Lean scc

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Using Lean for Improving Service Call Center performance

“Improvement usually means doing something that we have never done before.”

Shigeo Shingo

Author:

Jyoti Govekar – Lean Six Sigma Green Belt

Prasoon Agarwal – Lean Six Sigma Black Belt

A Lean approach in improving the performance of a Service Call Center

“Improvement usually means doing something that we have never done before.” Shigeo Shingo

Authors:

Jyoti Govekar – Lean Six Sigma Green Belt

Prasoon Agarwal – Lean Six Sigma Black Belt

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© Tech Mahindra Limited 2011

Abstract

Service Call Centers (SCC) have evolved into multichannel contact centers and increasing competition,

globalization and demanding customers have changed the playing field in the business. Many organizations

have realized that the key for survival is efficiency and effectiveness with focus on productivity and

customer experience.

Lean techniques which focus on waste elimination and Six Sigma which aims to deliver breakthrough

improvement and reduce process variations have provided large scale benefits to manufacturing industries.

Lean Six Sigma approach can help SCC map value stream, standardize operational processes and drive

continuous improvement on the floor.

Lean approach can help SCC transform them from a cost center to a profit center, increase market share and

enhance customer experience in a competitive global economy.

This white paper attempts to highlight the application of Lean in SCC, in identifying different forms of wastes

in the operational processes thereby improving their performance and end customer experience.

Copyright © Tech Mahindra Ltd., 2011. All rights reserved.

TechM maintains that all reasonable care and skill has been used in the compilation of this publication. However, TechM shall not be

under any liability for loss or damage (including consequential loss) whatsoever or howsoever arising as a result of the use of this

publication by the reader, his servants, associates or any third party. All third-party trademarks are hereby acknowledged.

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Table of Contents

Lean: An Introduction .................................................................................................................. 3

Benefits of Lean ........................................................................................................................................ 3

Lean Tools ................................................................................................................................................. 4

Service Call Centers at a glance ................................................................................................... 5

Challenges faced by Voice based SCC ........................................................................................... 7

Metrics that matter..................................................................................................................... 8

Mapping SCC NVAs to 8 Wastes .............................................................................................................. 10

Identifying & Measuring NVA: ................................................................................................................ 11 Value Stream Mapping .............................................................................................................................................. 11 Time & Motion Study ................................................................................................................................................ 12

Way forward............................................................................................................................. 13

Acknowledgement .................................................................................................................... 14

About Tech Mahindra ............................................................................................................... 15

Glossary .................................................................................................................................... 15

References ................................................................................................................................ 16

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© Tech Mahindra Limited 2011

Lean: An Introduction Lean manufacturing is a management philosophy which comes from Japanese manufacturing industry and is

derived from Toyota production system. The term “Lean” was first coined by John Krafcik in a fall 1988

article, "Triumph of the Lean Production System," published in the Sloan Management Review. Elimination

of waste is the goal of Lean, and Toyota defined three broad types of waste as Muda, Muri and Mura.

However most of the Lean implementations consider the focus only on Muda. While the wastes are typically

associated with manufacturing enterprises, it is apparent that they also apply to service industries like

Finance, Banking, SCC, Construction, Government, Healthcare, Insurance and Manufacturing.

Lean focuses on eliminating waste and constantly reducing the cycle time. As the waste is eliminated, quality

improves while cycle time of the process and the cost are reduced.

Lean recognizes eight forms of waste as defined in detail below:

1) Overproduction - Producing more than what is needed by the customer / market demand

2) Over processing/Non value added activity - Inefficient processes that use more steps or tools than

are actually required for the desired outcome/ activities not required for the outcome

3) Waiting – Waiting time for the next step

4) Transportation - Movement of products / items during or after production

5) Defects (scrap/rework) – Errors or mistakes occurred

6) Motion - Excess motion mainly in people, document movement, searching etc.

7) Inventory - Buffer stocks or resources (raw, work in process, bench staff etc).

