Improving quality services in banks using the six-sigma DMAIC model

Introduction

Depending on the comparison and differences between the expectations of the customer and the

services they receive, quality service refers to how customers feel about their happiness. This

difference is also called the difference between cognitive quality and perceived quality if the

perceived quality is equal to or greater than the cognitive quality, the satisfaction of the customer

or loyalty achieved, and the customer is not satisfied (Wang & Hwang 2012 and
Gotlieb et al., 1994). Many research has rendered customer satisfaction an important
cause of service quality, expectation, confusion, success, desire, power, and fairness
(Zeithaml et al., 1996; Cardozo, 1965; and Mckinney, 2002).
The core of service quality and customer satisfaction is relevant in the banking industry
which aims to serve customers (Jamal and Naser, 2002). Management level and level of
service have thus become one of the parameters for assessing the banks' core
competitiveness.

The customer-oriented service concept has become the company’s purpose. Therefore,
the demand for banking services by users is getting higher and higher. At present, due to
bank’s high competition, the poor banking services are becoming more and more
apparent, especially for the long-term waiting time for consumers. According to statistics
in China, from the queuing or taking the number to the counter to handle business, the
average waiting time for bank outlets exceeding 30 min is more than 30%. The opening
of the window of banks is unreasonable. The working day is only about 60% open rate
and only a 50% open rate on non-working days. This work is inefficient, resulting in
generally low customer satisfaction.
The quality of the counter service directly reflects the strength of the bank’s overall
service level and affects customer satisfaction with banking services. So we mainly
strengthen banking business process management through Six Sigma management, to
shorten customer waiting time and improve bank customer satisfaction.

Six Sigma management is a new process of a process change that reduces customer
operating costs and cycles while improving customer satisfaction (Alexander, 2001). Six
Sigma is a management model that enhances the profitability of an organization by
improving the quality of its operations. Six Sigma is an effective management strategy
for companies to gain competitiveness and sustainable development in a new economic
environment (Hallowell, 1996). Relevant scholars have studied customer satisfaction, but
these studies involve not many banks, and the use of Six Sigma for research is even rarer
(Fornell et al, 1996 and Riley et al.,2013).

Based on the field survey, we designed the Six Sigma process for commercial bank
customer satisfaction, and applied the method to retail bank customer management,
enriched the customer satisfaction theory, and had a specific theoretical value for the
development of customer satisfaction theory.

It represents one of the most important administrative concepts in the world of business
administration, which can be applied to the various administrative procedures in banks. It
represents a management methodology and philosophy based on a firm building that
seeks to focus the effort to obtain services that are very close to the highest quality, In a
record time, it relies on the growing analysis of data and accumulated statistics to identify
the defects and defects in the procedures, so as to work on them permanently and try to
reduce the percentage of errors to reach zero defect whenever possible, specifically 3.4
defects per million chances.

The issue of raising performance is one of the main topics that receive wide attention
from business organizations. The company has recently moved to support the processes
of improvement and development to provide the best and to have the elements of
continuous success. Policies in the industrial sector, organizational structures and
business structures should therefore be built on the basis of continuous improvements in
their operations and activities through a number of methodologies and methods to
achieve the best performance. The most important of these are six approaches (6) which
adopt the principle of continuous improvement of all FAO operations (DMAIC) based on
the following steps: (Identification, Measurement, Analysis, Optimization, R and B), by
applying statistical tools and tools Helical.
Six Sigma provides a blueprint for implementation of total quality system. Its roadmap-DMAIC
(Define-Measure-Analyze-Improve-Control) means:

Define the problem of the process; Measure the performance of the process; Analyze the cause
of the process;Improvetheprocess,reducethewaste;Control the process, eliminate the occurrence
of the same problem,

Six Sigma

According to Lin et al. (2009) Six Sigma was initiated by Motorola in the 1980s. Hayler
and Nichols (2006) defined Six Sigma as “use of facts and data to reduce process
variations, thereby enabling organizations to deliver consistent, high quality services to
customers.” The two key methodologies used in Six Sigma are DMAIC and DMADV.
DMAIC stands for define, measure, analyze, improve, and control. In the define phase
organizations defines the problems, key process characteristics are identified, studied and
benchmarked in the measure and analyze phases. In the improve phase solutions are
created and implemented for a better or optimized performance. The control phase then
ensures that the problem does not appear again. In banking sector mostly, DMAIC is used
because banks usually adopted Six Sigma to improve processes not creates new ones.

