and Learning TEAL Consulting Limited a a Meeting Customer Demand in Challenging Times July 2010

Slide 2 © TEAL Consulting Limited 2010 Internal Factors Errors, delays and inefficiencies – plus causes and implications 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) Customer Demand Type, Volume, Variation, Service vs. Failure, Non- Service Requests, Feedback & Complaints Service Delivery Chain Step 1 Step 2 Step 3 Step n Service Outputs & Outcomes What value and benefit do customers get from the service – what is the impact on related services provided by the organisation? Service Understanding

Slide 3 © TEAL Consulting Limited 2010 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

Slide 4 © TEAL Consulting Limited 2010 SERVICE PURPOSE Desired Outcomes, Success Criteria, KPI’s and Targets SERVICE EFFECTIVENESS Customer Focused Process Customer Outcomes, Customer Satisfaction/Dissatisfaction CUSTOMER DEMAND SERVICE EFFICIENCY Service Requests, Avoidable Contact, Complaints…. Resources Needed to Satisfy All Demand

Slide 5 © TEAL Consulting Limited 2010 What are we trying to achieve Quality TimeCost Our focus is – variation reduction Our focus is – waste reduction Our focus is – a reduction in the amount of calendar time consumed + People Q C T People are the glue that hold organisations together Our focus is empowerment

Slide 6 © TEAL Consulting Limited 2010 Cost of Poor Quality COPQ Prevention Costs External Failure Costs Appraisal Costs Internal Failure Costs Cost of Conformance Cost of Non-Conformance

Slide 7 © TEAL Consulting Limited 2010 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)

Slide 8 © TEAL Consulting Limited 2010 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

Slide 9 © TEAL Consulting Limited 2010 Kano Model of Customer Expectations Need not Fulfilled Satisfaction Need Fulfilled Must Have’s Dissatisfaction Region Satisfaction Region Delighters More is Better Service Pressure More is Better needs are generally explicit, Must Have’s and Delighters are usually unspoken More is Better needs are generally explicit, Must Have’s and Delighters are usually unspoken Dissatisfaction

Slide 10 © TEAL Consulting Limited 2010 VOC to CTQ : CTQ Tree GeneralSpecific Hard to measure Easy to measure CUSTOMER: “Good room service" Speed of Delivery Elapsed Time from Order to Arrival Cost Service Charge Compared with eating in restaurant Taste Presentation Temperature Food Quality VOC Critical Customer Requirement CTQ “Vague” termsMeasurable items

Slide 11 © TEAL Consulting Limited 2010 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

Slide 12 © TEAL Consulting Limited 2010 Runners, Repeaters & Strangers % Vol 80% 100% 95% % Service range Runners Rapid flow Dedicated processes Self managed 20% Repeaters Partially flow Shared processes Some management Strangers One offs Universal processes Significant management

Slide 13 © TEAL Consulting Limited 2010 Consider the following 3-step process: Input 100 documents ABC Output 90 documents Yield = 90% Is this the whole story? Rolled Throughput Yield Problems in processes have a cumulative effect...

Slide 14 © TEAL Consulting Limited 2010 REWORK Rework - Hidden Processing Input 100 Documents A RFT = 94% B RFT = 91% C RFT = 92% Output 90 Documents 9398 SCRAP What is the true yield (Rolled Throughput Yield) ?

Slide 15 © TEAL Consulting Limited 2010 Rolled Throughput Yield Input 100 documents A RFT = 94% B RFT = 91% C RFT = 92% Output 90 documents 9398 Rolled Throughput Yield = RFT A x RFT B x RFT C = 0.94 x 0.91 x 0.92 = 79% A true reflection of process performance

Slide 16 © TEAL Consulting Limited 2010 Overall Process Effectiveness Source : Lean Toolbox for Service Systems John Bicheno

Slide 17 © TEAL Consulting Limited 2010 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

Slide 18 © TEAL Consulting Limited 2010 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.

Slide 19 © TEAL Consulting Limited 2010 External Perspective Time Waiting time Length of delivery delay Perceived service quality They don’t care about my business; it isn’t worth the wait B Customer traffic

Slide 20 © TEAL Consulting Limited 2010 Internal Perspective Customer Satisfaction Level of customer satisfaction Length of delivery delay Sales Size of service and delivery department We can’t afford these employees

Slide 21 © TEAL Consulting Limited 2010 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