I Saved my Company Millions of $$ - Check out how
Saving money is something that companies constantly strive to do. Cost-savings can come from various methods. In this case, I explain how I was able to save a former company I worked for, over $7M in savings year after year with a one-time $200,000 investment.
This is an example of applying basic Lean principles in a sophisticated environment. When you tear down the business department, to the core steps that comprises it, you realize that it is simply another process. When the same steps are repeated over and over, across several people, you have in your hands a great opportunity to increase efficiency. When that process is spread across over 1,000 people, you have a great opportunity for large cost-savings.
There were 8 STEPS taken in this case study to get from the start to end after the savings were realized.
I observed the situation and it was communicated to me that there were over 1,000 employees across 5 different sites. Leadership communicated to me that the operations were running fairly well and gave me freedom to identify and propose opportunities.
2.Performed Time Study
I determined that a time study would be the best approach. I performed the time study across all of the sites and with people at various performance levels. What I did was use an old-fashioned stop watch and manually documented what each person did throughout their work days. I performed this several times to established a solid sample size and several calls with each person.
3.Broke out Day in Life of Employee
I used what I learned to break up the employees’ activities into categories of activities. In addition, I took notes of common scenarios that each employee encountered on their calls. What I developed was a pie chart of the typical employee’s work day.
4.Identified value-adding & non-value-adding activities
I analyzed the data and categorized the ‘activities’ into buckets of value-adding or non-value adding. What I determined was that out of the 8-hour workday of employees only 35% of their day was value-adding. The other 65% was non-value-adding.
5.Identified note-taking time as non-value adding activity to be addressed
I determined that I wanted to focus on note-taking time, which represented 20% of an employee’s time. Note-taking time represented the time employees took notes after a call to documented what happened during that call, it sometimes meant no one answered the phone, it could have represented they spoke with someone and yielded an outcome, and sometimes it represented a payment was taken. There were several different types of scenarios.
6.Formed focus groups to gather data, research, and brainstorm
I then formed a few focus groups and our focus was to use the our time together to gather more data, to perform research on unique situations and we also brainstormed potential solutions to reducing or eliminating note-taking time. We put specific focus on simply note-taking time, nothing else.
7.Implemented changes to automate most common note scenarios
What we realized was that 4 types of outcomes of calls represented 80% of all calls. We implemented 1-click buttons that fully documented those outcomes. To address the remaining 20%, we determined that we could document 95% of that 20% with 5 different dropdowns boxes on the operating system. Those dropdown boxes when each selected, created an entire statement that was then documented for the call. Finally, we automated the note-taking process of documenting a few set of activities such as taking payments from various channels as well as setting up payment plans. We invested $200,000 to implemented the proposed changes.
8.Monitored & results realized over $7M savings
After implemented, we realized that 75% of note-taking time was eliminated. This led to an overall efficiency improvement of 15% across the entire operations. This 15% represented major cost-savings. These cost-savings came in the form of averted costs and gave us the ability to relocated resources to other departments which had a need, leading to avoiding spent costs for the target department. The end-result was $7M in truly realized cost-savings that impacted the bottom line for the business.
The solution took significant diligence over the span of around 7 months, but throughout the process, the business was continually engaged and involved with the solution-finding process. In the end, a department which was considered to be in a solid operational state, ended up improving efficiency by 15% across all operations. This example is available in further details as the first case study in my book, “Simplified Process Improvement, The art of process improvement decoded in 5 simple steps”.
- Have you experienced or driven a similar cost-savings initiative?
- What other approaches have you taken to solve a similar situation?