By JAMES RATEMO
Cutting cost of operation and enhancing customer satisfaction are key aspects every company strives to realise in order to remain competitive and profitable. Riding on the Lean Six Sigma (LSS) methodology, the National Bank of Kenya is transforming its processes to better satisfy clients and enhance employees’ experience.
Mr Thomas Gachie, Director, Operations Division at National Bank says the financial institution adopted the globally acclaimed business principle to “provide distinctive client service.” He notes that the bank has never regretted the 2014 decision to go for Lean Six Sigma training offered locally by the Kenya Institute of Management (KIM) in collaboration with Institute of Lean Six Sigma Professionals. “We have attained a faster turnaround time in most of our services. Our account opening now takes three days from one month,” says Gachie.
LSS is a methodology that relies on a collaborative team effort to improve performance by systematically removing waste and improving business efficiency. Its management approach to business performance improvement aims at enhancing speed, efficiency and taking waste out of a business process. In the LSS certification, one begins with White Belt, Yellow Belt then Green Belt followed by Black Belt and ultimately a Master Black Belt.
Gachie says the LSS training has seen the bank adopt a document management system, which allows files to flow from branches to the head office electronically. In actualising LSS, NBK trained 34 of its employees who were certified with LSS Yellow Belt. As a result, the bank has seen a reduction in waste across all its processes.
Five stages of LSS
The LSS method helps financial institutions improve operational efficiency and its implementation processes go through five distinct stages including: planning, deployment, implementation, expansion and sustaining. Each of the five phases has a set of prerequisites for success before advancement to the next. “We used to purchase inventory in bulk and distribute to all branches, which meant having to store and transport a lot of materials that we did not need to use immediately. Today, we purchase what we need at the right time and place to eliminate delays, storage and transportation costs,” he says.
According to the operations director, the bank no longer transports physical documents from branches to the headquarters but rather scans and sends them to the headquarters via Internet for scrutiny and approval. This saves on time and customers do not have to wait long for feedback.
In addition, the bank has improved on scrutiny and signing of documents. In discouraging bulk processing, documents now move in a single flow to ensure no officer sits idle while waiting for a colleague to complete signing a bunch of documents. The bulk flow strategy means that the last person in the chain has been idle and is thus forced to work on many documents within a short time, which creates opportunities for mistakes and burnout.
The production and processing of documents is now done on customer request, as opposed to the past where documents such as cheques and debit cards were produced in bulk. This new strategy offers an opportunity to spend only on what is required without the possibility of tying down money on materials that are not needed in the short term. “Every time there is a waste or defective document, service or product, we do a root cause analysis to ensure the mistake is never repeated,” explains Gachie. He notes that bad quality products should be detected internally before it is released to the customer. Errors that have been largely eliminated following the LSS training include wrongly spelled names, wrong addresses, unprocessed documents due to misplacement and other errors that can render a document defective.
Gachie observes that LSS level of operational excellence is determined through self-assessment and counterchecking by external assessors. “In April 2015, KIM in conjunction with the Institute of Lean Six Sigma from UK, trained and certified our top executives. Training the senior management will help us cascade the best practices across the bank,” he says.
Lean staff and technology
Most organisations rarely think about the sitting arrangement of their employees yet, as per the LSS formula, it matters since it contributes to improving efficiency through cutting down on movement, which in turn saves time. At NBK, staff who work together sit in cellular format to eliminate unnecessary movement.
Gachie says the adoption of LSS has seen the bank go lean on staff costs. From about 2,000 employees in 2012, the bank now has 1,400 and its profits have grown by 45 per cent over the last two years. The extra employees were facilitated to retire voluntarily as the bank sought to trim its workforce and enhance efficiency.
Furthermore, the bank has increasingly moved its service to the internet meaning customers do not have to visit the bank to access basic services and documents. “Our customers can now access their statements on the digital self-service platform created by the bank. This has eased pressure and increased turnaround time. Additionally, salary processing time has reduced from eight hours to a few minutes since we have automated the process. This means less workforce but increased efficiency,” he explains.
The thinking behind LSS is running operations at the lowest cost, with greater reliability, speed, superior ability to change and continuous improvement. These are some of the pillars in the development of operations strategy in organisations that seek to survive in this competitive environment.
Gachie says the key components to the success of implementing LSS are related to the commitment of top management, supporting infrastructure and training. In realising this, NBK has an operational procedures manual which is updated every year to reflect best practices.
“LSS has helped us demystify processes. We have standardised the way we do business as we seek to continually improve and eliminate waste. Our branches are no longer operational points but service points. Staff at the branches are now financial consultants,” says Gachie.
The director of operations adds that before the implementation of LSS, the concept looked like a myth but currently staff are driving the sigma quality. He notes that with LSS, NBK aspires to identify and eliminate the causes of defects and errors in business processes by concentrating on activities that are relevant to its clients.