Tag Archives: lean office

How much waste is there in the Service Industry?

Over the weekend a question was posed to me via Twitter (@theleanmanager if you’d like to follow) about the amount of waste (wasted time) in the back office of banks/service/insurance operations. Now I took this to mean the call centres, data processing centres, mail rooms, customer response teams etc.

The guys asking the questions @wisemonkeyash and @channingwalton  wanted to know could it be as high as 90%? (Update: we do know that in some legal firms the time to process matters is being improved by 50%, by using lean thinking, indicating that wasted time could considerable in the professional services sector.)

I decided I should expand upon my 140 character replies, which were based on my experience.

Variation of demand is the first factor to consider i.e. what does the busiest day (for demand, not completed work) look like and what does a quiet day look like and what are the patterns the peaks and troughs for the demand.

What causes this demand, the peaks and troughs? Our experience? it’s normally another part of the business which generates and stokes the demand and therefore changes here can reduce the peaks.

This could be letters with incorrect details, mass direct marketing mailing, customers chasing progress etc

This variation often causes capacity (people) to be 50% more than required to achieve the current results.

The implications here are that you can deliver improvement by changing something outside of the back offices, without changing what many individuals do – making continuous improvement more readily accepted.

Remember that so far we haven’t looked at the waste in the activities undertaken in these departments. Now as a lean person we look for the 7 hidden wastes, yes I know others have 8 or even 9 but we stick to the 7.

To give you just one example, have you rung a call centre, in the last 6 months,  to be told ” I’m sorry the system is a bit slow today”?

Sometimes that is genuine, the system is slow, it may be that the networking is slow or the server needs upgrading or the PC workstation is old. So say you have 50 agents handling 20 calls an hour? how much time are you wasting because the technology isn’t up to speed?

The more common reason for ” I’m sorry the system is a bit slow today”, that we see is that staff have two screens in front of them and they maybe running 4 different programmes at once. As the programmes can’t transfer information directly to one another, the staff take info from one system, send to their own e-mail, cut and paste it into another programme and then have to delete the e-mail.

This is just one example and adding up the rest we often find that 50% of the activity time is wasted.

What does this mean  overall?

If we start with 100% and 50% is waste due to Variation demand, this leaves 50%.

Of the remaining 50%, we reckon 50% is wasted time, so we get to the figure of 25% (50% *50%), or 75% of the work can be classified as waste.

Remember this is based on what we have seen, so not as high as the 90% the guys originally asked.

Within an hour I spotted this article all Aviva shakes up it’s Customer Service  from the FT, which shows the global serving UK based insurance firm Aviva put the waste figure in call centres as 60%.

It’s also worth noting that Aviva thought it was completing work in 5 days, in reality it was taking 39.

How can this happen? well sometime companies split activities into discrete chunks and add up the time each chunk takes, assuming this equals the processing time. They forget the handoffs and delays that each happen between each activity. We’ve definitely seen office work with activities of an hour take over 10 days to complete in reality.

Okay there is a variation in the figures but should we split hairs on whether waste in offices is 50% as in the professional services firms or 60% – 75% for the back offices and call centres, the reality is that the waste appears to be relatively large, though maybe not as large as the 90% that started the question.

Do you have any views on what the waste could be?

About the Author;

Mark Greenhouse has been working on the application of Lean management in Legal and design led Manufacturing companies for the past 5 years. His own Lean journey started back in 1988 when he started study of Production Engineering. He’s applied lean in many organisation types, finance, call centres, banking, FMCG etc. Mark also provides lectures on operational management at Leeds University Business School.

Lean Office & Management Training

The training referred to below is currently being revised and upgraded. Please visit our new website www.Levantar.co.uk or go directly to Lean Office Management Services page on the website.

 

Despite the inflationary pressures and ups and downs of the wider UK economy, UK manufacturing has continued to grow both in terms of outputs and productivity. Indeed in recent observations the most resilient manufacturing firms will be those exporting. This in a sector often more linked with exporting jobs not products!

Can service organisations and office departments learn from the manufacturing firms and departments? learn the continuous improvement techniques that have made these firms more efficient, more productive and more resilient?

learn how to

  • increase the capacity of their departments,
  • get through work faster,
  • reduce errors and
  • positively impact cash flow!

