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    Lean scc Lean scc Document Transcript

    • A Lean approach in improving the performance of a Service Call Center“Improvement usually means doing something that we have never done before.” Shigeo Shingo Authors: Jyoti Govekar – Lean Six Sigma Green Belt Prasoon Agarwal – Lean Six Sigma Black Belt © Tech Mahindra Limited 2011
    • Abstract Service Call Centers (SCC) have evolved into multichannel contact centers and increasing competition, globalization and demanding customers have changed the playing field in the business. Many organizations have realized that the key for survival is efficiency and effectiveness with focus on productivity and customer experience. Lean techniques which focus on waste elimination and Six Sigma which aims to deliver breakthrough improvement and reduce process variations have provided large scale benefits to manufacturing industries. Lean Six Sigma approach can help SCC map value stream, standardize operational processes and drive continuous improvement on the floor. Lean approach can help SCC transform them from a cost center to a profit center, increase market share and enhance customer experience in a competitive global economy. This white paper attempts to highlight the application of Lean in SCC, in identifying different forms of wastes in the operational processes thereby improving their performance and end customer experience.Copyright © Tech Mahindra Ltd., 2011. All rights reserved.TechM maintains that all reasonable care and skill has been used in the compilation of this publication. However, TechM shall not beunder any liability for loss or damage (including consequential loss) whatsoever or howsoever arising as a result of the use of thispublication by the reader, his servants, associates or any third party. All third-party trademarks are hereby acknowledged. 1 © Tech Mahindra Limited 2011
    • Table of ContentsLean: An Introduction .................................................................................................................. 3 Benefits of Lean ........................................................................................................................................ 3 Lean Tools ................................................................................................................................................. 4Service Call Centers at a glance ................................................................................................... 5Challenges faced by Voice based SCC ........................................................................................... 7Metrics that matter..................................................................................................................... 8 Mapping SCC NVAs to 8 Wastes .............................................................................................................. 10 Identifying & Measuring NVA: ................................................................................................................ 11 Value Stream Mapping .............................................................................................................................................. 11 Time & Motion Study ................................................................................................................................................ 12Way forward............................................................................................................................. 13Acknowledgement .................................................................................................................... 14About Tech Mahindra ............................................................................................................... 15Glossary .................................................................................................................................... 15References ................................................................................................................................ 16 2
    • Lean: An IntroductionLean manufacturing is a management philosophy which comes from Japanese manufacturing industry and isderived from Toyota production system. The term “Lean” was first coined by John Krafcik in a fall 1988article, "Triumph of the Lean Production System," published in the Sloan Management Review. Eliminationof waste is the goal of Lean, and Toyota defined three broad types of waste as Muda, Muri and Mura.However most of the Lean implementations consider the focus only on Muda. While the wastes are typicallyassociated with manufacturing enterprises, it is apparent that they also apply to service industries likeFinance, Banking, SCC, Construction, Government, Healthcare, Insurance and Manufacturing.Lean focuses on eliminating waste and constantly reducing the cycle time. As the waste is eliminated, qualityimproves while cycle time of the process and the cost are reduced.Lean recognizes eight forms of waste as defined in detail below: 1) Overproduction - Producing more than what is needed by the customer / market demand 2) Over processing/Non value added activity - Inefficient processes that use more steps or tools than are actually required for the desired outcome/ activities not required for the outcome 3) Waiting – Waiting time for the next step 4) Transportation - Movement of products / items during or after production 5) Defects (scrap/rework) – Errors or mistakes occurred 6) Motion - Excess motion mainly in people, document movement, searching etc. 7) Inventory - Buffer stocks or resources (raw, work in process, bench staff etc). 8) Unused creativity - Losing time, skills, ideas and learning opportunities by not listening to the employeesBenefits of LeanLean provides numerous benefits including: • Reduced lead/cycle time • Decreased work-in-process (WIP) • Reduced cost • Increased resource (equipment, operator) utilization • Easier scheduling 3 © Tech Mahindra Limited 2011