Harry and Schroeder (1999) defined Six Sigma as ‘a disciplined method of using
extremely rigorous data gathering and statistical analysis to pinpoint sources of errors and
ways of eliminating them’. However, according to Antony and Banuelas (2002) Six
Sigma employ statistical and non-statistical tools and techniques to minimize process
variation and enhance process performance and competence. Linderman et al. (2003) also
considers the importance of statistical as well as non-statistical tools and defined Six
Sigma as: ‘Six Sigma is an organized and systematic method for strategic process
improvement and new product and service development that relies on statistical methods
and the scientific method to make dramatic reductions in customer defined defect rates’.
However, as (Antony and Banuelas, 2001) described in business world the term Six
Sigma is defined differently, “ Six Sigma is business strategy used to improve business
profitability, to improve the effectiveness and efficiency of all operations to meet
customers’ needs and expectations.” In views of Hahn et al. (2000) Six Sigma is a
product and process quality enhancement approach based on statistical tools and
discipline. Other researchers take Six Sigma as a management strategy requiring cultural
changes (Sanders and Hild, 2000). Schroeder et al. (2008), after a detail study of
literature and consulting many practitioners defined Six Sigma as “Six Sigma is an
organized, parallel-meso structure to reduce variation in organizational processes by
using improvement specialists, a structured method, and performance metrics with the
aim of achieving strategic objectives.”

6σ

DMAIC (Define-Measure-Analyze-Improve-Control)
For a long time, quality has been the human being concern. Over the last few
decades, companies experienced dramatic changes in business environment such as
increasing consumer awareness of quality, rapid technology transfer, globalization
and low cost competition. Therefore, many tools and methods were setup to clarify
the quality, beginning from Quality Inspection (QI) to Quality Assurance (QA),
and Total Quality Management (TQM) that was developed by Japanese companies.
As a result of inability of American companies to rival in global market, American
companies initiated Strategic Quality Management (SQM) that was adopted by
IBM. In fact, Toyota was the first entity to concern about quality, inventory, low
cost, and delivery time to maximize customers’ satisfaction Desale and Deodhar
(2014:286), so it used the Just in Time (JIT) system for production which initiated
by Toyota too then developed to Lean Manufacturing (LM). In the early and mid-
1980s, Motorola engineers decided that the traditional quality levels of measuring
defects in thousands is not accurate, therefore they developed a system that
measures the defects per million called Six Sigma system. Consequently, they
saved billions as a result of applying the Six Sigma system. As mentioned above
when the organizations used either Lean Production or Six Sigma, they were able
to improve and develop their Business Performance. The question is if we combine
both system (Lean Production and Six Sigma) together what will be the results?
Only very limited authors tackled this point, this study is trying to combine both
Lean Production with Six Sigma and study their effect on organizations’ Business
Performance. With adding a new element to Lean Six Sigma which is sustainable
development and study its value added to the Business Performance.

A few years ago new trend was revealed in which companies tried to merge
between Lean Production system and Six Sigma system in which called Lean Six
Sigma, where Salah, et. al. (2010:250) stated that since 1986 “The George Group”
was the first to integrate Lean with Six Sigma. Chinvigai, et. al. (2010:3) said Lean
is a philosophy of continuous improvements while Six Sigma is a way to meet
quality by measuring ability of enterprise to produce perfectly. The aim of Lean
Six Sigma is maximizing shareholders’ value (Laureani and Antony, 2010:688).
Moreover Muthukumaran, et. al. (2013:98) said that in 1997 BAE Systems tried to
combine Lean Management principles with Six Sigma, the company named their
program Lean Sigma Strategy to protect market share in aerospace industry. Dey
(2013:4) explained that despite their different roots, Lean and Six Sigma share
several fundamental common features including a focus on customer satisfaction,
continuous improvement, identification of root causes, and comprehensive
employee involvement. Jovanovic, et. al. (2013:237) stated using Lean Six Sigma
approaches in health care processes is rather a new area for research which it was
found very useful for improving health care processes by researchers and
practitioners. Muhareb and Graham-Jones (2014:1) stated as a managerial process
of continues improvement, Lean Six Sigma considered a process that can improve
products continuously in order to achieve high product quality, competitive costs
and reduced delivery times, that leads to customers’ satisfaction.