Can service organisations learn how to get more out of their current resources? How can non-manufacturing departments support the shop floor improvement initiatives?

Lean thinking techniques which have been prevalent in UK manufacturing for many years have been translated and applied in offices, distribution and retail environments by many companies including Tesco, Zara, HMRC, Starbucks etc so these continuous improvement techniques can be applied outside of manufacturing to departments such as marketing, sales, accounting, hr and they deliver results in the form of Lean Office and Lean Management.

It gets better in the UK if you’re in Yorkshire or Humberside, not only can you learn the techniques but you can get 50% towards the investment in training. There are no restrictions on sectors, business size or turnover, you must be privately funded though. (Public sector organisations and those outside the Yorkshire & Humber region can complete the course and get the qualifications but the funding is NOT available to them)

The training runs to a total of 24 hours of training (3 days or 6 half days) + a work based project and leads to a qualification for the attendees and the course is overseen by Leeds University Business School and MAS Yorkshire & Humberside.

The article Lean Office, Lean Management Training – Yorkshire and Humberside details the specific offer and how to get the training course (3 days, 6 half days etc) for an investment of just £750 per attendee.

Courses can be tailored to the specific needs of a company if it wishes to put a number of staff through a course.

The Lean Office course is one of  9 continuous improvement courses that follow a similar framework, 3 days of training, work based project and qualification via Leeds University Business School and Manufacturing Advisory Service through their Manufacturing Masters programme and they can all be funded.

Free Lean Management Training Course

From time to time, we offer free training via other organisations.  One such organisation we work with is Leeds, York & North Yorkshire Chamber of Commerce.

On the 25th March 2011, in Leeds, we’re offering a free 2 hour insight into Lean Management techniques. This is about how Lean can be applied across all departments in any organisation, so it isn’t limited to just manufacturing or profit facing bsuinesses.

So

  • if you work in IT, Finance, NHS, Public Sector, Service, Marketing or Manufacturing companies or
  • if your career means you are responsible for continuous improvement, process improvement, or training or
  • if you are faced with getting more out with the same or fewer resources

then this course will give you something to take away to use in improvement.

You can find all the details here LEAN MANAGEMENT TRAINING  COURSE

This session will show you how you can improve your business efficiency, by using tools and techniques developed in manufacturing and now proven within organisations, ranging from Tesco, Toyota, Zara, GE, NHS, Intel, Johnson & Johnson, Seyfarth Shaw (Law firm) through to Starbucks.

Lean manufacturing businesses found that more than 70% of their improvement projects lay not on the shop floor but in the offices and service based departments and so it has spread to these sectors. It will help to improve your business speed, capacity, cost control and quality whatever your sector or department.

If you’ve got any questions on this training then drop us a line.

Thanks

ResQ

Help for UK Manufacturers!

In manufacturing, ever heard of BERR? Well what about MAS? No? okay Solutions for Business?

Well if you’re a manufacturer then MAS is the one you want, the Manufacturing Advisory Service. This is the national scheme, administered on a regional basis, which can help your business to develop and grow.

MAS can offer you free advice and even substantial grants towards improving efficiency, quality, delivery times, reducing costs, reducing carbon footprint etc.

Visit the national MAS website and you’ll find a ton of case studies, events & news all related to the manufacturing sector.

ResQ are business improvement suppliers to MAS in both the Yorkshire & Humberside and East Midlands regions and you can get support for improvement projects, where 50% of our costs can be met by the MAS funding.

Does it apply to you? well there are rules; normally a manufacturer has to have less than 250 employees and turnover less than 50m euros, but these are only guidelines. In some regions even if you outsource all the production you can still qualify.

The best advice, if you’re in the East Midlands or Yorkshire & Humberside is to give us a call, 07712 669396, or drop us a line info@resqmr.co.uk and we’ll see if we can help you.

If you’re elsewhere find the number of your local MAS office and call them, they’ll tell you what is available and put you in touch with the right people to get 2010 off to a flying start!

How do you find your local MAS number?

Go to the MAS website and click on your region on the map of the British Isles and go to your regional homepage and have look there as to how your region are operating and get the number and give them a call.

Remember many MAS advisors are like ourselves, people with experience of improvement techniques in manufacturing and other sectors who now spend their time helping other businesses to improve.

