Professor Niall Piercy, PhD. Swansea, United Kingdom Web: www.niallpiercy.com Email:
[email protected]
High Quality AND Low Cost: The Lean Service Centre Niall Piercy & Nick Rich1 Published in: European Journal of Marketing
Full citation: Piercy, N. and Rich, N. 2009. High Quality and Low Cost: The Lean Service Centre. European Journal of Marketing. 43, 11/12, pp1477-1497 DOI: 10.1108/03090560910989993. Open access full text: http://tinyurl.com/n9wyf8h. Publisher link: http://tinyurl.com/ohk2dbz
This paper is released under the UK Open Access Framework. There may be very minor differences between this document and the published journal version due to changes and corrections at the print-proofing stage. All copyright for the material within this paper rests with the publishing journal.
1
School of Management, Swansea University, UK.
Other papers by the same author that you may be interested in are listed below. Free, open access full text of most papers is available from the links given with publication/post-press copies available from the journals in question subject to payment. Lean and general operations management
Piercy, N. and Rich, N. 2015 The Relationship Between Lean Operations and Sustainable Operations. International Journal of Operations and Product Management. 35, 2, 282-315. DOI:10.1108/IJOPM-03-2014-0143. Open access full text: http://tinyurl.com/pefpr6p. Publisher link: http://tinyurl.com/pwogwog Piercy, N. and Rich, N. 2009. Lean Transformation in the Call Service Centre. International Journal of Operations and Production Management. 29, 1, 54-76. DOI: 10.1108/01443570910925361. Open access full text: http://tinyurl.com/qxsur3n. Publisher link: http://tinyurl.com/nqt44c7 Piercy, N. and Rich, N. 2009. The Implications of Lean Operations for Sales Strategy: From Sales-Force to Marketing-Force. Journal of Strategic Marketing, 17, 3-4, 237-253. DOI: 10.1080/09652540903064738. Open access full text: http://tinyurl.com/onkdlr9. Publisher link: http://tinyurl.com/ovum4z8 Piercy, N. and Rich, N. 2009. High Quality and Low Cost: The Lean Service Centre. European Journal of Marketing. 43, 11/12, pp1477-1497 DOI: 10.1108/03090560910989993. Open access full text: http://tinyurl.com/n9wyf8h. Publisher link: http://tinyurl.com/ohk2dbz Piercy, N., Caldwell, N. and Rich, N. 2009. Considering Connectivity in Operations Management. International Journal of Productivity and Performance Management. 58, 7, 607-632. DOI: 10.1108/17410400910989449. Open access full text: http://tinyurl.com/o2cja9t. Publisher link: http://tinyurl.com/ohlrp3k Lin, S., Piercy, N and Campbell, C. 2013. Beyond the make-or-buy dichotomy: outsourcing creativity in the fashion sector. Production Planning and Control 24, 4/5, 294-307. DOI: 10.1080/09537287.2011.648542. Open access full text: http://tinyurl.com/q7ucy3q. Publisher link: http://tinyurl.com/otbbelr Piercy, N. 2012. The Role of History in Operations Management. Business History. 54, 2, 154-178. DOI: 10.1080/00076791.2011.631121. Open access full text: http://tinyurl.com/q6b6h7x. Publisher link: http://tinyurl.com/pf2cwjx
1
Piercy, N. and Rich, N. 2004. Strategic Marketing and Operations Relationships: The Case of the Lean Enterprise. Journal of Strategic Marketing, 12, 3, 145-161. DOI: 10.1080/0965254042000262896. Open access full text: http://tinyurl.com/pqlovcu. Publisher link: http://tinyurl.com/nzw294h
Public sector operations management
Lewis, M., Piercy, N., Phillips, W. and Palmer, J. (2015). Towards a Model of the Intervention Process. Policy & Politics, 43, 2, 255-271. DOI: 10.1332/030557312X655927. Open access full text: http://tinyurl.com/punuocp. Publisher link: http://tinyurl.com/ps6l9ks Piercy, N., Phillips, W. and Lewis, M. 2013. Change management in the public sector: The use of cross-functional teams in the Public Sector. Production Planning and Control , 24, 10-11, 976-987. DOI: 10.1080/09537287.2012.666913. Open access full text: http://tinyurl.com/p4tzwbz. Publisher link: http://tinyurl.com/qcf2y5c Rich, N. and Piercy, N. 2013. Losing patients. A systems view on healthcare improvement. Production Planning and Control. 24, 10-11, 962-975. DOI: 10.1080/09537287.2012.666911. Open access full text: http://tinyurl.com/qaey6c4. Publisher link: http://tinyurl.com/pu8gnle
Marketing-operations cross-functional relationships
Piercy, N. and Ellinger, A. 2015 Demand- and supply-side cross-functional relationships: an application of disconfirmation theory. Journal of Strategic Marketing 23, 1, 49-71. DOI:10.1080/0965254X.2014.914067. Open access full text: http://tinyurl.com/putxgv6. Publisher link: http://tinyurl.com/og7aeao
Piercy, N. 2011. Marketing and Operations Relationships: Why can’t we all just get along? Business and Marketing 6, 13, 64-66
Piercy, N. 2010. Improving marketing-operations cross-functional relationships. Journal of Strategic Marketing. 18, 4, 337-356. DOI: 10.1080/09652541003768095. Open access full text: http://tinyurl.com/oswbv47. Publisher link: http://tinyurl.com/pqy8535
Piercy, N. 2010. Improving the Marketing-Operations Relationship: Case Evidence from an Internet Small-Medium-Enterprise. The Marketing Review. 10, 4 333-351. DOI: 10.1362/146934710X541311. Open access full text: http://tinyurl.com/p4ep83q. Publisher link: http://tinyurl.com/nodzenm 2
Piercy, N. 2009. Positive management of marketing-operations relations. Journal of Marketing Management, 25, 5/6, pp551-570. DOI: 10.1362/026725709X461858. Open access full text: http://tinyurl.com/pk8ec4m. Publisher link: http://tinyurl.com/p6ur3sz Piercy, N. 2007. Framing the Problematic Relationship between the Marketing and Operations Functions. Journal of Strategic Marketing, 15, 2/3, 173-195. DOI: 10.1080/09652540701319037. Open access full text: http://tinyurl.com/oyg64z4. Publisher link: http://tinyurl.com/pck8tbw Piercy, N. and Rich, N. 2004. Strategic Marketing and Operations Relationships: The Case of the Lean Enterprise. Journal of Strategic Marketing, 12, 3, 145-161. DOI: 10.1080/0965254042000262896. Open access full text: http://tinyurl.com/pqlovcu. Publisher link: http://tinyurl.com/nzw294h
ResearchGate.net will continually be updated with new papers and links – if the paper you are interested in is not available above, check on http://www.researchgate.net/profile/Niall_Piercy for updates.
3
High Quality AND Low Cost: The Lean Service Centre Niall Piercy & Nick Rich
Full citation: Piercy, N. and Rich, N. 2009. High Quality and Low Cost: The Lean Service Centre. European Journal of Marketing. 43, 11/12, pp1477-1497 DOI: 10.1108/03090560910989993. Open access full text: http://tinyurl.com/n9wyf8h. Publisher link: http://tinyurl.com/ohk2dbz
STRUCTURED ABSTRACT
Purpose There are two objectives of this paper: firstly, to examine the application of lean production improvement techniques to the pure-service context; and, secondly to evaluate the contribution of lean production techniques to services marketing improvement.