    • • More streamlined flow • Reduced floor space • Improved quality • Improved employee moraleLean Tools The set of Lean "tools" that assist in the identification and steady elimination of waste are: 1. Value Stream Mapping, a Lean tool, takes into account not only the activity of the product but also the management and information systems that support the basic process. The focus of this tool is on identifying and eliminating the non value adding activities in each process step thus reducing the overall cycle time. These eliminations help make a process more compact and aim to reduce variation. Lean tools can also form a part of a Kaizen cycle, incorporated within the Analyze and Improve phases of Six Sigma. 2. Poka Yoke, a Japanese term for mistake-proofing is a mechanism to help the users avoid mistakes. Its purpose is to eliminate defects by preventing, correcting and drawing attention to human errors as they occur. Either the user is alerted when a mistake is about to be made, or the Poka Yoke mechanism actually prevents the mistake from being made. 3. In context of a truly “Lean” environment, Kaizen means “Continual Improvement”. When the possibility for improvements in key process steps arises, they can be taken up as Kaizen events by the different functions of an organization. Kaizen generates small improvements as a result of coordinated continuous efforts by all employees. Kaizen events bring together a group of process owners and managers to map out an existing process and identify improvements that are within the scope of the participants. Organizations which use Kaizen have found that they generate energy among those who work in the area being improved, and produce immediate gains in productivity and quality. Kaizen can be effective if applied in the Lean spirit of continuous improvement utilizing the rigor and discipline of Six Sigma DMAIC. 4. 5S which stands for five Japanese words - Seiri (sort), Seiton (set in order), Seiso (shine), Seiketsu (standardize) and Shitsuke (sustain) is a structured program to systematically achieve total tidiness, orderliness, cleanliness, standardization and discipline in a workplace. 5S aims for spontaneous and continuous improvement of working environment and working conditions. A well-organized workplace results in a safer, more efficient, and more productive operation. It boosts the morale of the workers, promoting a sense of pride in their work and ownership of their responsibilities. To get 4
    • the greatest success, the nature and implication of each "S" need to be understood by each employee and should be regularly practiced.Service Call Centers at a glanceAccording to Gartner (Year: 2009) the size of the global call center market is worth US$154 billion which can bebroken down into different sectors as shown in the below figure: India has 5-6% market share of the total call center Gobal BPO market by Industry Industry globally. Information 63% share of the offshore component revenues of Technology, Financial 43% Services, 17% US$10.9 billion from offshore call center. Domestic call center industry is 10% of the international call center market. Domestic call center industry is expected to reach US$6 billion in 2012. (Source: Gartner, Year: 2009) Commu- Manufact- Call center market is forecasted to hit US$450 nication uring, 9% Consumer (Telecom), billion by 2012 Goods/ 16% Services, 15% Indian Domestic call center industry is expected to grow by 25% by 2012. (Source: Ernst and Young, Year: 2008)The below figure illustrates the growth of Indian SCC industry over the past decade: 5 © Tech Mahindra Limited 2011
    • Indian BPO Industry Source: NASSCOM Figures in $ Billion 3.1 4.6 6.3 8.4 10.09 12.8 13.8 FY 2003-04 FY 2004-05 FY 2005-06 FY 2006-07 FY 2007-08 FY 2008-09 FY 2009-10SCCs can be categorized as Captive and Outsourced based on their operating models.A Captive call center undertakes business processing only for its own multinational businesses and hascomplete control on the operations of their business processes in other countries. However an Outsourcedcall center is the one where a company delegates its business processes to an external third party serviceprovider that in turn owns, administers and manages the selected process based on defined and measurableperformance criteria. There are over 900 companies operating within the Indian SCC space, including captiveand outsourced units (Source: Ernst & Young, Year: 2008).SCC provides an important channel for organizations not only to connect with their customers globally butalso to listen to their voices. The business benefits of SCC for any organization is twofold –one to keepexisting customers satisfied and two to add new customers, thus expanding their customer base.But the most important benefit of outsourcing is cost saving for the organizations. Continuous improvementis the life-blood of any successful organization. Improving processes and increasing efficiencies are moreimportant if the economy heads south. Although the current economic situation is improving; manyorganizations are opting to keep operational expenses on a tight leash and find innovative ways to increasemarket share and improve their profit margins. 6
