Operations Management – Process Redesign Essay Example

enthusiasm for the Job.

Cash collections have increased 10% month on month and the target is being exceeded by 6%.

Introduction

• Ltd Ltd is a small credit hire company established in January 2011, with a current staff of 30. The purpose of the business is to supply lams management services (including but not limited to Car Hire, Vehicle repairs It provides services to the customer on a credit basis and then recovers the cost of these services from the insurers of the 'at fault' party on the customer's behalf. It acts in place of a motor insurer where a customer is not comprehensively insured but the service is available to anyone who wishes to utilities it. This type of business is very cash flow intensive.

It is based on paying for the hire of a vehicle and for the vehicle repairs to be completed before recovering these from the 'at fault' party. Given this, the cash collection process is the key to the success of the business.

• Scope Of The Review By July 2012 realized that due to increased referral volume and its continued expansion, its cash collection process and strategy were not fit for purpose. Total income recovery was falling ( a drop of 15% was recorded in the previous 6 months) and the slow income collection process was hindering further growth. The company was being forced into further borrowing to support the business.

Despite having negotiated 30-day payment terms with creditors the average time to elect the outstanding invoices was averaging 51 days meaning it was effectively funding the differential 21 days through gearing. This was having a negative cash flow impact and

also affecting their ability to expand the business itself. It established that the average time from its payment of the client claim (Car Hire, Repair, etc) to the recovery of this cost from the 'at fault' party had increased significantly from an average of 35 days to 51 days over the previous 9 months and due to the cash-intensive nature of the business this was having a seriously detrimental effect.

Given this, the management team decided to undertake a review of the cash recovery process itself to develop a new strategy that would speed up cash collections. The process review was commenced by management in September 2012. By January 2013 however, it became clear to the management team that although they had an idea of what they wanted to achieve, and the issues they believed were preventing this, they were not equipped to complete the process review themselves. At this time I was approached by them and retained as a consultant with a view to not only implementing a full process review and implementation but also to ensure that the process put in place was scalable for the increasing business they were expecting to take on over the coming 24 months.

It was clear from my analysis of the initial process design (what little of it there was) that little thought or analysis was carried out into the market generally designed the initial process. The process itself was decided on by a few members of the senior management team in isolation following a strategy session that they undertook. The management team did what a lot of companies do and made unsubstantiated assumptions as to the

reasons for the failing process. The assumptions that they made are below I. Recruitment was required as the staff themselves were not sufficiently experienced or capable in the role and therefore more experienced staff were required ii.

Part of the downturn related to insurers' internal process' leading too backlog of cases to be dealt with and therefore they needed to be contacted more often to force the work to be dealt with more quickly iii. Issues with the cases that would prevent swift payment weren't being highlighted quickly enough 'v. The staff themselves were not sufficiently motivated to encourage improved performance It is clear from the review that no ongoing reviews of the process were undertaken and that all process amendments to date had been issued by the senior management team in isolation, were superficial at best, and wholly reactive as a response to any performance downturn.

• Current Cash Collection Process The process currently in use had been designed by the senior management team whilst the business was in its infancy.

They had realized that they needed some sort of structured and documented process to help the staff and it had been devised by the finance director based on a standard credit control process model that he had utilized in his previous employment. This had been varied occasionally over the following 12 months but on an ad hoc basis in response to challenges that were being identified and were not documented or process mapped. In addition to the cash collection performance issues, there were several areas of concern raised by the management team which they wanted to be incorporated into the review I. Productivity had

increased as the work volume had.

They were concerned as to whether they were getting the same quality of work. Lie. Staff turnover was an issue and they wanted to know the reasons for this Given the lack of visibility on the current process I decided to treat the process like a new service design and start from the beginning. This was the best way to ensure that the process was fit for its purpose and capable of maximizing the opportunities for performance within the department.

• Objectives The aim of this report is to me. Review and contrast the previous process design methods used with a more trucked business process review (BPR) approach it. Identify and comment on reasons for the ineffective process iii.

