NASSCOM BPM Summit 2014: Master Class: Managing the margin squeeze through better Operations management - Richard Jeffery, Aomi

© AOM International 2014, all rights reserved.

Managing the margin squeeze through better Operations Management

Richard Jeffery, CEO and Founder of AOMi


Meet Fred..

Meets his SLA s

Quality and Error Rates

Manages In budget

Regular staff appraisals

Uses benchmarks


Daily productivity

0%

20%

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60%

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100%

120%

140%

01-Jan 03-Jan 05-Jan 07-Jan 09-Jan 11-Jan 13-Jan 15-Jan 17-Jan 19-Jan 21-Jan 23-Jan 25-Jan 27-Jan 29-Jan

VARIABILITY OF PERFORMANCE


Factors Affecting Performance

Performance

Ability

Willingness

Opportunity


..overlaying incoming work . . .

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02-Jan 06-Jan 08-Jan 12-Jan 14-Jan 16-Jan 20-Jan 22-Jan 26-Jan 28-Jan 30-Jan 03-Feb 05-Feb 09-Feb 11-Feb


Factors Affecting Performance

Performance

Ability

Willingness

Opportunity


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

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2/1/09 9/1/09 16/1/09 23/1/09 30/1/09 6/2/09

16% more capacity


Degree of uncertainty over workloads and

capacity

Consequences of outcomesLimits on the levers

at my disposal

Level of contingency I carry

Just in case…


The River of Inventory

Confidentiality: Public

MachineSet up

Quality

Breakdowns

LeadTime

Inventory is like a river that flows throughout the factory.

Taiichi Ohno


But what about service operations?

• High proportion of ‘one and done’

• Serial vs parallel activity


Intangibility

Inseparability

Perishability

Variability

• Can’t make for stock


So what is pushed in service operations?



‘Rivers of Resource’


Staff Silos

DemandVariation

DemandVolatility

Single, TightSLAs

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


‘Just in Case’ resourcing leads to highly variable productivity


Variable incoming work Less variable staffing(not synchronised)

Highly variable Productivity


Just in case resourcing


Variable work volumes

Muda (waste)Muda (waste)

Muri(overburden)

Mu

ra(i

nco

nsi

sten

cy)

Pro

du

ctiv

ity


A ‘Large Bank’s work in and productivity



0%

5%

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38

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



Average Handling Time is actively managed and stable ..

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e co

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l (S

eco

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Daily 1st November to 20th Feb

AHT


But total time consumed per call varies hugely

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e co

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cal

l (S

eco

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AHT Available


Actively managing delivery at 85th percentile of recent performance range

would generate around 10% capacity for other work

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tial

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rs

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AHT Available Released


University of Warwick

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


Global Productivity Improvement Summary 2005-2015

Confidential22

Average c15% gain in 12 months


Confidentiality: Protected / Confidential / Restricted / Public

CAPTURING THE OPPORTUNITY ….



Method

SkillsTools

Approach

Upgrade the Management Operating System


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


Weekly Loading Meeting

Weekly Provisional

Plan

Daily Control Meetings

Weekly Variance Meeting

Improving management method


The planning ‘ratchet’


Raise the floor

Raise the floor again

Raise the bar—set new goals


Reducing the range of variation



Sharing work and resource across teams


Just in Time resourcing

Variable work volumes

Released Capacity



Moving work or moving people?

Balanced SurplusShortfallSurplus BalancedBalanced Balanced



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


Business StrategyOperations

StrategyOperations

ImprovementOperations

Management

Release capacity

Enhance control

Realise Benefits

Increase Choice

Sustain Competitiveness

Operations Management Capability is a strategic issue


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


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


Thank you

www.activeops.com



Agenda

• Why focus on Operations Management?

• Strategic improvement with Active Operations Management (AOM™)

• Investing in Operations Management: the business case

• Practical tips


Why focus on Operations Management?


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


Practical tips


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


...but is there evidence of JIC resourcing?

This does happen in reality...

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



Chart of daily productivity



Comparison of productivity and work done



Daily productivity



Comparison of productivity and work in



Frequency distribution of daily productivity


Mean70% 140%


Latent capacity: comparison of hours used and required



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


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