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!

Quite often, Process Design or Redesign are burdened with a lot of Legacy Thought! Sometimes, it may be better to start a Design or a Redesign of a Business Process with a clean sheet rather than make marginal improvements!

Many processes just evolve from nothing, or have a lot of outdated steps that may have been necessary when they were designed for the first time but may be outdated today!

Plus, technology may have evolved over the last two decades a business process has been under use, and now may be a good time to rethink processes. It may be time to evaluate whether what it being done inside the process is of any use, and of relevance today, or may be better done at an order of magnitude more efficiency and effectiveness than used to be done before!

Sometimes, it may be better to start with a clean sheet and design or redesign a business process from scratch!

Home Mortgage Loans in the U.S, are a great example of how a business itself has evolved over a period of time and how the design and redesign process may need to be thought of on the fly. Mortgage loans used to a local affair with local banks making and owning loans for a long time. Then national banks started buying them from the local banks and servicing them. There are now online ways of applying for loans and increased automation at the backend have also speeded up and simplified many of the subprocesses in mortgage loan processing.

Today, Offshore outsourcing and use of the Service Providers's systems, people and processes adds one more wrinkle to this whole thing that were not there even five years ago!

So today, if you were to Design or Redesign a 20 year or even a five year old Mortgage Loan Process, it may be better for you to start with a clean sheet approach! Failure to do this will only mean that your processes will be competing with a new company that was put together say five years ago and may be more efficient and effective than you are!

Legacy and Age may not make business processes more efficacious! You should be lucky if they don't set you back as compared to your competitors!

Age is something that doesn't matter, unless you are a cheese. - Billie Burke

Internal controls, like multiple levels of approvals for say Purchase Orders or Paying Invoices, are all necessary, but in many business processes they are the bane of Lean Process Improvement.

From a Value-adding point of view, Internal Control hardly adds any value to the end customer, but may add value to the organization itself. In classic Value Stream Analysis terms Internal Controls may be a gray area at best and a total waste, at worst.

Internal Controls are more like Insurance Policies whose need will be felt only in the case of contingencies. Their need is felt acutely when there is fraud, or embezzlement in the organization. So doing away totally with them is not such a good idea.

Internal controls may, however be accommodated quite well with a little bit of creativity, as well as the help of technology.

Document Management, Workflow, Business Rules Engines, and Email can all speed up parts of a business process that have to do with Internal Controls.

First off, Internal Controls need not be applied uniformly to all transactions. Credit Card charges these days at supermarkets do not require a signature of the amount charged is less than $25! Similarly for almost all business processes, transactions can be divided up based on the amounts of money or risk involved. Business Rules Engines can handle a lot of these divisions, then document management, and workflows can divert the workflows in different directions needed. Email approvals may be a simpler way to automate the same thing.

Internal controls need not be in conflict with Lean Improvement as long as the balance of internal control needed is maintained with speeding up the business process and cutting down the waste in movement, effort, rework and people!

Trust, but Verify - Ronald Reagan

Even as we speak, the global corporate world is embarked on a silent, huge, effort in letting paper go not much beyond the mailroom!

Digitization of all paper, whether coming in from customers as orders, or invoices from vendors is being undertaken on a huge scale. All documents coming into the mailroom are scanned, digitized and the paper sent way immediately to outsourced archival services. Thereafter, companies prefer handling them only in digitized image form!

Storage costs falling in price dramatically in the last few years fuelled by outsourcing and offshoring of business processes have spurred this large scale digitization on an accelerating scale. Many companies, even if they are not outsourcing, are consolidating functions like Human Resources, Accounting and Finance, Order Processing, etc in centralized locations, in Shared Services Centers. For example, many Grocery Supermarket chains in the U.S used to have accountants distributed geographically. Now they are being consolidated into central Shared Services Centers. Shared Services Centers have come about to a large part because of Digitization again.

However, what is being realized quickly, and even more significant than cost savings due to consolidation is that for Continuous Process Improvement to succeed, Digitization is an essential first step in instantly enabling a lot of waste in time, effort and physical movement of paper!

Digitized documents at instantly available anywhere in the world, cutting down mountains of waste in unnecessary handling of paper.

Simple, but a lot of gain in one single stroke of technology!

It is the framework which changes with each new technology and not just the picture within the frame - Marshall McLuhan

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