For those of us who have worked in the manufacturing and industrial sectors, the question posed in the headline would seem strange if not bizarre. Managers in those sectors take for granted the skills and disciplines their sectors have acquired over the past 200+ years and that managers apply as second nature in the day to day management of their organisations resources. So much so that they are commonly referred to as Operations Management Fundamentals or Operations Management 101.
The Science and Discipline of Services Management is relatively new and in many ways is still findings its feet. Yes, services are different but, unless hope is your only strategy, the basic principles of Operations Management apply to every organisation, services, knowledge-work & industrial. To paraphrase Einstein, the questions remain the same, it's the answers that demonstrate mankind's progress.
Regardless of who, what or where your organisation is, achieving the optimal balance between the demands of the market for your products & services with the resources available to your organisation, is one of the key challenges that every manager, individually and collectively, needs to master. Failure to get the balance right results in an underserved market or a waste of valuable resources and either way, a lot of unhappy customers. Every manager needs to have all of the basic tools and methods in their management toolbox and operations management is one such necessary set of tools and skills.
Reactivity is Not the Only Response Available to Manage Variable Demand
One of the most common errors I come across is the belief that demand variation in service and knowledge-work organisations cannot be managed. Variation in demand comes in 4 types, variation in frequency or timeliness of work, variation in quantity of work, variation in quality of work and variation in size of work.
Here are some insights on 2 of these:
Variation in Workload Quantity:
The first step in appreciating how you can manage this is to understand that most of the workload demand created for organisations is created by the organisation itself. As a general rule of thumb, 20% of the workload demand in a service organisation is created by customers and 80% by the organisation itself. If you map the end to end value stream (the processes by which you deliver value to customers) of any service in any service organisation, this ratio broadly applies.
In financial services, when a customer applies for a mortgage, a loan, an insurance policy or simply to open an account, measure how much work they generate initially and then measure the follow up work the organisation generates of its own accord.
In a contact centre, call centre, customer services centre or shared services centre, analyse the source of the calls and calculate what percentage of them come from failures somewhere in the organisation, what John Seddon popularised as "failure demand".
Insight: Measure this for your team and set a stretch goal to bring this ratio down to to 1:2 instead of 1:4
Variation in Workload Quality:
A problem I come across frequently is where organisations complain about the quality of the customers input to the service to be delivered. The application form is poorly completed, the service request in the email has inadequate information or the person on the end of the phone call can't explain their problem or follow instructions. One of most interesting issues I came across was in an insurance company who required the bank account details of their aspiring customers to be included on the application form for life insurance. This information was required to facilitate the company processing the insurance premium direct debit payments once the customer had been approved and setup. However on more than 50% of the application forms, customers left this information out and while the application was allowed to proceed internally, it created a lot of forwards and backwards communications within the organization trying to have this information collected. In investigating the reasons behind this "quality issue" it became clear that the organisation had no quotation process, only an order process with a "confirmation to proceed or not" sub-process. As such, all requests from customers were treated as "orders" and not "requests for quotations". Customers were not including their bank details because they often filled in application forms for more than one insurance company.
If the customer is an internal customer, there's no excuse for poor customer input quality, capture the data/evidence and speak to them using data and evidence on the impact! If it doesn't get resolved quickly you have a culture and senior management issue, which in many cases is the same problem.
Insight: Customer quality problems are always and every time the responsibility of the organisation. If they don't understand then you haven't communicated your requirements.
Note: communication is defined as the transmission of information, its receipt by the receiver and feedback that validates its accurate transmission-reception. If a customer fails to execute your desired actions, that is feedback that the send - receive loop has been corrupted.
Our Lean Service Operations Management programme for Team Leaders and Mid-Level Managers, delivered in conjunction with the Technical University of Dublin (5 ECTS per module) is available for booking on our website www.expertivity.com.