONTROL PHASE: The aspect of controlling phase should include the following:

Establishing efficient plan and actions in order to sustain new process performance level.

Development of new processes and methods for long term benefits.

Setting up processes for control and measuring the efficiency of the tool.

Finding an owner of a process and framing his role. Research and authenticate profits and cost savings.

Documentation of new process is of high importance.

Closure of the project, documenting key lessons learnt. Publication of internal and external reports

The below diagram illustrates the interaction between phases in DMAIC methodology: Six sigma for service processes Jiju Antony Division of Management, Caledonian Business School, Glasgow Caledonian University, Glasgow, Scotland, UK, Business Process Management Journal Vol. 12 No. 2, 2006 pp. 234-248 q Emerald Group Publishing Limited


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Figure 2: DMAIC Methodology-(Jiju Antony, 2006)

Challenges in the Proposed Methodology:

There are various challenges which arise while implementing Six Sigma using the DMAIC methodology in Service Industry such as:

a) The prime challenge is of customer satisfaction being high. b) The customer’s needs differ from one to another. c) The volume the company can expect would be unpredictable. d) Even the nature of work is uncertain. e) The appropriate inf0rmation about quality might be less. f) The factors and indicators to measure quality might be less. g) The absence of firm quality tool might be a challenge

The below table discusses these challenges and the phase they occur in with providing solutions within the DMAIC Methodology:


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Table 3: Overcoming the challenges of implementing Six Sigma in service industries, (Mohammad Abdolshah, Md. Yusof b. Ismail and Tang Sai Hon, 2009)

How to Implement Six Sigma Successfully?

The various elements necessary for successful Six Sigma implementation are as follows:

Upper Management Support and Involvement :

Many organizations admit that involvement of the management is one of the most crucial factors in success of successful implementation of Six Sigma. A head manager of US$1.2 billion firm claims that Six Sigma is a part of every discussion and it performance are discussed with his boss on a daily basis.' (Paul, 1999).


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For GE, it can be said that the secret to success has been the management. GE can easily claim that success of Six Sigma has been driven by upper management. The perception of its employees towards quality has been supported and controlled by them by restructuring its structure. (Hendericks and Kelbaugh, 1998). According to Kim M. Henderson and James R. Evans, 2000), an approach which GE follows is:

Personal attendance in Six Sigma training sessions and clarifying doubts of the students ;

Making reviews Making surprise visits for Six Sigma review session on monthly or weekly basis;

Making visits to the manufacturing sites and observing call procedures to ensure that Six Sigma is followed at root level; and

Discussion of progress of Six Sigma with Master Black belt team with reports and data on

monthly basis.

Achieving desirable quality levels of Six Sigma would require commitment and active involvement for every employee at every level in the organization. The organization would need to review skills of every employee before deploying Six Sigma plan. The organization which follow Six Sigma methodology has its employees trained rigorously on statistics and data and can be divided into expertise level of black, green, master black belt and champions. (Hendericks and Kelbaugh, 1998).

Training : One of the most crucial aspects of implementing Six Sigma would be to communicate all the employees in the organization the benefits of Six Sigma and ensure their training level also improves their comfort level. The training for Six Sigma can be delivered by both internal and outsourced training which comes in various packages. (Hendericks and Kelbaugh, 1998)

Tools : The organization needs to be provide its employees set of tools to achieve highest levels of Six Sigma Some of the effective tools are shown in the table below:


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Table 4: Successful employment of Six Sigma (Kim M. Henderson and James R. Evans, 2000)

Six Sigma in Health Care Sector

Healthcare sector is one of the major sectors which need a wider and strict implementation of Six Sigma. It is crucial to maintain a high level of services quality and maximum reduction of defects when it comes to the health and wellbeing of humans’ .it needs a supreme focus and determination on service quality improvement.

When Six Sigma was initially introduced into health care, it was met with some negativity. The primary reason was disparity between humans with relation to automated machines and processes. It is quite possible in manufacturing not to involve human precision, but health care being a process of patients being treated with human care and intelligence, the scope of disparity is even more and difficult to measure. Commonwealth Health Corp. (CHC) was the first heath care institution to introduce Six Sigma in partnership with General Electrics. CHC did raise its profits by $1.2 billion, improved radiology throughout by 33 % and decreased its cost by 21.5 %. (Thomson L.D, 2001)


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For example, an IT System in a hospital might not be able to change a process completely, but might decide to work around it until the investment expires or an alternate is found (Stah et. Al, 2003) It is also a tough challenge to deploy Six Sigma in this sector as it is a rapidly changing industry and new factors are emerging such as:

Competition Patient Safety Increase In Healthcare Costs Liability Internal Resistance Malpractice Insurance Cost Lack of Financial Resources Lack of Time Lack of Human Resources Poor Training Lack of Leadership Poor Project Selection