Outline potential improvements that could be made to the process design strategy in future 'v. Develop a robust framework from which the business can review processes' in the future to ensure that they meet the purpose of task

Business Process Review

There are many definitions for the Business Process Review (BPR) which was originally referred to as Business Process re-engineering. At the heart of BPR is the notion of discontinuous thinking" Hammer & Champs (1993). BPR is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements critical contemporary measures of performance such as cost, quality, service, and speed. Dry Michael Hammer.

The objective of BPR however is to evaluate the current business process to identify enhancements and opportunities for improvements This then allows us to make them more efficient and effective meaning less wasted effort and allowing staff to concentrate on spending their time on income-generating

or valuable work as developed by Hammer (1990) Hammer's thesis was simple: The Majority of work being done does not add any value for customers and should be removed, not accelerated through automation or IT. Instead, processes should be reconsidered to maximize customer value, while minimizing the expenditure of resources required for delivering their product or service. This is something that every business should undertake to complete periodically.

It does not need to be overly taxing in circumstances where not a lot of change is required however it is a useful gauge of the business itself and how well it is developing and managing its current workload. It is important to note that most BPR failures happen because practitioners internalize the process aiming at efficiencies things,

The model process I adopted was as follows:

Step 1: Schedule planning and programmer development The initial step was to speak with the key stakeholders within the business to determine what the objective of the project was to be, determine the strategy to be used and identify people within the business who should be involved with the process design.

It was also important at this stage to get an idea of the time scales within which the client was hoping to work so that any implementation deadlines that the client had could be met. At this stage, it was also important to stress to the client the need to have Job holders from the affected area involved in the process. It is important to have them involved in the process particularly in the early stages as they know the challenges that are being faced better than the management team

and therefore there input can be invaluable (Earl, 2000). The level of user interaction in the process is one of the key distinguishing factors of a service process None and Storey, 1998). It also helps at this stage to get management buy-in so that the Job holders are given time to participate and engage with the process.

It is also worth noting at this stage that it is important to assess the impact that other departments and processes around the business may have on the process which you are reviewing. In this circumstance, you may need to ensure there are representatives This is not something that had done during the previous process review. The process itself was based around a process for a Job role that whilst similar in that both involved the chasing of debt did not fit exactly into the current company where technical legal aspects were arising from the debt. The Job role that the holders were doing is more reminiscent of a technical claims role than that of a credit controller although the principles of debt recovery were necessary for both.

There had been no Job holder involvement in the process at all and no program for the review and implementation had been undertaken. The process was not structured which made its delivery more difficult as it was not being afforded the level of priority that it should have been. They also had not considered whether any other workstreams may impact the recovery process or volume of cash collected. )

Step 2: Review the current process It is necessary to become familiar with the current process to understand what it is

that you are being asked to do. It is important at this stage to review the current process flow documentation.

It is also useful to see if there is any market material available that would give an insight into what the industry as a whole does and how it performs.  unfortunately had very little in the way of current process documentation and what they did had had not been updated with the changes implemented over the previous 12 months. Although they had not obtained it rebelliously they were able to reach out to contacts within other similar businesses and obtain some information on the processes that they utilized.

Step 3: Speak to Job holders about the current process It is important to arrange meetings with key process knowledgeable staff to get a better understanding of the current process. This is even more important where little or incomplete process documentation is available.

This is very useful as they are often full of ideas that would improve their work practices and will often highlight quick changes that have an immediate and significant impact on the process. They are also a good sounding board for any potential impact that changes may have on other parts of the process. They are also likely to be able to shed light on the reasons why performance is not where it should be and what the challenges to hitting the performance target are. Core team (the department as a whole). Is there anything else that they feel has been overlooked or could be improved? It is worth focusing here on things that they do that they either do not feel necessary or

do not add value to the process overall.

On discussion with the senior management team at they confirmed that they had not thought to review the current process with the Job holding team or look to them for feedback regarding the reasons for underperforming against collections. They assumed that on discussion with the department themselves they would be faced with excuses for the underperformed and felt that it would not be productive. It was useful to be able to explain to them the benefits of utilizing the staff for this purpose and also the advantages from a staff morale and engagement point of view to allowing them to be involved.

