On its most basic level Six Sigma is an approach to eliminating defects through the application of statistical techniques to detect, correct, and improve variability in a process.
Posted May 17, 2004
Manufacturing companies have used Six Sigma as a tool to manage and drive quality and process improvements since the 1980s. On its most basic level Six Sigma is an approach to eliminating defects through the application of statistical techniques to detect, correct, and improve variability in a process.
Six Sigma is Important to Customer-Facing Processes
For manufacturers today competitive advantage comes not only from developing and selling the most innovative product at the best price, but also from delivering the best customer service. Customer-facing processes often represent significant inefficiencies that can be remedied by Six Sigma processes. In Six Sigma Way, for example, authors Peter Pande, Robert Neuman, and Roland Cavanagh state there typically is only 50 percent efficiency in front-office processes.
Companies that have implemented Six Sigma initiatives have reaped benefits that include an enhanced awareness of customer needs and the integration of those needs into core processes, as well as a corporate culture of continuous improvement.
In applying Six Sigma to ambiguous customer-facing processes, which unlike manufacturing production processes do not result in a tangible product that can be measured, a separate methodology called Design for Six Sigma (DFSS), can be helpful. DFSS helps to shape from the ground up processes that do not break down through an iterative process of DMADV, or define, measure, analyze, design, and verify.
CRM supports the Six Sigma methodology DMAIC in the following ways:
D strong >efine business objectives, metrics, and product and process maps based on industry-defined CRM metrics and process library.
Measure, quantify and Analyze defined output metrics leveraging prebuilt, drill-down voice-of-the-customer analytics.
Improve, Control, and standardize processes through automation, digitization, and use of best practices embedded in the business applications.
Knowing Where to Begin
Selecting the right customer-facing processes is essential to a successful Six Sigma initiative. Accordingly, a three-step approach can be helpful: defining objectives; identifying core processes; and defining key, high-impact problems.
Depending on the company and the specific objectives identified, good candidates for processes to which Six Sigma can be applied may vary. There are certain processes, however, that appear to be strong candidates for most companies and situations. These can include sales, call center, field service, and marketing.
CRM Helps Companies Achieve Their Six Sigma Objectives
CRM enables companies to better support and implement the Six Sigma methodology by providing a single platform that captures and automates these customer-facing processes. CRM supports the Six Sigma methodology through each of the steps in its approach.
To begin applying Six Sigma to CRM, the first step is to identify your company's key profit drivers and critical customer needs. Next, define the critical processes that influence these objectives. Finally, determine which critical processes will have the greatest impact when standardized. You can apply Six Sigma to:
Sales: Decrease the number of nonqualified leads in the pipeline; increase customer face-time; reduce order-entry errors
Call center: Increase first-call resolution; decrease average hold time; reduce follow-up call percentage
Field service: Decrease service cycle time; reduce (or eliminate) double-booking for service personnel; reduce percentage of customers receiving free service calls beyond their contract entitlements
Marketing: Increase marketing campaign response rate; reduce duplicate or outdated customer database records; reduce no-shows after event registration
What type of improvements can be seen as a result of applying Six Sigma and CRM to customer-facing processes? Industry benchmarks for Industrial Manufacturing indicate sales, general and administrative expenses of 17 percent. Assuming that there indeed is 50 percent waste in customer-facing processes, and assuming that 25 percent of this waste can be eliminated through improvements, then application of Six Sigma methodologies and CRM would result in an approximate 2.15 percent cost savings. Considering that average operating margins for the industry hover around 9.4 percent this cost savings would represent a 30 percent increase in profit margin as a direct result of applying Six Sigma and CRM to customer-facing processes.
As you can see, when judiciously deployed to customer-facing processes and adhered to throughout an organization, deployment of Six Sigma and CRM to customer-facing processes can create significant competitive advantage and have a strong bottom-line impact.
About the Author
Craig Fairfield is director of Siebel Manufacturing vertical products at Siebel Systems. He is responsible for the design and marketing of Siebel Systems' comprehensive solution specifically designed for aerospace and defense and industrial manufacturing companies. Mr. Fairfield joined Siebel Systems five years ago in product marketing, where he helped build the marketing and sales strategy programs around several product lines including product configuration, marketplaces, and distributor relationship management. In 2002 he was selected to join the Siebel Manufacturing vertical product group to lead the marketing, sales, and business development strategy. Prior to joining Siebel Systems, Fairfield was with SAP and was a consultant with R. B. Webber & Company. Fairfield graduated from Harvard Business School with an MBA, and from Yale University with a BS in economics and mechanical engineering.
A 60 percent failure rate suggests that process change requires behavior change.