Most of the theories, methods and case studies about productivity improvement come from manufacturing... Service processes differ from those in manufacturing in that the customer is actually an actor in the process, rather than someone consuming the product from it at the end... This is exacerbated in the public sector because public-facing organisations have to deal with whoever comes through the door...posted by TheophileEscargot at 12:00 AM on January 29, 2011 [5 favorites]
To standardise and streamline processes, service organisations often try to design out the complexity and unpredictability -- because simple equals cheap right? . According to John Seddon, standardised processes lead to ‘failure demand’ -- the demand caused by failing to meet the customer’s need the first time around. Many organisations, he says, fail to account for failure demand when calculating their unit costs...
For example, let’s say that I run a claims operation. I have led an efficiency programme which has reduced my unit costs to £100 per transaction. My boss says, "Bloody impressive, Rick. Well done! Have this huge bonus." What I haven’t told him (because it hasn’t even occurred to me) is that 80 percent of transactions have to be reworked because they haven’t met the customer’s need and so the customers go back through the process again. For every ten customers I am therefore spending not £1000 but £1800. My unit cost per transaction might be £100 but the cost per customer is actually £180.
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posted by infini at 10:16 PM on January 28, 2011