8) Unused creativity - Losing time, skills, ideas and learning opportunities by not listening to the

employees

Benefits of Lean

Lean provides numerous benefits including:

• Reduced lead/cycle time

• Decreased work-in-process (WIP)

• Reduced cost

• Increased resource (equipment, operator) utilization

• Easier scheduling

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• More streamlined flow

• Reduced floor space

• Improved quality

• Improved employee morale

Lean Tools

The set of Lean "tools" that assist in the identification and steady elimination of waste are:

1. Value Stream Mapping, a Lean tool, takes into account not only the activity of the product but also

the management and information systems that support the basic process. The focus of this tool

is on identifying and eliminating the non value adding activities in each process step thus reducing

the overall cycle time. These eliminations help make a process more compact and aim to reduce

variation. Lean tools can also form a part of a Kaizen cycle, incorporated within the Analyze and

Improve phases of Six Sigma.

2. Poka Yoke, a Japanese term for mistake-proofing is a mechanism to help the users avoid mistakes.

Its purpose is to eliminate defects by preventing, correcting and drawing attention to human errors

as they occur. Either the user is alerted when a mistake is about to be made, or the Poka Yoke

mechanism actually prevents the mistake from being made.

3. In context of a truly “Lean” environment, Kaizen means “Continual Improvement”. When the

possibility for improvements in key process steps arises, they can be taken up as Kaizen events by

the different functions of an organization. Kaizen generates small improvements as a result of

coordinated continuous efforts by all employees. Kaizen events bring together a group of process

owners and managers to map out an existing process and identify improvements that are within the

scope of the participants. Organizations which use Kaizen have found that they generate energy

among those who work in the area being improved, and produce immediate gains in productivity

and quality. Kaizen can be effective if applied in the Lean spirit of continuous improvement utilizing

the rigor and discipline of Six Sigma DMAIC.

4. 5S which stands for five Japanese words - Seiri (sort), Seiton (set in order), Seiso (shine), Seiketsu

(standardize) and Shitsuke (sustain) is a structured program to systematically achieve total tidiness,

orderliness, cleanliness, standardization and discipline in a workplace. 5S aims for spontaneous and

continuous improvement of working environment and working conditions. A well-organized

workplace results in a safer, more efficient, and more productive operation. It boosts the morale of

the workers, promoting a sense of pride in their work and ownership of their responsibilities. To get

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the greatest success, the nature and implication of each "S" need to be understood by each

employee and should be regularly practiced.

Service Call Centers at a glance According to Gartner (Year: 2009) the size of the global call center market is worth US$154 billion which can be

broken down into different sectors as shown in the below figure:

The below figure illustrates the growth of Indian SCC industry over the past decade:

Information Technology,

43%

Financial Services, 17%

Commu-nication

(Telecom),

16%Consumer

Goods/ Services, 15%

Manufact-uring, 9%

Gobal BPO market by Industry

India has 5-6% market share of the total call center

Industry globally.

63% share of the offshore component revenues of

US$10.9 billion from offshore call center.

Domestic call center industry is 10% of the

international call center market.

Domestic call center industry is expected to reach

US$6 billion in 2012. (Source: Gartner, Year: 2009)

Call center market is forecasted to hit US$450

billion by 2012

Indian Domestic call center industry is expected to

grow by 25% by 2012. (Source: Ernst and Young, Year:

2008)

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SCCs can be categorized as Captive and Outsourced based on their operating models.

A Captive call center undertakes business processing only for its own multinational businesses and has

complete control on the operations of their business processes in other countries. However an Outsourced

call center is the one where a company delegates its business processes to an external third party service

provider that in turn owns, administers and manages the selected process based on defined and measurable

performance criteria. There are over 900 companies operating within the Indian SCC space, including captive

and outsourced units (Source: Ernst & Young, Year: 2008).

