Similarities and Differences in Implementation of Quality Frameworks in Manufacturing and Service Sector

Introduction

A production defect in a company like GE (General Electric) might result in that specific product or the part being removed from the assembly line and not sent out as finished product.

However, in the service sector, a process error might prove to be costly as in the case of the JPMC or Citigroup (banking or financial services company that have adopted Six Sigma) where the “leverage” for each transaction is more and hence an error in a process can be magnified several times.

A literature review of the differences between adopting Six Sigma for manufacturing and services yields the finding that there are four things to consider before service organizations adopt Six Sigma as a way of life in their organizations.

Key Similarities and Differences between Manufacturing and Service Sectors

1. First, managers in the service sector must realize that unlike in the manufacturing sector, there are a number of processes in the banking and financial services companies (service sector) that are of varying complexity and different levels of customization. For instance, an assembly line in a manufacturing industry is an example of a highly standard process that can adopt a quality framework.

   However, in the banking sector, there are some processes that are highly complex and do not lend themselves to standardization in the same way that a process in the manufacturing sector does. Hence, the challenge for the service sector is to consider which process can be mass-customized meaning that the process is the same for all customers and in all conditions and then apply the quality frameworks to achieve process excellence.

   An example of a mass customized process in the banking industry or for that matter any service sector company would be the payroll and the credit card accounting processes that lend themselves to standardization. Similarly, in a fast food chain, the processes lend themselves to a high degree of standardization and hence these can selected for application of the quality frameworks.

2. The second point to be considered is one of the cardinal principles of quality control: To define what is a defect and how is one going to measure it? In manufacturing industries it is often easier to spot defects as visual inspection or even advanced quality control processes can often spot defects as they relate to the quality of the product manufactured.

   However, in service companies, defining a defect is a challenge as the conflict between quality as demanded by the customer and the quality of the service as offered by the service provider are two different things. Owing to the perceptual nature of arriving at an understanding of what a defect is, it is often helpful to define the defects in terms of customers lost, customer satisfaction ratings and service turnaround times.

   What these three parameters mean is that the concept of quality in the service sector is often dictated by the customer. Hence, efforts must be made to understand the customer point of view by using skilled researchers and service representatives to implement a “feedback loop” that feeds into the system prevalent in the service industry and self corrects (in the ideal case) or is prodded to do so.

3. The third point relates to the way in which quality slippages are analyzed within the service sector company. Continuing the same point made in the preceding paragraph, it is important to find out the “root cause” behind the defect or the deficiency in service and then act accordingly. It might be the case that complex processes with numerous rules governing each step of the process (that is the hallmark of banking and financial service companies) might need to be analyzed minutely for possible root causes for the defect.

Leadership Practices

The leadership and management practices that have been found to have contributed to the successful implementation of the quality frameworks would be analyzed in this section. As the case study pertaining to the Dow Chemical implementation of Six Sigma framework shows, there needs to be sustained focus on the goals and objectives that have been set for the Six Sigma implementation.

The analysis of the Case Study of Dow Chemical shows how the leadership implemented a “Staircase of Change Leadership” model that has the ten attributes progressing from each step starting with the enunciation of “vision” and culminating in the success step of the staircase that represents the pinnacle of achievement for Dow.

Case Study of Dow Chemical

The Dow Staircase of Change Leadership consists of the following steps: Vision, Values, Attitude, Language, Behaviours, Best Practices, Articulated Strategy, Implementation, Culture Change and Success. The emphasis at each step of the model is to have a coherent strategy to implement Six Sigma and ensure that it is driven from the top as well as embraced by the bottom.

In short a combination of top driven and bottom-up strategies that enunciate a clear vision to be the leader in achieving Six Sigma compliance is the focus of the model as followed by Dow Chemicals.

The key points about this model are the emphasis on “terminology” that is unique to the framework and its implementation (the language step), the necessary “behaviours” that are needed to be followed by each employee and which were communicated as part of “road shows” and the adoption of best practices from across the industry and customizing them to the specific case of Dow Chemicals.

Case Study of Doosan Company

The other case study that is being analyzed for Leadership practices is the one that has been followed by the Doosan Company in South Korea. Under the six-sigma framework adopted by Doosan, there are five elements in the model that are aligned with each other in pursuit of the objective of quality excellence.

The five elements that Doosan incorporates in its model are

1. top-level management commitment,
2. stakeholder involvement,
3. training schemes,
4. project team activities, and
5. measurement system

An analysis of the elements reveals the fact that each of them cannot function without the cooperation and collaboration of the other and a coordinated and synchronous approach towards pursuing the Six Sigma framework is what gives Doosan the edge over its competitors.