Operating Efficiently: Thumb Rules for Increasing Operational Efficiency

5 Aug

ABC ships cereal to people. ABC has a large operations team that handles customer complaints, e.g., “I got the wrong kind of cereal,” “the cereal was too old,” “the cereal arrived too late,” etc., and custom requests, e.g., “I would like seventy custom boxes shipped to a company retreat”, “I would like the delivery date to be changed,” etc. ABC is interested in providing customer service at a lower cost. What are its options? Here are some thumb rules:

  1. Prevent Work: 
    1. Prevent complaints from arising. Prevention will cost money so it is tempting to think of it as a trade-off. In the long term, prevention is generally financially beneficial.  
    2. Self-Serve: Build tools that allow customers to self-serve. It can be a win-win.
  2. Convert Externalities to Internalities: What special favors are customers asking that are not part of the price? For instance, are customers contacting you for changing delivery dates? Are you charging them for such changes? Bottom line: do not provide services that people are not willing to pay for.
  3. Staff Appropriately
    1. Forecast different kinds of work (by different work we mean work for which you pay different amounts of money and need to hire different people or train differently), come up with ideal shifts, and incentives for staying longer or going home sooner when reality doesn’t match up to reality. If you can forecast months in advance, it can inform your hiring or ‘right-sizing’ plans.
    2. Reduce Specialization: One thing that gets in the way of reducing staffing in having a lot of specialization. 
    3. Smooth Work by Separating Urgent from Non-Urgent Work: Say that a lot of work arrives in a narrow window. Not all of it is urgent. Build tools like ‘call me back’ to deal with non-essential work.  
    4. Simplify Work: Make sure that you don’t need to train people a lot to do the work.
  4. Make People More Efficient
    1. Train: Train people so that they can get more done per unit of time.
    2. Incentivize: Make sure workers and managers are optimally incentivized.
    3. Better Tools and Processes: Invest in tools and processes that help people do the job quicker. For instance, building tools that allow you to seamlessly transfer work between shifts by conveying all the relevant info. 
    4. Prioritize Work: For the same resources, one way to provide better quality is to prioritize work correctly.
  5. Hire more efficient people and fire inefficient people.
  6. Reduce Work: Automate work that can be automated. It includes semi-automation: automating portions of work.