SCC provides an important channel for organizations not only to connect with their customers globally but

also to listen to their voices. The business benefits of SCC for any organization is twofold –one to keep

existing customers satisfied and two to add new customers, thus expanding their customer base.

But the most important benefit of outsourcing is cost saving for the organizations. Continuous improvement

is the life-blood of any successful organization. Improving processes and increasing efficiencies are more

important if the economy heads south. Although the current economic situation is improving; many

organizations are opting to keep operational expenses on a tight leash and find innovative ways to increase

market share and improve their profit margins.

3.1 4.6 6.3 8.4 10.09 12.8 13.8

FY 2003-04 FY 2004-05 FY 2005-06 FY 2006-07 FY 2007-08 FY 2008-09 FY 2009-10

Indian BPO IndustryFigures in $ Billion

Source: NASSCOM

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Challenges faced by Voice based SCC Stability, lack of proper project management, lack of industry expertise among suppliers and dissatisfaction

among employees are the challenges faced by domestic suppliers. The major challenges faced by a voice

based SCC are briefly mentioned below:

Dynamic Process:

Contrast to a traditional industry where the processes are generally fixed and process re-engineering is a

challenge, SCC being part of service industry have dynamic processes which needs to adapt itself to changing

customer expectations, market and regulatory demands. New product updates, schemes, new scripts,

policies keep changing on fortnightly or monthly basis thus making the process dynamic in nature. This is a

major challenge as it greatly impacts all the key KPIs including operational productivity and customer

experience.

Erratic call patterns with crests and troughs:

There may be spikes seen in the call volumes at certain times and tremendous drop other times generating

crests and troughs. This complicates the manager’s ability to sustain the productivity of the work force and

maintain desired service level and answer level at all the times around the clock. It also impacts the ASA

(Average Speed to Answer) and in turn affects the customer experience.

Contractual Obligations:

Due to contractual obligations SCCs need to demonstrate continuous improvement or need to improve to

boost their profit margins. This is specifically applicable to any transaction based call center which gets

payments based on transaction volumes. Hence in SCC milestones like service level, answer level and

productivity needs to be on target irrespective of the call volumes.

Unavailability of competent resources:

Low profit margins leads to the recruitment of resources with minimum educational qualifications, thus

comprising on the right knowledge, attitude and skills. Unavailability of competent resources is a major

challenge in SCC due to huge variation in demand and supply chain. This hampers most of the key KPIs like

average handling time and customer experience.

Communication gap due to diversity:

Some SCCs handle calls of different regions where the local language differs and hence it becomes difficult

for the associate to communicate with the customer fluently. Such kind of language barrier may impact the

key KPIs like productivity and customer experience.

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Customer awareness:

Certain SCCs cater to customer base where the literacy rate is low and hence customers are technologically

challenged. For example customers living in some remote regions are not very familiar with the usage of the

technology like GPRS, 3G. Customers calling in do not comprehend completely with the response of the

associate. These scenarios make it difficult for the associate to maintain the productivity and customer

experience.

Increase in Attrition, Absenteeism:

Attrition and absenteeism along with erratic call patterns make SCCs one of the most dynamic business

environments. Proper allocation of resources needs to be done based on associate skill sets, forecasted call

volumes and current productivity levels. Also at the same time getting new trainee batches within minimum

lead time on the production floor is a major challenge. Increase in the attrition rate and absenteeism can

cause resource shortages and hence may lead to high waiting time for the end customers and reduction in

processes’ service level and answer level.

Metrics that matter

"You can't manage what you don't measure” said by Bill Hewitt, co-founder of Hewlett-Packard.

Delivering a positive customer experience in a SCC is of paramount importance in stabilizing customer

relationships and maximizing customer value. Optimizing operations across and beyond the customer touch

points and striking the appropriate balance between efficiency and effectiveness is the key.

Metrics that make up the business goals for a SCC can be categorized further as depicted in the figure below.

