Transaction Intensity reduction vs Lean

I am working on transaction intensity reduction. It amused me as it is different from other quality methodologies. In six-sigma, we focus more on defect reduction. Lean focuses more on reduction of cycle time. In my current project, vendor keeps sending invoices against each transaction. Lean supports single peace flow. But, it is making transaction intensity very high and unmanageable at payable end.

Someone suggested single invoice single vendor per month. However, it will create batch processing. In all this, I feel it makes sense to have optimal batch sizes than single piece flow mindlessly.  Overall cost and lead time implications should be seen.

In BPO, many calls may be automated or self-answered in FAQ format which may reduce transaction intensity. Sending bus for each passenger may not serve purpose. Batching has its own advantage. It reduces change over time in continuous process.

Six sigma experts may question need for multiple purchase order, invoices, HR training sessions, or any other voluminous activity and may plan strategy to reduce the transactions itself to make them more manageable.

Banks reduced transaction through diverting them from branch to ATM, internet or mobile. Ticket window in Indian rail has been diverted to internet, cash coupon, or monthly ticket etc.

Skeletonising the process

Lean method is about streamlining the process. Processes should run with minimum efficient resources. Many operation managers think it is job of quality person to streamlining the process. They are happy to do daily routine job. Conflicts between operations and quality functions are well known. Quality professionals work in extreme theoretical world (perception), while operation managers are in more realistic world. Solution lies somewhere in between. Both teams have to work for organization benefit.

Skeletonising may not be right word as we should plan for buffer for emergencies. However, it reflects the intention. Cutting down the legal waste is most painful job. In fact, it creates boundaries in mind of any change agent. These wastes are holy cow and should not be touched. Change managers feel restricted by some myth. Some changes can’t be done in all cases like

  1. No salary increment while improving employee motivation
  2. No cost increment while increasing customer satisfaction
  3. No tax benefit should go away while smoothening the process
  4. Bosses mandates

Rest they are supposed to do with minor additional cost. In result, they suggest mediocre solutions in many cases.

Change needs blood. It is as simple as that. If organization is ready to bear the pain, they will be successful. I have seen top managements frustrated with their top brass and again sitting with same in next morning. Life goes like that and change never happens.

Toyota did miracle with lean methodology. They commitment to lean methodology is remarkable. Subsequently, their processes are leaner.

Change management is very psychological process. Human resists changes. We want status quo which is against nature. Nature loves changes. Processes need to be flexible and efficient to bear economy shocks from external environment.

Shared Service

Objective, Definition, and benefits

This is new management jargon. We can compare it with centralizing the transaction activities. However, is slightly different as it is customers orientated with service mind-set. In highly competitive environment, Shared service may become a competitive tool for cost advantage. Bringing all mindless jobs under one roof make sense. It may help in thinning the processes at optimal level.

Its effectiveness may vary from company to company. It is tough tool to implement and get meat out of it. It also needs some tough decisions. People management and realignment mistakes may cost the organization.

 Types of Terms

Centralization: Bringing decentred operations from various locations to one place

Shared service: Bringing all transactions activities at same place.  

POE (Pocket of excellence) : It is highly specialised work conducted by highly specialised professionals like legal, litigations, or R&D.  

Methodology

Make project plan

List down activity list

Identify Transactions and specialised activities through defined format/framework

Propose model of working for both worlds (Transaction and left-out one)

Collect SOPs or Make SOP – Swim lanes from process owners

Define Escalation matrix / Define governance model

Bursting compliancy centres

Reaching at one milestone makes us complacent which makes us to take rest. Sense of security makes us to slow the speed. It is good for a while .However, Long pause makes us useless. This is true in organization point of view also. Any organization creates many complacency pockets which are to be busted. A person worked great in one project may not work with same enthusiasm on another project.

Top management generally uses the same guns again and again. It is necessary to add some young energy and let the experience guy do more mentoring job.

BJP lost in current election in Uttar Pradesh as it was trying same old guns with no new agenda. Meantime, companies are now trying learning and development, or nominating centre of excellence, or allocating special project to their old guns. Front part is generally handled by young energetic leader.

Giving powers to young hands involve lot of risks. But this risk is worth taking in competitive environment. Customer facing functions like marketing, sales, projects, or production can’t have afford to have complacency centres. Other support functions like quality, research or development, strategy making, management reporting, corporate services, or human resource may use the experience.

Processing speed of computer is faster if we have less memory. Similar is true in terms of organizational speed. Huge experience may bring better safety and control however it may compromise the speed.

Process – Man two distinct dimensions:

I met many managers in last two weeks and asked them what activities they perform. I got surprised when wrote down activity list for them. Two member teams gave me list of hundred items. On other hands, some large teams (around twenty members) told me list of ten –twenty activities. I thought it is very person specific. Communication skill of a manager also plays an important role. Some managers were telling me level 3 while others were telling me level 4 processes.

Thinking deep on this subject, I realised that process streams and their interconnection points also play an important role. Some employees are working on interconnection points means participating in multiple processes. End to end cycle of processes like O2C (order to cash) , P2P (procure to pay), H2R( Hire to retire) etc are quite long and many employees play important roles. Hands off with adjacent processes are also possible along with outer connecting points like vendors, customers, or government authorities..

Process (activity level ) and human involved are two distinct axis. Many people may involve in single process activity while single person may involve in many process activities.

Understanding this complexity may help in simplifying the process. Linking the person with process activity may help the organization in development of robust design and lean organization.