Using Six Sigma DMAIC to improve credit initiation process in a financial services operation

Abstract

Purpose

The credit initiation process for mid‐level corporate credit card customers involves dependencies on multiple people across divisions considered as a critical function for a US financial services company. Increasing efficiency and effectiveness of the process could save time and money for the company. The purpose of this study is to analyze the process using Six Sigma DMAIC tools in order to determine inefficiencies; specifically, to decrease the number of days it takes from the time a company submits a request, to the time it is approved from 20 days to 15 days, resulting in a 25 percent improvement in throughput.

Design/methodology/approach

The process improvement tool used is the Six Sigma DMAIC methodology, in addition to cause‐and‐effect diagrams and the development of poka‐yokes.

Findings

This study found several areas for improvement in the process studied. Using statistical testing, bottlenecks in the process were identified. Process changes are suggested, as well as, new measures that can be implemented to prevent variance in the process.

Practical implications

Business operations can benefit from evaluating key processes in this way to strengthen procedures and eliminate variation. The managers at the financial services operation studied will be able to implement the recommended process to improve efficiency and throughput.

Research limitations/implications

Limitations exist that may prevent the recommendations from being carried out. These limitations lie in elements that are outside the control of the credit manager, such as the actions of the sales team and the approval of executive management. Success of this project hinges on cooperation from these parties.

Originality/value

The process under evaluation in the study has never before been examined with such scrutiny. The outcome of the study and recommendations for improvement will be of great value to the financial services operation studied. Other service organizations, however, can learn from the Six Sigma process executed for this study as well. Six Sigma is a valuable methodology that can be applied to a wide variety of organizations and business processes.

Citation

Kumar, S., Wolfe, A.D. and Wolfe, K.A. (2008), "Using Six Sigma DMAIC to improve credit initiation process in a financial services operation", International Journal of Productivity and Performance Management, Vol. 57 No. 8, pp. 659-676. https://doi.org/10.1108/17410400810916071