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9 July 2010

Process Speed (You Make the Call) - RESOLVED

In the first half of this post, we looked at a service contract department whose contract entry time had doubled. Now lets see what we did to get the data entry time back under control.

At first glance, this would seem to be another situation of a system implementation gone awry. It looks like the project team really messed up the implementation of the new contract management system. But did they really?

We know that only one of three teams, the smallest team in terms of personnel, is having an issue. The other two much larger teams really like the new system and all of the advantages it brings. We know that the contract team is capturing twice the amount of information they were previously, which leads to a lengthier data entry process for this specific team. We know that the company's revenues and customer service levels are hurting due to the backlog.

Our Suggestions

First, we adjusted the training material to reference a process with fewer steps. The contracts team had already discovered how to shave off a few steps in the process to cut their entry time and their suggestions were sound. This would save time for new team members, but was already reflected in processing times for existing employees.

Second, we made recommendations on ways the application could be improved in the future to shave some time from the process, but the suggested changes were actually very minimal. With our changes, we felt we could reliably shave 30 seconds from the 10 minute process, but we could not decrease the process to 5 minutes, the time claimed for the old system.

Our last suggestion was to give the process time. That might seem to be an odd suggestion until you understand contract renewals. Customers generally renewed their service contracts on a yearly basis, but it had only been 6 months since the CRM system had been implemented. While all the old contract data was converted into the new system, the number of data elements that were missing from the old system were half the total data required in the new system. Most of the additional contract entry time was taken up by filling in this missing data. By the next year, more than 80% of the contracts entered would take significantly less time to renew because all needed data would exist in the CRM tool. In the short term, we suggested making use of contract labor to process the easier to process contract renewals.

When the process times for the division as a whole were taken into account, total labor time actually decreased with the implementation of the CRM tool. Only five employees had increased labor time while 225 saw a decrease. The entire point of a CRM tool is knowing your customer, and by forcing entry of customer data at the start of the process, contract entry, the rest of the division saw great savings, plus customers generally had a better overall experience when interacting with the company.

Options We Discarded

The first rejected option was to contact each of our customers who were not yet up for renewal and get the needed information and have a temporary team do nothing but 'fill in the gaps.' The problem with this was that most customers hated doing inventories of their products at renewal time and were unlikely to do a supplemental inventory mid-contract just to fill out the gaps in our information. We expected a really low response rate were we to try this, so it was deemed a waste of time to even pursue.

Next, we suggested that the invoice printing and processing be sent to an outside vendor who specializes in mass mailings. We suggested modifying the system so that the documents automatically printed at a remote site and not in the contract entry personnel's location.

Lastly, we discussed an option that was eventually enacted once labor costs went too high. The entire department was outsourced to a low cost region where the company had established a regional office. Margins on extended warranties usually need to be large to support the infrastructure to support the warranties. With a high labor cost for data entry and a market that couldn't tolerate any price increases, the company was left with little alternative than to shrink overhead or reduce their service. Maintaining service quality won at the end of the day as that was what was important to the customer, not the nationality of the person entering their contract.

So how did you do? Did you think of alternatives that we did not? Do you disagree with our decisions or reasoning? Let us know in the comments!