Case studies
- Service Centre Rationalisation
- Creating Capacity to Grow Sales in a UK Insurer
- Improving Productivity and Service Quality
- Improving Operations using the Seven Wastes
Service Centre Rationalisation
This case study is also available as a pdf, please click here to view (60kb).
Problem
A major retail bank announced it would be rationalising its personal banking service centres from twelve to six. The cost benefits of reduced headcount and premises closures were to be realised in the current year. Productivity of the remaining centres would have to rise dramatically to cope with the influx of work. Many anticipated efficiency gains were based on a programme of IT improvements which weren’t due until the final quarter of the year. Experience had shown that these programmes were often late and less effective than predicted.
A combined team of oee and bank staff was tasked with ensuring that the necessary capacity release could be achieved irrespective of the IT programme.
Solution
An initial assessment by oee indicated that the operations’ performance measures were over-estimating productivity, and that there was a significant opportunity to release capacity in the remaining centres with no capital investment or impact on service quality. This would require the introduction of good basic operations management, changes to work organisation and the application of appropriate process improvement techniques, with the overall focus on reducing waste. To overcome natural scepticism a short pilot was conducted over 8 weeks. At the end of the pilot the increase in measured performance was dramatic. Senior management made the decision to rollout a bottom up approach to deliver benefits on the go. oee concentrated on putting in the framework, skills transfer and dissemination of appropriate tools and techniques.
Results
Over nine months the following benefits were delivered:
- Capacity release of 680 FTE - £14.5m annualised cost saving, 35% productivity improvement (actual heads released and additional work migrated with no additional heads);
- No reduction in service quality;
- No increase in operational risk;
- Return on investment – 10:1 payback within the year.
topCreating Capacity to Grow Sales in a UK Insurer
This case study is also available as a pdf, please click here to view (60kb).
Problem
A major UK Insurer had experienced significant growth in its protection business over a short period leading to increased volumes in its crucial underwriting operation. Despite efforts to expand the workforce, a six month lead-time from recruitment to accreditation for new staff coupled with bottlenecks in existing work allocation methods and structures, meant the business was unable to respond to fluctuations in demand. Even an off-shore outsourcing strategy put in place to help was hindered by poor levels of productivity and slow assimilation of key skills. The company was in danger of losing hard won sales.
Solution
A detailed operational review was carried out by oee which revealed a number
of operational weaknesses including impediments to workflow such as
unnecessary
hand-offs, excessive lead times and re-assimilation times. These findings
were shared with and buy-in secured from management and staff through
workshops,
operations games, bespoke training modules and mentoring. Following
this,
in a pilot area, the core process was restructured to allow the streaming
of work by type and complexity. This dramatically increased throughput
and
a new team structure capitalised on these gains.
The pilot demonstrated that a significant increase in capacity could
be realised in less than 4 months and the new process was subsequently rolled
out across the whole operation. oee worked
closely to ensure skills were
transferred to enable ongoing sustainable improvements once the oee
team
had left.
Results
Over a four month period oee delivered these tangible benefits:
- Capacity increase of £24m APE (Annual Premium Equivalent is the value of new business which could be sold each year);
- Lead-times were reduced from 9 to 2 days;
- There was no increase in operational risk or reduction in quality.
Improving Productivity and Service Quality
This case study is also available as a pdf, please click here to view (60kb).
Problem
A new senior management team had been appointed to run a business unit servicing customers of high net worth within a large Financial Institution. Although this business unit made significant profits, the customer base was eroding and it was perceived to be inefficient and not customer focused, especially in its back office operations. A small team of three specialists from oee was assigned to work with management and assess the possibility of quickly understanding and addressing the operational problems.
In total the unit employed over two thousand people, for the most part in branch offices round the country. Back office processing was concentrated in one location in the South of England, and it was here that initial efforts were focused. For historical reasons the operation, consisting of two hundred people, was spread over three different buildings. Most of the staff had long service with the bank and the average age was considerably higher than in other areas. The culture was one of settled resistance to change. Processes were not standardized, were often fragmented and many ‘spanish practices’ had grown up over the years. Service level agreements were undemanding and inappropriate from a customer perspective.