Methodology / Approach Three case companies from the British financial services sector are tracked through the process of lean improvement. Analysis of management change of a common process within each company forms the basis of the investigation.
Findings Research findings highlight that through the adoption of lean service tools, service call centres can serve both of the traditionally competing priorities of operational cost reduction and increased customer service quality. The lean approach is validated in the service context and proposed as a valuable addition to traditional service marketing approaches to services improvement.
4
Practical Implications The techniques described are easily replicable by academics, practitioners and managers and can be applied to a wide range of service centres or service businesses. In the contemporary marketplace, the difficulty of delivering quality service at any costs suggests that there is a great opportunity for the business that can deliver better service at a reduced cost of operation.
Originality / Value Lean transformation in the manufacturing sector is well established, however, the use of lean improvement tools to improve the quality of service delivery within the service sector is relatively new, with limited understanding of approaches and benefits in the academic or managerial arenas. In addition, coverage of lean tools is still rare in the marketing literature.
Keywords: Service, Call-Centre, Lean
Categorisation Research paper / case study
5
High Quality AND Low Cost: The Lean Service Centre INTRODUCTION The telephone call centre is becoming increasingly commonplace in the service economy. Low cost telecommunications and computer software have seen sectors such as finance, banking, insurance, customer and technical support move towards call contact centres as the primary means of service delivery (Ellis and Taylor 2006). The retail financial services sector has been one area where such centres have become especially common. Faced with increased deregulation and competition, established financial companies have for some time sought cost savings through replacing expensive branch-networks with cheaper call contact service centres. More recently, the rise of internet-only financial service providers, who benefit from lower cost bases, have placed even greater pressure on traditional companies to reduce overheads across the organisation, heightening dependency on call contact centres as the cheapest, and therefore primary, method of customer service (Dixon 2002).
Call centre operational management has focused on the mass-production logic to answer organisational cost reduction demands. Service centre management have driven out cost by using low-wage workers with minimal training, performing narrowly defined tasks that are very tightly controlled by management (Johnston and Clark 2005, Slack et al 2006). Reports indicate that the quality of service on offer from these environments is poor at best and terrible at worst, with management struggling to deal with competing priorities of cost reduction and good customer service quality (Seddon 2003, Marr and Neely 2004).
The academic literature still provides little useful guidance for the design of a service business capable of fulfilling these opposing goals. The results observed in service businesses around the world report the consequences of this - increasing costs of service while at the 6
same time reducing the quality of service delivered (Quinn and Gagnon 1986). In the manufacturing industry, significant activity has been devoted to resolving the cost-quality dichotomy. The primary driver of improvement in this area has been through the implementation of the Japanese-derived, lean production philosophy (Womack and Jones 1996). Research has reported the results of lean approaches in service areas such as retail or healthcare, where there are physical products (or patients) that are moved and processed (Bowen and Youngdahl 1998, Swank 2003). The suitability of lean for the pure-service environment is still uncertain. In this paper we seek to determine whether managerial and marketing requirements for cost-reduction and service quality improvement can be achieved in the pure-service setting with lean improvement.
Using three case examples of lean improvement in financial service call centres, our results indicate that lean techniques are applicable in this area. The focal cases were in a relatively short period of time able to implement lean techniques to halve the average time to complete a customer enquiry while at the same time drastically reducing the amount of wastage and unnecessary activity in serving the customer. For the organisation this waste reduction generated significant cost savings and at the same time improved customer service delivery. The managerial and research implications of this finding are discussed.
TRADITIONAL SERVICE-CENTRE DESIGN
The scientific, mass production principles of compartmentalized, low skill workers performing routine and repetitive tasks, continues to define the organisation and operation of service centre (Ellis and Taylor 2006). Traditional worker management approaches based on rigid control through exacting specifications and close monitoring have proved ineffective in
7
the service environment, with employee resentment of constant monitoring and practical problems in planning task design for every situation that arrives in the heterogeneous service encounter (Hill 2005, Slack et al 2006). Management performance systems designed to improve delivery (for instance, measuring call duration or number of calls answered) have tended to focus on speed of service delivery rather than, and usually at the expense of, quality service delivery (Seddon 2003, Marr and Neely 2004).
This short-coming, and the impact of such organisational approaches, has led to a continuing inability to deliver quality or value to the end customer (Quinn and Gagnon 1986, Zeithaml et al 1990). Research has highlighted that service quality levels remain very poor in most service industries: Fournier et al (1998 p43) noted customer satisfaction rates in the United States as at all-time lows while in the UK Acland (2005) reports a twelve month study which found that 86% of British adults had complained of receiving poor quality customer service, with 59% sharing their experiences with friends or colleagues. Worryingly, research has suggested that service is not only bad but getting worse and that while organisations pay lip service to excellent service there is little evidence of any real commitment to achieving it (Dickson et al 2005).
IMPROVING SERVICE DELIVERY
Part of the challenge in improving service delivery is the requirement of a dual understanding by marketers. Not only must they consider the demands placed on the organisation by the customer but also operational capability to deliver services to the customer (Chenet et al 1999, Deshpande et al 1993, 1997). There is therefore a need for marketing to extend beyond analysis of the customer interface to consider how the service encounter is nested within the
8
broader organisational structure that determines service delivery and customer satisfaction (Bitner 1990). Several bodies of work within the marketing field have sought to clarify such a system. Key among these have been the concepts of service-quality, the service profit chain, service blueprinting and market organisation.
i) Service-Quality Conceived in the 1980s as one of the first scales to be applied specifically to the service environment, the ServQual measure of Parasuraman, Zeithaml and Berry (Parasuraman et al 1985, 1988, Zeithaml et al 1990) has become synonymous with services quality. The twentytwo item customer survey has become one of the most widely used and replicated tools to analyse services (Buttle 1996, Asubonteng 1996). The organisational issues in service delivery, and the identification of gaps or shortfalls between customer expectation and actual delivery, were key parts of the original research programme - of the nine chapters in Zeithaml’s seminal 1990 book ‘Delivering Quality Service’, only one is spent on analysing service demands, the rest on structures to deliver on them. However, very few of the studies and critiques that have replicated ServQual have considered organisational service mechanisms, focusing instead on service analysis. Those that have focused on the organisation, report differences between managerial awareness versus the reality of customer demands and organisational delivery mechanisms (Brown and Swartz 1989, Deshpande et al 1993, 1997). The need for a re-examination or re-extension of service-quality into the mechanisms that deliver service is increasingly necessary.
(ii) Market(ing) Orientation
9
The realisation of the marketing concept in practice has been proposed by various authors through the adoption of market(ing) orientation. Three distinct bodies of work on market(ing) orientation have established common themes. These works focus on: the organisational culture and coordination required (Narver and Slater 1990); the generation and dissemination of intelligence on customer needs (Kohli et al 1993); orientations around serving customer needs (Deshpande et al 1993, 1997); and, ultimately “the set of cross functional processes and activities directed at creating and satisfying customers through continuous need assessment.” (Deshpande and Farley 1996 p14).
These approaches provide a useful conceptualisation of marketing activities in practice, however, it is unclear how they can be applied for operational improvement. Analysis of the current-state of activity and issues to resolve identified short-comings is possible (for instance addressing poor cross-functional working with greater project or team based work). However, the next step required to make changes to the operational delivery of service remain unclear. Improving the support systems and structures of the organisation to improve customer focus and marketing awareness of operational ability is important, however, greater attention is still required on the operational activities or improvements needed to meet the ideals of the marketing concept (satisfied and profitable customers) in practice.
iii) Service Profit Chain
Developed at Harvard Business School during mid-1990s the concept of the service profit chain sought to link in a chain internal employee satisfaction (related to capability, loyalty and productivity) and external services quality, value delivery, customer satisfaction, loyalty to the company, growth and profitability (Heskett and Schlesinger 1997, Heskett et al 1997).
