The advantages and disadvantages of BPR and Six Sigma

In the CEM view consumers are not treated just as ‘rational satisfied actors’ but also possessing of emotional responses. Hence the measurement and understanding of emotions is a key area that should be appreciated alongside the usual insight measures of satisfaction. Fortunately, this is a component of CEM easily integrated into BPR / Six Sigma/ Lean’s statistical and methodological orientation

The advantages and disadvantages of BPR and Six Sigma

BPR and Six Sigma grew in appeal in the late 1980s and through the 1990s due to its early success in responding to a market environment characterizedby increased competitive entry, a failure to satisfy customer needs and an insufficient cost structure. In particular, it offered an unbiased review of a company’s business processes’ that enabled streamlining and efficiency benefits.

By 1993, as many as 65 percent of Fortune 500 companies claimed to have initiated re-engineering efforts; adoptees such as Taco Bell claiming that this had led directly to a 22 percent growth in revenues by ‘rethinking who the customer is and by focusing on enhancing activities that bring value to the customer’.

Likewise with Six Sigma, by 2006 Motorola has reported a total saving of $16 billion whilst GE claimed to have saved more than $1.5 billion beyond its initial investment in a period of 4 years. In addition, its impact is seen not just in terms of cost savings but also in rates of customer satisfaction. Bank of America for instance, attributes a 10.4 percent increase in customer satisfaction and a 24 percent decrease in customer problems to Six Sigma.

Beyond its contribution to the bottom-line, Six Sigma’s popularity is also due to its measurement approach and rigorous process design which fits in with the quality and business themes of customer focus and process improvement. For corporate executives it
provides an executable methodology focused on the key steps of leadership, customer focus, strategic goals, improvement project selection, training and execution, resources and communication, alongside the development of ‘blackbelt’ training experts.

This methodological appeal can be easily appreciated through its clearly defined implementation phases. In particular, the five phase improvement cycle summarizedby the DMAIC acronym outlined as follows.

• Define: define the customers and their requirementsthe team charter and the key process impacting the customer.
• Measure: identify key measures, data collection plan and processes in question.
• Analyze: analysis of the data collected and the root cause of any problems.
• Improve: determine the potential solutions.
• Control: develop, document and implement a plan to ensure performance improvement.

Furthermore, some of the early adopter companies remain committed to its practice today e.g. Bank of America, Honeywell International and Caterpillar.

However, as appealing as this may seem, with time it has become increasingly apparent that not only has room for cost efficiency become increasingly difficult to find but also that cost reduction is a short-term fix that risks undermining your ‘value differentiator.’ Hence, for most implementations the ‘Achilles heel’ has been in its inside-out perspective where the focus is less on the customer and more on process efficiency and cost savings with a consequent lack of structure in mapping customer response and over dependency on customer satisfaction measures.

There is therefore a need for a paradigm shift in the approach to customer centricity within BPR and Six Sigma not least in the need to apply best practice CEM insight that delivers a more rounded understanding of how any change program impacts not just rational satisfaction but emotional commitment; and increasingly in a networked world, word of mouth.