SIX SIGMA IN SERVICE ORGANIZATIONS: A CONCEPTUAL FRAMEWORK BASED ON ASPECTS OF IMPLEMENTATION AND PERFORMANCE AYON CHAKRABARTY (M.E., BITS, Pilani, India) (B.E., University of Rajasthan, Jaipur, India) A THESIS SUBMITTED FOR THE DEGREE OF DOCTOR OF PHILOSOPHY DEPARTMENT OF INDUSTRIAL AND SYSTEMS ENGINEERING NATIONAL UNIVERSITY OF SINGAPORE 2009 ACKNOWLEDGEMENT Thanks will be a mere word to express my immense gratitude to all those who have helped me in my research progress and more so in shaping my Ph D into an enriching and memorable experience I wish to sincerely acknowledge here all the encouragement and support I received directly or indirectly from different persons at different times The research guidance that I got through A/Prof Tan Kay Chuan was much more than what I wished for before coming to NUS I express my sincere gratitude and countless thanks to him for being a splendid supervisor Without his immense support, timely inputs, precise guidance and encouragement my progress was impossible I fall short of words to explain his influence on me and my research In him, I have realized a guide, a mentor, very good motivator, a good friend for life and more than all a complete human being I can look up to Thank you Sir; thanks a lot for everything I extend my thanks to Prof Xie Min and Dr Chai Kah Hin for their kind acceptance to be on the panel of examiners and for valuable suggestions for planning this research during the qualifying exam I also thank the final reviewers for spending time on evaluating this thesis I wish to admire and thank the unknown reviewers of our publications, who gave constructive feedbacks on all our manuscripts and helped us to bring out the best of this research to the community I also express my sincere gratitude to all the professors at ISE/NUS whose valuable lectures/seminars have put some intriguing thoughts in me, contributing good ideas to this research i My experience as part time research assistant to the Office of Quality Management (OQM) was truly enriching I specially thank Prof Tan for involving me in the new projects and providing me a good chance to learn more It was indeed a privilege to work with him and others in OQM and a great value addition Special thanks to my department (ISE) for giving me an opportunity to be a teaching assistant for both undergraduate and postgraduate students (which truly added a color to my experiences at NUS) and also for financially supporting my conference visits My affectionate thanks to all my lab-mates and other friends at NUS for their fantastic company and useful interactions I additionally thank Usman Asad, Goudarzlou Atarod and Zhou Qi for being a motivating flagship Ph.D student of our group Friends, thanks a lot for making the Ergonomics lab a great place to work and enjoy research You all have been part of my wonderful times in NUS At this moment when I am going for my highest qualification, I remember and thank all my professors, students and precious friends who trained, tuned and inspired me to be what I am today The eventful journey, so far, would not have been wonderful without all your contributions My family members are always the source of inspiration They continue to motivate me to better in whatever I am doing Their blessings and faith in me were the main driving force during the course of my PhD I dedicate my PhD to my parents as without their unconditional sacrifice this work would not have been possible I am ever grateful and indebted to you all and specifically to my parents ii TABLE OF CONTENTS ACKNOWLEDGEMENT……………………………………………………….… … i TABLE OF CONTENTS………………………………………………………… …iii SUMMARY…………………………………………………………………….… … xiii NOMENCLATURE…… ………………………………………………….…… xvi LIST OF TABLES…………………………………………………………… …….xviii LIST OF FIGURES……………………………………………………… … …… xxi CHAPTER 1: INTRODUCTION………………………………………… ………… 1.1 Research Background………………………………………………………… 1.2 Research Objective…………………………………………………………… 1.3 Research Questions…………………………………………………………… 1.4 Purpose of this Thesis…………………………………………………… 1.5 Thesis Structure……………………………………………………………… CHAPTER 2: LITERATURE REVIEW…………………………………………… 10 2.1 Introduction…… ………………………………………………………… …10 2.2 Literature Review Methods and List of Articles……………………………….10 2.3 The Classification Scheme…………………………………………………… 12 2.4 Literature Trends………………………………………………………… … 14 2.5 Literature Research Topics and Methods………………………… ………….18 2.6 Six Sigma Definitions and Philosophy………………………………… …….21 2.7 Tools and Techniques and Six Sigma Methodologies……….