Solution
In the past the previous management had attempted a number of initiatives aimed at improving performance. None had delivered significant benefit or had outlasted management’s initial burst of enthusiasm. It was clear that the culture would have to be changed and that any sort of ‘top down’ approach would not work. In line with oee’s general philosophy of the importance of basic operations management, a programme was rapidly developed to engage the team managers and front line staff.
A small combined team from oee, support services and the back office operation itself began to work with one area at a time:
- Teams were given the tools and techniques to examine the way they worked and highlight how much waste there was in everything they did – the true (low) level of efficiency was revealed;
- The role of team managers was re-defined – they should manage and not be process experts;
- An atmosphere of ‘welcome to the problems’ was developed, everyone was shown how to undertake team based problem solving;
- Skills and tools and techniques were rapidly transferred to the business unit staff.
Results
In the first three months efficiency was raised such that the FTE count in the back office could be cut by 22%. This was absorbed by the release of temporary staff and natural turnover. The basics were in place to deliver a further improvement of 15% identified in the first phase. In addition process redesign and a programme of automation could now be contemplated with confidence.
The combined team was invited to use the same approach in the other areas of the wealth management business.
Improving Operations Using the Seven Wastes - Mail Processing
This case study is also available as a pdf (81KB) click here to view.
A DVD of this case study can be ordered from OEE or viewed online at www.iet.tv.
Problem
A Mail Processing Centre (MPC) in a large Retail Bank asked for oee’s help to improve customer service and reduce costs. The MPC played a vital role in the end-to-end process of handling customer interactions, many of which the Bank promised to complete on the day of receipt. The MPC’s management team realised that they needed to provide a faster and more reliable service to their customers, to help improve the proportion of requests hitting the one-day Service Level Agreement.
As the handler of the entire Bank’s branch mail, the MPC was charged with delivering sorted items, many of them in scanned image form, to a number of internal customers. Although great efforts were being made, customers were unhappy with the timeliness and reliability of delivery, and were pushing for earlier and earlier completion of work.
The MPC was an enthusiastic and well-run department very focused on meeting its daily targets. However, the management team had not been introduced to the principles of Lean Thinking, leaving them struggling to find ways in which they could improve performance.
Solution
During a 9-week project, oee introduced the MPC staff to the concept of Waste, opening their eyes to all of the activities they performed that did not add value to the customer. In particular, the concept of the Seven Wastes was used to help them recognise opportunities to improve:
Transportation – carrying work from one area to another driven by poor layout;
Inventory – Piles of work getting stuck at key points;
Motion – unnecessary movement by staff again due to poor layout;
Waiting – there was a mismatch of shift start time and first post delivery;
Over-production – parts of the process were producing faster than necessary;
Over-processing – some tasks were not required by customers such as counting and banding request slips into 50s;
Defects – poor preparation resulted in jams and delays.
Working with the MPC team, oee first worked to eliminate unnecessary process steps. A simple but effective cell layout was then created, condensing activities and significantly reducing transportation and motion wastes.
An analysis of a typical end-to-end process showed a ‘bow wave’ of work moving along the value stream. Poor flow in the MPC, and also in downstream processes, was resulting in a ‘feast and famine’ scenario.
For the first few hours of the shift the MPC’s poor work flow resulted in too little mail being delivered to customers who were thus starved of work. Suddenly mid-way through the shift large batches of work began being delivered and downstream customers were unable to cope.
Working with oee, the process flow was significantly improved, by collapsing the time taken for the first item to pass through the process from 2 hours to 20 minutes, and by streamlining the flow within the new cell. As a result the flow to customers became more reliable, with a predictable and constant output rate being
achieved throughout the shift.
Results
Working with the management team, oee was able to significantly improve customer satisfaction through earlier and more reliable delivery of work items. The recommended cell lay out was designed, purchased and implemented within the 9-week project window. This was achieved simultaneously with a 20% reduction in staff required to perform the process.
To view files you will need the free Adobe Acrobat Reader which can be downloaded by clicking on the button below.
