Lean Six Sigma: A Case Study in Capacity and Demand
The other day, I ordered coffee on the mobile app but the store front door was locked, so I sat down outside and waited. An employee soon came to bring my coffee and said with a chagrined look, “Sorry we’re not opening the door, but we’re short-staffed today.”The funny thing about that was, it sure didn’t look like their strategy was saving time.By the time you unlock a door, talk to a customer, go get their coffee, explain why things are going badly today, and go back to your work station, you’ve spent a lot more time than it would have taken to just leave the door open and deal with the people who come into the store.Failing to keep up with the work just causes more work.When you get behind on your work, whether you’re a coffee shop or any other kind of business, your customers will start calling, knocking, or otherwise reaching out to ask for status updates or reprioritization of the work you haven’t done yet. Those escalations unfortunately just cause a snowball of work rolling down the hill, which eventually becomes an avalanche of extra work as the reduced capacity (from responding to the customers instead of just doing the work they need) just gets you further and further behind in getting the actual work done. Your team then spends more time on communicating status, prioritizing, and doing the work for some of those unhappy customers than on the regular work itself. Finally, even if the original capacity or demand situation that caused the problem in the first place gets resolved, the backlog continues to beget more backlog, and your team gets further and further behind.Many businesses have been dealing with similar situations recently, and a lot of the reasons are perfectly understandable: - The pandemic has impacted staff availability and driven new processes that cost more time and effort for employees to manage- The Great Resignation has even further drawn down available staff, and that particularly has impacted training and skill levels, as experienced team members are replaced with newer hires- The need to train new people creates an even greater demand on the more experienced people, who may have to answer questions and check the work of those new people until they’re fully capable; these distractions reduce the capacity even further of your most efficient workers- As the economy has picked back up, demand has increased more quickly than companies can re-energize their capacityIt can cause a perfect storm, a rogue wave of work that builds upon itself and capsizes your business.In this session, we’ll engage participants in a real case study on how to recover from a process capacity and demand problem. The case study comes from the Group Proposal Services department (GPS) at a financial services company. The GPS department created quotes for group health, dental, life, and disability products. Their expected turn-around time (TAT) for producing a quote was 48 hours, and in the prior year's "busy season", the team had experienced some significant backlog and a drop in their service levels, attributed by leaders at the time to the fact that volumes had exceeded their capacity. They wanted to ensure that the next year turned out better.Participants in this session will discuss process streamlining opportunities in GPS, identify the non-value-added work in the process, and then see if they can figure out how the team improved its process and performance. The discussion will be highly interactive, with layers of learning about the story and then opportunities for participants to ask questions and figure out the next steps that the team took in each phase.In short, there are a few key strategies that have to happen in concert in order to get on the road to recovery:- Analyze the process and data to find some quick ways to reduce handoffs and/or non-value-added work in order to free up some capacity to get more work done- Use that freed-up capacity to start keeping up with “new incoming work” in order to reduce the escalations from newly-unhappy customers- As counter-intuitive as it sounds, stop hiring for a while, so that your experienced people can get work done rather than training and checking new people- Focus the team on performance by providing daily feedback on progress, with a team goal for keeping up and catching up- Dedicate the additional freed-up time on knocking out the in-good-order work (the work that is ready and available to do) from the remaining backlog We'll discuss how a Lean Six Sigma approach can articulate and drive the execution of those strategies, once we’ve let the participants have a chance to try to guess how the story ended!