Human element is the first challenge when planning to implement Six Sigma, it will need to Leverage the data of human behaviour and Combine with cultural strategy in healthcare. The change curve diagram describes the process of transition in human behaviour in adapting to new frameworks (Fisher’s transition curve, 2012)


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Figure 3: the process of transition (the change curve) Fisher, 2012

The shape of U in this diagram walks through the elementary stages from left to the final stages to the right, the role of leadership is to understand the phase where the employee is standing at while rolling out new implementations and ideas, some employees might live in a specific phase for a long time without adopting to change which has a significant impact on successful implementation of Six Sigma framework. A solution oriented mind set will make the employee’s transition from the left to the right side of the curve successful.

The commitment and support of the top management will be the key factor in the organization’s cultural change. By designing strategies customized to the imperatives of the healthcare organization and maintaining sustainable monitoring and support.

Another methodology which can be added to the DMAIC is the DFSS (design for six sigma) which enables the organization to improve existing processes or create ideas for new ones.

The below Figure demonstrates the interaction between all elements in a healthcare project to reach the main goal of quality management tool: customer satisfaction.


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Figure 4: The core of six sigma applications in healthcare: (patient satisfaction) - source: Mehmet Tolga Taner, ¨lent Sezen and Jiju Antony, 2007)

Application in Health Care The DMAIC (Define, Measure, Analyze, Improve and Control) approach can be used for any process or service, including health care. Generally the below listed four 4 variables may define performance of the delivery system ( Olay Sewall & Camille De Yong, Six Sigma in health care, 2003):

I. Service Level: The metrics of service level help in matching the performance level with expectations of the patients.

II. Service Cost: This metrics measures the cost incurred by the organization in meeting the optimum performance levels.

III. Customer Satisfaction: Indicators determining the customer satisfaction may be divided into patients, payers, staff, family etc.

IV. Clinical Excellence: Metrics may be used to measure a particular pathway or a department.eg. use of aspirin in treatment of a disease or effective use to radiology department in the hospital


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Six sigma activities can be conducted in the following healthcare fields (Mehmet Tolga Taner and Bu¨lent Sezen, 2007):

By Increasing The Total Capacity Of X-Ray Rooms;

Reduction In Unnecessary Emergency Admissions;

Performance In Day Care Needs To Be Increased;

The Coding Of Clinics Needs To Be More Accurate;

The Success Level Of Patients In Emergency Room Is Critical;

.Time Consumption In Preparing Medical Reports Needs To Be Reduced;

Reduction In Leakage Of Time Within Departments;

The Time Period By Various Patients Needs To Be Reduces In Diagnostic Areas;

Reduction In Medical Errors therefor Ensuring Safety Of Patients;

Issues Like Patient Falls Need To Be Minimized;

High- Risk And Sensitive Medicines Needs To Be Zero;

Errors Caused By Administrative Department By Issuing And Ordering Medicines Needs To Be Reduced;

Personnel Expenditure Needs To Be Minimized By Proper Management;

Productivity And Capacity Of Hospital Professionals Needs To Be Maximum;

The Tests And Results From Laboratory Need To Accurate And Without Error;

Effective And Accurate Process For Billing To Reduce Unnecessary Wastage Of Time;

Ensuring That Beds Are Available Within Various Departments;

Reduction in Infections Resulting After the Operations, Treatments and Surgeries.


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Selected Samples of Six Sigma Applications in Healthcare Sector:

Decreasing Waiting Time before Surgery

A major dissatisfaction registered by patients is waiting time for surgery. From hospital’s perspective it resulted in increased costs and wasted resources. As for the patients and their family, it is a great inconvenience that their time is wasted. Process improvement method to overcome this problem is as follows:

1. Setting up a Quality Improvement team to determine process flaws resulting in the delay. The below cause and effect diagram demonstrates the possible reasons for the delay:

Figure 5: Potential causes of waiting time before surgery-- Source: (Mehmet Tolga Taner, Bu¨lent Sezen and Jiju Antony, An overview of six sigma applications in healthcare industry, 2007)


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2. The team develops a process of using a flowchart for admitting patients to hospitals.

