Increasing of Customer Satisfaction in Sepahan Oil Company Using Six Sigma Methodology

International Conference on Metallurgical, Manufacturing and Mechanical Engineering (ICMMME'2012) December 26-27, 2012 Dubai (UAE) Increasing of Customer Satisfaction in Sepahan Oil Company Using Six Sigma Methodology Masoud Hekmatpanah, Arash Shahin and Natraj Ravichandran Abstract—Both public and private sectors have given much One major quality concept that is making this cross-sector attention to the concept of customer satisfaction in the past couple of transition is Six Sigma and its philosophy of continuous decades. Naturally, administrators have requested their staff to do improvement. Six Sigma is a data-driven quality improvement customer satisfaction studies for their own organizations. A key philosophy that emphasizes defect prevention over defect motivation for the growing emphasis on customer satisfaction is that detection by focusing on improving process inputs to improve highly satisfied customers can lead to a stronger competitive position resulting in higher market share and profit. service quality is one of process outputs. Six Sigma practitioners view all work as the major issues facing operations managers but it is an area processes that can be defined, measured, analyzed, improved, characterized by debate concerning the need for assessing customer and controlled (DMAIC) (Chow et al., 2010). expectations and service quality assessment. The rationale for the implementation of Six Sigma in SOC Six Sigma is a data-driven quality improvement philosophy that was agreed as cost reduction through reduction of wastage in emphasizes defect prevention over defect detection by focusing on 4-litre can production. This was expected in turn to lead to an improving process inputs to improve process outputs. The ultimate goal of Six Sigma is flawless performance, zero defects, with a defect optimal production line with high productivity, thus bringing defined as anything that results in customer dissatisfaction with using in profit to SOC. It was noted that such improvement would the six sigma technique and SPC tools is used to demonstrate how to inevitably result in customer satisfaction. relate potential causes of a major presenting problem in Sepahan oil company. For this purpose, the four liter production line of the II. METHOD AND MATERIAL company has been selected for investigation. The findings imply that the application of SPC tools has reduced the scraps and increase the A. Six Sigma methodology customer satisfaction from 66.3% to 94.5%. The quality revolution of the past three decades has evolved from its origins of mass production quality control, through Keywords—Quality, Customer satisfaction, Six Sigma, the various stages of quality assurance, total quality Management, SPC. management, business excellence, continuous improvement I. INTRODUCTION and, latterly, Six Sigma (Armitage and Keeble-Allen, 2007). The concept of implementation of Six Sigma methodology The first and most important principle is customer focus. was pioneered at Motorola in the 1980s with the aim of Measuring performance level in Six Sigma starts with the reducing quality costs, i.e. costs of not doing things right first customer. Improvements are defined by their impact on time, costs of not meeting customer requirements, etc. customer satisfaction and the creation of value. This principle (Antony and Banuelas, 2002). leads it to use voice-of-the-customer (VOC) and voice-of-the- Six Sigma stresses the application of statistical and marketplace data as the main driver of its activities. (Javier problem-solving tools and techniques in a methodical and llore et al., 2006). In today’s competitive business systematic fashion to gain knowledge that leads to environments, firms are under intense pressure to breakthrough improvements with dramatic impact on the systematically produce tangible quality achievements, control bottom-line results (Antony and Banuelas, 2002). Within the quality standards and generate positive bottom line results. Six Six Sigma regime, it straightly follows a formal and Sigma has been adopted by many organizations to develop disciplined methodology for improving organizations’ and strive for excellence in quality standards and innovations processes, based on rigorous data gathering and analysis, (Teck-Yong, 2011). following the well-known strategy – “define-measure-analyze- improve-control” process. The strategy takes an organization’s key business processes through five phases to deliver breakthroughs in performance: (1) Phase 1. Define – involves defining the scope and goals Masoud Hekmatpanah, Ardestan Branch, Islamic Azad University, of the improvement project in terms of customer requirements Ardestan, Iran (corresponding author to provide phone: +989132051162; fax: and the process