Super7 Operations | The Next Step for Lean in Financial Services
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Super7 Operations | The Next Step for Lean in Financial Services | Menno R. van Dijk MSc | Taschenbuch | Kartoniert / Broschiert | Englisch | 2013 | iUniverse | EAN 9781491713501 | Verantwortliche Person für die EU: Libri GmbH, Europaallee 1, 36244 Bad Hersfeld, gpsr[at]libri[dot]de | Anbieter: preigu Print on Demand.
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- Super7 Operations | The Next Step for Lean in Financial Services
- Author
- Menno R. van Dijk MSc
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Super7 Operations
The Next Step for Lean in Financial Services
By Menno R. van DijkiUniverse LLC
All rights reserved.
Contents
Foreword, v,
Introduction, ix,
Discovering the True Benefits of Lean, xi,
Section 1: Super7 Operations, 1,
1. Super7 – The Logical Next Step for Lean within Financial Services, 3,
2. The Development of Super7 at ING, 9,
3. Three Reasons to Introduce Super7 in Your Operation, 15,
4. What Super7 Means for the Manager, 37,
Section 2: Case Studies – Experiences with Super7 within ING, 41,
5. OS Leeuwarden: One Year after Super7 Implementation, 43,
6. Super7 at the Mortgages Department, 51,
7. Super7 at the Credit Cards & Loans Department, 57,
Section 3: Super7 Outside of Operations – Ideas and Experiments, 63,
8. Super7 within a Small Consultancy Team, 65,
9. Is There a Use for Super7 Outside of Back Offices?, 71,
Conclusion, 75,
References, 77,
Acknowledgements, 79,
Index, 81,
CHAPTER 1
Super7 – The Logical Next Step for Lean within Financial Services
A few years ago I was given the opportunity to complete a significant task – optimising the back office at the Leeuwarden branch of a Dutch bank called ING. What began as an experiment in implementing lean in this back office eventually developed into something else: a new solution, and one with the potential to redefine lean and its application within the financial services industry. We call this solution Super7.
Super7 Defined
Super7 Operations are based on the principle of dividing traditional-size teams into small teams of five to nine persons. Each small team is called a Super7, and every Super7 receives a fixed percentage of the work of the larger group.
Each Super7 team has the task of completely finishing all of their customer requests from start to finish, directly the same day, without making the customer wait. In most cases, implementing Super7 Operations makes it possible to work without inventory and without handovers. This means that a complex workflow-management or inventory-management system is no longer necessary.
The small Super7 team creates flexibility in skills: if a customer request requires several different tasks, a multi-skilled Super7 is created that can finish all tasks within the team. The team size is effective, and because the teams are small, they allow for visibility and trust, which in turn enables the team to make effective decisions. It's almost impossible for a traditional team of twenty to twenty-five persons to make a decision that everybody is happy about.
Finally, every Super7 has control over how they do the work: who does what, in what order, and at what pace – all are the responsibility of the Super7. Super7s are steered only on output, on what they deliver. And they can ask their managers for help at any time. The Super7 applies the principles of lean and operational management, with autonomy and responsibility on the shop floor.
The most recent trend in this space, operational management, has achieved some impressive results, causing a true lean-hype at banks since the early 2000s. What I have found in my own experience in the last few years, however, is that it's now time for the next step beyond operational management, via the kind of new approach offered by Super7.
The Limitations of Operational Management in Back Offices
Lean was first introduced in the world of banking via the back office, as this environment was the bank department most similar to the production environment (i.e., shop floor) where lean originated – the manufacturing and assembly plants of Toyota. The lean basics [see figure 1] and well-known lean best practices [see figure 2] like standardised work, takt (pace of manufacturing time [from the German]) and standardised cycle times, visual management, and production levelling were all translated into a system for the bank back office. This system is what we call operational management, and it consists of the following:
• standard times for each type of customer requests
• work packages of exactly one hour of work each, assigned to individual employees on an hourly basis
• work held in inventory with planned production to level out peaks and lows in customer demands
• performance measurement, which measure and direct employee availability and productivity, with matching target setting on all levels in the organisation
• team boards visualising team performance versus targets; weekly meetings with the team
• regular continuous improvement sessions on the shop floor
Leeuwarden had adopted operational management a few years prior to my arrival, and at the time, everybody was very enthusiastic about it. When I arrived at Leeuwarden, however, the initial sheen was off the rose, so to speak. Operational management was not having the desired effect anymore. In fact, the performance of their back office had ING entirely puzzled.
