Category: - BP Consulting (NZ)

What influences a process? – part 4

12/8/2011

6. What % of the customers / vendors / stock / or whatever (relevant for process) are actually active?
The bigger the gap between what you have and what you actually use also impacts the cost and quality of the process. It will take longer to find what it is you actually want and wrong selections will be more common.

7. How many customers / vendors / stock / or whatever (relevant for process) produce 80+% of volume
The fewer of something you have making up the top 80% the easier the process will be to improve.

If you have 5000 customers it becomes daunting, but if you start with the top 100 you have an achievable target. Also it will get to the point where the marginal gain is not worth the effort. If some one trades with you only once or twice a year you may still want them as a customer but will want a simple, trouble free way of dealing with them.

What influences a process? – part 3

12/1/2011

4. What is the % of fields pre-populated in system?
This is about reducing keying errors, rework and duplication of effort. Modern systems pre-populate available data to avoid re-keying.

5. How many customers / vendors / stock / or whatever is there (relevant for process)?
The more of something you have the harder it is to manage. It requires more focus, resource and time. You will have more data to maintain and possibly more physical items to store and move about.

What influences a process? – part 2

11/24/2011

2. What is the % of corrections as a % of process driver?
Corrections mean rework. The higher the % the higher the cost of the process.

3. What is the average number of line items for each process driver?
If you need to cross match as part of the process (eg: invoice to purchase order to goods receipt; time sheet to personnel to pay rates; sales order to delivery note to invoice) then processing a 1-1-1 match is easier than a 30-17-22 match. If you are doing this sort of matching you will appreciate that there are never the same number of lines on the documents to be cross matched. A low number of lines to match will also make automation easier.

What influences a process? – part 1

11/13/2011

Unfortunately numerous factors influence the cost and quality performance of a process. The next 12 blogs look at some of these factors and their potential impact on a process:

What follows is not a comprehensive list. Some factors may not be applicable and there could be others not listed impacting the process. Hopefully the list gets you thinking about the types of things that may be impacting the process you want to review.

When you are reviewing your process you should step back and think about all of the things that could be impacting its performance. Use the list to start you off then add any additional factors that are appropriate for your process.

1. What is the per annum volume of the main process driver?
The economies of scale effect means the more volume you have the cheaper per item you should be able to process it. This does depend on your cost structure and how good your process is.

An organisation with high volume will probably show more interest in the process and be able to afford to invest more $$ and time in the process to improve it. If the volume is low it may be hard to get people’s attention on improving the process because it is not viewed as important.

High volume can also mean big problems and backlogs can develop quickly.

If you have low volume process it could be a part-time process where people have to remember what it is they are supposed to do so skill and knowledge retention could be an issue. It will also be hard to justify improvements that larger scale organisations can implement.

Key measures for assessing the quality of a process – part 6

11/3/2011

6. Is the process understood?
Are the job roles and processes clearly defined and documented. If not how can people be expected to follow them?

People will do what they think is best or easiest if there is no direction. They may do the right thing but often will not. If you do have documentation then it needs to be regularly reviewed and updated because things change. Annually is enough, 6 monthly if you are really keen and have the time. You need to review the documentation for process or system changes, new short cuts people have learned that others should know, new policies / regulations, etc.

Key measures for assessing the quality of a process – part 5

10/30/2011

5. Is the process measured?
The process needs to be measured in terms of volume drivers and performance indicators. If the process is measured it is more likely to be maximised for performance.

If you are not measuring the performance of the process then how can you expect it to perform well? The inference is that you have no idea what is actually happening. I

If you do measure performance just doing it once is not enough as you need something to compare it against.

Measuring performance on a regular basis is best. You could measure it on a weekly, monthly, quarterly, 6 monthly or annually basis. The regularity will depend on how easy it is to do and what the feedback loop is like (ie: if nothing much happens in a week then measuring monthly would suffice). You just want to do it on a regular basis so you can see the trends and compare the results.

Key measures for assessing the quality of a process – part 4

10/20/2011

4. Time delay between instigation & completion of processing
There should be a target cycle time for processing. The shorter the cycle the more effective the process must be. If the cycle is longer than expected it implies there is a problem.

You probably have a goal of at least attempting to process everything you receive on the day you receive it (allowing for peak periods). If the first attempt is successful you may succeed in this.

People would like things processed quickly, within 1 day is normally the target with 48 hrs acceptable. Beyond 5 working days and people will probably chase to find out what is happening, causing more queries. We know that time frames can vary depending on the process under review. You may be happy with a shorter or longer cycle time, but probably the shorter the better.

For the processing cycle you are trying to determine the average time taken. You can assess this through sampling (tracking some of the volume), workflow records (if you use workflow software), use dates recorded by your computer system (eg: for Accounts Payable the invoice date is usually entered into the system and the entry date will be recorded by the system itself. Compare the two and allow 5-7 days for the supplier to raise the invoice and post it to you), a last option is simply to ask people for their estimate.

Key measures for assessing the quality of a process – part 3

10/13/2011

3. How many phone calls / e-mails are received relevant to the process (as a % of customers / vendors or volume)

Something causes people to ask a question. It means work for them to ask it, and work for you to answer it. The more questions the more work.

People normally query for a reason and phone calls / e-mails require action. They are an indicator of problems with a process and require resource to respond (includes both internal & external phone calls / emails – anyone who is querying the process).

To get the query % you can simply ask people how many emails / phone calls or even mail items they get a day, then compare this to the number of internal and external customers or vendors they have (customer or vendor is very broad for this – it is people who feed data into the process or take data out of it). If you can use phone and email logs if available and assume that everything is work related. Active means they are current (ie: you may have 1000 vendors for Accounts Payable but only 400 have traded in the last 12 months).

Key measures for assessing the quality of a process – part 2

10/6/2011

2. How many transactions are processed at their first attempt
The lower the 1st attempt failure rate the more effective the process must be. Failure to process at the first attempt means reprocessing and double handling which increases the cost of processing that transaction. It may also have flow on effects to other processes.

To determine the 1st attempt failure rate ask the people involved for an estimate and / or ask them to keep a record for a day or two.

Key measures for assessing the quality of a process – part 1

9/22/2011

The next 6 blogs outline the six measures that we believe are the key indicators of the quality of a process, no matter what the process. They focus on the main elements of quality: turnaround time, accuracy, queries, right first time and are you doing what people would expect you to do.

1. How often are errors made?
The lower the error rate the better the process. Errors mean double handling requiring more resource and higher cost.

A good error rate for human data entry is <2%. A really good data entry person could achieve <1%, while a well programmed computer data capture solution could achieve <0.25% (there would be human quality audits as part of this).

How do you determine your error rate? Check a sample, not everything, a sample is sufficient – say 5% of the volume or even just 100 transactions. If this is to hard can you identify corrections, rework or the number of transactions reversed? It may not always be caused by an error but it is an easy way to estimate the error rate.

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