………… ……24 2.7.1 Classification Scheme of Tools and Techniques………………… ……26 2.7.1.1 ASQ Classification……………………………………….… ….26 iii 2.7.1.2 Tool Matrix………………………………………………… ….27 2.7.1.3 Innovation Tools………………………………………… …….27 2.7.2 Six Sigma Methodologies…………………………………………….…28 2.7.2.1 DMAIC Methodology………………………………………… 28 2.7.2.2 Design for Six Sigma (DFSS): Overview………………….……29 2.8 Critical Success Factors (CSFs)………………………………………….……33 2.9 Critical-to-Quality (CTQ) Characteristics…………………………….….… 37 2.10 Key Performance Indicators (KPIs)……………………………………… ….40 2.11 Six Sigma in Manufacturing and Service Organizations………………….… 43 2.12 Literature Review Summary……………………………………………… ….46 2.13 Total Quality Management…………………………………………………….48 2.13.1 TQM Adoption………………………………………………………… 48 2.13.2 Identification of TQM Dimensions………………………………………49 2.13.3 Obstacles to TQM……………………………………………………… 51 2.14 Conclusion……………………………………………………………… ……53 CHAPTER 3: DEVELOPMENT OF FRAMEWORK….………………………….56 3.1 Introduction……………………………………………………………………56 3.2 Six Sigma Implementation Framework……………………………………… 56 3.2.1 Implementation………………………………………………………… 56 3.2.2 Framework……………………………………………………………….57 3.2.3 Proposed Framework…………………………………………………….58 3.2.3.1 Critical Success Factors (CSFs)……………………………….…60 3.2.3.2 Critical-to-Quality (CTQ) Characteristics ………………… 61 iv 3.2.3.3 Key Performance Indicators (KPIs)…………………………… 62 3.2.3.4 Set of Tools and Techniques (STTs)……………………… .62 3.3 Conclusion…………………………………………………………………….63 CHAPTER 4: RESEARCH METHODOLOGY…………………………………….64 4.1 Introduction………………………………………………… …………… …64 4.2 Research Methodology……………………………………… ………….……65 4.2.1 Grounded Theory……………………………………… ………….……65 4.2.2 Key Elements of Grounded Theory……………………… ………….…67 4.2.2.1 Theory Building…………………………………… ……….… 67 4.2.2.2 Multiple Case Studies……………………………… ……….….68 4.2.2.3 Practitioner Involvement…………………………… ……….…69 4.2.2.4 Triangulation………………………………………… …………71 4.3 Three-Phase Approach……………………………………………….……… 71 4.3.1 Phase I - Macro Study………………………………….………….…… 72 4.3.2 Phase II – Small-Scale Questionnaire Survey and Case Studies…….… 73 4.3.2.1 Small-Scale Questionnaire Survey………………………………73 4.3.2.1.1 Structure of the Questionnaire…………………….…… 73 4.3.2.1.2 Questionnaire Design…………………………………….75 4.3.2.2 Case Studies…………………………………………….……… 76 4.3.2.2.1 Sample Selection………………………………….…… 76 4.3.2.2.2 Data Collection Procedure……………………………….78 4.3.2.2.2.1 Documentation……………………………… …78 4.3.2.2.3 Unit of Analysis……………………………………….…79 v 4.3.3 Phase III – Large-Scale Questionnaire Survey and Case Studies…… …81 4.3.3.1 Case Studies…………………………………………………… 81 4.3.3.1.1 Data Collection Procedure…………………………….…81 4.3.3.1.1.1 Interviews……………………………….……… 81 4.3.3.1.1.2 Participation in Projects………………………….84 4.3.3.1.1.3 Documentation………………………………… 85 4.3.3.2 Large-Scale Questionnaire Survey…………………………… 85 4.3.3.2.1 Structure of the Questionnaire………………………… 85 4.3.3.2.2 Questionnaire Design……………………………………86 4.4 Response Variables…………………………………………………………….87 4.5 Targeted Population……………………………………………………………90 4.6 Survey Implementation……………………………………………………… 91 4.7 Testing for Sampling Bias…………………………………………………… 92 4.8 Conclusion…………………………………………………………………… 93 CHAPTER 5: PHASE I: MACRO STUDY………………………………………… 94 5.1 Introduction…… ……………………………………………………….… …94 5.2 Phase I – Macro Study…………………………………………….……… .94 5.2.1 Data Collection Procedure……………………………………………….94 5.2.1.1 Interview…………………………………………………………94 5.2.1.2 Documentation………………………………………………… 95 5.2.2 Case Study 1: ESERV1……………………………………………… 95 5.2.2.1 Background……………………………………………….….… 95 5.2.2.2 Data Analysis……………………………………………… … 96 vi 5.2.2.2.1 Findings…… ……………………………………… …96 5.2.2.3 Discussion………………………………………………….… 96 5.2.2.3.1 Implications………………………………………… …97 5.2.2.3.2 Limitations………………………………………… … 98 5.2.3 Case Study 2: ESERV2…………………………………………………98 5.2.3.1 Background…………………………………………….