10
The service profit chain concept has become widely adopted within the service management community (Maddern et al 2007). The linkage between employee satisfaction and customer satisfaction has been empirically verified in a number of settings (Payne et al 2001, Saura et al 2005, Keiningham et al 2006, Loveman 1998). In the service environment, where the delivery of services is determined by the behaviours of frontline staff (for instance, helpfulness on the telephone) ensuring staff are capable and satisfied is logical – it is their behaviour that determines customer satisfaction and their behaviour which is in large part determined by their own mood and satisfaction within the working environment (Van Looy et al 2003, Grönroos 2000, Fitzsimmons and Fitzsimmons 2004, 2006).
Several researchers have however questioned the strength of the correlation between employee satisfaction and customer satisfaction (Roth et al 1997, Sewell and Brown 1990, Lau 2000). There are suggestions that adaptations are necessary to fully conceptualise the value chain (Pritchard and Silversteo 2005, Davis 2006). Schneider and Bowen (1995) described a ‘human resources trap’ where the focus on service management is solely on individuals rather than the system of service delivery. In a similar vein, Pritchard and Silvestro (2005) proposed the service profit chain may be a ‘strait jacket’ to thinking about service improvement, overlooking many key aspects of the service delivery. Several authors propose that a focus solely on individuals at the expense of the operational system in which they operate is short-sighted as it is the system or process that determines what service the customer experiences (Maddern et al 2007, Sewell and Brown 1990, Lau 2000, Schneider 1994, Seddon 2003).
iv) Service Blueprinting
11
Service blueprinting involves documenting all process steps and options from the start to finish of a service (such as from making a loan application to receiving the final payment), representing these as a series of visual steps or boxes from start to finish as a way of conceptualising services for management attention and improvement (Shostack 1984, 1987). Improvement can be achieved through simple techniques such as isolating points of failure, measuring time or cost at different stages and simplifying processes (Baum 1990, Polonsky and Garma 2006, Coleman 1989, Berkley 1996). The ease with which a blueprint can be constructed and common-sense can be applied to optimise the service process is highly appealing (Coleman 1989). Blueprinting represents a process mapping technique that is common in operations but that has received less attention in the marketing community (Bitner et al 2007, Flieβ and Kleinaltenkamp 2004).
Blueprinting exists as an activity to conceive processes. Operational approaches such as lean thinking provide a toolkit based on process visualisation, extending the conception of service process beyond simple or common-sense problem solving to operational workplace transformation based around established change tools. This toolkit may provide a potential added value to build on the blueprinting approach, supporting greater operational improvements over time.
FROM LEAN MANUFACTURING TO LEAN SERVICE
Marketing based approaches to improve service delivery have supported a change in perspective, culture and a greater awareness of service issues across the organisation. However, none have sought to unseat the traditional mass-production organising logic of the service delivery process. In the manufacturing sector, the application of traditional or classical
12
management approaches (financial measures of cost of service/production, rigid bureaucratic structures and tight worker control) have been increasingly challenged and shown to be ineffective with new business models emphasising the importance of holistic, systems or process perspectives (Davenport 1993, Senge 1990). Most notable is the rise of the lean enterprise as an organisational form which represents a step-change in operational design from previous scientific approaches. This approach focuses on bottom-up, worker led improvements and a process wide approach to production that has drastically reduced costs and improved quality across a range of industries and countries (Womack et al 1990, Womack and Jones 1996, 2003).
While lean transformation has made inroads into a range of
manufacturing settings we are still in the infancy of the application of lean principles to the service sector.
LEAN ORIGINS
The spread of lean thinking beyond its operational base in automotive manufacturing is well underway, however, the often incomplete or contradictory definitions and explanations of lean thinking in both academic and practitioner literature requires a clarification of the origins and application of the lean paradigm. The lean approach to organisation was defined by the International Motor Vehicle Program which demonstrated gaps of 2:1 in productivity and 100:1 in quality of the vehicles produced in Japanese versus Western production (Womack et al 1990). Researchers identified the Toyota Production System (TPS) as the explanation for the superior performance observed in Japan. This method of production used fundamentally different bases of organisation and operation to the mass production and scientific management philosophies employed in the West. To aid Western companies in any industry or sector in emulating the success of Toyota, a set of lean principles were produced to help
13
those in the West redesign their operations based on Toyota derived methods (Womack and Jones 1996).
Five lean principles were stated to guide the organisation seeking to transform towards the lean model: firstly, the need to understand and identify the real value sought by customers; secondly, the need to visualize the value stream - the steps, stages and processes that involve the creation to provision of value to the customer which should be mapped out with any steps that do not add value from the customers point of view targeted for elimination. Thirdly, the need to make these steps flow without hold up or delay; fourthly, the need to implement pull based responsive systems and finally, organisations are instructed to seek to continually engage management and all staff towards the elimination of all areas of waste that do not add value for the customer (Womack and Jones 1996). Supporting these principles is an established group of change tools that address cultural change, group-based working, bottomup improvement, statistical-process control, work organisation and processes (Bicheno 2004).
LEAN SERVICE?
Several researchers have taken forward Womack and Jones (1996) calls for lean in the service sector. For instance, Bowen and Youngdahl (1998) highlighted early on that lean approaches in retail, airline and hospital management could generate positive results for the companies. However, these gains were based not on an explicit lean change agenda within the companies but more a general set of change principles, many of which share commonality with some aspects of lean thinking. To evaluate fully the applicability of lean in the service sector it is necessary to evaluate specific instances of explicit and directed implementations of the lean principles and toolkit.
14
Extensions of lean thinking outside of production manufacturing are first identifiable in the application to supply chain management. Management of inbound and outbound supply was always part of lean manufacturing in the automotive sector. Several researchers in the mid1990s sought to extend this supply chain focus beyond specific automotive manufacture to product supply chains across all industrial sectors (Avery 2003, Hines 1996, Lamming 1996, Sandelands 1994). The largest single interest in these approaches, outside manufacture, has been seen in the retail sector. The Efficient Consumer Response (ECR) movement has supported the development and propagation of lean tools throughout global retail supply chains since the mid-1990s (ECR Europe 2005). Activity has focused on bringing supply partners closer together to reduce stocks throughout the supply chain, from store to original manufacturer. Benefits of such approaches have included a reduction in the costs of holding stocks, reduced write-off costs on perishable items and an increased ability to pull products quickly through the supply chain based to serve unpredictable customer demand (Jones and Clark 2002, Fernie and McKinnon 2003, Abernathy et al 2000). Tools such as process/value stream mapping and problem solving have been relatively easily transferred from automotive supply to retail supply contexts due to the common focus on product-flows (Bicheno 2004).
The second key area of lean service has emerged beyond the handling of commercial products to the handling of patients in the healthcare sector. In common to retail, some research has focused on the purchasing practices and supply chain of inputs to the healthcare system, applying lean supply partnership and inventory reduction approaches to improve responsiveness and cost (Jones and Mitchell 2006, Kollberg et al 2007). A greater body of research has focused on the movement of patients through the treatment process. Whether the focus is on products or people, the key concept of moving a physical entity through an
15
operational system remains the same, allowing the use of established lean tools such as mapping techniques and waste reduction (Seddon 2003, Womack and Jones 2005). Focusing on the flow of activities through the healthcare system, approaches to lean improvement have adopted process mapping and the use of constructed process maps as tools to identify areas of waste and inefficiency in the process (Swank 2003, Jones and Mitchell 2006, Towill and Christopher 2005, Esimai 2005, Massey and Williams 2005).
