© AOM International 2015, all rights reserved. Active Operations Management EXAMPLE CLIENT 2015...

© AOM International 2015, all rights reserved.

Active Operations ManagementEXAMPLE CLIENT

2015

Confidentiality: Confidential


Agenda

• Diagnostic Review• Supporting Analysis• What is AOM• Recent Client Example• Investment & Benefits• Appendices

– detailed implementation overview– an introduction to Workware– an introduction to RTM / Workware Connect



Diagnostic Review



Summary Findings and Conclusions

• EXAMPLE CLIENT achieves a high level two on the AOM Operations Maturity Model demonstrating behaviours of both level two and three. This represents an operation with significant positive behaviours but which offers the opportunity for improvement

• Recognition of the components of control – forecasting, planning, controlling and review. Manifestation of the control cycle does not include local capacity management and review

• Strong central capacity planning at monthly level. Local capacity management is based on instinct and experience rather than repeatable method and fact. This means that opportunity is lost




• Very strong team leaders who are clear in what they want to achieve and demonstrate a clear desire to improve performance in their teams whilst supporting the development of their people

• There is a clear structure of accountability and regular routine meetings are held at the appropriate level to look at performance and workload. Meetings are strong in terms of content, Team Leader prep, support and challenge

• Review of performance is strong, review of performance against plan is missing



• Integrated forecasting and planning information along supply chain across organisational boundaries

• Variance and variability systematically managed

Level 5 Quantitatively

Managed• Formal internal standards for capacity planning and

control• Skills in operations management defined and

developed• Consistency of execution and tools independent of

individuals involved

Level 4 Managed

• Recognition of the Four Components of control• Manifestation of control cycle is local or work

specific issue• No central standards

Level 3Incomplete

• Local practices for scorekeeping and reporting• Individuals are central to how information is

presented and utilised• Focus on scorekeeping – issue-driven capacity

planning

Level 2 Ad-hoc

• No formality to production control• Focus on technical product or case outcome• Management by exception or issue

Level 1 Unconscious

Majority of processing organisations

Typically between 25 and 40% lost capacity through reactive control

Average 31% gain over 15 months

Assessment and benchmarking



EXAMPLE CLIENT

7

• Integrated forecasting and planning information along supply chain across organisational boundaries

• Variance and variability systematically managed

Level 5 Quantitatively

Managed• Formal internal standards for capacity planning and

control• Skills in operations management defined and

developed• Consistency of execution and tools independent of

individuals involved

Level 4 Managed

• Recognition of the Four Components of control• Manifestation of control cycle is local or work

specific issue• No central standards

Level 3Incomplete

• Local practices for scorekeeping and reporting• Individuals are central to how information is

presented and utilised• Focus on scorekeeping – issue-driven capacity

planning

Level 2 Ad-hoc

• No formality to production control• Focus on technical product or case outcome• Management by exception or issue

Level 1 Unconscious

Assessment and benchmarking



What we look for during the review

• Includes decision making processes, collection/manipulation/use of data for decision making and the communication of those decisions.

• Effectiveness of the process and the consistency & of its application are considered.

• Operations management process areas reviewed: Forecasting, Planning, Controlling to plan & Reviewing performance

Method Skills

• The skills associated with operations management and how they are emphasised and developed.

• Although other skills (e.g. technical & people) are very important for front-line management, these are not the subject of our analysis.

• Often, core operational skills of planning and controlling work and resources are not emphasised at all.

• We characterise three typical patterns of behaviour, moving from Reactive Management through Bureaucratic Management to Active Management.

• The attitudes to sharing and volunteering of resource

• Change accepting environment• Provide the opportunity for individuals and teams

to perform to their potential

Behaviours Tools

• Resources that support the desired management process:

• Work-time standards allowing the aggregation of different activities

• Performance standards & common definitions of key ratios

• Formalised measurement of skills and capabilities. • How well do they support the process & how

widely/consistently are they used?