Mark

www.resqmr.co.uk

www.twitter.com/theleanmanager

LEAN – It won’t work here!

Alternative Title “Who else uses LEAN?”

So Lean isn’t for you or your company then, it won’t work in your industry, it’s for car makers or those people on a production line isn’t it?

It occurred to us that a great number of organisations have lean specialists, lean trainers, change managers etc who are trained in and utilise lean and six sigma techniques everyday, to drive change yet where can you find which organisations they are.

Try and find the “Lean” department in structure charts, organisational diagrams and the like and you’ll struggle; you see lean doesn’t lend itself to a single department, it needs to permeate everywhere. Lean practitioners will have other names “progamme managers”, “process engineering”, “Improvement specialist” and so on.

So it not obvious, from the outside, which organisations are using lean & six sigma principles and tools to drive their business forward. Some will just be using lean in operations, production, & distribution, others in offices & call centres, the more progressive in lean accounting and one or two real trialblazers in lean marketing.

Hence, this list; it is built from our collection of articles we have read and from profiles of individuals who claim they use lean thinking and six sigma in their roles.

So next time you hear “Lean, it won’t work here!” you might just want to point people to this blog, to show them where it is working.

The aim of this blog is simple; to record the names of all the businesses, with UK bases*, who use lean and six sigma as methodologies and improvement techniques or employ people who claim to use lean as one of their primary improvement technique.

*- the UK is big enough for us right now.

Please feel free to send us details of companies you know who use it, all we ask is you provide some evidence (an article, a profile etc) & the business sector they are in and we’ll add them to the list.

 First published 13/10/09.

Here’s a few for starters

Lean Banking

  • LloydsTSB
  • Barclays
  • CO-OP
  • GE Cards
  • RBS

Lean Retailers

  • Zara
  • Littlewoods Shop Direct
  • Orange
  • Dixon Stores Group
  • Starbucks
  • Tesco

Lean Utilities

  • Severn Trent Water
  • Thames Water

Lean Insurance

  • Aviva
  • Willis
  • Axa
  • Zurich

Lean Food

  • HJ Heinz
  • Mars
  • Tulip
  • United Biscuits
  • Kerry Group

Lean IT

  • Hewlett Packard
  • Siemens
  • Fujitsu
  • Unisys

Lean Councils

  • Leicester City Council
  • Bristol City Council
  • Suffolk County Council

Lean NHS

  • Birmingham Children’s Hospital
  • Guy’s & St Thomas’s Hospital NHS Trust
  • Gwent Healthcare NHS Trust

Lean Engineering

  • BAE Systems
  • Toyota
  • Harley Davidson
  • ABB

 

Lean Pharmaceuticals

  • Eli Lilley
  • 3M
  • Bausch & Lomb
  • GlaxoSmithKline
  • Smith & Nephew

Please let us know if these details aren’t correct and we’ll amend them straight away.

Add to FacebookAdd to DiggAdd to Del.icio.usAdd to StumbleuponAdd to RedditAdd to BlinklistAdd to Ma.gnoliaAdd to TechnoratiAdd to FurlAdd to Newsvine

Do you REALLY listen?

Do you listen to the Voice of Your Customers? I mean really listen, not just to what they say but what they do and how it affects your business?

Could listening to the Voice Of the Customer (VOC) have saved a UK bank?

Back in autumn 2008, we highlighted the story of Norwich Union (Aviva, if you watch the adverts or are based anywhere outside the UK) who had just started a car insurance marketing campaign which we felt was a really good example of Lean Marketing.

WHAT WAS IT?

NU (Norwich Union) offered to give its potential customers a quote for car insurance and at the same time it would give prices from its competitors (using web technology) even if they were cheaper.

WHY?

We hypothesised that NU was testing similar work to that we talk about in Lean Marketing, in which we talk of Customer Value & Loyalty being built on three core foundations;

  1. Features & Benefits – what is it about your product/service that are the hygiene factors? what sets your product/service apart from the competitors?
  2. Brand – what does the brand say about how you’ll treat me as a customer? in these credit-crunch days, how much confidence do I have you’ll be here next year?
  3. Price – often “quoted” as the single reason customers buy from a company however it’s rarely the biggest reason!! (try testing people by asking what their competitors charge – if it’s that important surely they’d know?)

