Improving service business with Lean Six Sigma

Let’s take the example of a small consultancy company that provides consulting to small and medium sized companies. How can Lean Six Sigma be used to improve such business, or can it?

Define the problem

The dilemma of a small consultancy is how to divide time between sales work and consulting work. Sales brings revenue in the future, consulting creates revenue in the short term. The problem to solve in this example is: how to maximize the efficiency of the sales operation while keeping the revenue stream solid.

Measure current state

Measuring results bring no information about what to improve, so we are looking for gauges that measure the actual doing rather than results. Typical candidates for measurement objects could be:

  • number of emails to new leads per week
  • number of cold calls per week
  • number of customer visits per week
  • kilometers driven
  • billable hours per week
  • maturity of sales plan
  • time since last update of sales plan
  • clarity of value proposition
  • number of updates to website per week
  • % of time used on sales
  • % of time used on consulting

Using the Meters tool 1-3 most relevant and representative objects of these to measure are selected. Let’s assume that the meter selection work results would be a) number of emails to new leads, b) number of cold calls per week, and c) % of time used on sales. Measurement is started and current state before improvement project start is documented.

Analyze current state

A proper tool for root cause analysis is selected. In the example root causes are identified e.g. by using 5 whys – tool. Also other tools such as the Cause and Effect, i.e. Ishikawa diagram or Appreciation can be used based upon the nature of the problem to be solved. The core of the Analyze phase is to identify the root cause in order to fix it in stead of fixing symptoms.

The analysis could for example provide the following three root causes:

1. Machines and technology are used inefficiently

  • Paper and yellow stickers are difficult to share to customer after workshops
  • Customer data is spread in emails and on various network drives
  • Setting up laptop takes too much time during workshop

2. Methods and processes fail to provide expected results

  • Too few cold calls are made
  • Email marketing gives very little results
  • Work specification for call center is unclear

3. Available market Information is insufficient

  • We do not know much about our competitors
  • Our customers are from industries we do not know well
  • The real problem of the customer is not known

Improve business by fixing the identified root problems

The identified root causes are improved using selected tools in Kaizens, or improvement workshops. These improvement workshops include the people that actually suffer from the problems daily. The result of these workshops in this example are: a) hiring a presentation technique trainer to train the consultants and b) taking into use a Customer Relationship Management CRM system. In addition c) a renewed sales process is designed to get sufficient material and market information input to the business process.

After the improved measures have been implemented the meters selected in the beginning of the process are rechecked to verify real measurable improvement has occurred.

Create an Out of Control Action Plan OCAP to make changes permanent

Using the meters selected in the first beginning and confirmed after the improvement phase a plan is made on how to react if and when operations are slipping back to old habits. Actions are listed that are taken when slippage is detected. Trigger values for the selected meters: % of time used on sales, number of cold calls and emails  to new leads per week are set that, when exceeded , will trigger the taking into use of the OCAP. The excellence of the OCAP will define how successfully the new mode of operation will be maintained.

 

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s