Meeting Customer Demand in Challenging Times

1. Meeting Customer Demand in Challenging Times July 2010

2. Service Understanding Internal Factors Errors, delays and inefficiencies – plus causes and implications Service Outputs & Outcomes What value and benefit do customers get from the service – what is the impact on related services provided by the organisation? Customer Demand Type, Volume, Variation, Service vs. Failure, Non-Service Requests, Feedback & Complaints Service Delivery Chain Step 1 Step 3 Step 2 Step n External/Environmental Factors What external constraints are imposed on the service which affect its performance and ability to improve (e.g. economic factors, lack of customer knowledge, unrealistic customer expectations of the service)

3. Outcomes vs Outputs It's important to understand the difference Processes deliver – OUTPUTS Recruit Staff - new appointed people OUTCOME - a level of performance or achievement The staff may be: at the right time or too late for the line manager capable or incapable of performing their role too many or too few

4. Customer Focused Process SERVICE PURPOSE Desired Outcomes, Success Criteria, KPI’s and Targets CUSTOMER DEMAND Service Requests, Avoidable Contact, Complaints…. SERVICE EFFECTIVENESS Customer Outcomes, Customer Satisfaction/Dissatisfaction SERVICE EFFICIENCY Resources Needed to Satisfy All Demand

5. What are we trying to achieve Quality People are the glue that hold organisations together Our focus is – variation reduction Q + People C T Our focus is empowerment Cost Time Our focus is – a reduction in the amount of calendar time consumed Our focus is – waste reduction

6. Cost of Poor Quality COPQ Cost of Non-Conformance Prevention Costs Appraisal Costs Internal Failure Costs Cost of Conformance External Failure Costs

7. Understanding Customer Requirements • Gather meaningful Data on what the Customer requires • Voice of the Customer (VOC) • Analyse and Translate VOC into meaningful terms • Critical to Quality standards (CTQ)

8. Starting with “What is a Customer ?” • A Customer is a recipient of the Output of a Process • The Customer can be Internal or External • External Customers are not limited to end-users of the Product or Service • External Customers can also include Regulators, Monitors of Law and the Public or Community (Stakeholders) The definition of Quality here means satisfying Customer Needs

9. Kano Model of Customer Expectations Service Pressure Satisfaction Delighters Satisfaction Region More is Better Need Fulfilled Dissatisfaction Region Must Have’s Dissatisfaction More is Better needs are generally explicit, Must Have’s and Delighters are usually unspoken Need not Fulfilled

10. VOC to CTQ : CTQ Tree Speed of Delivery Elapsed Time from Order to Arrival Taste Presentation Temperature CUSTOMER: “Good room service" Food Quality Service Charge Compared with eating in restaurant Cost Critical Customer Requirement VOC CTQ General Specific Hard to measure Easy to measure “Vague” terms Measurable items

11. Defining Customer CTQs • Convert customer data into Specific Requirements • Define a Requirement not a Solution • Document all the information • Ensure the Requirement is Measurable • Define the Measure • Establish meaningful Specification Limits The acid test is whether the CTQ can be Measured

12. Runners, Repeaters & Strangers % Vol 100% Strangers One offs Universal processes Significant management 95% Repeaters Partially flow Shared processes Some management 80% Runners Rapid flow Dedicated processes Self managed % Service range 20%

13. Consider the following 3-step process: Rolled Throughput Yield Problems in processes have a cumulative effect... A B C Input 100 documents Output 90 documents Yield = 90% Is this the whole story?

14. REWORK Rework - Hidden Processing A RFT = 94% B RFT = 91% C RFT = 92% Input 100 Documents Output 90 Documents 98 93 6 4 9 4 7 4 2 5 3 SCRAP What is the true yield (Rolled Throughput Yield) ?

15. Rolled Throughput Yield A RFT = 94% B RFT = 91% C RFT = 92% Input 100 documents Output 90 documents 98 93 Rolled Throughput Yield = RFTA x RFTB x RFTC = 0.94 x 0.91 x 0.92 = 79% A true reflection of process performance

16. Overall Process Effectiveness Source : Lean Toolbox for Service Systems John Bicheno

17. Exercise • Objective • To identify the Customers of your Processes • To consider what improvement could be made in your service effectiveness and efficiency • How • List 1 of your service processes • Identify all the Customers of this Process – Internal and External • Consider what measures exist for your processes • Output • An understanding of what measures currently exist • An initial assessment of the effectiveness and efficiency of your Processes

18. Reminder - Customer Value • Value is Generated for Customers via • Quality • Cost of Service • Delivery • In meeting Customer Needs there is benefit for the organisation in terms of • Right first time – lower number of repeat calls • Lower Costs – Less time wasted • Satisfied customers e.g. rate payers • Reduction of Non Value Adding time is a major driver • Minimising amounts of staff time wasted.

19. External Perspective They don’t care about my business; it isn’t worth the wait Waiting time Perceived service quality B Length of delivery delay Customer traffic Waiting time Time

20. Internal Perspective • Customer Satisfaction Level of customer satisfaction Sales Length of delivery delay We can’t afford these employees Size of service and delivery department

21. And Finally • Understanding what outcome the service is intended to deliver - is the start • Understanding how this impacts on quality of service delivery is critical • The effectiveness of the service has a direct impact on your costs • So jumping to be more efficient before addressing effectiveness is a short term fix – which will come back later