Applications of lean thinking where there is no physical entity require a greater reconsideration of the lean approach. This is the focus within the research presented here. Considering the pure-service environment, and specifically within this paper, the call service centre, analysis of the activities taking place do provide many parallels with physical product environments. While there may be different issues in service delivery (based around issues such as intangibility, heterogeneity of encounters, lack of standardisation and customer coproduction) (Van Looy et al 2003, Grönroos 2000, Fitzsimmons and Fitzsimmons 2004, 2006), at the most fundamental level all services involve a series of input-transformationoutput process activities (Slack et al 2006, Hill 2005). For instance, metal is taken into a pressing process, stamped and passed out to the next stage of production. In service encounters, such as a call centre, a customer enters the call screening electronic menu stage, performs an operation (such as pressing option two for saving enquiries) and is passed out to the next stage of the process. By mapping out and following the customer as they progress from start to finish of their encounter with the company, it is possible to plot out a series of activities and operational actions being conducted (Shostack 1984, 1987, Flieβ and Kleinaltenkamp 2004).
16
The co-production of the pure service by customer and employee (the role of the customer interacting with the company, in-part determines the service items and levels that are provided) (Johnson and Clark 2005, Fitzsimmons and Fitzsimmons 2004, 2006) supports the tracking of services as a production process. For instance, the service encountered by a call centre customer will be determined by which services they require (such as savings or loan), by their own financial details and background and by the manner in which they interact with the call operative. Thus, as a producer of a service, following the production from start to finish (as proposed by lean manufacturing principles), is possible by following the customers experience throughout the service encounter (Seddon 2003). Mapping out, step-by-step, the activities required in the construction of a product or service
can be applied to both
manufacturing (such as the different materials, parts and machining required to produce a car door) or to pure service (such as the different information, administrative activities and service issues required to open a new savings account) (Womack and Jones 2005).
As the foundation of the lean implementation, process visualisation is equally possible in service as in manufacturing. With this visualisation in hand, framing the input-transformationoutput cycles, it is possible to optimise this process. Despite the possibilities for lean implementation in pure-service, literature in this area is still emergent. The conceptual appeal of such approaches requires greater validation in practical application. Further, research on lean management, in any setting, remains dominated by operational efficiency perspectives rather than marketing service requirements. In this paper we serve to address two issues: firstly to assess whether lean process techniques can be successfully applied to the pure service setting; and, secondly, to create an awareness of the opportunity (or danger) of such an approach outside of the operations management community, engaging more fully with the marketing and management arenas.
17
RESEARCH METHODS
In this paper we use three in-depth cases from the retail financial services sector to explore the benefits of lean methods for organisational redesign. There have been extensive debates about the appropriateness of large scale empirical surveys versus more in-depth but smaller sample qualitative research (Saunders et al 2003). A note is therefore worthwhile to justify the basis of drawing conclusions from the three case studies provided. The task of studying management behaviour and strategy poses a complex and daunting task for researchers. Positivistic methods in the tradition of marketing research are often inappropriate for studies of a situation which struggles with concepts such as productivity, quality, and a systems perspective. These vague concepts are not easily tested by applying large scale surveys or sophisticated statistical manipulation and will do little to aid learning for academics or professional managers with new theory (Brown 2001, Fournier et al 1998). Thus, we believe that when investigating the improvement programs undertaken within service centres the inability to successfully describe entire systems within narrow quantitative research requires that qualitative research is most appropriate to probing the ‘messy’ issues at the interfaces between customers, workers, managers and the technology systems they use. On a more practical note, in examining emergent adoption of new techniques, by the very nature of emergence such practices are few and do not provide adequate sample sizes for quantitative investigation. A research strategy of a longitudinal exploratory cross-comparative case study approach is therefore required and adopted to give the depth of study and the time duration to answer the issues of how and why events unfold during change programs (Leonard-Barton 1990; Yin 1994).
18
INSERT AROUND HERE Table I: Description of Case Company Background
The study was conducted between January 2002 and June 2004 and involved studies of customer claims within three financial services company. An overview of the background of the case companies selected is provided in table one. All three companies were facing the same management pressures for change and reduction of service centre costs. Each case engaged in electronic or telephonic interaction with customers and each case represented a large scale operation employing many hundreds of staff on a single site. To ensure a crosscomparative research study, a common process that was shared by the three different organisations was selected to focus the study. Even though the product and actual consumer serviced differed, the operations process selected in each case concerned that of a claims procedure. The process standardisation across the sector (electronic menu screening, call routing to staff with skills in limited areas, and referral areas for atypical customer requirements) meant each company adopted a near identical process. Each company, experiencing the same problems on the same process, undertook improvement with a common change agent using a standard change process. The data reported below is therefore presented in an amalgamated format. The change activities within each company were facilitated by an independent consultancy team. The researchers role was as observer of the change process. Initial briefing sessions with company management, the training of senior managers and change teams, discussions and meetings of the change team were all observed and notarised. In addition to observation of the activities taking place, the researchers discussed the activities taking place with managers and the change team in each company, before, during and after
19
lean improvements took place. Interviews were informal (unstructured), recording subject views on the company, problems and changes taking place. The researchers were also able to review a great deal of the information collected by the change team (for instance, statistics on process performance). An inductive approach to analysis was employed, reviewing the findings produced to evaluate the suitability of the lean approach in the case contexts.
THE INBOUND CALL PROCESS
The activity selected for study in each company concerned inbound customer claim requests to a service call centre tracked through to issue resolution. Each inbound customer contact made use of telephone systems with automated menus describing call routing options for the customer to select from (for instance, “for personal banking, press one”). Once a selection was made, customer calls were stored in an automatic queuing system and answered in the order in which the calls were received. Once a customer got through to a member of staff, the operative would assess the customers issue then select an appropriate script and pre-designed set of activities to follow and adhere to in attempting to solve the customers’ issues. When operatives were unable to successfully process and resolve the customer query immediately, the customer information was placed in their case files and moved into a buffer zone known as ‘work in process’ (WIP) which would then be accessed at a later date by staff with the extra training or knowledge to resolve the customer issues. This process is represented in figure one. The claims process in all three centres was typified by narrowly defined work tasks, operatives trained only to resolve very simple issues, a rigid script based control system and an increasing buffer area for issues beyond the resolution of the staff within the system.
20
INSERT AROUND HERE Figure I. Inbound Customer Process
In all three centres, major problems were observed with customer service: the average time to complete a customer request was very long, varying from 39-80 on average to 54-310 days at worst from across the three call centres. Examination of the call centre process suggested that the long delays were due to failures of the customer handling system at various stages of the process. Examining this process, the researchers, after discussion with management and staff identified three key areas of failure common in each company:
Stage One Error: Problems at the Entry Stage: At entry to the process, customers might select an inappropriate option from the electronic routing system (either due to mistakes or due to their actual problem not being an option and selecting the closest approximation).
Stage Two Error: Problems at the Processing Stage: i) Customer Attrition: Customers exiting the system due to long wait times to speak to an operative; ii) Back-Referrals: Customers being routed back into the menu-routing or queuing system by operatives unable to speak to other departments due to an inability to completely solve the customer issue in one contact.
