nasscom bpm summit 2014: master class: managing the margin squeeze through better operations...

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Managing the margin squeeze through better Operations Management

Richard Jeffery, CEO and Founder of AOMi

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Meet Fred..

Meets his SLA s

Quality and Error Rates

Manages In budget

Regular staff appraisals

Uses benchmarks

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Daily productivity

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VARIABILITY OF PERFORMANCE

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Factors Affecting Performance

Performance

Ability

Willingness

Opportunity

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..overlaying incoming work . . .

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Factors Affecting Performance

Performance

Ability

Willingness

Opportunity

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If performance had been steady at the upper end of capability…

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16% more capacity

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Degree of uncertainty over workloads and

capacity

Consequences of outcomesLimits on the levers

at my disposal

Level of contingency I carry

Just in case…

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The River of Inventory

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MachineSet up

Quality

Breakdowns

LeadTime

Inventory is like a river that flows throughout the factory.

Taiichi Ohno

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But what about service operations?

• High proportion of ‘one and done’

• Serial vs parallel activity

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Intangibility

Inseparability

Perishability

Variability

• Can’t make for stock

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So what is pushed in service operations?

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‘Rivers of Resource’

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Staff Silos

DemandVariation

DemandVolatility

Single, TightSLAs

‘Resource is like a river that flows throughout the back office.’

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‘Just in Case’ resourcing leads to highly variable productivity

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Variable incoming work Less variable staffing(not synchronised)

Highly variable Productivity

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Just in case resourcing

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Variable work volumes

Muda (waste)Muda (waste)

Muri(overburden)

Mu

ra(i

nco

nsi

sten

cy)

Pro

du

ctiv

ity

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A ‘Large Bank’s work in and productivity

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0%

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Latent Capacity by Team

Scale of the opportunity

• Analysis of 38 teams across 2 sites, using available data, shows a 13% saving is achievable by actively managing capacity.

• Teams analysed includes both pre and post Lean

• 5 post Lean teams could not be included as data was incomplete

8,000

£195M

13%

£25M

Operations staff

Salary cost

Latent Capacity

Annual Savings

13%

Applying findings across business operations:

Assuming 8,000 operations staff and an average staff cost of £24,400 (source: 2008

annual report).

Pre-Lean

Post-Lean

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Average Handling Time is actively managed and stable ..

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Daily 1st November to 20th Feb

AHT

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But total time consumed per call varies hugely

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AHT Available

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Actively managing delivery at 85th percentile of recent performance range

would generate around 10% capacity for other work

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Daily 1st November to 20th Feb

AHT Available Released

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University of Warwick

• “The most significant cause of lost time is staff not having the right amount of work for their time available”

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Global Productivity Improvement Summary 2005-2015

Confidential22

Average c15% gain in 12 months

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Confidentiality: Protected / Confidential / Restricted / Public

CAPTURING THE OPPORTUNITY ….

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Method

SkillsTools

Approach

Upgrade the Management Operating System

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Embed the necessary control within the daily and weekly management processes:

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Weekly Loading Meeting

Weekly Provisional

Plan

Daily Control Meetings

Weekly Variance Meeting

Improving management method

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The planning ‘ratchet’

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Raise the floor

Raise the floor again

Raise the bar—set new goals

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Reducing the range of variation

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Sharing work and resource across teams

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Just in Time resourcing

Variable work volumes

Released Capacity

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Moving work or moving people?

Balanced SurplusShortfallSurplus BalancedBalanced Balanced

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Capability Maturity Model

The operations planning and control framework is the driver of a fully integrated operations supply-chain leading to the definition of new services or ways of working

• Operations planning and control activities actively engage with and are relied on for other business functions such as HR/Sales/Finance

• Operational control cycles extend across organisational and P&L reporting boundaries to optimise delivery of services

• Full-cycle control of cost/quality/service is competently and consistently practiced throughout operations

• Central functions interact with operational management effectively

• Elements of cost/quality/service control

• Capacity planning is a specialist function within the organisation

• Operations management is highly situational

• Absence of cost/quality/service control

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Business StrategyOperations

StrategyOperations

ImprovementOperations

Management

Release capacity

Enhance control

Realise Benefits

Increase Choice

Sustain Competitiveness

Operations Management Capability is a strategic issue

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Operations Management is a key lever on business outcomes

This means excelling in Operations Management will cut costs and

boost your KPIs

Through realising benefits and increasing choice, Operations

Management feeds into Business Strategy…

…keeping you competitive!

Key Summary

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Thank youFind out more by visiting our AOMi representatives at Stall 6!

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Thank you

www.activeops.com

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Agenda

• Why focus on Operations Management?

• Strategic improvement with Active Operations Management (AOM™)

• Investing in Operations Management: the business case

• Practical tips

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Why focus on Operations Management?

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Features of operational excellence

Common currency for work vs resource

Productivity factored to reflect team/individual skills and performance

Proactive – forward looking to next week

Consistent framework and language

Transportable skills for managers

Individuals credited for ‘all’ work

Productivity determined by trends in performance

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Practical tips

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Establish common terms

Ensure any operational report contains: Actual Against Plan, Actual Over Time, Actual Against Standard

Require short term (daily -weekly) numerate planning at the team level

Start with the basics

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...but is there evidence of JIC resourcing?

This does happen in reality...

...maybe a lot more than you might think!

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Chart of daily productivity

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Comparison of productivity and work done

Confidentiality: Public

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Daily productivity

Confidentiality: Public

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Comparison of productivity and work in

Confidentiality: Public

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Frequency distribution of daily productivity

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Mean70% 140%

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Latent capacity: comparison of hours used and required

Confidentiality: Public

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Forecast

Plan

Review

Control

Operations Management

Process

Step

Process

StepProcess

Step

Process

Step Process

Step

Business Process

Work In

WorkComplete

Service and quality commitments to clients

System 1

System 2

System N

Technology

Admin Teams

Matching work and resources

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Improve my confidence and knowledge of

workloads

Make the outcomes a business issue not

a personal issue

Create capabilities and options to

respond to events

Just in time resourcing

Approach