8Confidentiality: Confidential


Overall Assessment



Findings – Operations Management Process

• The current ops management process is sound at the broad level with recognition of time as common currency paired with allocation of work based on skills

• There is a clear structure of accountability and regular routine meetings are held at the appropriate level to look at the workload

• Analysis of variance is difficult and focuses on weekly rather than daily performance

• Managers communicate plans to staff on an ad hoc basis • Daily huddles happen in some teams • Review of performance against plan is ad hoc



Skills

• Forecast; Front line managers are broadly comfortable with forecasting, although current practice is incomplete and highly manual and focuses on shortfalls where identified. The current process does not drive repeatable daily active behaviour on the floor and is variable in its application

• Plan; Monthly FTE requirement is provided from central planning. The translation of this into weekly operational plans are missing. Focus is on hours available and therefore work able to be completed.

• Control; Managers are able to interpret data correctly. Focus is on achievement of service levels and quality targets not necessarily on optimising performance with the resource available

• Review; Team leaders are comfortable with principles and performance review sessions take place and are effective. Focus is on what was achieved rather than what could have been achieved.



Behaviour and Environment

• Team Leaders interviewed were excellent with a sound understanding of their business, strong people skills and a clear desire to improve performance. Capacity management at the front line is recognised to be a gap in their toolkit.

• Management are aware of the critical dimensions of cost, quality and service, focus at team manager and staff level is heavily service and quality based.

• There is a universally good view of the operation from staff who are engaged and active in ‘putting themselves in the customers shoes.’ Some comments were made around printer issues , and timing of team huddles

• Available work, SLA and the available resource drives the level of productivity rather than determining individual and team capability and seeking to maximise.



Tools & Programmes

• A number of tools are utilised in the operation:– Process 360– Loading Boards– Process Timer– Smart Pack

• Use of the tools is good but limited in some areas by trust in the core timings

• A number of programmes are in place :– Lean– Ops Excellence




• Typically introducing AOM in similar context delivers between 10 and 15% improvement in productivity within 6 months

• Introduction of the AOM approach will:– Build on solid base and in control operation and introduce the art of the

possible– Release latent capacity within teams moving the operation from a position of

control to optimisation– Enhance the Operational Excellence Framework and Lean programmes – Position organisation to be best practice debt management provider

• Benefit highly achievable and low risk because:– Quality and commitment of the team leaders and managers– Awareness of the need – Central planning rigour in place



Supporting Analysis



Supporting Analysis

What are we looking for:

• Variance – does work rate (productivity) vary per day• Drivers – external factors that cause variance

» SLA» Day zero» Available hours» Incoming work volume

• Shrinkage (non productive) – variance per day or managed• Latent capacity – steady state, 85th percentile ‘controlled’ work rate



Work rate variance

Ground rent – June – work rate & production hours

03Jun2013

05Jun2013

07Jun2013

09Jun2013

11Jun2013

13Jun2013

15Jun2013

17Jun2013

19Jun2013

21Jun2013

23Jun2013

25Jun2013

27Jun2013

29Jun20133.000

3.500

4.000

4.500

5.000

5.500

6.000

6.500

7.000

7.500

8.000

0

50

100

150

200

250

300

350

400

450

Vol per hour (Exc Sat)Volume completed



Drivers

Ground rent – June – work rate & work at day zero

03Jun2013

05Jun2013

07Jun2013

09Jun2013

11Jun2013

13Jun2013

15Jun2013

17Jun2013

19Jun2013

21Jun2013

23Jun2013

25Jun2013

27Jun2013

29Jun20133.000

3.500

4.000

4.500

5.000

5.500

6.000

6.500

7.000

7.500

8.000

0

10

20

30

40

50

60

70

80

Vol per hour (Exc Sat)Work on day ZERO



Shrinkage (non productive)

Ground rent – June – shrinkage & work rate

03Jun2013

04Jun2013

05Jun2013

06Jun2013

07Jun2013

08Jun2013

09Jun2013

10Jun2013

11Jun2013

12Jun2013

13Jun2013

14Jun2013

15Jun2013

16Jun2013

17Jun2013

18Jun2013

19Jun2013

20Jun2013

21Jun2013

22Jun2013

23Jun2013

24Jun2013

25Jun2013

26Jun2013

27Jun2013

28Jun2013

29Jun201320%

25%

30%

35%

40%

45%

50%

55%

0.000

1.000

2.000

3.000

4.000

5.000

6.000

7.000

8.000

9.000

Non Prod %Vol per hour (Exc Sat)



