Tag Archives: service improvement

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

Waste – is the UK Government getting it?

The new UK Government has announced plans to attack the “Waste of Rework” in the NHS, provider of the public UK hospital system.  BBC News – Hospital Face Fines

The Waste of Rework is the waste of resources (time, people, materials, equipment etc) when a process isn’t completed to the required standard. Consequently more of the resources have to be spent putting the work right – which also has a knock on effect on the subsequent work planned.

It doesn’t matter whether we are talking about metal forming, handling insurance forms, answering customer calls, or attending to patients, doing a job right first time, will use up less resources, than having to re-visit the job.  So this waste, from a Lean point of view, is pretty universal.

The change proposed is that if a customer (okay they do still call them patients, they haven’t admitted these people are customers who have paid for the service, through taxes!) is re-admitted within 30 days of being discharged then the hospital will not be paid for the second stay, if it is related.

Hence I’ve viewed this as the hospitals will no longer be paid for the Waste of Rework, so the incentive is to get treatment right first time!

Within many of the reports on this new ideal came the complaint that this change will lead to longer times in hospital and increase the length of waiting lists. The people making these claims have never seen any lean thinking or queuing demonstrations on the effect re-work has on the capacity of a system. Re-work lowers the capacity of any system and often by more than the measured rework figure.

So a 10.5% rework rate will reduce capacity by more than 10.5% because of the effects it has on planning, we use a calculation known as OEE (Overall Equipment Efficiency) to demonstrate this, don’t be put off by the manufacturing bias to the name of this, you can use it for any process.

Now I don’t have all the figures to understand this but the % of re-admissions as proportion of all discharges, in the NHS, went up from 8.8% in 1998/9 to 10.5% in 2007/8.  There is no indication whether this 

  • is a statistically significant rise,
  • is a consistent rise from 1998/9, or just 2007/8 was a high year
  • is a function of re-admissions within the new 30 day limit,
  • is due to a focus on treatment at home, which might carry more risks
  • or just a function of an ageing population.

Whether it will actually work or drive the correct behaviours we don’t know because is the problem of rework being caused by people being sent home to early, or by something else….

Now if the Government used the 5Whys to determine this waste, then we’d have a better idea…..

Regards,

Mark

P.S.   Do you know what the rework level is in your organisation?

How to disappoint potential customers and increase waste – an everyday occurance!

Imagine you “buy” something for £200-300 for delivery on a specific date and you start to arrange other parts of your life around it, only to be told later “you can’t have it on that day, you’ll have to choose another” – how wasteful is that and how would you feel as the customer? 

Last week I booked my car in for its’ annual service. I booked it in with a national company and used their on-line booking service, I could have used the freephone number to contact the call centre, called the service workshop directly or even called at the garage in as I often pass by once a week.

Nonetheless I used the on-line service and I was curious when it didn’t give me a time for the service but asked me to bring the car at 8.30am and that I’d be told what time to pick it up then.

I feared I would be part of some large batch of customers all signing their cars in at 8.30 and early on this morning I wasn’t disappointed! I wasn’t surprised either when they couldn’t tell me when the car would be ready.

However when I booked on the Internet I specified what needed doing, the mileage, the registration etc and this was all on a nice neat form in the office. 

The guy booking in my car then had to transfer the details from the Internet booking systems on to a single sheet they use when carrying out the service, so I enquired why? he didn’t need anymore details than I had provided. 

Apparently the Internet system wouldn’t print out the sheets they needed, it never had done and so time was wasted transferring details to the sheets they actually use during the service.

I commented on how wasteful that must be every morning, at which point you may recognise the story; particularly if you’re a Lean practitioner, you start to get all the other problems. I was lucky! the Internet service and the call centre can’t see the diary for the garage so they have a set number of slots to book each day and give each one an 8.30am booking.

The branch staff however are busy servicing cars during the day, as well as booking in the direct phone-ins and the walk-in customers, only when they get a chance to go back to the office do they book in the Internet and the call centre customers for their slots in future days. Many times they find that the Internet and call centre have accepted customers for which there are no slots left and so the garage staff have to waste time ringing up customers who need to spend £200-300 gb pounds with them to move them to another date. You can imagine how that is met by some customers!

So to test this I was told in the garage their next available MOT (compulsory annual vehicle check in the UK) is next Thursday the 20th August. So I go online at midday today (12th August) and the internet will let me “book” an MOT on Monday the 17th August – why? there are no spaces left, the garage staff told me and how many potential customers will go on-line to make a booking for Monday to Wednesday next week and have to receive a phone call telling them they can’t have the date the internet part of the business said was free.

  • Why do companies let this happen?
  • Why do they let the waste of repeated form filling occur?
  • Why do they let the customers waste time booking appointments that they can’t keep?
  • Why do they let the first conversation between the service staff  and the customers, start off  “I’m sorry but……”

Maybe in this case, the car servicing companies feel that in this current recession, with car sales still depressed, many of us are electing to run cars for longer and therefore the need (not desire) for car servicing will grow.

They and their competitors will increase the volume of work and the revenues (the longer I keep my car the more expensive the servicing gets,  I find) they collect, they will prosper and they can just pass the costs of the hidden wastes on to the consumers. 

