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Lean Six Sigma


									6 IOMA BROADCASTER                              March–April 2009

     Improving Customer
     Satisfaction with
     Lean Six Sigma
     By Hermann Miskelly
     Director of Quality and Six Sigma Master Blackbelt
     Matheson Tri-Gas, Inc., Irving, TX

   n today’s economic environment many companies are turning to       provider’s ability to meet the need and the Y-axis representing the
   Lean Six Sigma for the first time. Others are reinvigorating their customer’s degree of satisfaction, as shown in Figure A. Starting
   current Lean Six Sigma programs. With its focus on bottom line     with this model of the customer’s needs can focus Lean Six Sigma
 financial benefit through sustainable productivity and efficiency    efforts on those needs that will significantly impact the customer’s
 improvements obtained by minimizing process waste and varia-         satisfaction. Significantly increasing customer satisfaction will lead
 tion, Lean Six Sigma is the perfect tool for                                                to increased sales and market share.
 reducing your operating costs as the market                                                    Basic needs are those that are expected by
 retreats. While this is an obvious necessity,         “Lean Six Sigma can be a              the customer to be fulfilled by the product or
 now is a good time to remember that the ulti-                                               service provider. As shown in Figure B, meet-
 mate goal of Lean Six Sigma is not simply
                                                     principal tool to increasing            ing a customer’s basic needs has a neutral
 reducing operating costs but rather increas-           market share, revenue                impact on satisfaction. Failure to meet basic
 ing customer satisfaction through sustainable                                               needs, however, has a significant negative
 breakthrough performance improvements.
                                                              and earnings.”                 impact on satisfaction.
 When the pie shrinks, you don’t just want to                                                   Here is an example to which we can all
 increase the number of cherries in your slice,                                              relate; windshield wipers are expected to be
 you also want a bigger slice of the pie. Lean Six Sigma can be a     included in the price of a new automobile. Having the salesman
 principal tool to increasing market share, revenue and earnings.     tell you that windshield wipers are optional on a particular model
                                                                      will promptly lead you to question his real desire to sell the car.
 Linking Customer Satisfaction to Meeting the Customers’              Examples of basic customer needs in the industrial gas business
 Needs                                                                include DOT shipping compliance, failure to leak, correct labeling,
 Customer satisfaction is achieved by giving the customers what       and on-time delivery. The ability to meet these needs is taken as a
 they want – meeting their needs. When addressing customer satis-     given by the customer and required for companies to stay in busi-
 faction with Lean Six Sigma, the Kano model of customer satisfac-    ness.
 tion can be helpful. Developed by Professor Noriaki Kano in the         Failures to meet a customer’s basic needs are, therefore, to be
 1980’s, this model places customer needs into three categories:      avoided because of the immediate and significant impact of these
 basic, performance, and excitement.                                  failures on customer satisfaction. Thus, Lean Six Sigma efforts are
    Needs are graphically plotted with the X-axis representing the    frequently focused on fixing these failures. There is usually abun-
                                                                         March–April 2009                  IOMA BROADCASTER 7