    • Challenges faced by Voice based SCCStability, lack of proper project management, lack of industry expertise among suppliers and dissatisfactionamong employees are the challenges faced by domestic suppliers. The major challenges faced by a voicebased SCC are briefly mentioned below:Dynamic Process:Contrast to a traditional industry where the processes are generally fixed and process re-engineering is achallenge, SCC being part of service industry have dynamic processes which needs to adapt itself to changingcustomer expectations, market and regulatory demands. New product updates, schemes, new scripts,policies keep changing on fortnightly or monthly basis thus making the process dynamic in nature. This is amajor challenge as it greatly impacts all the key KPIs including operational productivity and customerexperience.Erratic call patterns with crests and troughs:There may be spikes seen in the call volumes at certain times and tremendous drop other times generatingcrests and troughs. This complicates the manager’s ability to sustain the productivity of the work force andmaintain desired service level and answer level at all the times around the clock. It also impacts the ASA(Average Speed to Answer) and in turn affects the customer experience.Contractual Obligations:Due to contractual obligations SCCs need to demonstrate continuous improvement or need to improve toboost their profit margins. This is specifically applicable to any transaction based call center which getspayments based on transaction volumes. Hence in SCC milestones like service level, answer level andproductivity needs to be on target irrespective of the call volumes.Unavailability of competent resources:Low profit margins leads to the recruitment of resources with minimum educational qualifications, thuscomprising on the right knowledge, attitude and skills. Unavailability of competent resources is a majorchallenge in SCC due to huge variation in demand and supply chain. This hampers most of the key KPIs likeaverage handling time and customer experience.Communication gap due to diversity:Some SCCs handle calls of different regions where the local language differs and hence it becomes difficultfor the associate to communicate with the customer fluently. Such kind of language barrier may impact thekey KPIs like productivity and customer experience. 7 © Tech Mahindra Limited 2011
    • Customer awareness:Certain SCCs cater to customer base where the literacy rate is low and hence customers are technologicallychallenged. For example customers living in some remote regions are not very familiar with the usage of thetechnology like GPRS, 3G. Customers calling in do not comprehend completely with the response of theassociate. These scenarios make it difficult for the associate to maintain the productivity and customerexperience.Increase in Attrition, Absenteeism:Attrition and absenteeism along with erratic call patterns make SCCs one of the most dynamic businessenvironments. Proper allocation of resources needs to be done based on associate skill sets, forecasted callvolumes and current productivity levels. Also at the same time getting new trainee batches within minimumlead time on the production floor is a major challenge. Increase in the attrition rate and absenteeism cancause resource shortages and hence may lead to high waiting time for the end customers and reduction inprocesses’ service level and answer level.Metrics that matter"You cant manage what you dont measure” said by Bill Hewitt, co-founder of Hewlett-Packard.Delivering a positive customer experience in a SCC is of paramount importance in stabilizing customerrelationships and maximizing customer value. Optimizing operations across and beyond the customer touchpoints and striking the appropriate balance between efficiency and effectiveness is the key.Metrics that make up the business goals for a SCC can be categorized further as depicted in the figure below. 8
    • Customer Experience Cost • Revenue per agent •FCR % Customer Cost • Average cost per agent •Repeat Calls % Experience • Average training cost •Waiting time per agent •C-SAT Score •Average Revenue loss •SLA % for TAT on account of call •Agent Communication Operations abandoned Performance Score • % Profit Margin •Service Availability Operations Performance • % Answer level • % Service Level • % Call Abandoned • Average speed to answer • Manpower Utilization • Average Handling Time (AHT)Applying Lean for improving SCC performanceLean approach focuses on continuous identification and elimination of waste / non value added (NVA)activities which can help improve operational efficiency and customer experience in a voice based SCC.Lean plays a major role to help reduce any waste or NVA in an inbound or outbound call thus reducing thetransaction time (Average Handling Time) and improving the customer experience (CSAT, Repeat calls etc)by providing only valuable information to the customers. 9 © Tech Mahindra Limited 2011
