9. Applying scientific tools & techniques for improving customer satisfaction

1. Principles of process improvement I. Waste Reduction II. Process Simplification III. Cycle-time reduction IV. Process measures V. Error free principles

I. Waste reduction The first step in improving a process is to eliminate waste with the following techniques :- Value-added assessment Minimize checks and inspections Minimize administrative tasks Minimize storage and transportation activities

Value added assessment

Value to customer : First, the customer’s view point should be considered. The customers are only interested in receiving the product or service that satisfies their requirements. All activities that must be performed to cater to the customer’s requirements are value -added activities.

Does the activity add value to the customer ? 6Would any customer care if the activity was not performed ? 6Would any customer object if the activity was not performed ? 6Do the customers appreciate the results of the activity?

Value added assessment Value to business : There are many activities that may not add value from the customer’s point of view. Attending meetings, developing plans, compliance with regulatory guidelines, writing procedures etc are examples of activities that may not add value to the customers, but they do add value to the organization. Each of these activities must be carefully examined.

Minimize checks and inspections

Checks and inspections may be necessary in a process, however they do not add value to the process. Each inspection point should be identified and challenged. The next slide lists some questions to use in this challenge.

What if the inspection was deleted? Would the inspection be missed? What is the potential impact in eliminating the inspection? What potential consequences exist if the inspection is eliminated? What is the likelihood that the inspection would have revealed a problem?

Minimize administrative tasks Administrative tasks can reduce the ability of the organization to respond and focus on the needs of its customer.

Administrative tasks often result in delays in process time due to excessive paper work, levels of reviews and multiple signatures (mostly by people who, it seems, are never available when needed). Reviews, approvals, signatures, preparing written documentation, making and distributing copies etc needs to be thoroughly reviewed.

Minimize storage and transportation activities Sometimes storage and transportation are necessary evils but because they are both non-value adding they should be minimized. The purpose of just-in-time inventory systems to minimize the amount of inventory stored.

Transportation activities are also non-value adding. Often the relocation of single activity can significantly reduce the transportation requirements.

II. Process simplification Simplification means reducing the complexities of process. Simplification can lead to lessor activities and lessor things to go wrong. Process simplification can be done by combining similar activities and by analyzing decision points. Efforts should focus on reducing layers of management and structures that cause delays. Outdated systems and procedures need to be evaluated.

Balance verification Visit Bank Collect cash Visit ATM Withdraw cash Present Cheque Old Process New Process Quality checks built-in Example of waste elimination: Cash withdrawal WASTE

III. Cycle-time reduction Cycle-time is the time required to deliver a product or service to a customer. Long cycle-times not only prevent prompt delivery of product/ service to your customers, but also increase costs. One of the best ways to cut down on your cycle-time is to conduct activities in parallel and eliminate unnecessary waste times as demonstrated on the next slide.

1. Activities Performed in serial 2. Activities performed in parallel

If the performance of any system or process is not measured, it can not be meaningfully improved. Quantitative and qualitative measures that address both objective and subjective elements should be implemented. The measures recommended are Revenue per employee, percent defectives, cost of quality, profitability ratios, customer satisfaction index etc. IV. Create and implement performance based measures

Profit Sales Customer satisfaction Purchase price Efficiency variance Build inventory Many improved teams Many unfocused projects Select low price supplier Strategies Performance measures Incorrect performance measures create barriers

Profit Sales Customer satisfaction Supplier quality Cycle-timeCost of poor quality Strategies Performance measures Correct performance measures

V. Error free principles Mistake proofing is a scientific technique for improvement of operating systems including materials, machines and methods with an aim of preventing problems due to human error. The term “error” means a sporadic deviation from standard procedures resulting from loss of memory, perception or motion.

2. Benchmarking Benchmarking is quality by comparison for achieving better standards. In the global movement today, the competition is increasing at a faster rate, and the only way to improve your relative quality and move upwards is to benchmark or compare with the best in the class.

Benchmarking :- Stages of improvement World Class Recognized as the best. Benchmarked by others even in other sectors Best in Class Exceeds customer expectations,outperforms all competitors and has clear competitive edge Efficient Meets all internal requirements for cost margins, asset utilization,cycle-time and measures of excellence Incapable Is ineffective, inefficient and at the risk of failing. Needs major redesign Effective Satisfies all customer requirements

Benchmarking methodology Benchmarking can be of various types - Competitive benchmarking, product benchmarking, process benchmarking and best practices benchmarking. Whatever be the category chosen by the organization, the benchmarking methodology remains the same in each case. Benchmarking methodology is explained through 5 simple steps in the following slides.

A. Identify processes to benchmark Select processes to benchmark. Measure current process capability. Understand detailed process which needs improvement.

B. Select organization to benchmark Select organizations which perform your process. Compile a list of world class process parameters.

C. Compile the required information Develop a detailed questionnaire to obtain desired information.

D. Analyze gaps Identify the performance gaps and develop an action plan to close the gaps. Also highlight and quantify the consequences of not closing the gap.

E. Develop an action plan Review observations of the gap analysis. Set new performance standards. Develop an action plan for meeting the new performance standards.