Stage Three Errors: Problems at the End Stage: Call termination with the customer issue unresolved due to lack of information availability or a lack of knowledge by call
21
operatives. The customer case here is referred to the buffer zone for later processing by more experienced staff.
Each problem individually was reducing customer satisfaction with the claims handling process. Customers waited for long times in queues to speak to staff who often could not resolve their issue, referring them back into the long queues to speak to other operatives or passing their files on for secondary handling at some point in the future.
Each error individually represents a failure preventing customer service and satisfaction, however, compounded together across the system as a whole, the effects of each error become multiplied, resulting in service centres with deteriorating customer service and satisfaction while suffering increasing staff costs. Several key interactions were observed: a vicious circle at entry to the system – callers who would queue for a certain period of time before giving up would recall later, adding to the overall volume of calls held at any one time (and therefore queue length/time and therefore the number of callers abandoning the queue and recalling).
Each centre operated in tightly defined departments (for instance, policy amendment, policy termination, policy claim). The automated menu system was created to ensure customers were immediately routed to the correct department, thus reducing queue times. In practice, increased referrals back to the queuing system were observed (due to customers incorrect selection or a single operative in a single department being unable to completely resolve an issue), further escalating queue times and the customer-recall cycle.
Even when customers were in contact with the correct operative to resolve an issue, time based performance measures would lead to set-scripts being rushed, with customers having to
22
make second or even third contacts with the centre to gather the information they requested but were not properly provided during the first contact, further increasing overall call volume.
Operatives inability to resolve issues within the rigid scripting system and department structure was leading to increased referrals to the work-in-progress buffer zone. The volume of work being referred into the this area in all three service centres had led to an increasing number of operatives whose time was solely occupied with addressing this specific area. With finite operating budgets and no additional money for special problem-resolution staff, these staff were drawn from the general operative group, reducing the number of available staff to answer incoming queries, further increasing queuing times, the recall cycle and customer dissatisfaction.
For the customer, the time to speak to operatives was unacceptably long and even when connected there was a less than fifty per cent chance that their query could be successfully resolved in that contact, with many referred to a buffer area that itself suffered long delays before customer issue resolution. Research indicated that each company was spending over half of all their operating time (and therefore budget) in activity that could be classified as ‘failure demand’. Failure demand is classified as demand created for operational activities by failures in the system to resolve issues at the first opportunity (Marr and Neely 2004). In the three service centres this failure demand concerned the cost of errors at each stage of the system individually and interacting with each other to increase operating cost and reduce customer service. The work in progress area was the most clearly defined area or failure demand. In addition, any customer contact that required more than one operative can be classified as a system failure creating demand for additional services. Overall, the increasing queue times and customer-recall cycle was creating a huge extra strain on the organisation (of
23
all the customers in a call queue, more than half were there making multiple contacts or referred back due to a failure of the process to resolve their problems first time in a timely manner).
Each case company was facing management pressure to resolve customer and organisational problems. Customer complaints were escalating, focusing both on the length of time to resolve issues and also the quality of interaction with service staff. Internally, the organisations were seeing higher than industry average levels of staff turnover and absenteeism. It was these findings which prompted the improvement programs at each company.
THE LEAN IMPROVEMENT PROCESS
Each contact centre undertook lean improvement with the same team of advisors. A common change process was therefore adopted in each setting. The first activity focused on senior managers, providing a one-day seminar on lean management to engage them with the programme and gain their support. The core change activities were undertaken by dedicated change teams of ten people from within each call centre. The role of the advisors was to train these staff, facilitating improvement rather than directly undertake change themselves. A four week period of training in lean principles and basic techniques was provided to these teams to equip them to begin change in practice. The lean improvement tools to be adopted were shaped by the advisors based on providing each company with a basic understanding and improvement toolkit founded on the application of the five lean principles: identification of customer value, process mapping of the value stream, problem solving and process reconfiguration to ensure value flows to demand and a mentality of continuous improvement.
24
The first stage concerned understanding customer value and the collection of data on the current performance of the call centre process. By reviewing customer logs and complaints, the change team determined that customers wanted their issue resolved in a timely manner and by the first person they encountered or a single point of contact consistently in the company. Mapping out the process of activities serving the customer (shown in figure one) and gathering data around this process demonstrated each company as failing to serve this core value, with most seriously very long periods to complete customer enquiries (up to 310 days). The observations of the change team, based around process mapping of the claims process, highlighted the existing organisational structure as a major cause of failure to deliver value. Monitoring of customer calls demonstrated the majority of customers as having issues that spanned across two or more of the current departments or menu-options offered to customers. Even though all queries were related to the same basic activity (making a claim) the narrow job specifications and lack of cross training meant that queries could not be resolved by a single operative, resulting in referrals back to the queuing system or to the WIP buffer area.
The biggest change implemented was in redesigning the claims process to create a single pool of cross-skilled workers so that any operative could completely resolve any customer enquiry. This required a period of staff training and a physical redesign within each call centre (both achieved within three months of starting the change programme). In addition, traditional efficiency performance measures (such as call duration) were replaced by measurement of customer claims completed first time. By focusing on this objective, the number of calls handled dramatically fell as failure demand was reduced. In addition, WIP levels fell as greater training resulted in less work having to be referred to that area. By reducing failure
25
demand, simplifying the processing of claims and the creation of a one-stop-shop, maximum claim time was reduced by nearly three months, improving customer service, reducing operating costs and saving the company from a damaging regulatory investigation.
DISCUSSION
The application of the lean approach to three low-performing financial service call contact centres forms the basis of our investigation into lean service in-practice and specifically the benefits that it can deliver compared to traditional or classical management approaches. This paper seeks to address two issues: firstly exploring the potential for lean in the pure service environment; and, secondly, considering the implication of lean process approaches for established service marketing concepts.
INSERT AROUND HERE
Table II. Measured Service Improvement from Lean
Implementation
Addressing the first issue, the cases demonstrated that with minimal investment and training, internal staff were able to redesign the call process to reduce the cost to serve customers while in parallel improving the service delivered (key metrics are highlighted in table two). The drive to eliminate waste and reduce failure demand by taking a lean process orientation at all three companies has proven extremely successful. Using the lean principles as a foundation for understanding customer requirements (a single point of contact) and mapping out the
26
existing process or value stream of activities serving this value, led to a realisation of the problems of the organisational design used in each call centre. As a result of redesigning the claims process, failure demand (the summation of stage one, two and three errors) was significantly reduced in all companies (with a 36%-68% reduction). As a result of this, the amount of steps or activities needed to resolve a signal customer claim fell and the time to resolve customer queries drastically reduced (from a maximum of 310 days to 84 days). Rather than devoting up to half of staff time (and therefore staff cost) with failure demand resultant from and contributing to poor customer service through process failures, the centres were able to reduce the overall staff cost by delivering the service right first time, thus avoiding the cost of rectification and the cost of dissatisfied customers. The removal of failure demand, and reduction in steps required to process a customer claim meant that the cost of serving each customer fell dramatically while at the same time improving the service delivered to them.