Opportunity

Ground rent – June – 85th percentile work rate

03Jun2013

05Jun2013

07Jun2013

09Jun2013

11Jun2013

13Jun2013

15Jun2013

17Jun2013

19Jun2013

21Jun2013

23Jun2013

25Jun2013

27Jun2013

29Jun20130

50

100

150

200

250

300

350

400

450

500

0.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00

Volume completedPotential (Exc Sat)Cumlative Capacity

= 10.32%



Supporting Analysis

Balancing Down – June – Work rate & Production hours

3-Jun-13

5-Jun-13

7-Jun-13

9-Jun-13

11-Jun-13

13-Jun-13

15-Jun-13

17-Jun-13

19-Jun-13

21-Jun-13

23-Jun-13

25-Jun-13

27-Jun-13

0

100

200

300

400

500

600

700

0.000

2.000

4.000

6.000

8.000

10.000

12.000

14.000

16.000

From Production DataVolume Per Hour



Supporting Analysis

Customer Info – June – Work rate & Production hours

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 200

100

200

300

400

500

600

700

0.000

2.000

4.000

6.000

8.000

10.000

12.000

14.000

From Production DataVolume Per Hour



Analysis Summary

Extracted of Data Provided

Comparison to Smartpack data extract

Utilisation Productivity

Average 85th Percentile Opportunity Avg Time 85th Percentile Opportunity

TPA 34% 41% 7% 14.42 5.69 34.89% n/a

Correspondence 56% 61% 5% 34.58 18.91 10.41% 9.98%

Balancing Down 72% 76% 3% 91.13 52.02 27.51% 26.60%

Ground Rent 62% 68% 6% 34.38 26.15 19.62% 10.32%

Overall 2.7% 19.35%

• Benefits through stabilisation• Management action (through Ops Excellence and Lean initiatives) would deliver

further benefits



What is AOM


© AOM International 2015, all rights reserved. 25

Why AOM

The most significant cause of lost capacity in a service environment is individuals not having the right amount of work to do in the time available Warwick Business School

The difference between the best performing team leaders and the average is method not willingness or working hardInstitute of Operations Management

The most significant cause of stress on managers and staff is uncertainty, not the pressure of work to be doneHBR



Work in

100

200

300Work Done

200

150

100

50

3020100Days

Reactive Operations Management



Work in

100

200

300Work Done

200

150

100

50

3020100Days

Active Operations Management

Increase understanding

Increase Control

Informed Choices



What is AOM?



How does AOM work?

• Method– Consistent method of balancing work and time across all

managers

• Skills– Confident decision makers able to make the most

appropriate choice

• Tools– Simple, powerful decision support

To see more visit www.activeops.com/aom-video



Implementing AOM



Global Performance

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10

Month 11

Month 12

Month 13

Month 14

Month 15

Month 16

Month 17

Month 18

-5%

0%

5%

10%

15%

20%

25%

30%

35%

40%Poor Performers Upper Boundary

Average Performance

High Performance Lower Boundary

Range of Performance Improvements

NO.OF MONTHS FOLLOWING AOM PROGRAM START

Implementation Phase

AOM Quality Objective



Some of our Clients

32Confidentiality: Confidential

http://adcb.com/default.asp

http://www.jobcentreplus.gov.uk/JCP/index.html

http://www.nfumutual.co.uk/index.htm

http://www.ato.gov.au/

http://www.hiscox.co.uk/

http://www.td.com/index.jsp

http://www.capita.co.uk/


About AOM International

33

UK Partnership, formed in 2005Offices in Canada, US, Australia, South Africa, Middle East, India and the UKAOM implemented in 35+ countries managing 40,000 + employees as at August 2012. Queens Award Winner for Enterprise 2011



Recent client example



Capacity Planning vs Capacity Management

Capacity ManagementCapacity Planning



Performance improvement-Actual

29 Apr - 05 May 2013

06 - 12 May 2013 13 - 19 May 2013 20 - 26 May 2013 27 May - 02 Jun 2013

03 - 09 Jun 2013 10 - 16 Jun 2013 11 - 16 Jun 2013

-10%

-5%

0%

5%

10%

15%

20%

-6%

-1%

6%

8%

11%

18%

12%13%

Drop in productivity from 18% to 12% improvement was due to a reduction in the UK Deceased and India Settlement and Registrations teams.This has been caused by holiday and sickness in the UK and the buffer staffing in India.