Despite the implementation of lean, customer goodwill was at an all-time low, with production lagging consistently behind customer requests. With all the lean best practices in place, why were the customers complaining so much about the service they received? And, when operational management had always been the most effective solution for meeting customer expectations, why was the organisation now unable to meet those expectations when applying that solution to the situation?
Simply put, the old methods weren't cutting it within the evolving world of financial services. The way we used to do operational management wasn't enough for what banking was becoming.
The integration of Web-based services into the customer experience of businesses across a wide array of sectors had changed the time frame of customers' perception of what quality customer service is. Via the Internet, customers had become accustomed to a new level of service; for instance, a Web-hosting contract is closed within minutes, with digital forms, e-mail confirmations, and all the necessities provided online.
The customer question became: why do I have to wait more than a week for my bank to answer a simple request/question? Perhaps even more importantly, as a result of the global financial crisis, customer trust was at an all-time low. We needed a new approach in place that could increase efficiency on the shop floor and directly address customer needs, assuaging both the rise in customer expectations and the rise in customer complaints.
Super7 — Rethinking the Back Office
Super7 Operations, as described in this book, provided the new approach that answered the prevailing dilemma at ING. And what worked for ING, perhaps, could work for more financial-sector back offices searching for the next lean breakthrough, the next logical step after operational management, and the one that would transform the financial sector's processes, culture, and customer relationships.
Clearly, the lean trend within financial services is far from over. According to recent research, banks and other financial institutions that have successfully implemented lean programmes record 15 per cent to 25 per cent improvement in overall efficiency. Although the banking crisis forced banks to rethink their business, their proposition, and their priorities, lean (with its core elements of continuous improvement, waste reduction, process thinking, and customer-centricity) is still an important pillar in the strategy of a large number of leading banks.
Super7 builds off these core principles and successful applications of lean within the financial space in a new and promising way. Moreover, in the wake of operational management, there clearly is a need for the next lean programme that can transform the space. Super7 has proved to be just that. It is not a departure from lean but a dynamic enhancement. Simply stated, Super7 is the sought-after next logical step.
In the subsequent chapters within this section, we will explore just how Super7 works, describing its attributes and benefits, examining some examples of how it manifests in the back office, and seeing the results it can produce.
CHAPTER 2The Development of Super7 at ING
In 2011, I dug into my new project at ING – helping to improve the back office of Operational Services (OS) in Leeuwarden. Customer service was in need of improvement, with customer requests taking days or sometimes weeks to process, leaving many customers wondering if they would ever receive a proper answer to their requests. I was tasked with streamlining the back office and increasing throughput in order to (1) get customer needs addressed in a timely manner, and (2) get customer loyalty and satisfaction back in a safe zone for the organisation.
When I arrived in Leeuwarden, they had already had lean in place for a few years. Employees were responsible for their own hour packages. All the work was sorted into customer requests of the same type, and each type of work was given a standard completion time. In this way, every employee had a standard amount of time to work on each customer request. Managers gathered the incoming requests, preparing them and then saving them up for processing the next day by individual employees. When that work was meted out to individual employees the next day, they each were tasked with addressing exactly the number of hour packages to satisfy the eight-hour workday.
Despite this seemingly accurate way of matching work to capacity, it required a lot of management attention to ensure that all work packages had been completed at the end of the day. If an hour package was not completed in a workday, it was sent back into production planning and work distribution for readdressing the next day.
The employees were productive and committed to the set goal, but their commitment to that goal was based on the SLA, not the actual customer. Their efficiency didn't answer an obligation to what ostensibly was ING's main concern – the customer – but to an `internal process owner' that addressed customer needs as 'inventory'.
It wasn't 'inventory' by any stretch of the imagination. After all, where was the benefit to the customer? Think of it this way: if you go to a store to buy a jar of peanut butter, having that inventory stocked on the shelf benefits you as a customer. But that paradigm cannot apply within a bank. It was not as if one of ING's employees could respond to an address change, say, with something they already had on the shelf. 'Here, take this address change I already had prepared beforehand ...'; naturally, that wouldn't do the job. What we essentially had on our hands was not inventory but backlog.
The Problem
The dilemma with this backlog was that, simply put, work was lying around. One day before the end of an SLA, the inventory management system would prioritise inventory as 'orange'; on the last day or beyond, it would mark it as 'red'. By and large, this system of prioritisation meant that work would sit around waiting to become orange.
When tasks were finally parcelled to an employee for processing, that employee would inevitably be under pressure to finish because of the standard times. If anything about the task was unclear, if any bit of critical information was missing, the employee would just 'reject' the task and send it back to the customer.