The last two decades have seen many different approaches to operational improvement. Approaches such as six-sigma quality improvement, agility or build-to-order have been proposed as competing change mechanisms (Hill 2005). Many of these approaches can generate improvement gains, however, only the lean approach addresses system wide change. For instance, while six-sigma improvement measures statistical processes and adopts a fivestep continuous change cycle (both of which were replicated from lean production approaches), the failure to address the wider cultural and managerial systems, the significance of change is limited (Slack et al 2006). All three companies had previously attempted to use six sigma based approaches to performance improvement but had experienced no success with the approach, finding that despite staff time and money being consumed in monitoring and change activities, the result was a further degradation of worker morale and customer
27
service provision. Based on recommendations from advisors and colleagues, senior management withdrew their six sigma programs and moved towards the broader and proven lean approach.
Each company had already spent significant time and money in other (unsuccessful) change activities. Both management and staff were sceptical of the benefits of the lean approach, with several reporting a belief that no real benefit would be realised. The change team, who conducted the major change activities, were purposefully selected as those with a positive attitude to drive forward improvement. Despite initial scepticisms, the process of change encountered little resistance with staff valuing the opportunity for greater training and responsibility that lean organisational redesign offered them. The benefits reported to management highlighted the improvements on offer and value of the approach to management, fostering their continued support for the programme.
Considering the implication for services marketing, the lean process based approach may serve as both revision or addition to existing work on improvement approaches. The original ServQual research in the 1980s included significant investigation into the organisational issues in service delivery, proposing a number of organisational gaps to be rectified in service improvement (Zeithaml et al 1990). The lack of replication of the organisational side of ServQual, provides little validation of the gap-definition-improvement methodology proposed. The organisational research tools to clarify service deficiencies that are provided are long and time consuming to complete (which in part may explain the lack of replication). It is also unclear at the present time how the proposed gap identification metrics can be usefully applied in the contemporary business environment. The validation of the lean process mapping approaches, as well as the ease with which they can be completed provide a possible
28
addition to the ServQual toolkit. In the research reported here, managerial definitions of a fundamental service requirement on one issue were used as the starting point (a single person who could resolve all customer problems without referral or delay). Marrying the ServQual service-analysis toolkit to a lean improvement toolkit may provide a useful exploration of improvement to service management techniques and also serve to better integrate marketing and operations approaches to service delivery.
The three independent bodies of research on market(ing) organisation, and the consolidated meta-analysis, provided a ground-breaking extension of the theory of the marketing concept to a definition and meaning of marketing in practice (Deshpande and Farley 1996). The need for analysing customer requirements and disseminating this information across functions is necessary for service delivery (Narver and Slater 1990, Kohli and Jaworski 1990). However, the organisational and operational tools necessary to take this forward to usefully improve services in practice remains under-explored within market(ing) organisation frameworks which focus on cultural awareness of customer needs rather than taking the next step forward to design the mechanisms to operationally fulfil customer needs. As the realisation of the marketing concept in practice this is not unexpected and not a direct criticism of those works. The operational challenge in extend market(ing) orientation into service delivery has however yet to be fully addressed. The ability to do this may in part be served by adoption of lean process techniques. There is commonality and therefore compatibility across the two approaches with both emphasising shared understanding, customer focused culture and crossfunctional working. Thus, a lean process approach could serve as a useful addition to market(ing) organisation research.
29
The service profit chain has provided a key linkage in the managerial and academic mindset between the actions that happen within an organisation and how customers experience service outside the organisation (Heskett et al 1997). Recent research has however suggested that a primary focus on satisfying employees (to ensure external service quality) may by shortsighted, with three quarters of the issues that determine service quality (such as administrative rules and procedures) being determined by the operational processes of the organisation (Sewell and Brown 1990, Schneider and Bowen 1995). The issue of process management may therefore be a key consideration beyond a specific focus on employee satisfaction (Davis 2006, Seddon 2003). The use of the service profit chain remains an important method of demonstrating to managers (and academics) the holistic nature of service delivery, despite calls for adaptation or even abandonment of the tool (Lau 2000, Pritchard and Silvestro 2005). Considering adaptation rather than abandonment, there is much compatibility between the service profit chain and lean process approaches. The service profit chain model has in common with lean thinking, sought to link internal and external activities while in practice, implementations have frequently been supported through operational tools such as service mapping, cause-effect charting (Heskett et al 1997). The use of mapping and problem solving tools such as these are a common part of lean implementation (Hines 1999). There may be a compatibility between the service profit chain and lean process approaches, bringing together the employee focus of the service profit chain, with the process focus of lean implementation.
Service blueprinting is a powerful tool to understand the service process (Shostack 1984, 1987). Such a mapping activity is a key part of the lean improvement implemented here. The established toolkit on lean improvement (for instance, issues such as standardised-work, team-working, cell-design, cross-functionalisation, staff up-skilling) can be applied to build on the process mapping or blueprinting approach (Bicheno 2004). This toolkit can provide a
30
potential added to blueprinting, supporting greater operational improvements. In the cases discussed here, key improvements were driven by the lean principles and tools that exist in addition to the process visualisation techniques (including: measuring the failure demand at each stage of the process, forming worker-led, cross-functional change teams, using the idea of a key definition of value as one point of contact to generate future process plans, and breaking down functional or departmental boundaries to form a cross-skilled, single pool of workers). From an operational point of view the integration of blueprinting as a part of lean improvement is well established (Slack et al 2006), however, for the marketing community, showing increased interest in blueprinting approaches (for instance, Bitner et al 2007), greater insight into the next step of activities that exist beyond the blueprint is needed to facilitate services change.
CONCLUSION
Research on the suitability of the lean principles to service has predominantly focused on those service environments where a physical product can be identified and tracked (Allway and Corbett 2002, Abdi et al 2006, Atkinson 2004). The application of lean tools to the pure service environment is still emergent (Corbett 2007). In this paper we present data on the implementation of lean process approaches in the call centre context, highlighting rapid improvements (in quality and cost positions) for minimal investment with established lean tools (value identification, process/value stream mapping, removal of barriers to flow value to the customer). For the operational community this serves as an extension of lean into a context increasingly important for the economy as a whole. Within this paper only three cases are investigated and greater research is needed to validate the work undertaken and examine the changes in outcomes at each stage of improvement. Managers and practitioners in the pure
31
service environment are facing increased demands for cost reduction and improvement to the quality of service provided. Classical management thinking has seen these as opposing goals whereas a lean management system identifies cost reduction as a function of quality improvement due to a reduction in system failures. The lean toolkit provides a cheap and easy to replicate set of activities that managers can adopt.
Within the services marketing community, there has always been an interest in improvement activities. Across all areas of services marketing reviewed here, there was a consistent focus in the organisational activities required to manage and improve services. All however share a primary focus towards understanding customer demands and requirements (as would be expected from the marketing community). The secondary focus, on actually improving services, remains under-developed in the marketing community. This may in part be a function of the nature of such issues which are operational in nature. The integration of lean process approaches to traditional services marketing perspectives (such as ServQual, market(ing) orientation, the service profit chain or service-blueprinting) may serve to enhance marketing ability to improve service delivery to the customer. Despite the traditional demarcations between marketing and operations management, integrating perspectives across these two areas will be key for the future of services management. Greater investigation is needed into the relationships between marketers and operations experts in organisations to model how such activities may be possible in organisational change in practice.
This paper has sought to demonstrate the applicability of lean approaches to the pure service environment and highlight the importance of this approach to build on the existing management techniques of the services marketing community to drive forward real improvements in the service sector.
