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Making Data Analysis Lean with Visual Six Sigma

Traditional statistical tools for problem-solving and process improvement can be unhelpful and inefficient.

Visual Six Sigma is the next step in the evolution of process and product improvement programs. Using JMP® statistical discovery software from SAS, you can identify problems, uncover solutions and communicate results – visually.

Visual Six Sigma empowers analysts and practitioners to leverage contextual knowledge to pose relevant questions and reliably find answers that reflect real-world ambiguity, uncertainty and compromise.

Stakeholders can more easily review and challenge recommendations, exploring alternatives without the distractions of unnecessary or spurious statistical detail.

Learn how JMP can broaden and deepen your application of Six Sigma® thinking in your organisation. Download a free chapter from the new book Visual Six Sigma: Making Data Analysis Lean at www.jmp.com/lean

“ The authors of this book have done an outstanding job of illustrating how the practice of Six Sigma can be simplified and made more user-friendly through the use of visual data analysis methods.”– Mikel J. Harry, PhD, co-creator of Six Sigma and

CEO of Six Sigma Management Institute

Deliver real business impact with your process improvement and problem-solving initiatives. A new book shows you how.

Copyright © 2010, SAS Institute Inc.

The financial-services sec-tor has undergone a roll-er-coaster ride over the last few years with bank

collapses, public anger over em-ployee bonuses and government threats of draconian regulation.

Set this against longer-term is-sues, such as pensions and mort-gage mis-selling together with a lack of trust among customers, and it is hardly any wonder that many of our financial institutions are feeling battered and bruised.

So can Lean management and Six Sigma help? Or could those institu-tions that have already implement-ed these systems – Lean especially – actually have made things worse by reducing costs and paring back?

Banks, building societies and insurance companies have shown the same enthusiasm as many oth-er members of the service sector for Lean and Six Sigma systems over the last few years. Bourton Group, which specialises in this area, was asked by Siemens Busi-ness Services (SBS) to help it cut costs, improve productivity and

reduce reliance on manual cleri-cal operations after SBS won an outsourcing deal from National Savings & Investments (NS&I) to improve and run its customer op-erations over a ten-year contract.

The programme started with Lean workshops to educate senior managers in Lean thinking before it was rolled out across the busi-ness. SBS and NS&I created ten “learning families”, consisting of trained managers and facilitators who built an awareness of Lean and their role in its implemen-tation, developing skills in Lean tools and techniques, facilitating change and teaching others.

Once they had grasped the principles of Lean, teams began by agreeing their core purpose and determining how to tackle waste in their areas, using the ‘plan-do-check-act’ methodology to put process improvements into practice and carry out changes such as enhancing workplace layout and organisation. Timeli-ness and accuracy of processing improved to 99.6 per cent while

quarterly compensation was re-duced by more than 80 per cent. Savings amounted to £7 million over the 15-month programme.

So if it saved money and im-proved customer service at NS&I, can it work for other financial institutions? “Lean is now quite mature in the financial-service sector, particularly in retail bank-ing, where there are very few large transactional services that have not applied Lean in a big way. More re-cently, some of the big investment banks have explored the potential of Lean to improve their opera-tions,” says Damon Dermody, di-rector of operational excellence at Serco Consulting.

“The key areas for the applica-tion of Lean in the financial-serv-ice sector are at those compelling crossroads of customer service improvement and efficiency; for example, account opening,” he says.

At a large global card payment firm, Serco Consulting identified four separate customer hand-offs

during the customer contact func-tion. In financial services Lean is helping organisations to improve process efficiency while bringing the decision-maker closer to the customer to enhance the overall customer experience.

“The next development in fi-nancial services will be the ap-plication of Lean to the higher complexity, more ‘considerative’ processes,” says Mr Dermody. “For example, at a regulatory client of ours dealing with con-sumer credit protection, Lean has been used to improve decision-support processes, both in terms of reducing key points of risk and increasing overall efficiency.”

Neil Dennington, a principal at management consultancy AT Kear-ney, says: “Many traditional insur-ers have, over the years, focused on adding bells and whistles to standard policies that relatively few customers really valued. But with low-cost insurers entering the mar-ket, with stripped down policies and direct distribution, it has be-come more and more important to understand what customers really value and how that can be provided at a price the customer will pay.”

Lean should not be automati-cally compounded with Six Sig-ma partly because, in financial services, the former can be easier to implement, says Alan Noble, managing director of consultancy Venturehaus, whose clients in-clude HSBC. “We worked with a client who had previously been

introduced to Six Sigma and de-scribed it as ‘rubbish’ because he said it doesn’t work,” says Mr No-bel. “But Lean is much more ap-propriate to financial services and it can be implemented by stealth. You don’t shout about it from the rooftops; it has a viral effect as success breeds success.”

With the threat of increased regulation hanging over finan-cial-services companies, Lean has a new function. According to Su-khendu Pal, managing partner at Centrix Consulting: “The role of structured products created by derivatives specialists at invest-ment banks, such as collateralised debt obligations, has been the root cause of the financial crisis.

“Many clients have been serious-ly beguiled by the structure of these products that were expensive, high-ly complex and simply not appro-priate. Yet, investment bankers sold them for their personal gain and sky-high bonuses. Effective imple-mentation of Lean management, coupled with tougher regulatory regimes, would eliminate products and services, which do not serve the interest of clients.”

The discipline and standardisa-tion of systems required by both Lean and Six Sigma also makes investigation by regulatory au-thorities easier for banks and other financial-services companies to manage. The benefits of imple-menting these systems, not only for banks, but for their customers and regulators, are clear.

FinancE Can Lean and Six Sigma help revive financial services? or was their use partly to blame for current turmoil? Simon Brooke investigates

Battered and bruised…but thrown a lifeline?

Top-down engagement leads by example

You don’t shout about it from the rooftops;

it has a viral effect as success breeds success

12 LEAN & SIX SIGMA