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Applying Lean for improving SCC performance Lean approach focuses on continuous identification and elimination of waste / non value added (NVA)

activities which can help improve operational efficiency and customer experience in a voice based SCC.

Lean plays a major role to help reduce any waste or NVA in an inbound or outbound call thus reducing the

transaction time (Average Handling Time) and improving the customer experience (CSAT, Repeat calls etc)

by providing only valuable information to the customers.

Operations Performance

CostCustomer

Experience

• Revenue per agent• Average cost per agent

• Average training cost per agent

•Average Revenue loss on account of call abandoned

• % Profit Margin

Cost

• % Answer level• % Service Level

• % Call Abandoned

• Average speed to answer

• Manpower Utilization

• Average Handling Time (AHT)

Operations Performance

•FCR %•Repeat Calls %

•Waiting time

•C-SAT Score

•SLA % for TAT

•Agent Communication Score

•Service Availability

Customer Experience

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This section of the paper will focus on the use of Lean approach in improving Productivity & Customer

Experience of a voice based SCC.

Following steps as part of the Lean approach can be applied in a typical voice based SCC environment:

1. Capture VOC (Voice of Customer) - Helps to understand the pain areas of internal and external

customers and also for setting the expectations. This can also be used for identifying the

stakeholders affected by the problem.

2. Define problem statement – Map baseline processes and measures associated with it. This also

helps to calculate the expected cost savings from the Lean improvement project.

3. Map Value Stream - Takes into account the touch points adding value to the processes & systems

starting from the suppliers and ending at the customer.

4. Identify Waste – Identifying & measuring Muda (Japanese word for “waste”) /NVA activities in the

entire value chain. Based on this exercise major areas of improvement could be identified and

targeted.

5. Eliminate Waste – Eliminating the waste / NVA activities by implementation of improvement action

plan. Put control plan in place to ensure benefits are sustained going forward.

Productivity of a voice based SCC is measured in terms of AHT (Average Handling Time), which is a critical

metric for measuring operational efficiency. Presence of NVA activities on call increases the actual talk time

thus providing more opportunities for fatal errors (Example: giving wrong information to the customer,

denial of service, rudeness, call disconnection, call avoidance, wrong service request creation). Hence it

impacts the end customer experience.

Average Handling Time is the average duration in minutes or seconds taken by the associate in resolving

customer query / request/ complaint. Typically it is measured from the time customer initiates the call and

includes talk time, hold time and related tasks that follow the transaction.

Average Handling Time is calculated as = (Total Talk time + Total Hold time + Total After Call Wrap Time)

Total number of calls handled

Following are the different forms of wastes identified in several Lean studies conducted in voice based SCCs

operating for Domestic as well as International clients:

Mapping SCC NVAs to 8 Wastes

NVA types Definition Lean Waste Impact on Impact on

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Productivity CE

Long Call Scripts Long opening, empathy, paraphrasing, closing scripts

Over Processing / NVA

Unstructured Scripts Useless scripts used increasing customer interruption/ argument

Defects, Over Processing / NVA

Irrelevant Probing Questions not pertaining to the issue

Defects, Over Processing/ NVA, Motion

Repeated Customer Interaction/ Interruption

Customer interrupts when all the required info not given at a single instance

Defects, Over Processing/ NVA

Repetition of Associate Queries

Same questions repeatedly asked by the associates and the Customer

Defects, Motion, Over Processing/ NVA

Dead Air

Situation when both Customer and associate not conversing to each other

Waiting, Defects, Over Processing/ NVA

Hold Time Placing the call on hold

Waiting, Defects, Over Processing/ NVA

Transfer Time Transfer time to another queue

Waiting, Defects, Over Processing/ NVA

Unnecessary Customer Validation

Customer validation done even when not required

Over Processing/ NVA, Defects, Motion

Lack of Multitasking

Multitasking in terms of usage of tools on computer and talking to the customer at the same time

