DMAIC: Make continuous improvement of your processes a reality
“Life is a process”.If you think about it, it doesn't take too much philosophizing to realize that this is so. Life is a process.
As in the retail or manufacturing industry, the financial sector does not escape having a high volume of daily transactions. Each transaction is data that will become information for the business that has to be organized by processes for excellent and efficient management.
Business processes must be mature, innovative, and in favor of continuous improvement to guarantee a better customer experience. For a financial institution, applying methodologies such as the DMAIC cycle, which ensures a step-by-step team review of a process to be improved, becomes key.
The day-to-day can immerse us in urgent tasks, losing sight of the essential processes. For this reason, I invite you to follow the example of a banking institution, where we solve with the five stages of DMAIC one of their biggest pains and nonconformities from their customers.
Index
DMAIC is a continuous improvement methodology. It is made up of 5 stages which are:
It is part of the Six Sigma philosophy tools. Each step is designed to follow a logical sequence in search of continuous improvement for a given process.
Why DMAIC?
When we think about what can be an effective way to make our business processes more agile without letting it out of our hands, DMAIC is very attractive to apply because:
Today's use case is about a bank that offers several products. One of them and the one we will be reviewing is personal loans for their customers and potential customers. This type of loan should be approved within a couple of hours, and unfortunately, it is not generating the results established by the institution. In addition, they have received multiple complaints from their clients regarding the application's approval time (about 4 hours). Many of these customers get frustrated and switch to a competitor. Other banks take less than 2 hours to approve loans. Bank staff claim they do not know how to streamline the process as they are lengthy, complex, and lack clarity of execution.
Only 30% of personal loan applications pass on the first attempt, and processing the information will take up to 4 hours.
To address this issue, we will use the DMAIC methodology hand in hand with its step-by-step tools. I invite you to follow the step by step.
1. Define
In the beginning, the whole team should meet and establish which process will be reviewed, what objections there are, bottlenecks, pains for the client and the staff, delimit the scope, etc. Question why you should attack this process and define the As-Is process; in this case, Personal Loan Approval Process. With the help of a SIPOC, you place the process with its inputs, outputs, suppliers, and customers.
You may be interested in reviewing this: SIPOC
Below is a flow chart of the As-Is process with its description of each current stage.
So far, the execution time for each stage is around 2 hours, but it is essential to consider the time it takes to move on to the next step. That said, being a manual process with outdated systems and assuming a high transaction flow, it is prone to human errors, reprocessing, and downtime, becoming complicated handling that adds approximately 2 hours more to the As-Is Personal Loan Approval Process. The total estimated time is 4 hours.
2. Measure
At this point, the problem is a long duration in approving personal loans to customers (therefore the loss of the same), so measure these critical variables and give a follow-up to validate the problem raised. Additionally, it is crucial to consider the values obtained and all the possible variants that feed this problem and give alarming results.
Some of the KPIs that we can measure are:
3. Analyze
Knowing the problem to attack and with the data that supports why you deal with it, an Ishikawa diagram is constructed with the team, showing the problem and its causes. Here is the image and the explanation below:
We must attack those causes that generate reprocesses, delays, do not generate value, where processes become more complex to execute and therefore result in a bad customer experience:
4. Improve
In several work sessions, you must look for opportunities for improvement and how this can be a positive experience for your customers. Specifically, how do you decrease the approval time for personal loans? With brainstorming, for example, we can build the To-Be process of the Personal Loan Approval Process.
From the ideas generated and information from previous stages, the issue of manual processes from the beginning to the end of the As-Is Process is the one we should improve, change and adapt to new technologies. Therefore, it is proposed to invest in purchasing a system that allows us to manage the flow of the process and that this system takes care of the repetitive tasks. A system that helps with reminders and alerts. Versatile. In such a way, the bank's personnel can focus on adding value to their functions.
The To-Be Personal Loan Approval Process would follow this sequence:
The execution time of this process, Personal Loan Approval To-Be, takes approximately 40 minutes. Automate several manual tasks; the time between each stage is 0 minutes, except for the final approval (Management Approval) to the customer's email (Customer Notification). This is because Management has a work queue to give the final approval that takes no more than 10 minutes.
The bank's staff can more easily perform their processes and focus on the activities that add value. As mentioned, the bank executive receives the application only if the form is completed and the client attaches the documentation.
5. Control
The new Personal Loan Approval process must run according to the To-Be proposal and be measured to control the variables and how they behave. Also, you must have dashboards with KPIs, where the control of the process is reflected, that it has been implemented and that the personnel executes it completely.
You can check: Employee experience design
It is important to emphasize that DMAIC, being a cycle, constantly seeks continuous improvement and therefore invites us to review business processes actively.
If you want to learn more about this methodology, its tools, and how to apply them, we invite you to visit www.imagineer.co, where we will be pleased to provide you with all the support from Strategy Consulting.
“Life is a process”.If you think about it, it doesn't take too much philosophizing to realize that this is so. Life is a process.
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