Application of Lean Six-Sigma to
Service Industry Settings
Lean Six-Sigma applications are traditionally rooted in manufacturing production settings. Lean
methodologies were designed to eliminate waste from process. Perhaps the simplest illustration
of lean principles in practice is found in the TIM WOODS acronym.
Transportation Transport of materials, product, information, or persons
Inventory Storing excess inventory or information
Motion Unnecessary or excessive movement during production processes
Waiting Production stops and slowdowns caused by production process bottlenecks
Over Production Producing too much product which leads to excess inventory waste
Over Processing Excessive quality standards in relation to the products Marketing Mix
Defect Scrap or rework of product components (errors)
Skills Underutilizing worker skills or insufficient training of staff for a process
The areas shown in the TIM WOODS acronym are common contributors to waste in processes.
Lean seeks to eliminate waste from process and streamline operations.
Six-Sigma, in comparison, focuses on reducing the defect rate(s) within a process and provides
for an additional focus on customer satisfaction. Six-sigma is characterized by the DMAIC
model.
Define
Voice of the Customer Define the Processes to be Improved
Critical to Quality Customer
Requirements
Measure
Measure Current Process Identify the Process Variation(s)
Performance Measure Systems
Analyze
Interpretation of the Measure Data
Improve
Categorize Solutions to Processes Errors
Recommend the Best Solution
Control
Determine control methods to ensure the Recommended Improvement Solution is fully
integrated into processes
Together, Lean Six-Sigma creates a powerful approach to maximizing production efficiency by
focusing on customer satisfaction, eliminating process waste and reducing process errors.
Production manufacturing settings lend themselves relatively easily to Lean Six-Sigma
methodologies because of the “quantifiable” aspects in manufacturing processes. For example,
Application of Lean Six-Sigma to Service Industry Settings
Jeffrey Quintal
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the rate to produce a product can be measured in time. Defect errors are measurable in scrap and
rework numbers. Process defects can be measured through statistical analysis.
Service Industry customer satisfaction, unlike manufacturing, is often defined as the “Customer
Experience.1“ How then, can Lean Six-Sigma methodologies be applied to the “Customer
Experience?” For illustration purposes, this paper will use Starbucks as an example to show how
these methodologies can be applied in the service industry.
Service Model
Starbucks primary product is coffee. Although coffee can be purchased in thousands of locations
for, usually, almost half the prices of Starbucks coffee, customers consistently demonstrate brand
loyalty for Starbucks products regardless of the nearly 100% markup as compared to its
competitors. Starbucks CEO Howard Shultz has described Starbucks products as an “affordable
luxury.2” What keeps Starbucks customers loyal to the high-end brand? It can be argued that
Starbucks customer satisfaction comes through the “customer experience.” And Starbucks
customer experience can be described through a set of consistent and reproducible processes.
Define
Starbucks, like most successful service organizations, must create and maintain a consistent
customer experience. Applying the DMAIC model, six-sigma Voice of the Customer and Critical
to Quality tools are helpful in identifying those key elements of customer satisfaction that
produces the customer experience.
Voice of the Customer
1. Fast reliable service 3. Good quality food
2. Friendly Service 4. Comfortable atmosphere
Critical to Quality
Service Consistency
Store Smell Product Product
Customer Experience
Taste & Smell (Coffee) Product Flavors Freshness Quality
Line Order Wait Product Time Managed
Queuing Time Time Preparation Volume
Seating & Comfortable Comfortable Pleasing Color Comfortable
Space Spacing Seating & Patterns Atmosphere
Store Noise/ Music Volume & Kitchen Noise Other Room
Sound Mood Customers Acoustics
Temperature Room & Space Food Products
Colors &
Patterns Store Colors Lighting Level Brand Colors
1
Colin Shaw and, John Ivens; Building Great Customer Experiences (Palgrave Macmillian 2002), 8-13
2
http://www.businessweek.com/magazine/content/08_16/b4080000943927.htm
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Measure
The measure phase in production manufacturing is extremely effective because production
efficiency, speed, and quality posses, mostly straightforward, quantifiable characteristics.