Waiting, NVA

Search Time On Portals/Systems/Applications

Navigation time on the systems finding difficult to search the information

Waiting, Inventory, Motion

Identifying & Measuring NVA:

Value Stream Mapping

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Value Stream Mapping (VSM) is a strategic improvement planning tool which can help in identifying and

measuring waste in an inbound or outbound call. The purpose of VSM is to look at the flow of conversation,

the systems in use and the time required at each stage from the start of the call till the customer ends the

call. A typical VSM of a call flow in a voice based SCC is as shown in below figure:

The above VSM is called as the current state VSM (CSVSM) which shows the “As-Is” call flow with the

NVAs/wastes shown at each stage of the call. The time accounting to these NVAs increases the average

handling time. CSVSM can be used as the basis for identifying the improvement opportunities with a view of

reducing the wastes over the time. A future state VSM (FSVSM) can be designed for the call flow minus the

NVAS/wastes. Moving from CSVSM to FSVSM improves the Process Cycle Efficiency (PCE) which helps in

reducing the wastes and thus the Average Handling Time (AHT).

Time & Motion Study

The Time and Motion (T & M) study has been instrumental in identifying opportunities for improving

efficiency in manufacturing operations. This scientific technique can be deployed in a SCC to capture the

Customer

Name

Phone noAddress

Customer details

Call started

Opening

Capture Q/R/CCheck resolution

Resolve Q/R/C

Unable to

resolve Q/R/C

Service Request

Back end team

Closing

Issue

Customer details

Validation Probing

Understand customer issue

Taking customer

detailsGive opening

script

CRM Systems

Resolution

Resolution

Give closing

script

Long scripts

Unnecessary authentication

Irrelevant probing

Repetition of queries, Hold time, Dear air

Dead air, system issues, transfer time

I

I

I

I

Call transferred to back end team

Value stream map of call flow in a Voice Based SCC

NVARepetition of queries,

Hold time, Dear airSystem Issues

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elements in CSVSM, establish the correct split in VA and NVA, and based on a sample size based on

confidence level (95%) and standard deviation of the population.

The T & M study focuses on a standard worker and a concept of rating for capturing the standard time to do

a job. Similarly, to minimize measurement errors, it is important to implement MSA (Measurement System

Analysis) in the study. Gauge R&R, which stands for Gauge Repeatability and Reproducibility, is a statistical

approach that can help in measuring the amount of variation in the measurement system.

Based on the findings of the T&M study, brainstorming sessions can be conducted by the Lean project team

to uncover the waste / NVAs. Subsequently multi voting could be useful to prioritize the top NVAs which

contribute to 80% of the problem.

This practice of “Identifying and Eliminating Wastes” in voice based transactions can form a part of the

control plan. Quality auditors can set up a NVA measurement system, with regular audits focusing on NVAs,

feeding it back to operations and training for necessary preventive and corrective actions.

Way forward

Lean practice or Lean production has played a pivotal role in shaping the future of manufacturing

organizations. The approach has streamlined workflow, reduced defects, eliminated waste and resulted in

improving the overall customer experience.

SCCs need to replicate the Lean manufacturing processes in their routine schedule. With an ever increasing

focus on cost and efficiency improvement, Lean provides a perfect opportunity to achieve more (output)

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with less (resources).The principles of VSM, Poka Yoke, 5s and TPS (Toyota Production system) can be

applied in SCC environment to improve operational efficiency and customer experience.

The diagram below gives a pictorial representation of the application of Lean in service management.

The hiring managers need to consider the feedback from operations/training in recruitment of freshers with

right background and experience. This will ensure that defects in process are not passed downstream.

Similarly, the quality assurance team will provide a regular feedback to operations on the NVAs observed in

the process. This will not only help drive continuous improvement on the floor but also help the training

team in assessing the requirements for both fresh and experienced resources.

SCC can become Lean by first developing the awareness and intolerance of waste within all the operating

functions. The waste consciousness should pervade the entire organization in such a way that people

proactively begin seeking improvements and challenges even in the least structured activities to ensure they

align to customer value and business goal.