32
REFERENCES Abdi, F., Shavarini, S. and Hoseini, S. (2006). Glean lean: “How to use Lean Approach in Services Industries?” Journal of Services Research. 6, Special Issue, pp191-206 Abernathy, F., Dunlop, J., Hammond, J. and Weil, D. (2000). “Control Your Inventory in a World of Lean Retailing.” Harvard Business Review. Nov-Dec, pp169-176/ Acland, H. (2005). “Disaffected Nation”. Marketing. June 8th, pp32-35. Allway, M. and Corbett, S. (2002). “Shifting to Lean Service: Stealing a Play from Manufactuers’ Playbooks”. Journal of Organisational Excellence. 21, 2, pp45-54. Asubonteng, P., McCleary, K and Swan, E. (1996). “ServQual Revisited: A Critical Review Of Service Quality”. The Journal Of Services Marketing. 10, 6, pp62-81 Atkinson, P. (2004). “Creating and Implementing Lean Strategies”. Management Services. 48, 2, pp18-33. Avery, S. (2003). “Buyers Get Back to Basics”. Purchasing. 132, 4, pp30-31. Baum, S. (1990). “Making Your Service Blueprint Payoff.” Journal of Services Marketing. 4, 3, pp45-52 Berkley, B.J. (1996). “Analysing Service Blueprints using Phase Distributions.” European Journal of Operational Research. 88, 1, pp152-165. Bicheno, J. (2004). The New Lean Toolbox. Picsie Books, Buckingham. Bitner, M.J. (1990). “Evaluating Service Encounters.” Journal of Marketing, 54, April, pp6982 Bitner, M.J., Ostrom, A. and Morgan, F. (2007). Service Blueprinting: A Practical Tool for Service Innovation. Working Paper, Centre for Services Leadership, Arizona State University. Bowen, D. and Youngdahl, W. (1998). “‘Lean’ Service: In Defense of a Production Line Approach”. International Journal of Service Industry Management. 9,3,pp207-225. Brown, S. (2001). “Marketing Classics: Art or Science? Fifty Years of Marketing Debate”. The Marketing Review. Vol 2, pp89-119 Brown, S. and Swartz, T. (1989). “A Gap Analysis Of Professional Service Quality.” Journal Of Marketing, 53, April, pp92-98. Bruhn, M. (2003). “Internal Service Barometers.” European Journal of Marketing. 37, 9, pp1187-1204. Buttle, F. (1996). “Servqual: Review, Critique, Research Agenda.” European Journal Of Marketing, 30, 1, pp8-32.
33
Chenet, P., Tynan, C., and Money, A. (1999). “Service Performance Gap: Re-Evaluation and Redevelopment”. Journal of Business Research, 46, pp133-146 Coleman, L. (1989). “Blueprint Sets Foundation for Better Service and Customer Satisfaction.” Marketing News. 23, 26, p14. Corbett, S. (2007). Beyond Manufacturing: The Evolution of Lean Production. The McKinsey Quarterly, August 2007. Davenport, T. (1993). Process Innovation. Harvard Business School Press. Boston. Davis, P. (2006). “In Search of the Common Wealth: A Service Profit Chain for the Public Sector.” International Journal of Productivity and Performance Management. 55, 2, pp163172. Deshpande, R. and Farley, J. (1996). Understanding Market Orientation: A Prospectively Designed Meta-Analysis Of Three Market Orientation Scales. Marketing Science Institute Working Paper Report 96-125. Deshpande, R., Farley, J. and Webster, F. (1993). “Corporate Culture, Customer Orientation, and Innovativeness In Japanese Firms: A Quadrad Analysis.” Journal Of Marketing, 57, January, pp23-37. Deshpande, R., Farley, J. and Webster, F. (1997). Factors Affecting Organizational Performance: A Five Country Comparison. Marketing Science Institute Working Paper Report, 97-108. Dickson, D., Ford, R. and Laval, B. (2005). “Top Ten Excuses for Bad Service”. Organisational Dynamics, 34, 2, pp168-204. Dixon, P., (2002) Futurewise: Six Faces of Global Change Profile Business. Profile Business, England. ECR Europe. (2005). The Case for ECR: A Review and Outlook of Continuous ECR Adoption in Western Europe. Efficient Consumer Response Europe, Brussels. Ellis, V. and Taylor, P. (2006). “You Don’t Know what you’ve got till it’s gone: Recontextualising the Origins, Development and Impact of the Call Centre”. New Technology, Work and Employment. 21, 2, pp107-122 Esimai, G. (2004). “Lean Six Sigma Reduces Medication Errors.” Quality Progress, 38, 4, pp51-88. Fernie, J. and McKinnon, A. (2003). “The Grocery Supply Chain in the UK”. International Journal of Retail Distribution and Consumer Research. 13, 2, pp161-174 Fitzsimmons, J and Fitzsimmons, M. (2004). Service Management (4ed). McGraw-Hill, Boston.
34
Fitzsimmons, J. and Fitzsimmons, J. (2006). Service Management. (5ed). McGraw Hill International, New York. Flieβ, S. and Kleinaltenkamp, M. (2004). “Blueprinting the Service Company.” Journal of Business Research, 57, pp392-404. Fournier, S., Dobscha, S. and Mick, D.G. (1998). “Preventing the Premature Death of Relationship Marketing”. Harvard Business Review, Jan-Feb, pp42-51 Gelade, G. and Young, S. (2005). “Test of a Service Profit Chain Model in the Retail Banking Sector”. Journal of Occupational and Organisational Psychology. 78, pp1-22. Grönroos, C. (2000). Service Management and Marketing (2ed). Wiley, Chichester. Heskett, J. and Schlesinger, L. (1997). Out in front: Building High Capability Service Organisations. Harvard Business School Press, Boston. Heskett, J., Sasser, W. and Schlesinger, L. (1997). The Service Profit Chain. Free Press. Hill, T. (2005). Operations Management (2ed). Palgrave Macmillan, England. Hines, P. (1996). “Purchasing for Lean Production”. International Journal of Purchasing and Materials Management. 32, 1, pp2-10. Hines, P. (1999). Value Stream Management. FT Prentice Hall, Harrow. Johnston, R. and Clark, G. (2002). Service Operations Management. FT Prentice Hall, London. Johnston, R. and Clark, G. (2005). Service Operations Management (2ed). FT Prentice Hall, Harrow. Jones, D. and Clarke, P. (2002). “Creating a Customer Driven Supply Chain.” Efficient Consumer Response Journal. 2, 2, pp28-37. Jones, D. and Mitchell, A. (2006). Lean Thinking for the NHS. NHS Confederation, London. Keiningham, T., Aksoy, L., Daly, R., Perrier, K. and Solom, A. (2006). “Re-examining the Link Between Employee Satisfaction and Store Performance in a Retail Environment.” International Journal of Service Industry Management. 17, 1, pp51-57. Kohli, A. and Jaworski, B. (1990). “Marketing Orientation: The Construct, Research Propositions and Managerial Implications.” Journal Of Marketing, 54, April pp1-18. Kohli, A., Jaworski, B. and Kumar, A. (1993). “MARKOR: A Measure Of Market Orientation.” Journal Of Marketing Research, 30, Nov, pp467-77. Kollberg, B., Dahlgaard, J. and Brehmer, P. (2007). “Measuring Lean Initiatives in Health Care Services: Issues and Findings.” International Journal of Productivity and Performance Management. 56, 1, pp7-24.