These foundations impact on the value customers place on the total package they receive and on their loyalty, the exact nature of the impact varies, depending on the industry. However we believe NU was saying if you value our Features and Benefits, trust our Brand then our Price is less important and we don’t have to be the cheapest in the market.

I can hear almost what you saying “but they’ll have lost potential customers”.

Almost certainly they have; there are consumers out there who buy the cheapest, but exactly what have NU lost?

Potential customers who were basing their purchase solely on price, so what would happen at the renewal of their insurance? they’d look for the cheapest supplier again. So NU would have invested (marketing & sales) resources in acquiring a customer, incurred costs setting up their details (operational resources), sending out policy document and packs (distribution resources) only to have that customer looking to leave after one year. This type of customer is probably less likely to have bought anything else from NU, the price was their largest consideration.

Contrast this with the customers they may get on their book with Lean Marketing? they are not so readily driven by price, these customers are also placing more value on the Features & Benefits and Brand offered by NU. So again a hypothesis, these customers are probably more likely to buy other products (cross sales) and more likely to stay with the company when it comes to renewal.

Result: the organisation removes one of the “7 Hidden Wastes of Marketing” – the waste of attracting customers who only buy one product once based purely on price! There is always someone else waiting with bigger and deeper pockets ready to compete on price.

Does it work?

Well the advert appeared to run for a couple of months, in Autumn 2008 and then stopped, now it is back and running again, a classic direct marketing test you could say.

We are summarising that the fact that it is back and running is because it worked;

  1. customers acquired by Norwich Union have proved to be more robust, less likely to cancel!
  2. more likely to purchase other Norwich Union products.

we can’t say that they are more likely to renew, the advert appears to have only been running for 7 months so far, we’ll know if this strategy stays past Oct/Nov later this year.

You may have also noticed that the UK price comparison (moneysupermarket, gocompare, confused.com etc) websites have started introducing new features that compare the product features and allow for feedback on customer experience (of the brand) – have they too realised that not everyone buys on price alone?

So could this help anyone else? even have saved a UK Bank?

Back in in 2006/07 HBOS (now part of Lloyds Banking Group) implemented a new mortgage strategy, prior to whch they commanded 21% of the new mortgage market. The strategy which was simple and not too dissimilar to NU’s, was that HBOS would no longer offer potential and existing customers different mortgages @ different prices.  There would be one group of prices and they would be priced to maintain a reasonable margin for the bank.

(In the UK most lenders had a policy of offering new customers introductory rates to entice them in these would rise at the end of a fixed period – though you could move and re-mortgage as a new customer rate with another lender.)

So what was the result? The HBOS share of the new mortgage market dropped 8% from 21% – or a 62% reduction – in a six month period. Other lenders retained their policy of offering great deals to new customers. HBOS on the other hand was offering not so great deals to new customers but offering better deals to its’ own customers coming to the end of their existing deal – to try and improve customer retention.

What were potential and new customers telling HBOS? over half (62%) of the customers HBOS could have expected to sell to, went elsewhere. Was it that

  1. The features and benefits of the mortgage weren’t compelling enough over those of it’s rivals?
  2. The brand wasn’t strong enough to convince these people to come to the company?
  3. Price became the primary factor in the decision making process – effectively customers saying “We’re that strapped for cash we need to watch every penny?”

This last one I find interesting – was it the first warning sign of the economic health of HBOS customers or even the housing market and economy in general?

It certainly should have highlighted that 62% of the customers on the existing mortgage book might not be interested in other products (cross-selling), they might only have bought on price alone. Or highlighted that the branding work and the features and benefits of the HBOS mortgages were not regarded as positively different enough by over half the market – the same conclusion could be drawn about the competitors. Remember these customers came to HBOS prior to their pricing changes.

Did HBOS listen? We’ve no idea, the only articles in the public domain talk of corrective pricing strategies that reversed the previous strategy and boosted their share of new mortgages back up to the 15-20% band.

Maybe HBOS did consider what their customers (existing and potential) were telling them, maybe they changed their features and benefits, maybe they changed their branding work, we’ve no evidence, they never said, maybe they considered all this and dismissed it.

Maybe they considered the shareholder customers above those who bought the product and services. (The share price dropped when HBOS admitted that their share of the mortgage market had dropped.)