Acknowledgement

We would like to thank Mr. Siddhartha Shankar Ray, Master Black Belt (MBB) – Tech Mahindra Ltd for

motivating, encouraging and guiding us in writing this white paper. His invaluable suggestions at each stage

have helped us in successful completion of this white paper.

Hiring (Lean Organization)

Training (Lean Organization)

Operations (Lean Organization)

Quality Assurance & Control

NVA

Pulling Value from suppliers

Feedback on NVA flowing from internal customer internal to Suppliers

NVA Measurement system

Pulling Value from suppliers

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About Tech Mahindra

Tech Mahindra Limited (formerly known as Mahindra-British Telecom Limited) is the global leader in

providing E2E IT services and solutions to the Telecom Industry.

Majority owned by Mahindra & Mahindra, India’s fifth largest commercial group, in partnership with BT Plc

(BT), Europe’s second largest telecom service provider, Tech Mahindra has grown rapidly to become the 8th

largest software exporter in India (NASSCOM 2006). With over 34,000 professionals, Tech Mahindra services

customers across geographies from 16 sales offices across USA, Europe and Asia-Pacific.

Tech Mahindra owns 10 state-of-the-art offshore development centers - UK (Milton Keynes, Belfast) and

India (Pune, Mumbai, Bangalore, Kolkata, Chennai, Hyderabad, and Noida). Having serviced premium

telecom companies worldwide, for nearly two decades, Tech Mahindra combines deep domain expertise in

OSS (Operations Support Systems) and BSS (Business Support Systems) systems, intellectual leadership and

a global workforce advantage to provide services to leading players in the telecom ecosystem.

Tech Mahindra provides a wide variety of services ranging from IT strategy and consulting to system

integration, design, application development, implementation, maintenance, and product engineering.

Through a rich Telecom heritage, Tech Mahindra has built long-term sustainable relationships with telecom

customers through delivery of IT services that help them achieve significant ROI and the greatest

competitive advantage in the telecom marketplace. Committed to quality, Tech Mahindra adds value to

client businesses through well-established methodologies, tools and techniques backed by its stringent

quality processes. Its centers are ISO 9001:2000 & BS7799 certified and it also holds a SEI-CMMi Level 5

certification.

Tech Mahindra’s people-care practices are certified at PCMM Level 5. Tech Mahindra is also one amongst

only three companies worldwide to be successfully appraised for SSE-CMM Level 3.

Glossary

AHT Average Handling time

BPO Business Processing Outsourcing SCC Service Call center

US$ US Dollars

VOC Voice of Customer

AL Answer Level

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SL Service Level

ASA Average speed of answer ATT Average Talk time

NVA Non Value added

T&M Time and Motion

DMAIC Define-Measure-Analyze-Improve-Control

CE Customer Experience CSAT Customer Satisfaction

GPRS General Packet Radio Service

VSM Value Stream Map CSVSM Current State Value Stream Map

FSVSM Future State Value Stream Map PCE Process Cycle Efficiency

3G Third generation

Muda Muda is a traditional Japanese term for an activity that is wasteful and doesn't add value or is unproductive.

Muri Muri is a Japanese term for overburden, unreasonableness or absurdity, which has become popularized in the West by its use as a key concept in the Toyota Production System.

Mura Mura is avoided through Just In Time systems which are based on little or no inventory, by supplying the production process with the right part, at the right time, in the right amount, and first-in, first out component flow.

References

1. www.isixsigma.com – Concepts of Six Sigma, Lean and Kaizen.

2. http://en.wikipedia.org/wiki/Lean - Definition of Lean

3. http://www.indobase.com/bpo/global-market-of-bpo.html- Global and Indian BPO

industry

4. http://www.globalservicesmedia.com/BPO/Market-Dynamics/23/28- BPO Market dynamics