    • This section of the paper will focus on the use of Lean approach in improving Productivity & CustomerExperience of a voice based SCC.Following steps as part of the Lean approach can be applied in a typical voice based SCC environment: 1. Capture VOC (Voice of Customer) - Helps to understand the pain areas of internal and external customers and also for setting the expectations. This can also be used for identifying the stakeholders affected by the problem. 2. Define problem statement – Map baseline processes and measures associated with it. This also helps to calculate the expected cost savings from the Lean improvement project. 3. Map Value Stream - Takes into account the touch points adding value to the processes & systems starting from the suppliers and ending at the customer. 4. Identify Waste – Identifying & measuring Muda (Japanese word for “waste”) /NVA activities in the entire value chain. Based on this exercise major areas of improvement could be identified and targeted. 5. Eliminate Waste – Eliminating the waste / NVA activities by implementation of improvement action plan. Put control plan in place to ensure benefits are sustained going forward.Productivity of a voice based SCC is measured in terms of AHT (Average Handling Time), which is a criticalmetric for measuring operational efficiency. Presence of NVA activities on call increases the actual talk timethus providing more opportunities for fatal errors (Example: giving wrong information to the customer,denial of service, rudeness, call disconnection, call avoidance, wrong service request creation). Hence itimpacts the end customer experience.Average Handling Time is the average duration in minutes or seconds taken by the associate in resolvingcustomer query / request/ complaint. Typically it is measured from the time customer initiates the call andincludes talk time, hold time and related tasks that follow the transaction.Average Handling Time is calculated as = (Total Talk time + Total Hold time + Total After Call Wrap Time) Total number of calls handledFollowing are the different forms of wastes identified in several Lean studies conducted in voice based SCCsoperating for Domestic as well as International clients:Mapping SCC NVAs to 8 WastesNVA types Definition Lean Waste Impact on Impact on 10
    • Productivity CE Long opening, empathy, Over ProcessingLong Call Scripts paraphrasing, closing  / NVA scripts Useless scripts used Defects, OverUnstructured Scripts increasing customer Processing /   interruption/ argument NVA Defects, Over Questions not pertainingIrrelevant Probing Processing/   to the issue NVA, Motion Customer interrupts when Defects, OverRepeated Customer all the required info not Processing/  Interaction/ Interruption given at a single instance NVA Same questions Defects, repeatedly asked by the Motion, OverRepetition of Associate Queries   associates and the Processing/ Customer NVA Situation when both Waiting, Customer and associate Defects, OverDead Air   not conversing to each Processing/ other NVA Waiting, Defects, OverHold Time Placing the call on hold   Processing/ NVA Waiting, Transfer time to another Defects, OverTransfer Time   queue Processing/ NVA OverUnnecessary Customer Customer validation done Processing/  Validation even when not required NVA, Defects, Motion Multitasking in terms of usage of tools onLack of Multitasking computer and talking to Waiting, NVA  the customer at the same time Navigation time on the Waiting,Search Time On systems finding difficult to Inventory,  Portals/Systems/Applications search the information MotionIdentifying & Measuring NVA:Value Stream Mapping 11 © Tech Mahindra Limited 2011
    • Value Stream Mapping (VSM) is a strategic improvement planning tool which can help in identifying andmeasuring waste in an inbound or outbound call. The purpose of VSM is to look at the flow of conversation,the systems in use and the time required at each stage from the start of the call till the customer ends thecall. A typical VSM of a call flow in a voice based SCC is as shown in below figure: Value stream map of call flow in a Voice Based SCC Customer details Name Phone no Customer Address Closing Give closing script Call started Resolution Resolve Q/R/C Understand customer issue Opening Validation Probing Service Give opening Taking customer Check resolution Request script details Capture Q/R/C I Resolution Issue Customer I Unable to resolve Q/R/C details I I Call transferred to back end team Back end CRM Systems team Long Unnecessary Irrelevant Repetition of queries, Repetition of queries, System Dead air, NVA scripts authentication probing Hold time, Dear air Hold time, Dear air Issues system issues, transfer timeThe above VSM is called as the current state VSM (CSVSM) which shows the “As-Is” call flow with theNVAs/wastes shown at each stage of the call. The time accounting to these NVAs increases the averagehandling time. CSVSM can be used as the basis for identifying the improvement opportunities with a view ofreducing the wastes over the time. A future state VSM (FSVSM) can be designed for the call flow minus theNVAS/wastes. Moving from CSVSM to FSVSM improves the Process Cycle Efficiency (PCE) which helps inreducing the wastes and thus the Average Handling Time (AHT).Time & Motion StudyThe Time and Motion (T & M) study has been instrumental in identifying opportunities for improvingefficiency in manufacturing operations. This scientific technique can be deployed in a SCC to capture the 12
    • elements in CSVSM, establish the correct split in VA and NVA, and based on a sample size based onconfidence level (95%) and standard deviation of the population.The T & M study focuses on a standard worker and a concept of rating for capturing the standard time to doa job. Similarly, to minimize measurement errors, it is important to implement MSA (Measurement SystemAnalysis) in the study. Gauge R&R, which stands for Gauge Repeatability and Reproducibility, is a statisticalapproach that can help in measuring the amount of variation in the measurement system.Based on the findings of the T&M study, brainstorming sessions can be conducted by the Lean project teamto uncover the waste / NVAs. Subsequently multi voting could be useful to prioritize the top NVAs whichcontribute to 80% of the problem.This practice of “Identifying and Eliminating Wastes” in voice based transactions can form a part of thecontrol plan. Quality auditors can set up a NVA measurement system, with regular audits focusing on NVAs,feeding it back to operations and training for necessary preventive and corrective actions.Way forwardLean practice or Lean production has played a pivotal role in shaping the future of manufacturingorganizations. The approach has streamlined workflow, reduced defects, eliminated waste and resulted inimproving the overall customer experience.SCCs need to replicate the Lean manufacturing processes in their routine schedule. With an ever increasingfocus on cost and efficiency improvement, Lean provides a perfect opportunity to achieve more (output) 13 © Tech Mahindra Limited 2011