The aim of any business is to be profitable and successful but according to global
standards and criteria that should be taking sustainable development as a critical
standard in any business to maintain the planet and resources for the future
generation, from this point sustainable development should be added to Lean

Production, Six Sigma and Lean Six Sigma elements as it is balancing among
people, planet and profit (Leonard and Schneider 2014:120-121). Furthermore, Hai
and Mai (2014) concluded that there is a relationship between Lean production and
Corporate Social Responsibility, where the company might increase its efficiency
and minimize environmental effects at the same time.

Therefore, it seems that it is a worthwhile to combine both systems and study their
effect on organizations’ business performance, so this study will investigate the
effect of the combination of both systems on Jordanian Pharmaceutical
Manufacturing Organizations’ (JPMO) Business Performance.

1.2. Problem Statement

Measuring and managing Business Performance is a worldwide concern; actually it

is not limited to organization, industry or country. Yeh, et. al. (2011) said applying
Lean Six Sigma improve organizations’ processes. Soare (2012:193) stated quality
and research within Continuous Improvement displayed a particular interest in
recent years. Abu-Hameeda (2013:19) noted that due to the high pressure that the
production companies including the pharmaceutical ones faced, and because the
Jordanian market now is open for any pharmaceutical products, these companies
forced to use the a quality system including Lean Six Sigma to produce a high
quality goods that increase customers’ satisfaction that can lead these organization
to achieve the sustainability and the succeed in the markets. Junankar, et. al.
(2014:131) cleared that pharmaceutical industry has to face many major challenges
in order to provide best performance. Koripadu and Subbaiah (2014:91) explained
how Lean and Six Sigma systems can be successfully used for taking a proactive
problem solving management steps with higher profits along with better efficiency
and effectiveness.

Therefore the purpose of this research is to investigate the effect of Lean Six
Sigma elements on Jordanian Pharmaceutical Manufacturing Organizations’
(JPMO) Business Performance.

Problem Questions:

The study problem can be perceived by having detailed and scientific answers to
the following questions:

The main question:

1. Do Lean Six Sigma elements (defect, over production, waiting time,

transportation, inventory, motion, extra processing, non-utilized talent and
sustainability development) affect the Jordanian Pharmaceutical Manufacturing
Organizations’ business performance?

According to Lean Six Sigma elements the main question can be divided into the
following sub-questions:
. 1.1.  Does defect affect the JPMOs’ business performance?

. 1.2.  Does over production affect the JPMOs’ business performance?

. 1.3.  Does waiting time affect the JPMOs’ business performance?

. 1.4.  Does non-utilized talent affect the JPMOs’ business performance?

. 1.5.  Does transportation affect the JPMOs’ business performance?

. 1.6.  Does inventory affect the JPMOs’ business performance?

. 1.7.  Does motion affect the JPMOs’ business performance?

. 1.8.  Does extra processing affect the JPMOs’ business performance?

. 1.9.  Does sustainability development affect the JPMOs’ business

performance?

1.3. Study Purpose and Objectives:

This study investigates the effect of Lean Six Sigma on the Jordanian
Pharmaceutical Manufacturing Organizations (JPMOs’) Business Performance.
Therefore, the current study aimed to find the effect of Lean Six Sigma elements
(defect, over production, waiting time, transportation, inventory, motion, extra
processing, non-utilized talent and sustainability development) on JPMO’ Business
Performance. The main objective of this research is to provide sound
recommendations to pharmaceutical organizations, as well as, to other industries
and decision makers regarding the influence of Lean Six Sigma indicators on
organizations’ Business Performance.

1.4. Study Importance:

The current study might be considered as initiative that presents the effect of Lean
Six Sigma on Jordanian Pharmaceutical Manufacturing Organizations. A better
understanding of the effect of Lean Six Sigma elements on the JPMOs’ business
performance draws conclusions that can be beneficial not only for JPMOs but also
to other organizations, institutions and decision makers. The content also may be
of an interest to academic studies related to the reporting and decision making
concerning Lean Six Sigma.

Therefore the importance of this study comes from the following scientific and
practical considerations:

1. Highlight on the importance of Lean Six Sigma (LSS) and its applications on the
Jordanian Pharmaceutical Manufacturing Organizations (JPMO) and its
importance in achieving high performance levels that contributes to the
achievement of the long run goals.

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