dant historical data available since failures to meet basic needs are  days will probably not have a very large impact on overall satis-
typically documented through quality and corrective action sys-        faction. The second problem is that incremental improvements in
tems. Assigned Lean Six Sigma teams can quickly begin finding          performance can be, and will be, very quickly matched by com-
root causes, implementing process improvements to correct the root     petitors, thus eliminating any competitive advantage a company
causes, and putting controls in place to ensure that the improve-      might have had. This leads to new targets and new Lean Six Sigma
ments are maintained and the failures eliminated or significantly      projects. So on it goes.
reduced.                                                                  Breakthrough, game-changing improvements in the ability to
   Performance needs, the second category of customer needs, are       meet the customer’s needs are required to achieve significant
those where the ability to meet the need has a proportional impact     improvements in customer satisfaction. Breakthrough improvements
on customer satisfaction. For performance needs, as shown in           to products or services will minimize competition, significantly
Figure C, more (or less) is better.                                                           increase sales and market share, and – if the
   Going back to the windshield wiper exam-                                                   improvement excites the customer enough –
ple, one performance need is price; the lower
the price, the greater the satisfaction with the
                                                                                                            provider to name the
                                                    “Improving the ability to meet allow the breakthrough improvements,price!
                                                                                              Generally,                                espe-
windshield wiper. Conversely, as the price            performance needs is also a             cially if derived from patented or protected
increases, so does the dissatisfaction.                                                       processes or methods, take longer for the
Performance needs are the customer’s needs
                                                        frequent Lean Six Sigma               competition to copy. Thus, the market lead
on which companies generally compete.                 project. The desired outcome            associated with breakthrough improvements
Within the industrial gas business, companies
typically compete on performance needs
                                                    is easily measured: lower cost, tends to be longer lasting. category of cus-
                                                                                                 This leads us to the third
such as price, lead times, purity, etc.                 shortened lead times, or              tomer needs, called excitement needs.
   Improving the ability to meet performance                                                  Personally, I prefer the term latent needs for
needs is also a frequent Lean Six Sigma proj-
                                                             increased purity.”               this category since these are needs that the
ect. The desired outcome is easily measured:                                                  customer does not know a given provider can
lower cost, shortened lead times, or                                                          meet or, in many cases, the customer is not
increased purity. Improvement targets for specific needs must be set   even aware of the need.
and Lean Six Sigma teams must be tasked with hitting the targets.         I also like the term Tom Peters uses for this category of needs:
These targets are generally set by halving the difference between      WOW! Failure to meet a latent requirement has no impact on a cus-
where the company currently is and what they think is possible. The    tomer’s satisfaction since he is not aware of the need in the first
teams start studying the current processes used to meet these          place, to say nothing of anyone’s inability to fill it. But, as shown
needs, identifying and eliminating the non value-added work and        in Figure D, successfully identifying and fulfilling a latent need has
waste from the processes, designing and implementing stream-           a very large impact on customer satisfaction.
lined, waste-free processes, and, once again, putting controls in         Relative to the automotive example, an excitement feature could
place to sustain the newly achieved improved performance.              be a windshield wiper blade that never wears out or one that auto-
   There are problems with competing on performance needs              matically turns on when it rains. Think about the TiVo, the iPod, or
alone, however. First, improvements in the ability to meet perform-    the Boeing 707 Jetliner – all filling latent needs. Latent needs that
ance needs produce generally only mild increases in customer sat-      are currently going unfilled in the industrial gas business
isfaction. Very significant improvements in performance are            include………HA! Did you really think I was going to share that
needed to drive large changes in customer satisfaction. For exam-      information with you!? We all need to find these potential market
ple, shortening the lead time for a product from five days to three    discriminators ourselves.                                Continued ®
8 IOMA BROADCASTER                                March–April 2009

 Improving Customer Satisfaction with Lean Six Sigma                       One Lean Six Sigma tool that can help answer the first question
 Continued from page 5                                                  is Quality Function Deployment (QFD), commonly called the House
                                                                        of Quality. Developed by the Japanese in the 1960’s for complex
 Achieving Breakthrough Performance Improvements                        engineering construction work, QFD is now extensively used in the
 Obviously then, companies need to be constantly searching, iden-       U.S. for new product development. This tool is used to translate the
 tifying, and fulfilling needs that excite the customer. There are two  customer’s needs into product or service requirements (using the
 ways to achieve customer excitement, either through a significant      language of the business) and then identify the links between these
 improvement in the ability to meet a known, stated customer need       requirements and the features or methods by which a company
 (breakthrough performance improvements) or through the identifi-       intends to meet these needs. With QFD, holes in understanding the
 cation and fulfillment of an unknown,                                                         customer’s needs quickly become apparent,
 unstated customer need (latent performance                                                    as do any conflicting needs. QFD can be
 improvements).                                          “Only once the customer’s             used to quickly and fully address quality
     Lean Six Sigma can provide methods and                                                    issues with a customer and to identify any dif-
 tools that will facilitate achieving sustain-
                                                            needs are thoroughly               ferences in interpretation of, or subtle con-
 able customer-exciting performance in fulfill-               understood can a                 flicts in, the stated needs.
 ing existing and unstated needs. The first                                                        Only once the customer’s needs are thor-
 type of needs, existing needs, is the best
                                                                 company set                   oughly understood can a company set
 place to start.                                           improvement targets.”               improvement targets. Of course large
     Companies need a detailed understanding                                                   improvements can achieve significant
 of what the customer expects from their prod-                                                 improvements in customer satisfaction. But
 uct or service. Answers to the following questions are required        how much of a breakthrough improvement will excite the customer?
 before starting to make improvements:                                     Equally important is identifying what is really achievable. Can
     • What are the customer’s stated needs? What does the cus-         the target be achieved within the current processes? Can it be
       tomer really expect the product or service to deliver? Are we    achieved within current state-of-the-art? Can it be achieved within
       interpreting the stated needs in a way that meets the cus-       the financial limitations of the company? Setting improvement tar-
       tomer’s real intent?                                             gets that are not achievable, either physically, financially, or politi-
     • How well do we currently fulfill these needs? Equally impor-     cally, will doom Lean Six Sigma projects to failure in terms of per-
       tant, how well do our competitors fulfill these needs? Where     formance, schedule, or budget.
       do we lead the market in performance and where do we trail?         Again, Lean Six Sigma provides tools that can help address
     • What improvements in meeting these needs are reasonable?         these questions and set reasonable, achievable improvement tar-
                                                                           March–April 2009                   IOMA BROADCASTER 9