……… 98 5.2.3.2 Data Analysis……………………………………………………98 5.2.3.2.1 Findings…………………………………………….……99 5.2.3.3 Discussion………………………………………………….… 100 5.2.3.3.1 Implications……………………………………… ……100 5.2.3.3.2 Limitations…………………………………………… 101 5.3 Conclusion……………………………………………………………………101 CHAPTER 6: SMALL-SCALE QUESTIONNAIRE SURVEY……………….….102 6.1 Introduction……………………………………………………………………102 6.2 Small-Scale Questionnaire Survey……………………………………………103 6.2.1 Preliminary Analysis……………………………………………………103 6.2.1.1 Number of Responses……………………… ……………… 103 6.2.1.2 Respondent Profile………………………………… ……… 104 6.2.1.3 Organization Profile…………………………… …………… 105 6.2.2 Descriptive Analysis………………………………… ………….……106 6.2.2.1 Critical Success Factors (CSFs)………………… ………… 106 6.2.2.2 Critical-to-Quality (CTQ) Characteristics……….………….…107 6.2.2.3 Key Performance Indicators (KPIs)…………….…………… 107 vii 6.2.2.4 Set of Tools and Techniques (STTs)………………………… 107 6.2.2.5 Reasons for not Implementing Six Sigma………………… …110 6.3 Conclusion……………………………………………………………………111 CHAPTER 7: CASE STUDIES…… …………………………… …113 7.1 Introduction……………………………………………………………… …113 7.2 Case Studies……………………………………………………….………….113 7.2.1 Multiple Case Studies (SERV1 – SERV14)……………….……… …113 7.2.1.1 Six Sigma in Singapore Public Service Organizations……… 113 7.2.1.2 Data Analysis…………………………………….…………… 119 7.2.1.2.1 Findings……………………………………………… 125 7.2.1.3 Discussion…………………………………………… 126 7.2.1.3.1 Implications………………………………………… …126 7.2.1.3.2 Limitations……………………………….…………… 128 7.2.2 Case Study (Serv15)…………………………………………….……128 7.2.2.1 Six Sigma at Starwood Hotels and Resorts………………….…128 7.2.2.2 Data Analysis………………………………………………… 131 7.2.2.2.1 Findings……………………………………………… 133 7.2.2.3 Discussion………………………………… ………………….135 7.2.2.3.1 Implications…………………………… …………… 135 7.2.2.3.2 Limitations…………………………………………… 136 7.2.3 Case Study (SERV16)……………………………….………………136 7.2.3.1 Six Sigma at the Hospital…………………….…….………… 136 7.2.3.2 Data Analysis……………………………….…………….……138 viii 7.2.3.2.1 Findings…………………………………….…… … 145 7.2.3.3 Discussion…………………………………….…….………… 145 7.2.3.3.1 Implications…………………………….………………146 7.2.3.3.2 Limitations………………………………….………… 147 7.2.4 Case Study (SERV17)……………………………………………… 148 7.2.4.1 Six Sigma at Construction and Related Engineering Service Organization…………………………………………………………148 7.2.4.2 Data Analysis………………………………………………… 149 7.2.4.2.1 Findings……………………………………………… 151 7.2.4.3 Discussion………………………………………………………153 7.2.4.3.1 Implications…………………………………………… 154 7.2.4.3.2 Limitations…………………………………………… 156 7.2.5 Case Study (SERV18)……………………………………………… 156 7.2.5.1 Six Sigma at the Consultancy Service Organization………… 156 7.2.5.2 Data Analysis………………………………………………… 157 7.2.5.2.1 Findings……………………………………………… 158 7.2.5.3 Discussion…………………………………………………… 159 7.2.5.3.1 Implications…………………………………………….160 7.2.5.3.2 Limitations…………………………………………… 161 7.3 Conclusion……………………………………………………………………161 CHAPTER 8: LARGE-SCALE QUESTIONNAIRE SURVEY…………………162 8.1 Introduction………………………………………………………………… 162 8.2 Large-Scale Questionnaire Survey………………………………………… 162 ix Appendix G  < Year  to Years  to Years  to 10 Years  > 10 Years Q4 Skills Please indicate your skills in Six Sigma, as below  Champion  Master Black Belt  Black Belt  Green Belt  Yellow Belt  Brown Belt Q5 Responsibility Please indicate whether your Six Sigma responsibility is full-time or part-time  Full-time Involvement  Part-time Involvement Q6 ServiceArea Please indicate the service area of your organization  Banking/Finance  Consultancy  Employment Agency  Healthcare  Hospitality/Hotel  Information Technology  Insurance  Retail  Telecommunication  Transport  Utilities  Others (please specify): Q7 Employees Number of full-time employees in your organization  to 19  20 to 49  50 to 99  100 to 199 305 Appendix G       200 to 499 500 to 999 1000 to 1999 2000 to 4999 5000 to 10000 > 10000 Q8 Sector Within which sector does your organization operate  Public  Private  Not-for-Profit/Community  Others (please specify): Q9 QualityDepartment Does your organization have a Quality Department  Yes  No Q10 EmployeesinQD Number of full-time