Six Sigma and Service Industries

When I first started working with Six Sigma in the phone company, many people said it wouldn't work because Six Sigma works for manufacturing, not services. Nothing could be further from the truth. This is just a convenient way for crafty employees to dodge learning the improvement strategies.

What are Services?
According to Peter Pande, et. al., the answer is:
Sales, finance, marketing, procurement, customer support, logistics, IT, or HR in any organization, from a steel company to a bank to a retail store. A few of the other words used to describe these activities include: transactional, commercial, nontechnical, support, and administration. These business functions have tried to hide from Six Sigma and many have been successful at flying under the "radar."

I have found that, at an abstract level, there's no real difference between a service process and a manufacturing one. They both encounter delays, defects, deviation and unnecessarycosts. One may produce purchase orders instead of computers, bills instead of brake liners, but they all take time, cost money, create defects, cause rework, and create waste. When we focus on finding the few key measures of defects, delay, and cost that are hampering profits and productivity, breakthrough improvements are easy.

In an IT department, we might focus on downtime or transaction delays. We might focus on manual rework of order errors or the costs of billing errors. Even a great manufacturing company with IT problems can suffer tremendously from the service side of the business.

Every aspect of your business follows a process; it may be a highly refined process or an error-prone, ad hoc one. Regardless of whether it's service or manufacturing, there are always defects in the process steps, delays between steps, and increased costs involved in reworking or scrapping some work product.

Good manufacturing companies often need to improve the backroom service activities: ordering, fulfilling and billing. Use Six Sigma to simplify and streamline your "service" components. If you're a good service company, find some key defects, delays, or costs in which to make breakthrough improvements that will differentiate you from your competitors. 

Key Six Sigma Tools for Services

Define and Measure



before after line graphs
before after pareto charts



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