                                                                          Achieving Latent Performance Improvements
                                                                       Identifying and fulfilling latent performance improvements is difficult,
                                                                       but also much more rewarding. The only way to identify these
                                                                       unknown customer needs, so that they can be fulfilled, is to under-
                                                                       stand the customer. A company must intimately know how the cus-
                                                                       tomer procures, handles, uses, and disposes of their product or serv-
                                                                       ice. When they understand their product or service in the customer’s
                                                                       environment they identify opportunities for improvement that can
                                                                       also improve how the customer uses the product or service.
                                                                          Two tools are extremely useful in understanding the customer’s
                                                                       environment with respect to the product or service. One is a gen-
                                                                       eral marketing tool and the other is the most important Lean Six
                                                                       Sigma tool. The general marketing tool is a simple system for col-
                                                                       lecting information regarding the customer. It is important that all
                                                                       information is collected, no matter how the information enters the
                                                                       company. Experience shows that the most useful pieces of informa-
gets that are significantly large enough to impact customer satisfac-  tion relative to identifying a customer’s latent needs can come from
tion. To determine appropriate targets for breakthrough perform-       the most unlikely of sources. Companies touch customers in many
ance improvements a company must understand 1) how the com-            ways: sales staff, delivery personnel, quality engineers, account-
petition currently performs (inside) and 2) what is “best in class”    ing, on-site servicing, and many others. Each of these organiza-
performance (outside) for comparable needs. Commonly called            tions sees a different aspect of the customer’s environment. Latent
benchmarking, both inside and outside comparisons are useful in        needs can be found when all of these different “images” are
establishing the minimum improvement required and the maximum          brought together and combined through methods like affinity dia-
improvement possible.                                                                           gramming or Ishikawa analysis.
   The Lean Six Sigma tools most useful in                                                         The second way in which the customer’s
assessing your competition’s ability to meet           “Experience shows that the               potential latent needs can be identified is
the customer’s needs (inside benchmarking)                                                      through the use of value stream mapping and
are the Quality/Cost Profile and the Value                 most useful pieces of                process mapping. Value stream mapping is a
Map. Shown in Figures E and F, these tools                information relative to               high level look at the internal life cycle of the
provide both a head-to-head comparison for                                                      product or service from receipt of the cus-
each customer need and an overall value                  identifying a customer’s               tomer’s order to delivery of the product or
assessment for each competitor. With this             latent needs can come from                service. The value stream map includes infor-
information, a company can identify those                                                       mation flow (both inside the company and
needs where they lag behind the competition          the most unlikely of sources.”             outside to the suppliers), material flow, in-
— needs that require they at least match the                                                    process inventory, and processing time infor-
best competitor to eliminate a potential nega-                                                  mation. With a value stream map of the cur-
tive market discriminator. More importantly, however, this informa-    rent process a company can visualize a future-state map that elim-
tion can be used to identify those needs where a company leads         inates or minimizes waste: waiting, inventory, defects, transporta-
the competition. To achieve breakthrough performance the Lean          tion, motion, over production, and non value-added processing.
Six Sigma teams must be applied to further increase the market         This future-state map presents an idea of an optimized system that
lead so that a company can leverage these needs as positive mar-       minimizes production costs while “wowing” the customer.
ket discriminators.                                                       A second approach is to use process mapping, which is a
   To determine potential “best in class” performance relative to      detailed step-by-step construction of how the product or service is
specific customer needs requires that the Lean Six Sigma teams         procured, produced, delivered, used, and discarded. Process map-
break down each specific need or group of needs into general-          ping can be used to identify activities that are non value-added,
ized, abstract needs. For example, specified lead time require-        wasteful, or prone to mistake in the current process. A company
ments to multiple locations can be abstracted to distribution needs.   must particularly look for opportunities where small changes in
Once abstracted into general terms, a company can identify the         what they do internally have a major simplifying effect on the cus-
leaders in distribution methods and technology; Federal Express        tomer’s work. They also need to look for opportunities where sub-
and Walmart quickly come to mind. Now the teams can study the          optimization of a particular step in the process has impacted the
distribution systems of the “best in class” and identify methods and   overall effectiveness of the system. Construction of the customer’s
technologies that can be applied to their specific industry and        portion of the process map is best done with the customer’s partic-
processes. After potential breakthrough performance improve-           ipation, which in many cases may not be practical. In these cases,
ments have been identified, it simply becomes a matter of “running     a company can again fall back on the “images” obtained through
the numbers” to verify that the potential increases in sales and mar-  the myriad of contacts the company has with the customer. This
ket share are worth the investments required to implement the new      information can be used to construct the customer’s portion of the
methods or technology.                                                 process map.                                                Continued ®
10 I O M A B R O A D C A S T E R                  March–April 2009

