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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.