In service organizations, the customer experience may be viewed as less quantifiable because the
“customer experience” is considered more subjective. However, aspects of the “customer
experience” have measurable characteristics for preferences.
I. Line Queuing: (Fast Reliable Service)
Elements of line queuing, perhaps obviously, are in a sense a production manufacturing
assembly line. Lean six-sigma methodologies are applicable to line queues processes.
Customer Ordering Process
Payment
Food Order
Order Order
Preparation Delivery
Process Time
The customer experience can be increased (or decreased) by the efficient, quality, customer
ordering processes. Queuing lines should move quickly but without sacrificing quality; that is,
fast order preparation and delivery with friendly service and a correct customer order.
II. Product Quality: (Good Quality Food)
Product quality is measurable in several aspects: product temperature, product freshness, product
consistency.
Product Temperature:
Simply: hot coffee is hot; cold drinks are cold, and perishable products meet safe storage
temperature requirements. Product temperatures in service organizations can use Six-sigma
methodologies to set to acceptable upper and lower control limit temperature ranges.
Temperature ranges may be determined either by the corporation’s product quality standards to
meet Critical to Quality standards or as determined by local Health & Safety regulations.
Product Freshness:
Product freshness is measurable in terms of product shelf-life. Bread, for example, may be kept
for two days. Although the bread products may still be edible after two days, the commitment to
CTQ customer satisfaction preferences may dictate shorter storage limits to ensure the “customer
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experience” for taste and freshness is met and consistent. Customer satisfaction may be measured
using marketing focus groups though “Voice of the Customer” surveys to determine the best
shelf-life duration that becomes the Critical to Quality standard.
Product Consistency:
Product consistency is measurable and maintainable through formulation. Quality standards
elements can be set to determined levels: food ingredients mix, serving temperature; food
texture, preparation method, and product presentation enable product consistency. Lean Six-
sigma methodologies can be applied to set acceptable range variations to the quality standard
elements that ensure product consistency.
III. Elements of Atmosphere (Comfortable Atmosphere)
Although less straightforward, the elements of atmosphere posses some measurable
characteristics. Elements of Atmosphere can include color, lighting, seating, individual space,
and other elements. The key to using Lean Six-sigma to measure elements of atmosphere is to
determine creative methods for measuring the customer experience. Creative methods may
include Marketing Focus Groups and Psychology Studies.
Marketing Focus Groups
Marketing focus groups are useful for determining an optimal mix of the elements of
atmosphere. For example: music volume and kitchen noise levels as applied to room acoustics;
or for setting parameters that define an average size of a “comfortable space.”
A key aspect to Marketing Focus Groups is defining the primary customer demographics. For
instance, if the customer demographic is first (25 to 45 year old professionals) and second (18 to
24 year old college students), the marketing focus group should consist of both demographic
groups. Further, the focus group can be weighted based on larger versus smaller portions of the
demographic population. Lastly, the focus group should represent an adequate population size to
best represent the total demographic.
Although less clear cut than a production-line setting, preferences and, perhaps more important,
dislikes of the demographic can be identified. Does the demographic visit Starbucks to read, to
socialize, or to simply relax? What elements of atmosphere do the demographics find conducive
to these activities? What elements distract or diminish these activities? At what average volume
does music interrupt socialization or reading?
Psychology Studies
Psychology studies provide an element of empirical standard for measurement. A service
provider may select store color, décor, and lighting based on Color & Mood studies.
Studies have shown the following effects for the color green:
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Psychology of Green 3
Perceived as symbolizing nature / environment
Researchers have found that green can improve reading ability
Some researchers found that laying a transparent sheet of green paper over
reading material increases reading speed and comprehension
Green is often used in decorating for its calming effect
Green is thought to relieve stress
Green work environments are shown to reduce stomachaches
Analysis
In the analysis phase, Lean Six-sigma methodologies can help define Measurement data into
product quality standard elements and the optimal elements of atmosphere.
Quality Standard Elements
Line Queuing
1. What is the maximum Critical to Quality line queuing time?
2. How many Baristas are needed to ensure line queuing meets customer satisfaction control
limit metrics?
3. What is the average service time per customer that does not sacrifice friendly service and
does not detract from the customer experience?
