and Learning
TEAL Consulting
Limited
Meeting Customer Demand
in Challenging Times
July 2010
a
a
Service Understanding
Internal Factors
Errors, delays and inefficiencies – plus causes
and implications
Customer
Demand
Type, Volume,
Variation, Service
vs. Failure, NonService Requests,
Feedback &
Complaints
Service Outputs
& Outcomes
Service Delivery Chain
Step 1
Step 3
Step 2
Step n
What value and
benefit do customers
get from the service
– what is the impact
on related services
provided by the
organisation?
External/Environmental Factors
What external constraints are imposed on the
service which affect its performance and ability to
improve (e.g. economic factors, lack of customer
knowledge, unrealistic customer expectations of
the service)
Slide 2
© TEAL Consulting Limited 2010
Outcomes vs Outputs
It's important to understand the difference
 Processes deliver – OUTPUTS
– Recruit Staff - new appointed people
 OUTCOME - a level of performance or achievement
– The staff may be:
• at the right time or too late for the line manager
• capable or incapable of performing their role
• too many or too few
Slide 3
© TEAL Consulting Limited 2010
Customer Focused Process
SERVICE
PURPOSE
Desired Outcomes, Success Criteria, KPI’s and Targets
CUSTOMER
DEMAND
Service Requests, Avoidable Contact, Complaints….
SERVICE
EFFECTIVENESS
Customer Outcomes, Customer
Satisfaction/Dissatisfaction
SERVICE
EFFICIENCY
Slide 4
Resources Needed to
Satisfy All Demand
© TEAL Consulting Limited 2010
What are we trying to achieve
Quality
People are the
glue that hold
organisations
together
Our focus is – variation reduction
Q
+ People
C
T
Cost
Our focus is
empowerment
Time
Our focus is – a reduction
in the amount of
calendar time consumed
Our focus is – waste reduction
Slide 5
© TEAL Consulting Limited 2010
Cost of Poor Quality COPQ
Cost of
Non-Conformance
Prevention Costs
Appraisal
Costs
Internal Failure
Costs
Cost of
Conformance
Slide 6
External Failure
Costs
© TEAL Consulting Limited 2010
Understanding Customer Requirements
 Gather meaningful Data on what the
Customer requires
–Voice of the Customer (VOC)
 Analyse and Translate VOC into meaningful
terms
–Critical to Quality standards (CTQ)
Slide 7
© TEAL Consulting Limited 2010
Starting with “What is a Customer ?”
 A Customer is a recipient of the Output of a Process
 The Customer can be Internal or External
 External Customers are not limited to end-users of
the Product or Service
 External Customers can also include Regulators,
Monitors of Law and the Public or Community
(Stakeholders)
The definition of Quality here means satisfying Customer
Needs
Slide 8
© TEAL Consulting Limited 2010
Kano Model of Customer Expectations
Service
Pressure
Satisfaction
Delighters
Satisfaction
Region
More is Better
Need not
Fulfilled
Need
Fulfilled
Dissatisfaction
Region
Must Have’s
Dissatisfaction
More is Better needs are generally explicit,
Must Have’s and Delighters are usually unspoken
Slide 9
© TEAL Consulting Limited 2010
VOC to CTQ : CTQ Tree
Speed of Delivery
Elapsed Time from Order to Arrival
Taste
CUSTOMER:
“Good room service"
Food Quality
Presentation
Temperature
Cost
Service Charge
Compared with eating in restaurant
VOC
Critical Customer Requirement
General
CTQ
Specific
Hard to measure
Easy to measure
“Vague” terms
Measurable items
Slide 10
© TEAL Consulting Limited 2010
Defining Customer CTQs
 Convert customer data into Specific Requirements
 Define a Requirement not a Solution
 Document all the information
 Ensure the Requirement is Measurable
 Define the Measure
 Establish meaningful Specification Limits
The acid test is whether the CTQ can be Measured
Slide 11
© TEAL Consulting Limited 2010
Runners, Repeaters & Strangers
% Vol
100%
95%
Repeaters
Partially flow
Shared processes
Some management
80%
Strangers
One offs
Universal processes
Significant management
Runners
Rapid flow
Dedicated processes
Self managed
% Service
range
20%
Slide 12
© TEAL Consulting Limited 2010
Rolled Throughput Yield
Problems in processes have a cumulative effect...
Consider the following 3-step process:
Input 100
documents
A
B
C
Output 90
documents
Yield = 90%
Is this the whole story?
Slide 13
© TEAL Consulting Limited 2010
Rework - Hidden Processing
Input 100
Documents
A
98
RFT = 94%
6
4
B
93
RFT = 91%
9
4
C
Output 90
Documents
RFT = 92%
7
4
REWORK
2
5
3
SCRAP
What is the true yield (Rolled Throughput Yield) ?
Slide 14
© TEAL Consulting Limited 2010
Rolled Throughput Yield
Input 100
documents
A
98
RFT = 94%
B
93
RFT = 91%
C
Output 90
documents
RFT = 92%
Rolled Throughput Yield
= RFTA x RFTB x RFTC
= 0.94 x 0.91 x 0.92
= 79%
A true reflection of
process performance
Slide 15
© TEAL Consulting Limited 2010
Overall Process Effectiveness
Element
Six Big Losses
Description
Example
Major stops
Unable to run - Major stop > 10 minutes
IT failure / No staff / No work
Transition Losses
Delays between activity
Minor stops
Interruptions. Minor stops < 10 minutes
Skill Losses
Wrong things or wrong staff
Process errors
Internal failures
Supply errors
External failures
Availability
Performance
Quality
Awaiting patients or information. Set-up
& clean down at start & end of day
Unplanned distractions - Phone, email,
colleagues
Completing unnecessary work or Dr
covering on reception
Correcting data entry errors / dealing
with customer complaints
Mistakes made by others - Courier
damage / Pathology lab results
Source : Lean Toolbox for Service Systems
John Bicheno
Slide 16
© TEAL Consulting Limited 2010
Exercise
 Objective
– To identify the Customers of your Processes
– To consider what improvement could be made in your service
effectiveness and efficiency
 How
– List 1 of your service processes
– Identify all the Customers of this Process – Internal and External
– Consider what measures exist for your processes
 Output
– An understanding of what measures currently exist
– An initial assessment of the effectiveness and efficiency of your
Processes
Slide 17
© TEAL Consulting Limited 2010
Reminder - Customer Value
 Value is Generated for Customers via
– Quality
– Cost of Service
– Delivery
 In meeting Customer Needs there is benefit for the
organisation in terms of
– Right first time – lower number of repeat calls
– Lower Costs – Less time wasted
– Satisfied customers e.g. rate payers
 Reduction of Non Value Adding time is a major
driver
– Minimising amounts of staff time wasted.
Slide 18
© TEAL Consulting Limited 2010
External Perspective
Waiting time
Length of
delivery delay
B
They don’t care
about my
business; it isn’t
worth the wait
Perceived
service quality
Customer
traffic
Waiting
time
Time
Slide 19
© TEAL Consulting Limited 2010
Internal Perspective
 Customer Satisfaction
Level of
customer
satisfaction
Sales
Length of
delivery delay
We can’t afford
these employees
Size of service
and delivery
department
Slide 20
© TEAL Consulting Limited 2010
And Finally
 Understanding what outcome the service is
intended to deliver - is the start
 Understanding how this impacts on quality of
service delivery is critical
 The effectiveness of the service has a direct impact
on your costs
 So jumping to be more efficient before addressing
effectiveness is a short term fix – which will come
back later
Slide 21
© TEAL Consulting Limited 2010