six sigma in business functions

Six Sigma in Business Functions

Presentation by

Benchmark Six Sigma

Remember: Does Six Sigma apply to you?

When there is an Output . . .

there is a Process

When there is a Process . . .

there is Performance

Variation

When there is Performance Variation . . . there is a Six

Sigma Opportunity

Six Sigma can be applied to

ALL functions, disciplines

and business processes

Further, Six Sigma Equation is:

• Y• Dependent• Output• Effect• Symptom• Monitor• Response

• X1 . . . XN• Independent• Input-Process• Cause• Problem• Control• Factor

f (X)Y=

This equation is valid across any business process or even any general process. This is the inherent strength of Six Sigma which makes its applicability feasible across any business domain

Given the Universal applicability of Y=f(X)

• Six Sigma Is applicable across all business functions like:

• Finance• Purchasing & Inventory• HR• Sales & Marketing• IT

Six Sigma Applicability

Six Sigma Application: FinanceBusiness

Function’s Objectives

Possible Issues Examples of Six Sigma Applicability

Business Planning & Budgeting

a. Incomplete, Inaccurate information

b. Long time for approvals

a. Ensuring completeness and accuracy of financial data.

b. Minimizing variation from budget.c. Reducing cycle time of approvals

Invoicing and Revenue Assurance

a. Errors in Invoices b. Late Invoices c. Payment defaults d. Delayed revenue realization

a. Reducing Invoicing errors b. Ensuring Timely Invoicing c. Reducing payment defaults d. Reduce cost of Invoicing

Collections and Receivables Management

a. High cost of collection b. Long time to collect money c. High Bed Debts d. Customer churn

a. Reducing cost of collection b. Reducing time to collect money c. Reducing customer defaults and bed debts.

Financial Reporting & Analysis

a. Delayed reporting b. Inaccurate reporting c. Reports not easily available

a. Ensuring ease of generating financial reports for analysis with reference to time., accuracy and availability

Six Sigma Application: Manufacturing OperationsBusiness



Manufacturing defect free products

a. Defective productsb. Waste of overproduction

or underproduction.c. Poor First pass yield

a. Reducing manufacturing defects at each stage.

b. Improving first time yield and efficiency of each step in the manufacturing process

c. Reducing waste by optimizing & managing production

Timely Manufacturing a. Delays in Manufacturingb. Machine failures leading

to delaysc. High changeover time

a. Reducing time to Manufactureb. Reducing machine downtime c. Reducing the machine changeover

time

Optimizing Operator Time

a. Suboptimal utilization of operators

b. Lot of WIP at each stagec. Waiting times at each

stage

a. Improving Operator utilization to enhance productivity

b. Reducing WIP (work in progress)c. Reducing waiting times at each

stage.

Six Sigma Application: Customer Care OperationsBusiness



Effective and Optimal Customer Call Handling

a. Difficulty faced by customers in accessing the organization

b. Agents providing incomplete/insufficient information to customers

c. A large number of unwanted calls

d. Delays in handing callse. Calls getting Abandoned

a. Improving accessibilityb. Improving the Quality of

Information.c. Reducing the unwanted callsd. Reducing customer waiting timese. Improving Agents Productivityf. Reducing call handling timeg. Reducing abandoned calls

Customer Call Analysis and Resolution

a. Large number of customer complaints

b. Delays in Issue Resolution

c. Queries not resolved to Customer satisfaction

a. Reducing the number of customer complaints

b. Achieving resolution as per SLAc. Improving Quality of query

resolution

Six Sigma Application: Purchasing

Business Function’s Objectives


Procurement of Material required for Business

Time to release Purchase orders

High material rejection High Lead time of materialsHigh Vendor turnoverHigh material rejection

Reducing time to generate purchase orderReducing Lead time of ProcurementReducing the number of material rejectionsMinimizing Purchase order

Stores and Inventory Management

High InventoryDifference between physical stock and system stock.

Reduce Inventory levelsMatching System stock with physical stock by first finding the root causes of gaps.

Six Sigma Application: Sales



Product Development High time to develop productHigh time to Launch productInefficient and ineffective

customer requirements gathering process

Reducing cycle time to develop productImproving the customer requirement

gathering process.Improving the feedback mechanisms for

product development right from concept to launch

Customer Acquisition Low leads conversionHigh sales & distribution costsLow sales productivityLow market shareDecreasing rate of growth in market share vis a vis competition

Improving the leads conversion processReducing sales & distribution costsImproving sales productivityImproving market share by analyzing 7 understanding root causes of low market share .

Six Sigma Application: Marketing



Potential Market Identification

Certain hot segments missed or ignored

Market already maturedMarket too naïveMarket tapped more effectively

by competitors.

Improving the overall process of Potential Market identification

Improving the customer voice capturing and customer voice analysis process

Market Survey & Forecasting

Long time taken for survey and forecastsGap between actual and forecasted salesGap between actual and forecasted revenuesLot of rework in Market Forecasting Survey

Reduce the cycle time for making survey forecastsReduce gap between actual and forecasted sales and revenuesWorking towards First Time Right (FTR) for market forecasting survey

Six Sigma Application: HRBusiness



Recruitment Long time to recruit could result in losing talent

Challenges in onboardingHigh cost of recruitment

Reducing the overall time to recruitImproving the overall Induction & On

boarding processReducing the cost of recruitment

Employee Development

Ineffective / Inadequate trainingEmployee AbsenteeismLow employee morale

Improving efficiency & effectiveness of training Improving employee satisfactionRationalizing training programs

Compensation & Benefits

Errors in Incentive compensationEmployee dissatisfaction

Six Sigma Application: IT



Business Application Management

High Application development cycle time

Cumbersome change request process

High downtimeErrors in application devpment.

Reducing application development cycle time.

Reducing change request cycle timeReducing the downtimeReducing the errors in application

development

Business Application Availability

Application not easily accessibleProblems in application performance

Improving application performanceImproving application uptimeImproving application accessibility

Following Inherent strengths of Six Sigma Methodology ensure success across any Business functions:

Six Sigma Success Factors: Methodology

• Each Project has a strong tie to business deliverables– This enhances customer satisfaction and loyalty– Gives the Project a Strategic importance– Ensures impact on profit (hard and soft benefits)

• All results link to a key metric, which ensures– Goals can be quantified and measured

• It is ensured that project selected is feasible, which ensures– Team can commit time to project– Potential solutions are relatively low cost

Clear roles defined for People working on a Six Sigma Project also ensures success across functions:

Six Sigma Success Factors: People

Executive sponsorship

• Clear link between project and critical business goal

• Executive is visible and supportive of team efforts

• Executive breaks down barriers to improvement

Dedicated project manager

• Black Belt for large or difficult projects, or projects that

require statistical analysis

• Green Belt for a smaller project within her/his team

Six Sigma Trained Student’s Advantage

• Gains knowledge about the Business Functions from the course books– This means learning about HR, IT, Finance, Sales &Marketing,

Operations from text books and discussions– Also learning Statistics & Quantitative methods as part of course

• After undergoing Six Sigma training:– Understands the interlinkage between various subjects studied in

MBA with reference to actual industrial environment.– Practically understand how their learnings in Project Management,

Quantitative Methods, Finance, Human Resource Management, Operations and Organizational Behavior are applied to address real business issues

– Can take up Summer Internship Project as a Six Sigma Project