employees in Quality Department of your organization  to 19  20 to 49  50 to 99  100 to 199  200 to 499  500 to 999  1000 to 1999  2000 to 4999  > 5000 Q11 QualitySystems Do you have any of the following Quality Systems in place  ISO 9001  ISO 9002  ISO 9003  ISO 9004  MBNQA (Malcolm Baldrige National Quality Awards)  EFQM (European Foundation for Quality Management)  Others (please specify): 306 Appendix G Q12 BusinessImprovement Business improvement initiative implemented in your organization  Business Process Reengineering  Quality Assurance  Quality Control  Total Quality Management  None  Others (please specify): Q13 SixSigma Has Six Sigma been implemented in your organization*  Yes  No  Partially * If your answer to the above question is “No” then please proceed to “Section F", no need to answer other sections Thanks for your cooperation Q14 LengthofTime How long has your organization been using the Six Sigma initiative  < Year  to Years  to Years  > Years Q15 SigmaLevel Average sigma capability level of your core business processes  < Sigma  to Sigma  to Sigma  to Sigma  to Sigma  > Sigma  Not Sure Q16 SixSigmaProjects How many Six Sigma projects have your organization completed  < 10  10 to 20 307 Appendix G     20 to 30 30 to 40 40 to 50 > 50 SECTION B This section attempts to identify the success factors which are required while implementing Six Sigma in your organization Please check the appropriate number according to the given 5-point scale - Not Important; - Somewhat Unimportant; - Neutral; - Somewhat Important; - Very Important Q17 CriticalSuccessFactors Management commitment and involvement Organization-wide commitment Management of cultural change Customer focus Education and training Clear performance metrics Organizational readiness Support of team members Linking Six Sigma to business strategy                                              SECTION C This section is divided into two sub-sections First sub-section attempts to identify various process parameters (critical-to-quality characteristics) which are critical to process improvement Second one is aimed at identifying the tools and techniques which are important while implementing Six Sigma for process improvement Q18 Critical-to-Quality (CTQ) Please define CTQ 308 Appendix G Q19 CTQ Please indicate the key measurable process parameters of service process in your organization which you feel can be improved through Six Sigma  Time  Service Time  Waiting Time  Cycle Time  Turnaround Time  Service Cost  Information Provided to Customers  Accurate Information to Customers  Timely Information to Customers  Time to Restore Customer Complaints  Time to Respond to Customer Complaints  Employee Behaviour  Yield  Customer Satisfaction  Customer Return Rate  Others (please specify): _ Q20 ToolsandTechniques Frequency of tools and techniques being used while applying DMAIC methodology Please mention the phase at which you are using a particular tool or technique (if a tool or technique is used in multiple phases, in that case you can mention more than one phase) The phases are: D - Define; M - Measure; A - Analyze; I - Improve; C - Control Please check the appropriate number and the phase(s) according to the given criteria - Never; - Seldom; - Sometimes; - Often; – Frequently Cause and effect analysis Pareto analysis Fishbone diagram Brainstorming Check sheet Control chart Histograms Normal probability plot Process capability Cost of quality Flowchart                                                        309 Appendix G Matrix diagram Relations diagram           Work-flow diagram Tree diagram Scatter diagram Failure mode effect analysis Mistake proofing Analysis of variance Decision matrix Design of experiments Root cause analysis Project management Regression/correlation analysis Statistical process control                                                             Cause and effect analysis Pareto analysis Fishbone diagram Brainstorming Check sheet Control chart Histograms Normal probability plot Process capability Cost of quality Flowchart Matrix diagram Relations diagram Work-flow diagram Tree diagram Scatter diagram Failure mode effect