It wasn't difficult to understand why this process was leaving customers disgruntled and ready to jump ship. Take a moment to imagine this process from the customer's end. A customer has submitted a request and has patiently waited for a response, only to ultimately receive a note that the form was rejected. Not the best way to foment customer satisfaction, or customer loyalty, for that matter. In fact, at the time, the 'processes' (customer requests) handled at the Leeuwarden back office had a Net Promoter Score (NPS) in the range of -30, so customer loyalty was thin on the ground, to say the least. Clearly, customers held a lot of resentment about how the team at Leeuwarden processed customer requests.
Naturally, the ING organisation had already started many initiatives to improve its customer-service procedures. For example, instead of sending rejected forms back to the customer, ING would first try to contact the customer to explain what went wrong and what information was missing; if possible, the back office would try to correct the problem directly. Customers appreciated the improved level of service. Naturally, all successful initiatives were incorporated into our solution.
The Solution — Developing Super7 Operations
I saw the situation at Leeuwarden as an opportunity to develop a new approach to lean within a bank setting. The challenge before me was increasing throughput and eradicating the backlog. I also needed to reprioritise employee productivity and focus, and make sure that the end goal satisfied customer needs.
It seemed to me that the first order of business was to eliminate any inventory older than one day. It made sense to me to start working a system of Today In, Today Out (TITO).
The problem was that work preparation typically took about 75 per cent of the day, leaving only 25 per cent of the day to actually process the tasks. It occurred to me that instead of dividing the work up among individuals, we might divide the work up among small groups. How small? Groups of seven, with each group comprised of team members that united all the necessary skills to accomplish tasks in one day. That's how the core idea of Super7 was born.
Before the development of Super7, the back office continually addressed work from a few days before. The logistics department would receive the forms and begin preparing the work into work streams and hour packages. Management would then sit in on a daily production meeting in order to determine who was going to undertake which work the next day – already a day behind. Best case scenario, an employee was at the earliest doing the work of yesterday, and, more often than not, work that was much older than that.
In addition to implementing a team that could handle the workflow in a single day, I knew that we needed to seriously reduce the logistics involved. Since teams would now be in place, portioning tasks was redundant; in fact, the daily production meeting was eliminated entirely, with work instead sent to the same physical location on a daily basis.
This made the workday far more efficient. Logistics now took the first part of the morning (from 7 a.m. to 9 a.m.) to open and sort customer mail (i.e., tasks,) and partition these tasks into packages of the same type. A single package of a single type of task was then sent to a single Super7 team that would address that package in a single day.
Some work streams were too small to have seven people working on them. We developed a solution for this by creating multi-skilled Super7 teams.
A single multi-skilled Super7 would work on all the requests of several types of requests, finishing the total volume of these requests the same day. There were also a couple of work streams that were too large for one Super7. These were assigned to two or three Super7s, each responsible for a fixed percentage of the daily volume.
Assigning all the work of the entire department to Super7s was quite a puzzle, as you can imagine. However, with logistics streamlined and tasks reprioritised, employee focus was now on customer requests, rather than feeding an internal machine and shuffling work back and forth. The focal shift was subtle, but nonetheless significant. The priority was once again the customer, and the bank could only be the better for it.
CHAPTER 3Three Reasons to Introduce Super7 in Your Operation
In my experiences with the development and implementation of Super7, I have found that there are myriad benefits to a business – on both the micro and macro levels – when the organisation employs these techniques in a back office. The nature of these benefits can vary from sector to sector. Consistently, however, three central benefits come up again and again:
• customer-centric and employee-empowered business culture
• reduced inventory
• more supportive management style
We will look at each of the above central benefits in detail throughout this chapter, as they are the three essential reasons for implementing Super7 at an organisation. Together, these three form an enterprise-wide transformation, bringing new and enhanced value to everything from the point-of-contact with the customer to shop floor processes. As such, I have found Super7 to be one of the most comprehensive solutions for improving the performance and efficiency of an organisation.
The first – evolving a new customer-centric and employee-empowered business culture via Super7 – is possibly the most difficult to delineate. The concept of business culture itself has always been somewhat amoebic, involving factors that often function on an intuitive level rather than a factual one. What I have seen, however, is that Super7 realigns the intent behind workflow in a way that naturally and clearly redefines the culture of an organisation. By restructuring the way employees handle tasks, Super7 automatically switches employee focus onto the customer.
(Continues...)
Excerpted from Super7 Operations by Menno R. van Dijk. Copyright © 2013 Menno R. van Dijk, MSc.. Excerpted by permission of iUniverse LLC.
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