that delivers these requirements. +983625242047; e-mail: [email protected]). (2) Phase 2. Measure – involves measuring the current Arash Shahin: Department of Management, University of Isfahan, Isfahan, Iran (e-mail: [email protected]). process performance – input, output and process – and Natraj Ravichandran: Department of Management, Jamia Hamdard calculating the sigma capability for short- and longer-term University, New Delhi, India (e-mail: [email protected]). process capability. (3) Phase 3. Analyze – involves identifying the gap between 329 International Conference on Metallurgical, Manufacturing and Mechanical Engineering (ICMMME'2012) December 26-27, 2012 Dubai (UAE) the current and desired performance, prioritizing problems and process, equipment, personnel, etc., that can affect the identifying root causes of problems. Benchmarking the product. It represents a summary of the empirical process outputs, products or services, against recognized quantification of the variability that exists within the product benchmark standards of performance may also be carried out. manufacturing process (Breyfogle III et al, 2001). Breyfogle (4) Phase 4. Improve – involves generating the described the variability as follows: The tabular information in improvement solutions and fixing problems to prevent them Figure 1 indicates the percentage of the area under the normal from re-occurring so that the required financial and other curve that can be found within ±1σ units throughout ±6σ units performance goals are met. centered about the mean, where σ represents true population (5) Phase 5. Control – involves implementing the improved standard deviation. For instance, ±3σ units of standard process in a way that “holds the gains”. Standards of operation deviation represent 99.73% of the total area under the normal will be documented in systems such as ISO 9000 and distribution curve (100%). The difference of 0.27% (i.e., standards of performance will be established using techniques 100% − 99.73%) is the probability of a plant production like SPC. whose product is outside of ±3σ units of standard deviation. If a process is centered, for every 100 product units, 99.73 % of B. Quality levels and specification limits them, approximately 98 products, will have desired Specification limits are the tolerance or performance ranges characteristics that fall within ±3σ. Figure 2.5 indicates that that customers demand of the products or services they are this corresponds to 2,700 defective parts per million (ppm) of purchasing. Because variability is so inevitable, specification the products at ±3σ. At ±6σ there are 0.002 defective parts per limits should be set in a way that takes into account some million (Lalovic, 2002). degree of imprecision in the work done. Figure 1 illustrates C. Six Sigma and firm performance specification limits as the two major vertical lines in the figure. The target value, shown in the figure as , is naturally The degree to which Six Sigma programs are effective can at the exact centre between the upper and lower specification be contingent upon the stability of the customer base or the limits. These specification limits are independent푋� of the bell- environment. When organizations are serving a specific shaped curve of the normal distribution, also shown in the customer base and the customer base is expected to remain figure. The customer expects the result to fall somewhere stable over time, Six Sigma programs can maintain a strong between the upper and lower specification limits; if not focus on translating the voice of customers into improvement exactly in the center .It is up to the customer to decide projects. This is due to the fact that within stable customer whether or not the extreme values at the specification limits base, customer requirements are expected to remain stable are acceptable quality levels.푋� The values outside the customer over time (Mellat Parast, 2010). specification limits are considered defects, failures, or nonconformities. (Lalovic, 2002) Fig 2. The effect of Six Sigma projects on firm performance D. Customer Satisfaction Porter (1985) suggested that a competitive advantage exists when an organization maintains an edge over its rivals in retaining customers and in positioning itself to take advantage of environmental changes. Under these circumstances, successful service organizations realize the importance of Fig 1. Normal Distribution between Six Sigma Limits carefully monitoring and managing of customer satisfaction Source: Lalovic (2002) (Bitner et al., 1994). Satisfaction is an “overall customer attitude towards a service The bell-shaped curve in Figure 1, also known as a provider” (Levesque and McDougall, 1996) or according to Gaussian curve, is called the normal distribution,.

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