analysis Mistake proofing Analysis of variance Decision matrix Design of experiments Root cause analysis Project management Regression/correlation analysis Statistical process control D                          M                          A                          I                          C                          310 Appendix G Q21 SelectionCriteria Please indicate the selection criteria for tools and techniques  Nature of business  Nature of project(s)  Nature of collected data  Familiarity of Project Leader/Black Belt with the set of tools and techniques  Suggestions from external consultant  Others (please specify): SECTION D In case of any quality initiative the outcome is most important This section is aimed at identifying the key performance indicators (KPIs) involved, while implementing Six Sigma in your organization Q22 KPI Please define KPI Q23 KPIs Some of the KPIs identified during Six Sigma implementation for your organization  Efficient service  Reduction in cost  Timely delivery  Customer satisfaction  Employee satisfaction  Reduced variation  Improved market share  Financial benefits  Cost of poor quality  Others (please specify): SECTION E This section attempts to identify the possible difficulties faced by service organizations while implementing Six Sigma 311 Appendix G Q24 Difficulties Please indicate the difficulties faced during Six Sigma implementation  Difficulty in data collection  Part-time involvement in Six Sigma projects  Identification of projects  Too complex to use  Too complex to learn and train  Extension of project timeline  Difficulty in identifying process parameters to be improved  Difficulty in deciding about the scope of project  Difficulty in identifying projects in long run  Staff turnover between the project/after training  Others (please specify): SECTION F This section aims to identify possible obstacles in Six Sigma implementation in service organizations Q25 Reasons Please indicate the reasons for not implementing Six Sigma  Unknown to us  Time consuming  High cost of training  Too complex to use  Too complex to learn and train  Difficulty in identifying process parameters to be improved  Difficulty in collecting data  Others (please specify): If you prefer to print this questionnaire, please fill it out, and send it to: Ayon Chakrabarty E1-07-19, Ergonomics Lab, Department of Industrial and Systems Engineering National University of Singapore 10 Kent Ridge Crescent Singapore 119260 HP: +65 9015 6874 Fax: +65 6777 1434 E-mail: g0403855@nus.edu.sg THANK YOU FOR YOUR PARTICIPATION 312 Appendix H APPENDIX H Respondents Database (Small-Scale Survey, Case Studies, and Large-Scale Survey) 313 Appendix H Details of Respondents of Small-Scale Survey Full-time or Part-time Participation Total Six Sigma Projects Completed On-going Six Sigma Project Sigma Level NA Part-time 10 to 20 NA 1-2 Sigma to NA NA 5 Sigma NA to NA Part-time 10 to 20 NA NA 1000-1999 NA to NA Part-time 10 to 20 NA 3-4 Sigma Public Service 2000-4999 to 19 to NA Part-time 100 K Full-time >50 75 4-5 Sigma NA Throughout the organization To a certain level of employee SERVF IND Manufacturing and after Sales Service >10000 200 - 499 1-4 Years 20-50 K Part-time >50 80 3-4 Sigma Throughout the organization SERVF - Information >10000 100 - 199 4-6 Years NA Full-time >50 NA 3-4 Sigma NA 316 Appendix H USA Technology SERVF USA SERVF 10 IND SERVF 11 USA Information Technology >10000 500 - 999 >6 Years NA Full-time >50 NA 3-4 Sigma NA Telecommunication 200-499 to 19 4-6 Years NA Full-time 20-30 NA 2-3 Sigma NA Banking/Finance >10000 50 - 99 NA NA Part-time >50 NA Not Sure SERVF 12 DEU SERVF 13 IND SERVF 14 USA Manufacturing and after Sales Service >10000 100 - 199 1-4 Years >100 K Full-time >50 110 1-2 Sigma NA To a certain level of employee 1000-1999 20 - 49 1-4 Years NA Full-time 100 K Part-time 10000 100 - 199 100 K Part-time 10 to 20 NA Part-time 40-50 NA NA Part-time 100 K Full-time 100 K Full-time >50 60 Not Sure Information Technology 1000-1999 to 19 1-4 Years NA Part-time 6 Years NA Part-time >10 Not Sure Transport >10000 20 - 49 1-4 Years >100 K Full-time 10 to 20 20 Banking/Finance 50-99 to 19