Step 4: Draft process maps based on the current process and obtains Job holder feedback

At this stage, particularly given the lack of documentation, it is worth drafting an outline process map for the current process. This ensures that your understanding is correct and also allows you to get feedback on this from the Job holders. The visualization is useful as it will identify the discrepancies between the process that the management think is being undertaken and the process by which the Job holders are working. Quite often there is a stark difference between these two things. The biggest thing to come out of this process was the fact that the core team believed most of the issues relating to the poor cash collections were due to quality issues in the work that was being sent to them.

This is not an issue that they had ever raised previously and the reason for this was that they felt their concerns would not be taken seriously.

This is a common disconnect between workers and management arising from a top-down style of management. It can be overcome by a more inclusive style.

Step 5: Feedback review workshop At this stage it is important to meet with the project participants to discuss the feedback to date and any other outcomes from the review and discussions with the ore team. This should also allow us to shelve out-of-scope issues and highlight other concerns relating to the process.  had never held a process review workshop and it was interesting to be able to do this with them.

I took this opportunity to feedback the comments the core team had made regarding the incoming work quality to them and this was something that although not overly well-received initially was a useful tool to demonstrate the benefits of this type of business review process as without this meeting they would have been unaware of the wider issues that were impacting the percentage of each claim that was recovered within the recovery department. As an aside, a separate project plan was put in place to the points raised by the recovery department.

Step 6: Hold a process improvement Workshop This allows us to hold a gathering of the key stakeholders and project participants with the sole purpose of developing ideas for improving the processes and starting on the design of the new process maps. The purpose of this is to define the following things The process Goals and Objectives How these are to be achieved

How these are going to be measured going forward The scope of each workflow process Issues or considerations that may affect these This

was very beneficial to the business as it allowed me to bring all the decision-makers together in one place, highlight the issues and show them the best ways to resolve these. It took some of the mystery of BPR away and left them with a clear understanding of the benefits and the realization that it is not something that needs to be time-consuming or laborious. It showed them that this process can be quite invigorating and a great way to improve staff morale, get employees empowered by and engaged with, fight for the business and make them want to contribute to what could be a bigger and better business for everyone (Davenport 1993).

Step 7: Draft new and improved process flows Following the workshop the next step is to draft the process flow documentation.

This is normally done by completing a high-level overview process map showing the departmental process structure at a high level with key processes identified followed by several more detailed "key process" process maps giving the low-level activity process. These key process documents should be sufficiently detailed to allow these to be used by the staff completing the various tasks as an aide memoir/script outlining what is required of them to complete each particular task. This should be sufficiently detailed to show the flow of work around the department, decisions made and interfaces to other functions, individuals, and systems where appropriate. This should be followed by a further workshop to ensure that the process design reflects the agreed actions and to ensure that there are no omissions.

The outcome f this should be an agreed-upon set of process flows and a list

of key actions needed to produce the final set of recommendations and projects to fulfill the project scope/ The Process maps and supporting documents can then be sent to the process improvement review participants for final review and feedback to allow the final changes to be made before they are presented for sign off.

Step 9: Process roll out Following the final sign off the process is ready to be rolled out. This should be done by firstly briefing the staff affected around the changes and giving them the chance to review and digest these. Then a further session should be arranged to allow them the opportunity to ask questions and ensure that they are fully conversant with the new process before it is launched. This has never been previously done by, historically when rolling out change this was normally done by memo or team briefing. The process changes were historically not structured or written down.

Step 10: Ongoing Review and recommendations Outline recommendations for process ongoing process improvement projects together with observations and outline the next steps. Ensure that the recommended rejects are prioritized, based on relevant criteria.

Conclusions

The new process has now been operational for 6 weeks and whilst the process is still bedding in, initial feedback is good. The staff report that the new process is easier to follow and they are clearer on the criteria that they are being measured against. Morale has been improved across the core recovery team as they now can feedback on the issues which are beyond their control and affecting collection performance.

In the first month, post-implementation cash collections were up by 10% on the

revised month and ahead of target by 6% which is encouraging. This will need further monitoring to ensure that it is not just an initial improvement caused by awareness of the process. Quite often businesses fail to understand or appreciate the benefits of completing a structured process review. BPR if completed properly can lead to Improved effectiveness Employees understand their position in the process and their contribution to it so they have a greater sense of responsibility. All processes are monitored and the result is that employees deliver a high-quality service. Increased productivity and Motivation