Six, Sigma, BPO, Customer, Methodology, Efficiency, Exult

Six-Sigma building optimum efficiency in BPO

01 Sep 2003 | (Case Study)

It goes without saying that to go into BPO, management and the business as a whole must be extremely efficient and customer-oriented. Most organisations can't properly organise their own business processes, let alone somebody else's. So it takes some exceptional organisational capabilities for entrepreneurs to tackle the highly personal task of managing 100 other businesses' projects as well as their own. Despite top-notch organisational capabilities and extensive experience, there are those in the BPO sector who believe that one can never be too proficient, nor too customer-oriented. It doesn't come as a surprise, then, that companies are looking to efficiency methodology and experts in order to pinpoint potential weaknesses and further streamline their processes. Exult's Bernie Kocanda, a veteran of the shared services sector, has found his solution in Six-Sigma, an efficiency and customer service methodology that enables him to fine tune an already well-oiled BPO machine. The result - revolution.

Consistency and cost-efficiency: more than a goal
Anyone leading an internal shared services organisation or a BPO organisation knows that achieving customer satisfaction and operating at a low cost are your critical success factors. Both factors are as vital to me today as they were when I spent six years leading a 200-person internal shared services centre. Today, I am the Six-Sigma Program Director for Exult, a BPO organisation that provides HR and financial services from four global customer service centres.

I've observed both the similarities and differences between internal and external service providers. One of the major differences is the rigor with which internal and external service providers deliver within a BPO. Needless to say, consistent, cost-effective global delivery of services isn't just a nice goal - it is the sole objective of BPO. To achieve this rigor, Exult has strategically opted to use the Six-Sigma methodology.

Enter Six-Sigma
What is Six-Sigma? As I study more, I realise that it is a multi-faceted discipline. Six-Sigma is a measurement of quality, a continuous improvement methodology, and the disciplined mindset of an organisation that is striving for perfection. As a measurement, Six-Sigma enables organisations to quantify and compare different operations using the same measure, the Sigma level. As a methodology, Six-Sigma is a process of performing continuous improvement projects. When combined, these aspects make Six-Sigma a powerful technique for improving overall efficiency and customer service.

Although Six-Sigma is generally viewed as a way to achieve quality, I have a much broader perspective on the methodology: Six-Sigma is a system that enables organisations to achieve consistent high levels of customer satisfaction, at minimum expense.

Quantifying success - and failure
Quintessential to the Six-Sigma methodology is its measurement definition, which enables an organisation to measure its capabilities and failings, and to quantify this data using a universal toolset. Six-Sigma bases its focus of measurement on counting defects - a defect could be a late payment, incorrect amount, a voided check or any number of flaws in the normal course of events. The Six-Sigma objective: to produce less than 3.4 defects per million opportunities.
Not only does Six-Sigma arm organisations with objective measurement criteria, but it offers tools that help management analyse the data collected. For example, organisations can use a Statistical Process Control (SPC) chart, a simple tool that allows management to determine whether defects occur due to "special" or "normal" causes. Simply defined, a special cause is a single event that sparks an unusually high number of defects; a normal cause is a recurring event or problem that causes a lower number of consistent defects. For example, if a programming error makes it necessary for the customer service team to void 200 checks in one day, the error would be the special cause. Generally, we react to special causes, find the source of the problem and resolve it. Meanwhile, we take for granted our average of five voided checks a day due to normal causes. Eliminate immediately the reason for special cause defects and the process becomes statistically stable; continuously eliminate the reasons for the normal cause defects and you achieve long-term customer satisfaction at a lower cost.

Indeed: the customer is always right
Six-Sigma emphasises that defects occur not only within an organisation, but also when the customer is not satisfied. How do you know what the customer wants? To define what is important for your clients, start with your customer service agreement. No matter how good your customer service agreement is, it cannot be relied on as an accurate reflection of your customers' views. An organisation must look beyond the customer service agreement, to understand the actual needs of the living, breathing, flesh-and-blood customer.

So far as Six-Sigma is concerned, only one perspective matters - what the customer thinks. To find out what is truly important to its customers, an organisation needs to gather information through surveys, focus groups, etc. For example: a call centre manager may view call time and abandonment rate as important criteria for measuring success when contacting customers. However, ask the customer, and he or she may have a completely different idea of what is a successful transaction.

According to Six-Sigma, the customer's perspective on a transaction is the only view worth considering. In other words, an organisation won't know what is important to its customers until it asks them. Six-Sigma prompts an organisation to do just that - ask customers for their values, and find out just what they are thinking. Once an organisation identifies the factors that are important to its customers, Six-Sigma helps management to implement a monthly "dashboard" that helps to monitor the status of customer satisfaction.

Methodology: a tool for every step
So how does Six-Sigma define its methodology? In my experience, a successful BPO company or shared services organisation needs to be consistent, and the only way to achieve this is by standardising its methodology.

If you've just launched a shared services company, chances are that getting started was a lot more difficult than you had expected, and operations are not yet as efficient as you envisioned. Similarly, if your BPO has been up and running for a few years, you have the same challenge to perform significantly better than in the previous year. Either way, you just can't dictate improvement and expect it to happen.

This is where Six-Sigma steps in - allowing everyone in an organisation to use the rigor of one process, thus streamlining what were previously inconsistent methodologies. Six-Sigma supplements every stage of an organisation's development by providing statistical and problem-solving tools. Even if each project may not require the full scope of each step or the use of all the tools, it is my belief that the logic of Six-Sigma's methodology greatly increases the likelihood of success.

Three easy pieces
Three aspects of the Six-Sigma methodology warrant further mention. The first, which I have already mentioned, is that an organisation must focus on the customer. Insofar as measurement is concerned, one of the first steps in a Six-Sigma project is to listen to the "voice of the customer', and by doing so define the factors that are critical to quality. Second, organisations must understand the relationship between process effectiveness and efficiency. For example, if you deliver fast service, your customer will be happy and the speed of delivery will lead to lower costs. And the final aspect worth highlighting is fact-based decision-making. An organisation needs to substantiate with facts every conclusion reached in each step of the methodology. In other words, every team member, whether experienced or fresh out of college, needs to back up his or her conclusions, recommendations and implementation decisions with facts.
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About Bernie Kocanda
Bernie Kocanda is Director of the Exult Six-Sigma Program, where he is responsible for the successful implementation and operation of the Six-Sigma methodology within Exult's worldwide Client Service Centres. Prior to joining Exult, Bernie served as the Director of Shared Services for Kraft Foods, a leading food company. Bernie has a Masters of Accountancy Degree, a Bachelors Degree in Information Systems and is also a Certified Public Accountant. Contact Bernie by phone, +1-281-539-6907 or e-mail: Bernie.Kocanda@exult.net

About Exult
Headquartered in Irvine, California, Exult, Inc. offers Exult eHRSM a comprehensive, integrated service designed to manage the entire human resources department for Global 500 corporations. Exult's strategy is to transform Global 500 HR departments by implementing and operating scalable process management solutions across many HR business processes. Exult uses its HR best practice expertise, shared client service centres, expert HR process consulting capabilities and its myHR web-enabled applications to help Global 500 corporations enhance human capital productivity, reduce HR costs, streamline HR processes, and provide superior HR services to their employees. For more information, visit Exult's web site at www.exult.net

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