    • with less (resources).The principles of VSM, Poka Yoke, 5s and TPS (Toyota Production system) can beapplied in SCC environment to improve operational efficiency and customer experience.The diagram below gives a pictorial representation of the application of Lean in service management.The hiring managers need to consider the feedback from operations/training in recruitment of freshers withright background and experience. This will ensure that defects in process are not passed downstream.Similarly, the quality assurance team will provide a regular feedback to operations on the NVAs observed inthe process. This will not only help drive continuous improvement on the floor but also help the trainingteam in assessing the requirements for both fresh and experienced resources. Pulling Value from suppliers Pulling Value from suppliers Hiring Training Operations (Lean Organization) (Lean Organization) (Lean Organization) Quality Assurance & Control NVA Measurement system Feedback on NVA flowing from internal NVA customer internal to SuppliersSCC can become Lean by first developing the awareness and intolerance of waste within all the operatingfunctions. The waste consciousness should pervade the entire organization in such a way that peopleproactively begin seeking improvements and challenges even in the least structured activities to ensure theyalign to customer value and business goal.AcknowledgementWe would like to thank Mr. Siddhartha Shankar Ray, Master Black Belt (MBB) – Tech Mahindra Ltd formotivating, encouraging and guiding us in writing this white paper. His invaluable suggestions at each stagehave helped us in successful completion of this white paper. 14
    • About Tech MahindraTech Mahindra Limited (formerly known as Mahindra-British Telecom Limited) is the global leader inproviding E2E IT services and solutions to the Telecom Industry.Majority owned by Mahindra & Mahindra, India’s fifth largest commercial group, in partnership with BT Plc(BT), Europe’s second largest telecom service provider, Tech Mahindra has grown rapidly to become the 8thlargest software exporter in India (NASSCOM 2006). With over 34,000 professionals, Tech Mahindra servicescustomers across geographies from 16 sales offices across USA, Europe and Asia-Pacific.Tech Mahindra owns 10 state-of-the-art offshore development centers - UK (Milton Keynes, Belfast) andIndia (Pune, Mumbai, Bangalore, Kolkata, Chennai, Hyderabad, and Noida). Having serviced premiumtelecom companies worldwide, for nearly two decades, Tech Mahindra combines deep domain expertise inOSS (Operations Support Systems) and BSS (Business Support Systems) systems, intellectual leadership anda global workforce advantage to provide services to leading players in the telecom ecosystem.Tech Mahindra provides a wide variety of services ranging from IT strategy and consulting to systemintegration, design, application development, implementation, maintenance, and product engineering.Through a rich Telecom heritage, Tech Mahindra has built long-term sustainable relationships with telecomcustomers through delivery of IT services that help them achieve significant ROI and the greatestcompetitive advantage in the telecom marketplace. Committed to quality, Tech Mahindra adds value toclient businesses through well-established methodologies, tools and techniques backed by its stringentquality processes. Its centers are ISO 9001:2000 & BS7799 certified and it also holds a SEI-CMMi Level 5certification.Tech Mahindra’s people-care practices are certified at PCMM Level 5. Tech Mahindra is also one amongstonly three companies worldwide to be successfully appraised for SSE-CMM Level 3.Glossary AHT Average Handling time BPO Business Processing Outsourcing SCC Service Call center US$ US Dollars VOC Voice of Customer AL Answer Level 15 © Tech Mahindra Limited 2011
    • SL Service Level ASA Average speed of answer ATT Average Talk time NVA Non Value added T&M Time and Motion DMAIC Define-Measure-Analyze-Improve-Control CE Customer Experience CSAT Customer Satisfaction GPRS General Packet Radio Service VSM Value Stream Map CSVSM Current State Value Stream Map FSVSM Future State Value Stream Map PCE Process Cycle Efficiency 3G Third generation Muda Muda is a traditional Japanese term for an activity that is wasteful and doesnt add value or is unproductive. Muri Muri is a Japanese term for overburden, unreasonableness or absurdity, which has become popularized in the West by its use as a key concept in the Toyota Production System. Mura Mura is avoided through Just In Time systems which are based on little or no inventory, by supplying the production process with the right part, at the right time, in the right amount, and first-in, first out component flow.References 1. www.isixsigma.com – Concepts of Six Sigma, Lean and Kaizen. 2. http://en.wikipedia.org/wiki/Lean - Definition of Lean 3. http://www.indobase.com/bpo/global-market-of-bpo.html- Global and Indian BPO industry 4. http://www.globalservicesmedia.com/BPO/Market-Dynamics/23/28- BPO Market dynamics 16