Can a Focus on Getting Calls Right Have the Far-reaching Benefits that Just-In-Time Had?

This is a post about how the commitment to one simple idea can launch a thousand ships of change and a virtuous cycle of profit improvements. After reviewing the far-reaching effects that Just-in-Time, a key element of the Toyota Production System, had in manufacturing, I will argue that a focus on getting calls right in call centers could have a similar wide-ranging effect on organizational performance and profitability.

The Toyota Production System (TPS) really is The Machine that Changed the World (see the book of the same title by Womack, Jones and Roos that has sold over 600,000 copies). TPS has changed how almost every single product is manufactured in every part of the world. One key pillar of the TPS system is Just-in-Time.

Just-in-Time is a production strategy that seeks to improve a business’ Return on Invested Capital by reducing the carrying costs associated with work-in-process (WIP) inventory (see Just in Time). It is a pretty simple idea: If we order from our suppliers just what we need for today's production, our WIP inventory goes way down, and that is a cost savings right there.  With less WIP however, we need less space, so maybe we can avoid building a new plant.  JIT was of course closely tied to demand, which meant practitioners ended up with less finished goods inventory, less need for storage and more savings. 

There's more.  When you take away the safety stock, all the production abnormalities such as machine reliability, excessive changeover times, and production bottlenecks, start to rear their ugly heads. So implementing JIT unveils production issues that management may not have even been aware of and forces them to improve those inefficiencies to avoid production outages.  Taken together, JIT had an almost immediate positive effect on ROIC.

But this is, as they say, the proverbial tip of the iceberg.  With only enough parts on hand for the production scheduled for that day, assemblers no longer had a choice of which part to use. Every part available had to work perfectly. If it didn’t, the line would shut down and increase costs.

Further, improving the quality of supplied parts was not always enough. Many companies were also forced to redesign the product to widen tolerances. This had the effect of further improving the quality of finished goods.  As quality improved throughout the entire supply chain including finished goods, scrap, service and warranty costs were all reduced which lead to further improvements in ROIC.

The biggest effects of JIT may have been the impact on the customer. JIT factories were better able to predictably deliver goods on the promise date. They were also able to be more responsive to customers' needs (JIT is really the key enabler of Mass Customization, an idea that is just as relevant for call centers as it is in Manufacturing.  See Is it Time for Mass Customization of Call Centers). Customers no longer had to, in the case of cars, “take what’s on the lot.” You could choose from a blizzard of options and get the exact car you wanted with remarkably little wait time. The quality improved, the choices improved, the responsiveness improved, and guess what? So did customer satisfaction, loyalty, and revenue.

 

The commitment to this simple idea of Just-in-Time drove dramatic improvements in results across the supply chain and throughout the organization...improvements felt and responded to by customers.  

So then here is the question:  Could handling every call that comes into a call center correctly have a similar, virtuous cycle of quality and C-Sat improvements and lowered production costs?

Let’s conduct a simple thought experiment. What would happen if we defined what a correct call was (Required Call Components), by call type, and our combination of people and technology guaranteed that the RCCs of every call would be exactly correct, every time?

Additionally, what if we further defined "correct" in terms the most efficient way to handle each call type?  And while still allowing the agents the flexibility to respond to the customers' needs, what if we increased the percentage of calls that followed the most efficient path?

What follows is a list of benefits that would accrue if we got the calls right in the two ways just defined. As you go through the list, actual results achieved using agent-assisted automation are shown in parentheses.  (Agent-assisted automation involves the use of pre-recorded audio files and pre-programmed system actions integrated with the CRM to allow error-proofing that are directed by the agent. The agent is live on the call, following the pre-defined path as appropriate, but intervening with his/her live voice whenever what is happening on the call requires it.)

1) If we are using some automation, there is less to teach the agents. If there is less to teach the agents we could reduce the lead time we need for hiring agents in advance of when they need to be on the phones. (One client reduced training time by 30% and completely paid for their investment in our software with these savings alone.)

2) If the automation is ensuring the calls are correct, we do not have to pull the agents off the phone for training/coaching as often which means we don’t need as many agents to hit service levels. (For one client, call volume is up due to the growth of the product, but the number of agents has been reduced.)

3) If we know the calls will be right, we don’t need to do as much monitoring, which means we need less monitors.  (Monitoring costs at a financial services giant have been reduced by 50%.)

4) If the call is right, we will get higher First Call Resolution and less repeat calls, which means we will have less volume and need less agents. (same as #2)

5) Because we have engineered the calls, the Average Handle Time is less and there is less After Call Work. This reduces the number of agents we need. (We have reduced AHT by 40% and ACW by 90%.)

6) If the automation is handling the boring and fatiguing parts of the job, the agents may be happier which will delay turnover. No one stays in the job forever, but delaying turnover is the same as reducing it. (We have dramatically improved agent satisfaction, but we do not have long term data on turnover effects.)

7) If we have less agents and potentially less turnover, it means we:

a. don’t need as much HR staff to hire, fire, and administer

b. don’t need as many managers/coaches

c. don’t need as many seat licenses for software and hardware

d. don’t need as much space

8) When agents make mistakes costs often occur outside the call center. There can be big groups handling improper warranty returns and letters to the CEO, calls get escalated to supervisors, legal gets involved to handle mistakes made by agents, fines have to be paid, etc. If the calls are handled correctly, all of this work goes down and may result in the need for less staff. (We have reduced fines, legal fees and accent escalations for clients.  Disclosure compliance on Federally required disclosures are now 100%.)

9) Often times the steps agents skip or don’t do correctly are cross-sells. If these are done every time, revenue goes up because the agent makes the right offer at the right time, every time. (We have increased cross-sell by 5X over agents not using the automation.)

10) As mentioned, when calls are streamlined it means less AHT. But when the calls you are streamlining are collections calls, handling more calls per day means collecting more revenue. (Record revenues have been achieved by agencies using our solution…up 25% pre/post.)

In manufacturing, all the WIP lying around were wasted resources that covered a lot of other problems that contributed to increase cost and poor C-Sat. Similarly, there is a lot of waste in and around call centers that is a direct result of a failure on the part of call center leaders to make sure that what they do hundreds of thousands or millions of times a day is correct (see What is an acceptable error-rate in contact centers?)

Let me be clear.  I am not blaming the agents for the landslide of incorrect and inefficient calls we see today. Call handling work is poorly designed, the job is fatiguing and stressful, the pay is low, turnover is high, and humans make mistakes. Call centers try to solve these problems with coaching.  The thought that sporadic coaching could solve these issues and result in more calls that are 100% correct is risible (See Call Center Coaching Remains Labor-in-Vain)

I am guessing that when Japanese and other companies first started with JIT, no one imagined that a simple commitment to reduce the waste associated with excess inventory would have the far reaching effects it had.  Could a simple focus on getting calls right hold the same potential?  


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