Velocity, Quality and Cost are three parameters that drive most of business decisions today. While Manufacturing sector has always been asked to deliver high quality products at lower cost and faster speed, in last one decade there has been growing demand for similar results from services functions as well.
Currently services process run at meager 6% average efficiency levels. It means that the actual processing time is just 6% of the lead time; while rest of the time work is just waiting to happen. Let’s put this into perspective – a service delivered by your team, with lead time of 24 hours could be delivered in less than 90 minutes, if there was no waiting time.
This poor state of affairs in services processes is good enough reason for organizations to look at their processes critically.
Velocity vs. Quality vs. Cost dilemma
So where do teams start – Do they look at improving speed first or they focus on quality or they start with cost. This could have been a difficult decision but good news is, all of these could be achieved at the same time. In fact, research and studies suggest that you can achieve velocity only if you also improve quality, and you can achieve maximum quality only if you improve velocity.
This may sound counter intuitive to many organization but Toyota has been doing this successfully for more than 4 decades – delivering superior quality products while consistently reducing cost of operations.
First things first
Before we look at how teams could achieve this, an interesting and obvious question to ask would be– How can such huge inefficiencies go unnoticed? Answer is, it is because most of the time teams are not even aware of this situation because they can’t visualize the work; they cannot see if work is flowing or not. Now, if you can’t see it, you can’t improve it. It is as simple as it gets.
Work flow visualization
So, if teams want to improve the velocity, first thing they need to do is, make work flow visible. This would help them visualize WIPs and thereby identify bottlenecks in the system.
Common causes of delays
Once teams know where the work is waiting, next step would be to identify the root cause for the delay. Toyota Production System’s Kaizen 4 M checklist is a good tool to evaluate four factors – ‘Machine’, ‘Material’, ‘Method’ and ‘Manpower’ and understand which factors are causing the delay.
My work of study in services process field, shows that except ‘Machine’ all factors are equally responsible for delay. Once you look at these processes closely you would realize that irrespective of function, all processes suffer same problems. Here is what I found:
✓ Material: Information is the most critical material in services processes. Most of the processes suffer delay because the required information is either not available in the usable format or it is not easily accessible as data is spread across multiple systems.
✓ Manpower: Workers without required skill set and process knowledge take more time to deliver. Unavailability of manpower at the right time is another reason that causes delay. This situation mostly arises due to unplanned leaves, sudden surge in demand and poor synchronization between operations.
✓ Method: Many times, Standard Operating Procedures are not documented and available. Therefore, teams rely on their experience and memory to perform the operation. Unavailability of decision making frameworks is another challenge that teams face. Workers doing their job without SOP and making decisions without standard rules is a big source of variance and that leads to quality issues eventually.
✓ Machine: There are incidents when printers, software application etc. are not available temporarily, however delays due to machines is not a very common occurrence in services function.
Technology & Automation
Many teams I worked with believed that technology could solve all of their problems. Yes, technology certainly can help, however automation of ineffective processes can cause more harm than doing any good. Therefore, it’s important to first remove the inefficiencies from the process and then automate the operations. We have used Lean principles to address process (value stream) inefficiencies. Six Sigma, Theory of Constraints and many other options are available that could be useful for this purpose.
Automation Decision Framework
In a world where every day new technology solutions are introduced, it is not an easy task to identify which solution could be leveraged to automate which kind of operation.
Cynefin framework created by Dave Snowden could be used as a conceptual framework that could aid in making these decisions. Cynefin offers four decision-making contexts or “domains”: Obvious, complicated, complex, chaotic, and a center of disorder.
✓ Obvious: The simple/obvious domain represents the “known knowns”. This means that there are rules in place (or best practice), the situation is stable, and the relationship between cause and effect is clear: if you do X, expect Y. This is the domain of legal structures, standard operating procedures, practices that are proven to work. Here, decision-making lies squarely in the realm of reason: Find the proper rule and apply it. Operations that fall under this category are simplest to automate. Policy rule engines could be leveraged in such scenarios.
✓ Complicated: The complicated domain consists of the “known unknowns”. The relationship between cause and effect requires analysis or expertise; there are a range of right answers. The framework recommends “sense–analyze–respond”: assess the facts, analyze, and apply the appropriate good operating practice. According to Stewart: “Here it is possible to work rationally toward a decision, but doing so requires refined judgment and expertise. Artificial intelligence copes well here.
✓ Complex: The complex domain represents the “unknown unknowns”. Cause and effect can only be deduced in retrospect, and there are no right answers. From services’ perspective, activities that require human interactions to arrive at a decision would fall under this category. These activities are very difficult to automate. In such scenarios, having clearly defined business rules, decision making framework and policies could help to some extent.
✓ Chaotic: In the chaotic domain, cause and effect are unclear. In the chaotic domain, a leader’s immediate job is not to discover patterns but to staunch the bleeding. A leader must first act to establish order, then sense where stability is present and from where it is absent, and then respond by working to transform the situation from chaos to complexity, where the identification of emerging patterns can both help prevent future crises and discern new opportunities. It is not possible to apply automation for the scenarios in this domain.
Mapping your operations to right domain is a good starting point. And, thereafter make continual efforts to move those operations to ‘Obvious’ and ‘Complicated’ domain where technology can be leveraged effectively for automation.
Conclusion
Innovation, Velocity, Quality and Cost have been the source of competitive advantage for organizations for long time. Rapid advancement of technology in last one decade has raised the expectations further. Organization that adopt technology with open mind and positive outlook are going to be winners in long run.
Rules of game are going to be no different for services team. In fact, services teams would be expected to lead business success through technology for their organizations. Technology solutions combined with structured approach can help them navigate the unexplored territories of services automation successfully.
Reference:
- Shigeo Shingo: A Study of the Toyota Production System
- https://en.wikipedia.org/wiki/Cynefin_framework
- Michael L. George: Lean Six Sigma for Service: How to Use Lean Speed and Six Sigma Quality to Improve Services and Transactions
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