Improving Operational Efficiency Related to Deal
Processing
Situation
This business unit of a large Houston-based
corporation had a feeling that they might need
improvement on the operations side of their business
but they were not sure if they really had a problem
and if it was serious.
Sales of the business unit were going through the
roof. The unit had recently engaged a highly
scalable sales channel. The selling was done by the
sales force of partners such as insurance companies
who had an army of sales people. The target
customers were the retail establishments in shopping
complexes and strip malls.
The executives rejoiced each week at the ever
increasing sales numbers - several thousand deals a
week. The sense around operations was that it is
doing alright, no major issues to report, and if
there were any problems the concerned groups would
resolve it without requiring senior executive
involvement.
Solution Approach
The approach was not to find problems but to make
sure that everything was fine and to build a
mechanism such that if things started to go wrong,
there would be a system for early warnings and
indications.
The objective was to help every group in the
operations area identify the metrics (key
performance indicators) that would indicate how well
things were going. And, develop metrics that would
indicate how things were working overall in all of
Operations.
The approach worked well and surprised everyone with
what it uncovered.
Solution and Results
With the help provided the groups identified metrics
and started tracking the data to report against the
metrics. Senior executives ratified the group of
metrics selected and set a schedule to review the
data monthly.
The group that was responsible for booking the deals
developed a metric to track % of errors in the deal
booking process. The first month of data indicated
that 18% of deals submitted had errors in the data
submitted and as a result those deal were not being
processed. This was a very serious problem. These
were commodity deals and their profitability was
affected by commodity prices. The contract allowed
the business unit to walk away from the deals within
fifteen days of signing if commodity prices changed
dramatically. At an 18% error rate, hundreds of
deals were collecting in the to-be-fixed category
and the fifteen day cancellation period was expiring
on them. The business unit was being committed to
these deals signed by external agents without having
had the chance to review or process them.
Realizing that senior executives would be aghast the
group began to find the cause and found it was a
training issue. The previous group was entering the
data in the wrong fields. By training the data entry
group, by the next month errors dropped to under 3%.
Tracking and reporting on metrics had the effect
similar to that of a spot light. The deal booking
group discovered the issue, responded immediately
and resolved the issue. This happened because senior
executives setup up a regular process to review the
metrics and committed their time and attention to go through the review
process on a regular basis.
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