I was recently involved in a project which involved optimising the value streams of a mortgage administration company. This company was of particular interest for a number of reasons; firstly due to confusion as to who was their 'true' customer, due to the nature of the organisation which carried out back office administration on behalf of mortgage lenders, for financial intermediaries on behalf of their clients.
To complicate this issue further the Financial Services Authority, who regulate the mortgage sector in the UK launched their TCF initiative (Treating Customers Fairly) two years ago which places responsibility on the regulated firm to ensure that all customers receive fair treatment through the entire product lifecycle, in this instance the regulator is referring to the end user (applicant/consumer); however this firm received 100% of its business from financial intermediaries and therefore they were considered the customer.
I argued that the clue was in the very nature of the organisation; to conduct outsourced administration for lenders and as such put the idea forwards that they are in fact the customer (from a lean perspective) and that there are in some instances several customer groups all with different value added requirements at various parts of the process.
The second reason why I found this particular organisation interesting was the way that new applications were processed. Upon receipt of an application form and supporting documentation (received in the vast majority of cases through the postal system), the cases would be piled up and keyed in batches, with the applications being processed the following day.
This batch process had been used as it was viewed as being more efficient; an administrator could be given a pile of cases to key throughout the day resulting in that member of staff achieving what was viewed as close to 100% efficiency. The fact that it meant that each new application had to wait in a 'batch' for up to a day was not viewed by the company as waste, primarily in my view as this waste was not measured or reported.
While talking through the lean concepts with employees, it was clear there were conflicting views from different interested parties; while the management viewed these batches as WIP (work in process) even though they had not yet 'entered the system' at this stage; staff regarded the system as being efficient as they were all very busy throughout the day while the introducing financial intermediaries viewed this batching process as wasteful and time consuming.
I would like to add a slightly different viewpoint; once value streams had been optimised, this process could essentially perform a similar function to the Heijunka box to control the rate that the work entered the system, as long as the administrators used the opportunity to identify and allocate different properties to each case to allow management (or ideally staff in a self regulated system) to prioritise and plan the workload for that day.
For example if large value loans were classed as one group, and perhaps smaller value loans allocated to another, the team could work on the cases which would bring about the highest value for both themselves and their customer (the lender); working on the lower value loans once they had cleared the first group.
The lesson here is that on the lean journey, nothing is ever black and white and different user groups will often have conflicting (and often deeply seated) views on a process as seen in the above example.
So, batching, WIP or Heijunka? You decide…..
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