If you realised that 62% of your market were

  • in financial difficulties
  • couldn’t discern product differences between providers
  • didn’t believe your brand offered a different experience?

What would you do differently?Listen, ask more questions, change what you do, stay doing the same, get out (let someone esle take the risk)…..

Add to FacebookAdd to DiggAdd to Del.icio.usAdd to StumbleuponAdd to RedditAdd to BlinklistAdd to Ma.gnoliaAdd to TechnoratiAdd to FurlAdd to Newsvine

Transferable Skills – from the car to the office, shop, lab……

Lean Service

Lean Manufacturing which started in the automotive industry, with principle of removing the 7 wastes and it’s raft of associated process improvement tools including 5S, OEE, KANBANs, JIT, Line Balancing, Demand Management, Six Sigma, Poke Yoke, and Voice of the Customer (market research) has slowly been making its way across sectors and functions of manufacturing and non-manufacturing  (Services including professional) organisations as a business improvement strategy in recent years.

Is it any surprise when examples such as Lockheed Martin found that 75% of the improvement projects in one 4,000 employee plant, actually took place outside of manufacturing and generated $5m of savings in the second year alone – including reducing purchasing costs by over 50% and purchase order processing by 40%.  (Michael L. George “Lean Six Sigma for Service” 2003 p5)

And GE CEO Jeff Immelt reckoned that by applying the principles to their sales process they could save $50 billion by applying lean to their sales functions alone! (“Growth as a Process” an interview with Jeff Immelt, Harvard Business Review June 2006, pp 60-70)

Lean with…….

So now we are finding more and more examples of Lean Service, Lean Office, Lean Call Centres right through to Lean Laboratories, Lean Accounts and Lean Retail. You name it and you can find examples of lean thinking beginning to invade and succeed in all functions and sectors of business.

If you’d rather sit back and listen to an excellent insight into lean service then we can recommend this episode of Radio 4s “In Business” on LEAN SERVICE, hosted by PETER DAY, it focuses on lean in the Service sector (actually it’s the retail (Amazon), call centre (GEM) and financial sectors (GE Money)). 

When you get to the website click on the “listen to this programme in full” button 

All of the examples we have found about the above show, to one degree or another that lean will deliver;

  • lower costs,
  • higher profits,
  • faster customer response times,
  • higher quality,
  • a better customer experience,
  • and a more motivated workforce.

Lean does this by inviting ALL staff to confront the wastes in their jobs, whether it be

  • excess stock,
  • excess raw materials (work in progress, paperwork to be signed, e-mails unactioned),
  • excessive transportation (work/documents between sites, individuals, departments),
  • excessive moving (to complete work i.e. to photocopiers, post rooms etc),
  • wasting time (waiting for materials, decisions, meetings, approvals),
  • product or service features that the customer doesn’t value,
  • and producing poor quality solutions.

This approach, to include all staff isn’t surprising when you consider that at the heart of the principles of lean are;

  • to do only what your customers value, by default staff stop having to do all the things that they know (they get the feedback from customers) don’t add value!
  • and to continuously improve what you do, something you can surely only do by ensuring all the staff experiences are utilised to identify improvements.

The next blog that we issue will be on Lean in the NHS (Lean Healthcare), we’ve come across a video and a audio file and some practices on the benefits of implementing Lean in this sector, including information on the real GOLDEN HOUR, which is nothing to do with Simon Bates (for those old enough) or even Chris Moyles.

Be aware! moving lean from manufacturing into another function or sector isn’t about just taking the tools of Lean and applying them. So ending up with a desk looking like this one below really ISN’T the only answer.

 (This picture was published in a North East Paper and if you type “HMRC + lean” into a search engine you’ll get a plethora of stories about a lean office implementation in HMRC, which appeared  to follow the path of taking manufacturing tools and just transferring them). 

The taped lines on the desk show where office equipment should be placed

If you would like to investigate how lean could be applied to your organisation or function then feel free to contact us at www.resqmr.co.uk or info@resqmr.co.uk and we’d be happy to talk to you.

Add to FacebookAdd to DiggAdd to Del.icio.usAdd to StumbleuponAdd to RedditAdd to BlinklistAdd to Ma.gnoliaAdd to TechnoratiAdd to FurlAdd to Newsvine