I was reading an article about how measuring Average Handle Time (AHT) in a Financial Services company, did not allow a very eager Financial Services Agent to provide the best service she could have provided a customer.

The customer wanted to do something on the Financial Services company online website, but the Average Handle Time (AHT) metric did not allow her to spend more time on the phone with the customer, and give him more information that would have made his online interaction with the company's website easier. Seems like that would brought the AHT metric for the whole center, as well as that particular agent down. So she had to bite her tongue and not tell the customer about something that would have prevented frustration on his part in the first phone call even though she knew about it! When he tried doing what he wanted to do, he could not and has to call them again on the phone!

The center explained that they were trying to increase the Customer Satisfaction KPI and if the AHT value goes up, the Customer Satisfaction KPI might suffer because that meant someone else was waiting to be serviced. However the above customer who had to call back again, would definitely would have brought that measurement down anyway!

So they may not have achieved anything more than frustrating an important customer!

Measurement and Reporting of KPIs should also identify these kinds of outliers, or exceptional cases, and allow them to be included in the analysis of the KPI performance. Metrics drive behavior and your interpretation of metrics should not enable the driving of undesirable behavior, eventually!

Many time, once we put technologies and metrics together, we think we have put behavior on auto-pilot! We may have automated the driving of undesired outcomes, rather than the desired ones instead! They are our tools and not ends in themselves. The ends, we will have to be very clear about and communicate them well!

Exceptions and outliers happen all the time and as long as we interpret metrics and measurements along with them, we should be fine!

The young man knows the rules but the old man knows the exceptions - Oliver Wendell Holmes

A simplification of Pricing your product or service could simplify a lot of your business processes and save you money in the long run! Hard to believe, but I can give you an example from my own recent experiences!

Recently I was in both New York City and Washington D.C. In both places, I took a lot of the local Subway for my transportation. Both were excellent public transportation systems to get around the city, easily.

In NY city, I was not frustrated in my using the subway, but in Washington, D.C, I was. I bet that administering business processes in NY city also is easier for their authorities than it is in Washington D.C.

All because of how they price their service!

NY City subway systems price any trip at a flat $2 a trip that gets swiped away from your card or you put in the tokens you get when you enter a station, any of their stations. Once inside, you can travel any number of trains or connections for any distance as long as you don’t exit any of their stations but take connections onward. No remembering where you entered and where you exited!

In Washington, D.C, trips are priced anywhere from $1.35 to $3.95 depending upon distances travelled on their system. This requires the ticket recording the place you are entering, calculating the price when you exit your destination station and taking it off from the value stored.

This is where I, as a user of the system got into a lot of hassles. The magnetic stripe got wiped out after I entered a station and the problem was known only at my exit station. Had to go talk to the station agent and get another ticket. The value left over in the ticket could be refunded only by one of their far away stations because that’s where their sales office was! What a hassle!

I am sure Washington D.C generates the same revenues per average passenger trip (about $2) that NY City does. The DC Metro system could simplify a lot of things for themselves as well as and provide a simpler hassle-free experience for their customer but just moving to a simple flat rate of pricing their service.

There could be many business process complications coming from a simple act of how you price your product! This is where you can save yourself a lot of hassle, costs, and customer complaints by simply following a simpler pricing strategy!

Something to think about!

Almost all quality improvement comes via simplification of design, manufacturing... layout, processes, and procedures. - Tom Peters

.... and Pricing!

Handoffs are encountered in Business Processes, whether they are In-house or Outsourced. Many are artifacts of the division of the different functions within a company. Like the Finance Department is responsible for the payment of a vendor on an Invoice even if the user has the budget and has approved payment. The shipping department is responsible for the shipping and logistics even if the order has been made ready by manufacturing.

In Outsourced Business Processes, the handoffs are more a function of manual Vs automated parts of a business process. For example, in an order processing process, some steps are manual and others are handled by an automated business rules engine, the parts that are manual are usually outsourced or even offshored for saving costs. Once these steps are completed, an automated process takes over and performs the business process till the next handoff.

There are multiple problems for everyone in these kinds of business processes in which there are handoffs. The first one, customer annoyance. Customers do not have to deal with different people in your company, just because there are handoffs in your own internal business process. There is nothing more annoying to the end-user or customer than to deal with multiple parties within your company, going over the details of what the problem or the issue was from scratch all over again!