The below flowchart clarifies the process for patients’ admission:

Figure 6: Flowchart of the waiting-time before surgery-- Source: (Mehmet Tolga Taner, Bu¨lent Sezen and Jiju Antony, An overview of six sigma applications in healthcare industry, 2007)


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Improving MRI Image Quality

Every year many technologies relating to imaging are introduced into healthcare industry. This is achieved at a high cost, but management of medical equipment and cost of redesigning has become important (Taner and Antony, 2000). In diagnostic imaging, the reading can vary from person to person; there is a risk of variation, which can be solved by better imaging techniques. The below Figure is a cause and effect diagram (fishbone diagram) to identify the root cause or the factors affecting the image quality of MRI:

Figure 7: Factors Affecting Image Quality of MRI-- Source: (Mehmet Tolga Taner, Bu¨lent Sezen and Jiju Antony, An overview of six sigma applications in healthcare industry, 2007)


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The quality of the image from MRI usually depends on many parameters such as: Technical variables

Adjustment of the equipment

Observer’s performance Processing circumstances

(Mehmet Tolga Taner and Bu¨lent Sezen, 2003). The performance of observing can therefore be achieved by training as well as proper maintenance of the MRI machine.

Decreasing Unnecessary Laboratory Tests Numerous of the urine and blood samples needed in obstetrics and pediatric wards are required to be done again due to flaws. This results in delay and unnecessary costs due to extra work. A proposed approach to improve the process and the results is as following:

1. A Quality Improvement Team should be appointed to understand the situation. 2. The team should design a flowchart to examine the existing process right from the

laboratory test all the way to results to the doctor. 3. Once the process is designed, a fishbone diagram can be developed to speculate any

errors. This diagram can be as shown below:


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Figure 8: A fishbone diagram identifies possible causes for unnecessary repeated laboratory tests- Source: (Mehmet Tolga Taner, Bu¨lent Sezen and Jiju Antony, An overview of six sigma

applications in healthcare industry, 2007)

4. This process should be followed by the method of collecting data to measure errors. The main focus is on equipment’s, personnel action and procedures to reduce errors. Hence, two main categories must be determined by the team were the team collecting samples and the team storing it.

This activity results in development of process in collection of blood samples and storing which later outcomes in cost reduction.

Reducing Catheter Infection

Catheter infection is one of the major issues faced by patients after surgical operations. This issue needs straight consideration and rapid resolution to ensure patient safety and level of service quality. The proposed approach is as following: Identifying patients with this infection by nurses. And then forming a controlling team who analysis all the possible causes for the infection by interacting with all organization staff and department and through valuation sessions and observations through the catheter procedures. The below fishbone diagram demonstrates the possible causes for catheter infection:


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Figure 9: Fishbone diagram for identifying cause for catheter infection- Source: (Mehmet Tolga Taner, Bu¨lent Sezen and Jiju Antony, An overview of six sigma

applications in healthcare industry, 2007) By identifying the root causes, many arrangements can be taken in order to prevent such infection, for example: excessive training for staff operating the catheter process and changing the location where to insert the catheter to reduce the risk of infection. All these improvements will result in reducing errors while doing the catheter operations which results in reducing the probabilities of infection occurrences. Case Study References (Mehmet Tolga Taner, Bu¨lent Sezen and Jiju Antony, An overview of six sigma applications in healthcare industry, 2007)


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Conclusions:

Six sigma is a practical operational quality management methodology yet still complex to implement due to multiple factors topped by the human nature and cultural resistance. The integration of this methodology into service processes is a challenging operation that involves various tools and approaches providing a comprehensive management to all organization’s aspects and manpower, which can powerfully result in better service quality level and higher financial revenues. The DMAIC methodology in six sigma provides a logical problem resolving approach with its cause-effect thinking and tools such as the fishbone diagram. It can be concluded that the Healthcare Industry is still in early stages of introduction to six sigma. Therefore an optimum solution would also be training and implementation with assistance from top management. Six sigma for healthcare sector is a convenient and powerful methodology as it is sensitive to all human and processes elements and approaches an interactive setting for problem solving in a cost effective system. The challenges in implementing six sigma until now are undeniable and majorly related to having the trained staff to implement this methodology when financial position of an organization might be preventing such expensive investment. It should be taken into consideration that the investment in improving quality of services processes and outcomes is a long term benefit to the organization and a transferring tool towards greater profits.


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International Journal of Quality & Reliability Management Vol. 29 No. 1, 2012 pp. 122-139 q Emerald Group Publishing Limited, [Viewed on 1st November 2013], Available from: www.emeraldinsight.com/0265-671X.htm

Diana Heckl and Ju ¨rgen Moormann, Michael Rosemann, Uptake and success factors of

Six Sigma in the financial services industry, Business Process Management Journal Vol. 16 No. 3, 2010 pp. 436-472 q Emerald Group Publishing Limited, [Viewed on 1st November 2013], Available from: www.emeraldinsight.com/1463-7154.htm





THE_EFFECTIVENESS_OF_SIX_SIGMA_IN_SERVICES_SECTORS-libre.pdf

Documents

sigma applications

measure phase

analysis phase

control phase

healthcare sector

excluding table of contents

quality management tool

upper management support