35
Lamming, R. (1996). “Squaring Lean Supply with Supply Chain Management”. International Journal of Operations and Production Management. 16, 2, pp183 Lau, R.S.M. (2000). “Quality of Work Life and Performance.” International Journal of Service Management. 11, 5, pp422-437. Leonard-Barton, D. (1990). "A Dual Methodology: Synergistic Use of a Longitudinal Single Site with Replicated Multiple Sites." Organisational Science 1(3): 248-266. Loveman. G. (1998). “Employee Satisfaction, Customer Loyalty and Financial Performance.” Journal of Service Research. 1, 1, pp18-31. Maddern, H., Maull, R., Smart, A. and Baker, P. (2007). “Customer Satisfaction and Service Quality in UK Financial Services.” International Journal of Operations and Production Management. 27, 9, pp998-1019. Marr, B. and Neely, A. (2004). “Managing and Measuring for Value: The Case of Call Centre Performance”. Cranfield School of Management Report, UK. Massey, L. and Williams, S. (2005). “CANDO: Implementing Change in an NHS Trust. “International Journal of Public Sector Management. 18, 4/5, pp330-349. Narver, J. and Slater, S. (1990). “The Effect Of A Market Orientation On Business Profitability.” Journal Of Marketing, 20, October, pp20-35. Parasuraman, A., Zeithaml, V. and Berry, L. (1988). “SERVQUAL: A Multi-Item Scale for Measuring Consumer Perceptions of Service Quality”. Journal of Retailing, 64, 1, pp12-40. Parasuraman, A., Zeithaml, V. and Berry, L. (1985). “A Conceptual Model Of Service Quality and Its Implications For Future Research.” Journal Of Marketing, 49, Fall, pp41-50. Payne. A., Holt, S. and Frow, P. (2001). “Relationship Value Management.” Journal of Marketing Management. 17, 7-8, pp785-817 Polonsky, M. and Garma, R. (2006). “Service Blueprinting.” Journal of Nonprofit and Public Sector Marketing. 16, 1-2, pp1. Pritchard, M. and Silvestro, R. (2005). “Applying the Service Profit Chain to Analyse Retail Performance.” International Journal of Service Industry Management. 16, 4, pp337-356. Quinn, J. and Gagnon, C. (1986). “Will Services Follow Manufacturing into Decline?” Harvard Business Review, Nov-Dec, pp95-103. Roth, A., Chase, R. and Voss, C. (1997). Service in the US: Progress Towards Global Service Leadership. Severn Trent, London. Sandelands, E. (1994). “Great Expectations for Lean Suppliers”. International Journal of Physical Distribution and Logistics Management. 24, 3, pp40-43.
36
Saunders, M., Lewis, P. and Thornhill, A. (2003). Research Methods For Business Students. Pearson, Edinburgh. Saura, I., Contri, G., Taulet, A. and Velazquez, B. (2005). “Relationships among Customer Orientation, Service Orientation and Job Satisfaction in Financial Services.” International Journal of Service Industry Management. 16, 5, pp497-525. Schneider, B. (1994). “HRM-A Service Perspective”. International Journal of Service Industry Management, 5, 1, pp64-76. Schneider, B. and Bowen, D. (1985). Winning the Service Game. Harvard Business School Press, Boston, MA. Seddon, J. (2003) Freedom From Command and Control: A Better way to Make the Work Work. Vanguard Consulting, Buckingham. Senge, P. (1990). The Fifth Discipline. London, Random House. Sewell, C. and Brown, P. (1990). Customers for Life. Doubleday, New York. Shostack, G.L. (1984). “Designing Services that Deliver.” Harvard Business Review. JanuaryFebruary, pp133-139. Shostack, G.L. (1987). “Service Positioning Through Structural Change.” Journal of Marketing. 51, 1, pp34-43. Slack, N., Chambers, S. and Johnston, R. (2004). Operations Management (4ed). FT Prentice Hall, London. Slack, N. Chambers, S. and Johnson, R. (2006). Operations Management (5ed). FT Prentice Hall, Harrow. Swank, C. (2003). “The Lean Service Machine”. Harvard Business Review. October. ppp123129. Towill, D. and Christopher, M. (2005). “An Evolutionary Approach to the Architecture of Effective Healthcare Delivery Systems.” Journal of Health Organisation and Management. 19, 2, pp130-147. Van Looy, B., Gemmel, P. and van Dierdonck, R. (2003). Services Management: An Integrate Approach (2ed). FT Prentice Hall, Harrow. Womack, J. and Jones, D. (1996) Lean Thinking Simon & Schuster New York Womack, J. and Jones, D. (2003). Lean Thinking: Revised and Updated. Simon and Schuster, UK. Womack, J. and Jones, D. (2005). Lean Solutions. Simon and Schuster, London.
37
Womack, J., Jones, D. and Roos, D. (1990) The Machine that Changed the World, Rawson Associates, New York. Yin, R. (1994). Case Study Research: Design and Methods. London, Sage. Zeithaml, V. and Bitner, M. (2003). Services Marketing (International Edition). McGrawHill, Boston. Zeithaml, V., Parasuraman, A. and Berry, L. (1990). Delivering Service Quality. Free Press, New York.
38
Table I: Description of Case Company Background Case A PolicyCo Financial Services Insurance Firm Call Centre 1980s
Case B BankCo Financial Services Banking Corporation Call Centre 1980s
Case C ClaimCo Financial Services Insurance Firm Call Centre 1980s
Administration of life assurance, pensions, investments and personal banking. To prepare the business to become a traded company owned by shareholders.
Administration of personal banking and personal insurance products. Improve performance and reduce the likelihood that key processes would be ‘exported’ abroad.
History of Change 1990s Team work and Initiatives quality circles. Business Process ReEngineering (BPR) 2000s Lean Methods Process Studied Claims Process
1990s Team work and customer empathy programmes. 2000s Lean and Six Sigma Claims Process
Administration of life assurance and pensions-related products. Increasing UK centre costs (% of product cost) Customer complaints and referral to regulator. 1990s Team work 2000s Team work and process management
Business Organisation Type Establishment of Site Core Business
Motivation to Improve
Claims Process
39
Figure I. Inbound Customer Process
Transferral back to other queues for additional services Referral back to other queues due to incorrect selection
Queue n
IN
Electronic Sort System
Call abandonment due to hold-time
Queue 1
Operative Call Handling
Customer Processing
Issue Resolution
Unable to resolve query
Referral to WIP Area
40
Table II. Measured Service Improvement from Lean Implementation
Before Lean Implementation System Indicator Average number of calls per day
PolicyCo 60
BankCo 165
ClaimCo 62
Average number of letters and emails per day Average Employee Productivity (turnaround within determined time) % of failure demand
19
43
47
97%
98%
90%
63%
55%
66%
Longest time to complete customer request Average time to complete customer request Number of steps in total cycle (without failure) Number of departments involved in total cycle Average number of policy holders as work-in-process
54 days
76 days
310 days
39 days
48 days
80 days
44
36
51
6
5
7
302 policies
277 policies
392 policies
After Lean Implementation (Nine Month Stage) PolicyCo BankCo ClaimCo 38 103 48 (37% (38% (23% reduction) reduction) reduction) 12 30 20 (37% (30% (57% reduction) reduction) reduction) NA NA NA
28% (56% reduction) 30 days (44% reduction) 23 days (42% reduction) 35 (20% reduction) 4
35% (36% reduction) 49 days (36% reduction) 21 days (56% reduction) 27 (25% reduction) 3
21% (68% reduction) 84 days (73% reduction) 30 days (63% reduction) 9 (82% reduction) 5
130 policies (57% reduction)
103 policies (63% reduction)
121 policies (69% reduction)
41
