Off-shoring has been an important part of business strategies for a long time, but has often created more problems than it has solved. Sofiane Boucheikh, Lean Trainer at the Institut Lean France and Lean Coach at Operae Partners, explains how lean can help us repatriate the service industry.
It has been decades since France and other European countries started off-shoring their service activities to countries with lower labor costs. It happened again recently, in 2012, when the extension contract for the call centre of a French transport public service, STIF, created a big fuss when it was announced that the winner was a Moroccan company.
In a centralised country like France, under the authority of a freshly elected socialist President, Francois Hollande, the event was a source of great concern and fear.
What happened illustrates the long lasting and slow decline of the French and European service industry. But is there an alternative to this decline?
Offshoring is mainly about cost reduction, but usually new issues arise once the service is moved to another country. We often find that customer satisfaction does not improve; that the cost of calls is in fact lower for a while, maybe a few years, but then after that a country with an even lower cost of labor comes into the picture (what to do then? Re-off-shore?); that extra costs arise as sales and service quality decrease and after-sales cost go up; and that off-shoring has a significant social impact.
There is an alternative to off-shoring, however: deploying lean in call centres, by means of enabling local teams to think and act with continuous improvement in mind.
This approach gives a call centre an opportunity to improve customer satisfaction, increase sales, and reduce the volume of non-value added calls, which leads to cost reduction.
Solving these problems one at a time leads to an increase in revenue, a decrease in costs and a higher level of motivation.
Here is the example of a company specialised in retail finance, with a complete portfolio of financial services (credit cards, loans, insurance, and so on). Inside this company, we focused on an organisation of 65 people working across France, divided in five teams of 10 to 12 people and a central team.
Their mission is to deal with all sales-related calls from anyone who is experiencing any problem. Here are two types of incoming calls: after submitting a loan request, a customer calls to check whether their request is accepted or not; or, a customer calls to provide further information to complete their application.
To implement lean across the organisation, we chose the following strategy: to carry an improvement project, with a specific duration and scope, one team at a time. This allowed us to gather knowledge on each project, and then to extend the lessons learned to each new team.
We initiated continuous improvement with the project and then we sustained it by means of a set of actions: continuous challenge, go and see inside the team.
However, this type of strategy is only relevant when you know what you want to learn. In our case, the goal of the discussion with the leaders of the organisation was to decide what the key questions and topics were.
To answer this question, we took the insight of the very efficient and simple to use method presented by Stephen Parry, Susan Barlow and Mike Falkner in their book Sense and Respond. The book presents the demand classification model as follows:
We started with one very demotivated team, who had to manage an ever increasing volume of calls and struggled with a bad quality of service, in terms of response time.
In order to reverse the trend, the team analysed the non-value calls, which represented 75% of all calls.
We then focused the problem solving on the reduction of these calls, with Pareto
typology and root-cause analysis.
Before we could make it happen, there were three obstacles we had to overcome:
- Let the sponsor, Franck (who is the executive manager that is “sponsoring” the lean programme), see the problem and take on the challenge, which he didn’t want to do because he thought the number of calls could never go down;
- Make the problem visible to all management and get agreement on it, which was even more difficult than with Franck;
- Let the team see the problem and take the lead, which was very simple because Marc, the team leader, was absolutely convinced that something had to be done:
- He was exhausted of dealing with angry customers every day.
- He knew things could be different as he had known a time when such problems did not happen.
- His team couldn’t bear the situation anymore.
- His end of the year bonus was not yet obtained.
The first step was to ensure everybody saw the problem in the same way and recognized it. Quite simply, there was a massive number of calls that add no value to the customer.
The second step was to support the operational team.
Franck, Marc and the lean coach had to deliver the same message, and support the team while it built its own action plan structured following the PDCA approach:
- Pareto analysis of the different typologies of non-value calls
- Choice of one typology and make a root cause analysis
- Implementation of the action plan for this one typology
- Results check:
- If they are not in line with the objectives, understand why, and act again
- If they are in line with the objectives, move to next typology
A few examples :
- 17% of calls were from salespeople checking whether their fax had arrived. In this case, the answer was simply “yes” or “no.” The team was authorised to analyse the root cause, which helped us answer a number of other questions:
- If the fax has effectively arrived, why is the salesperson calling?
- If the fax has not arrived, is the fax machine actually working? If not, why?
- What is the actual situation about the fax machine?
What we discover by investigating all around the company (in the IT division, with the telecom provider, with the central team) is that there were two fax machines, one of which wasn’t working properly when a fax was sent from an ISDN line (which uses a different technology).
We supported the team and help them to take action outside their area: first, we provided everyone with the fax number for the working fax machine and then we fixed the faulty one.
- 15% of calls were from customers who wanted to finalise their contract and have the lent money transferred to their account. In this case, our standard procedure was to take note of the request and transfer it to another team. What happened was that before the other team had the time to deal with the request, the customer usually called again to enquire further. For this simple kind of situation, we invited team members to finalise contracts themselves, which reduced the backlog of contracts waiting to be completed and the number of extra calls.
Finally we achieved a 27% reduction in the number of calls in four months, which in turn led to an improvement of the overall performance: customer satisfaction went up, response time was back to high standard level, and the number of lost calls went down to almost zero.
Let’s take a look at another area within the company.
We worked with 100 people in charge of after-sales incoming calls coming directly from the end customer. Their mission was to provide the right answer to the customers over the phone or via email. They also had sales objectives, known as “rebound sales”: any call from a client is an opportunity to sell another product.
Here is the starting situation:
Franck did not appreciate the fact that some teams did not reach their objective, up-selling on 10% of incoming calls. Here is what we did to help this team achieve similar results as the rest of the organisation.
We empowered the members and promoted team work. This helped us to regain motivation, improve results and, in the end, generate substantial economic gains.
The tools that we used in this case are visual management and quick response problem solving. Every day the team chooses one issue to address, from picking one product to try and sell more to increasing the sales of another product, improving the performance of a slowest moment of the day, learning how to sell a brand new product or training a new member of the team.
Every day, they also perform a quick problem solving exercise in order to determine if they are in line with daily objectives. If they are, they move on. If they are not, they try to understand why and then try a new standard (or one that has worked for someone else).
Within four weeks, the group had caught up with the best-in-class teams. In two months, they had reached the first rank:
Two months after the project, in the continuous improvement phase, the team continued to gradually improve its results. So did the others, until new records were reached.
These two problem solving exercises were very successful.
First of all, we achieved amazing results, at a level we had never reached before. We never could have imagined we would do so in a quarter, saving millions to the division.
Secondly, we started a positive cultural change, created a new job description, introduced new quality standards and engaged in continuous improvement, which has become tail wind for day-to-day work.
As team engagement grew, costs went down and sales went up. Insourcing became a more obvious choice, not only for today but for tomorrow as well.
The following year, the outsourcer contract was not extended, which led to savings of €500,000.
Our decision to insource was not only a tactical choice to respond to a specific situation, but it became part of the overall after-sales strategy. But this can only be successful with a continuous improvement culture in place.