Product Quality
1. When is hot coffee, too hot? What LCL and UCL temperature limits need to be set?
2. How long is food kept on-shelf / storage to meet service consistency and the customer
experience CTQs?
3. What ingredient mix produces the best widget drink?
Elements of Atmosphere
Lean Six-sigma can be used to analyze the elements of atmosphere that optimize the customer
experience. Some examples include:
1. What wattage outputs for lighting and décor are most conducive to reading/ studying and
atmosphere?
50 watt / 100 watt / 150 watt
Florescent lighting versus bulb lighting
2. What shade of Green color code [RGB: Red/ Green/ Blue code] most enhances the
customer experience? What are the acceptable RGB LCL and UCL ranges?
Color Code Shade Color Code Shade
Red 61 Red 128
Green 122 Green 255
Blue 0 Blue 1
3. Analysis of Color & Mood indicates Psychology of Brown may apply to the Starbucks
demographics. 3
3
http://psychology.about.com/od/sensationandperception/a/colorpsych.htm
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Color Psychology - Reactions to Brown 3
A natural color that evokes a sense of strength and reliability
Brings feelings of warmth, comfort, and security
Often described as natural, down-to-earth, and conventional
Color Code Shade Color Code Shade
Red 146 Red 184
Green 44 Green 18
Blue 12 Blue 0
Improve
As in production manufacturing, the improve phase of the Lean Six-sigma model provides a
Service industry company’s with recommendations to improve processes. The objective is to
provide recommendations that integrate Voice of the Customer and Critical to Quality
requirements with findings from the Analysis phase.
Using our Starbucks example, a condensed version of our Recommendation could consist of the
following:
Quality Standard Elements
Line Queuing
To maximize the customer experience, the line queue should not exceed 2
minutes +/- 20 seconds
Product Quality
Coffee should average 180 F +/- 10 F to ensure customer satisfaction and preserve
the customer experience
Lemon Bread shelf-life should not exceed 5 days to ensure moistness and texture.
Elements of Atmosphere
Lighting should average 500 lumens +/- 50 lumens to preserve reading settings 4
Focus groups VOC surveys indicate a 3 ft x 2.5 ft seating space per customer
provides the optimal customer experience while balancing conservation of space
Store colors shall fall within the following color code range limits to provide a
consistent customer experience
Green Color Code Range Brown Color Code Range
LCL Average UCL LCL Average UCL
Red 50 61 29 Red 146 122 184
Green 100 122 58 Green 44 30 18
Blue 0 0 0 Blue 12 6 0
Note that methods can be devised to measure and maintain traditionally subjective issues such as
color shade and depth.
3
http://psychology.about.com/od/sensationandperception/a/colorpsych.htm
4
http://www.energybooks.com/pdf/D1150.pdf
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Control
The Control phase places mechanisms into the recommended Improvement processes to ensure
quality standards are met and maintained. For our service industry example, the Control
mechanism would address methods for certifying process improvement, such as:
Quality Standard Elements
Line Queuing
To maintain the line queue 2 minutes +/- 20 seconds standard, a minimum of
three Barista will provide counter service and four Baristas during peak periods
Product Quality
The Bunn-o-Matic: Model 021-209000008 is recommended to ensure the 180 F
+/- 10 F standard
Lemon Bread will be marked and rotated using the First-In-First-Out (FIFO)
accounting method to guarantee the 5 day standard
Elements of Atmosphere
Store design and layout will be managed and reviewed by the regional Quality
management.
Store Design Procedural Manuals will be updated to communicate lighting
standards, store seating layouts (based on store size), and color composition.
Sample accepted color code ranges will be incorporated into the Store Design
Procedural Manuals to explain color ranges.
Although less traditional and less straightforward than production manufacturing settings, the
service industry and the “customer experience” can benefit from Lean Six-Sigma applications.
Understanding and breaking down the set of consistent process that create the customer
experience is an essential part of applying Lean Six-sigma to the “customer experience.”
Developing creative methods for measuring data and analyzing information within these
processes will allow Lean Six-sigma methodologies to provide useful improvements and process
controls.
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