Operational ControlType Item Units 17/ 06/ 2013 18/ 06/ 2013 19/ 06/ 2013 20/ 06/ 2013 21/ 06/ 2013 Plan Actual Actual vs Plan %Workload

Work In Mins. 74,960 66,571 71,056 74,350 68,830 361,736 355,767 98Work Out Mins. 69,984 70,619 71,380 74,043 68,623 354,361 354,649 100WIP Mins. 60,566 56,518 56,195 56,502 56,709 54,813 56,709 103Diverted Mins. 10,486 9,661 11,474 10,232 10,790 67,302 52,643 78

ResourcesStaff complement Mins. 96,780 96,750 97,230 96,000 96,025 466,380 482,785 104Annual leave Mins. 5,715 4,725 4,500 4,950 4,935 22,050 24,825 113Flexitime Mins. -540 -840 -660 -615 -120 165 -2,775 -1682Overtime Mins. 930 1,500 1,330 1,450 715 8,245 5,925 72Lend staff Mins. 8,264 10,473 9,641 9,364 7,996 44,900 45,738 102Borrowed Staff Mins. 2,369 1,589 2,384 3,268 1,820 10,155 11,430 113Temporary Staff Mins. 0 0 0 0 0 0 0 100Downtime Mins. 4,140 4,950 4,050 3,600 3,600 0 20,340 U/PTime worked Mins. 81,420 78,851 82,093 82,189 81,909 417,995 406,462 97Core Time Mins. 70,934 69,190 70,619 71,957 71,119 350,693 353,819 101

PerformanceProductivity(%) % 99 102 101 103 96 101 100 99Utilisation(%) % 87 88 86 88 87 84 87 104Complex Productivity(%) % 86 90 87 90 84 85 87 103Total Productivity % 86 90 87 90 84 85 87 103Cost per Standard Hour Cur. 18.41 17.89 18.19 17.47 18.72 - 18.13 U/P



Work In Progress - hours

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18800

850

900

950

1000

1050

1100

1150

1200



Mgmt Decision Man Days Non Core*

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

-5.00

0.00

5.00

10.00

15.00

20.00

25.00

30.00

25.10 FTE

Total man days utilised outside core work – 182.87 4 week man day daily average – 10.162 week man day daily average – 16.16

* Training+Lent out of Workware



Lent Out of Workware*

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 180

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

Total Lent Out of Workware man days – 145.934 week man day daily average – 8.12 week man day daily average – 12.69

* Lending to Investment Trust and Postal Dealing

19 FTE



Training

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 180.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

4.50%

1 FTE

8 FTE

Total training man days – 864 week man day daily average – 4.752 week man day daily average – 5.49



Overtime

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 180

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

Total overtime man days – 624 week man day daily average – 3.472 week man day daily average – 2.70

10 FTE

3 FTE



Flexitime

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

-1000

-800

-600

-400

-200

0

200

400

600

800

Total flexitime man days booked – 13.77



Investment and benefits



Investment

A range of Software & Services options:

Simulation course £15,000 per 18 managers

Workware Experience £7,500 per 18 managers

AOM Experience £225 per manager

Accreditation £750 per manager

Coaching £1,000 per FTE

Coach accreditation £600 per manager

Workware™ £360 per FTE per annum

Average cost per FTE c£1,500 per FTE



Break-even & Return in Investment

Per FTE

Total investment per FTE £1,500.00

Fully loaded FTE cost (average per annum) £25,000.00

Benefit to break-even 6.0%

Investment per FTE £1,500.00

Average identified latent capacity 15%*

Break-even < 6 months



www.activeops.com

Where this document has been classified as ‘Protected’, ‘Confidential’ or ‘Restricted’, the information contained within it is confidential and should be treated as such.

This document constitutes the intellectual and proprietary property of AOMi and is protected by intellectual property laws and international intellectual property treaties.

While the author has made every effort to provide accurate information at the time this document was produced, neither AOMi nor the author assumes any responsibility for errors or changes that occur after production (unless explicitly contractually agreed between AOMi and the recipient of this document).

Copyright © 2015 Active Operations Management International Ltd (AOMi).

All rights reserved.

Active Operations Management International LtdForbury Court 12 Forbury Road Reading BerkshireRG1 1SB

Tel: +44 (0) 118 907 5000 Fax: +44 (0) 118 907 5001


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