Many organizations have tried to deal with handoffs by requiring people who deal with you to document what happened before the handoff so that anyone handling you subsequently to get all the details so that you don’t need to recount these all over again. But this may be unnecessary work or a waste of time, effort and resources.

Single Interaction Resolution may be a good answer to handling handoffs properly but may not be possible in all cases, especially where outsourcing or offshoring is involved. This is where minimizing or concentrating all end-user or Customer Touchpoints in one or very few interactions may be a very useful way to handling handoffs and providing better service.

Customer Touchpoints are very good opportunities for companies to handle handoffs properly and may even provide opportunities for Cross-Selling or Up-Selling, if handled properly.

Being sensitive about handoffs in a business process provide a lot of opportunities in improving the metrics associated with it, especially Customer Satisfaction.

Quality in a service or product is not what you put into it.
It is what the client or customer gets out of it. - Peter Drucker

We seldom think of Unused Capacity as a Wasted Resource! In fact, it can be a wasted resource that can be fatal to the long term survival of your company and even your industry!

The Wallstreet Journal ran this story last Saturday - More Car Plants at Risk. It talks about Overcapacity in Automobile Manufacturing for Light Vehicles. We all know the trouble the car makers are in because they ignored the small car segment in favor or gas guzzlers and the market for them suddenly collapsed in 2008.

They used the following graphic from IHS Global Insight in the above article showing the difference between current and Projected Capacity and Projected Utlization!

What is remarkable is the very strict management of Capacity and Production in the past and the future of Toyota Vs. the Big 3 American Automakers! Toyota is also making losses currently but they might recover sooner than the other ones, just looking at these projections.

If you think about it, Over Capacity has a lot of costs associated with it - Idling Plants, Idling Huge Investments in these Plants for which some of these companies may be paying interest, Idling workers that are paid not to produce, Idling workers that are maintaining these plants even when they are on Ice with no actual workers around (Security, Preventive Maintenance people), etc.

Over Capacity may prove to be a huge huge waste and could be sucking a lot of the profits of the company even when some of your plants at producing at full capacity and making enormous profits for you!

Something to pay attention to, not just in Manufacturing but also in Services! Keeping the Capacity very close to Production in services, can be done easily with Multi-Skilling and good workforce optimization! There are lots of algorithms and software based on those, to account for seasonality of demand by hour of the day (Evenings and Nighttime for cusomer service on the phone, for example) and , day of the week (Mid week is peak for many business services), month of the year (Summer Travel Season or Thanksgiving for AAA services, for example) or season of the year (like Christmas!).

Training people to perform multiple tasks at work could go a long way in balancing demand and supply for business processes and services, smoothing out the overcapacity problem at any time.

Over Capacity could be one of the biggest wastes whether in manufacturing or in services or in business processes. Keeping capacity very close to demand adaptively with multi-skilling and good workforce optimization.

Production is not the application of tools to materials, but logic to work - Peter F.Drucker

Recessions are a great time to think about Business Process Improvement! In any case, you are already trying to cut costs, and you might as well take on larger efforts in cutting waste out of business processes. Of course, you can throw all kinds of new technologies like Document Management, Workflow, Document Digitization, etc but all of them cost a lot of money!

The real challenge here now is to actually squeeze the other inefficiencies out; those that require creativity, and innovative thinking, rather than expensive technology. Recessions offer this unique opportunity to take on projects that would in normal and prosperous times, the temptation may be to throw more money at it!

Toyota Keeps Idled Workers Busy Honing Their Skills is an interesting article about how Toyota keeps its idled workers in training classes to teach them more about the Toyota Production System and also on specific improvement projects.

The economic tough times set so many constraints on expenditure of money that process improvement efforts may have to concentrate on those ideas that require little, or no money. This is not necessarily a bad idea since most reduction of waste involves unncessary waits and waste of time, unnecessary movement of people and paper, etc. These require observation and insight into how the business process moves forward or not, rather than any revolutionary thought. These are the ones that will bear the most fruit also!

Efficiency is doing better what is already being done. - Peter F. Drucker