  • Was my original internet booking date changed? no but it could have been
  • Was I annoyed by the delay at 8.30? no  I expected a batching queue
  • Was I disappointed to find that they didn’t know what time my car would be ready? no I expected it

I’d planned my day around dropping the car off and being in my office sometime after 9 and that I should get my car back sometime after 5, I just lowered my expectations of the level of customer service.

Can I go anywhere and get better service? sadly experience means I’m not sure

Barista to Fashionista

It’s been a busy few weeks but these two stories came to me that demonstrate how the improvement techniques that Lean Thinking includes may be holding up in these difficult times.

They both relate to the application of Lean and business & customer led improvement in the retail trade – Lean Retail if you like.

  1. Starbucks To Test “Lean” Operations……   – apparently Starbucks are testing lean in some of their stores in the US. So next time you’re in the queue remember someone is trying to work out how they can improve the speed of service, the quality of the product and utilise green practices. What appear to be Starbucks staff seem to have a lot to say about this on the original blog posting, some them even sharing the ideas that have been tested so far; so I’ve posted an excerpt and a link to the comments at the bottom of this post. 
  2. As the lastest retail sales figures for February are released in the UK, a somewhat depressing picture is beginning to emerge – not really surprising when you consider that a lot of the major layoffs/shorter working time (Woolworth’s, Honda, Toyota, M&S, Wedgewood, the banks etc) didn’t start to kick in till January. 

The one ray of hope again appears to be Zara, especially when compared with similar companies in its’ sector, clothing. Two competitors, Next and H&M both posted reduced profits whilst Zara’s remained constant.

The excerpt from the BBC website stated;

“On Thursday, home improvements retailer Kingfisher said retail profit in the UK declined by £24m to £129m as it closed its subsidiary Trade Depot

Next said revenue and profits declined and that it expected sales to be negative for 2009 [revenue fell by 1.7% and profit by 13.9%]

Swedish retailer H&M, which has stores on many UK High Streets, reported a 12.6% fall in quarterly profit, blaming currency swings and lower sales

On Wednesday, the owner of the Zara fashion chain said its profits barely changed during 2008.   [Zara did actually record a 10% rise in sales as well, so they are attracting customers to spend more! – Lean Marketing ]”

You can read the latest performance press release as to why Zara is also upbeat about the rest of 2009.

So how come Zara are so holding up well? does it have anything to do with Zara being the Lean Fashion Leader?

As for the use of lean in Starbucks, well the quote below is from the comments on the blog, by a contributor named “JAVA JANE”  and gives and idea at to the journey they are starting on;

I work at a very large store in the NW – we started implementing Lean procedures last spring. The way it has worked for us:

We ran several “time tests” on daily processes, counting and timing each and EVERY step (making a frappuccino, ringing up and pouring drip coffee, making & storing prep, getting ice, whether the 4th register was necessary, sampling…) in order to weed out unnecessary steps. Also, we tried to rearrange certain stations to make them easier to use, for example, our cold beverage station was home to a couple of items that made more sense to keep at the bean counter or espresso bar as they were used there more often. Another example – we realized every time someone ordered hot tea, we were reaching around the brewing shuttles for the tea after grabbing the cup and then returning to the cup station to fill withhotwater…we just made room for the tea where the cups are. Basically – we stopped saying “It’s always been done that way” and started asking “Can that be done a better way? How?” We timed different methods of deployment, computed averages, came up with “lean” standards, and it’s been a great success! We definitely had some experiments that didn’t work, which is fine! You just have to be willing to change and go through a period of weirdness until it gets figured out. “

There are some additional posts from other contributors including a great one from ORSM, which details the first practices that have been trialled.

So whilst we can’t claim that Lean is the answer to all corporate ills, we do know that one Global retailer; who uses Lean and who is many years into the implementation has been able to maintain profits through this difficult period and another Global retailer has seen enough to give it a go! 

Could it help you?

www.resqmr.co.uk

 

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Lean improves Cash Flow by 38%

In these economic times where “Cash is King”, lean thinking provides a set of principles which can be used to dramatically improve cash flow.

The example we’ve come across here shows how lean thinking can be used to

  • improve cash flow
  • improve customer service
  • improve organisations in the service or knowledge sectors

and proves you don’t even need to resort to slashing stock levels, especially if you don’t have any!

The business in question is Stiles Associates LLC, an executive recruitment agency and the story was mentioned in Lean Directions, using lean thinking Stiles Associates achieved the following results;

  1. 29% reduction in time taken to fill a vacancy! filling in under 90 days
  2. 38% reduction in debtor days, which had a massive impact on cash flow.

They achieved this by conducting

  1. value stream mapping (including their customers)
  2. kaizen events 
  3. daily meetings to highlight completed, outstanding and on-going tasks
  4. visual management systems.

Goes to show that the promises of improved business processes, better cash flow can be achieved through lean and in sectors other than operations or manufacturing.

If you want to read how lean can be applied in marketing, sales or accounting then please visit our website www.resqmr.co.uk to see how we approach these areas as well as the traditional manufacturing/operations areas.

Or contact us at info@resqmr.co.uk , Mark.

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