    Improving Customer Satisfaction with Lean Six Sigma                   Summarizing
    Continued from page 9                                               Lean Six Sigma has been demonstrated time and time again to
                                                                        be the premier tool for improving internal productivity and effi-
           I have found that with a process map of the entire product   ciency. It has also been very successfully used to improve cus-
        or service, production, delivery and use opportunities for      tomer satisfaction by addressing failures to meet a customer’s
        latent performance improvements become apparent. In an          basic needs. Failure to meet the customer’s basic needs is detri-
        example from a previous employer, a detailed process map        mental to the reputation of a company and will eventually force
        for a particular hazardous product showed us that our cus-      it out of business, if not quickly and fully corrected. Continual
        tomer was required to stock our product in a remote location    improvement in fulfilling the customer’s performance needs is also
        to his facility. In his assembly process the                                           important to ensure competitiveness. In diffi-
        customer subsequently removed our                                                      cult economic times such as we are currently
        product from the remote storage, trans-      “Continual improvement in                 experiencing, we need to refocus Lean Six
        ported it to an assembly area, and                                                     Sigma efforts so that we are also addressing
        assembled it to another hazardous prod-
                                                        fulfilling the customer’s              the customer’s performance and latent
        uct that was stored at a separate remote       performance needs is also               needs. This will lead to significant growth in
        location. This necessitated two trips                                                  sales and market share.
        (transportation waste) to two different
                                                           important to ensure                     Unfortunately, there is a fly in the oint-
        locations (inventory waste). We recom-               competitiveness.”                 ment: over time what were once the cus-
        mended that, for a very nominal fee, the                                               tomer’s latent needs become his basic
        customer have the second hazardous                                                     needs. Automatic transmissions, car radios,
        product directly shipped to our facility                                               air conditioning, and CD players were all
        and that we would assemble it to our                                                   once latent needs in the automotive industry.
        product and ship the assembly to the cus-                                              Now they are basic needs that must be ful-
        tomer. Once assembled together the two                                                 filled in order to compete.
        products could be stored at a single                                                       In today’s world, the slide from latent
        location. This simplified our customer’s                                               need to basic need is ever accelerating.
        assembly process and greatly increased                                                 Only through the application of focused,
        his satisfaction with our company. (At a                                               disciplined, data-driven methods like Lean
        later date we convinced the customer                                                   Six Sigma will companies be able to per-
        that we could produce the second haz-                                                  form with the speed and accuracy required
        ardous product and effectively doubled                                                 to stay ahead of the competition and the
        our revenue with this single customer.)                                                customers. I

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