SEEP PLP: Maximizing Efficiency of Human and Physical Resources Introduction to Process Mapping

Transcription

1 SEEP PLP: Maximizing Efficiency of Human and Physical Resources Introduction to Process Mapping October 28, 2004 Caitlin Baron

2 Few institutions have the occasion to examine their processes in detail, from start to finish 2

3 Both of the institutions here today have analyzed the way they work in detail using process mapping. 3

4 Agenda Overview of process mapping Process Mapping How To Let s try this out 4

5 What is process mapping? A process map, or flow chart, is: Visual representation of a process that can illustrate: What activities are completed, by whom, in what sequence Hand-offs between departments or individuals Internal and external operational boundaries (swim lanes) Why map a process? Diagnosis and Improvement. Determine the cause of a problem or condition. Provide a critical assessment of what really happens within an institution.* Requirement. Meet regulator or industry standards, such as ISO certification. Training and Communication. Serve as component of training or operations manual. Process mapping can be constructed both informally and formally Informal method is best for getting started and securing buy-in Formal method ensures rigor and accuracy * Process mapping may also be a first step in other diagnostic analyses such as Activity Based Costing. 5

6 Sample Process Map for an Individual Lending Process 6

7 Close up on the previous process map Process from the moment the client arrives in the branch of the MFI to the time when the loan officer visits her home and business for the loan assessment Brief interview with Client to verify client eligibility 1 R Client meets minimum qualification criteria Yes 90% 2 10% No (1) Explanation of reasons for ineligibility 3 R Provision of information on the MFI s procedures and loan product 4 FO Completion and processing of preliminary application 5 FO/C Ref: LoInAp Initial application for new loans Verification of C s credit record through credit risk agencies 6 AO Visit to home and business to gather socioeconomic data 7 LO Ref: LoApNe Application for new loans 7

8 Any institution s processes are impacted by internal and external forces All work is part of a process Internal Forces External Forces All processes evolve some what over time Organizations can grow beyond their existing processes All processes take place in a competitive context What began as a good process may erode over time What was the right process for the organization is no longer What was a good enough process may no longer be sufficient to compete and win Probably few people have ever looked at the process in detail from start to finish Source: Adapted from Citibank Quality Training for Micro Finance Institutions, 2003; WWB analysis. 8

9 Example of improvements gained from process mapping at an MFI in East Africa: Equity Building Society Improvements in Cycle Time Procedure Before Process Mapping After Process Mapping Account opening 12.6 min min. Account Opening error rate 99.5% 22% Cash transaction (Cashier) 1.96 min min. Cash transaction (Total time) 7.14 min min. Issuing of Magnetic Cards 1-2 months 2 weeks Source: MicroSave work with Equity Building Society. 10

10 Agenda Overview of process mapping Process Mapping How To Let s try this out 11

11 Process mapping is a part of continuous improvement Continuous process improvement -- a deeply rooted capability for continuously defining, analyzing, innovating and improving process both inside the organization, and potentially beyond. Measure Implement Changes Identify gaps Analyze Efficiency & Risk Define process Map process 12

12 3. Map Processes: Gather data What methodologies can you implement to gather the data? Self contained knowledge: This is probably the easiest and quickest way to create a map. Its use however can be limited by the amount of knowledge possessed by the individual and can be substituted through observation of the process and review of manuals or policies and procedures. Internal reports and MIS data: Internal audit reports and performance data (by product, by branch, etc.) are important sources of information. Informational interviews One on one interviews with persons involved in the process both directly and indirectly will help in creating a draft of the process. This again can be verified through observation as well as review by an individual who is knowledgeable about the process. Group interviews can include a sample of individuals or all of the relevant individuals involved in the process. The goal is to map the process together with them. This process works well in the presence of a skilled facilitator. Observation: This is an important complement to informational interviews 16

13 Process maps or flow charts are composed of a relatively standardized set of symbols Standardized symbols enable the map to clearly, visually display what happens in a given process. The most common symbols include: = Start or stop point = Processing step or task = Decision point or checkpoint = Queue or wait point = Form or documentation However = Information sent to MIS Keep the overall number of different symbols in a map as limited as possible to prevent confusion Avoid being hampered by nomenclature. Choose what works best for your institution. 17

14 Constructing process maps: Tips of the trade There are range of different ways to do process mapping. In general, you should pick the level of rigor and detail that is appropriate for your purposes. For this training, we will employ a fairly high level of rigor. Develop draft maps early and revise often. Post-it Notes may be useful in the first iteration. Beware of confusing the ideal process, as detailed in manuals, with the real process, as found in the field. Expect processes to vary on the ground. Time to construct maps will depend primarily on 1) the number of processes you want to map, 2) the degree of variation in processes in the institution, 3) the strength of secondary materials such as MIS data and manuals Ultimately, process maps are most useful when you are able to benchmark your processes against those of competitors or international best practice. Investigate ways to use network relationships to benchmark processes. 19

15 Analyzing the process maps Analyze process for non-value added steps. In analyzing process maps, look for Process inefficiencies such as delays, rework, rejects, etc. Wide separation of decisions from work activity Frequently repeated steps Shared responsibility among several people Excessive control points such as numerous layers of approval Questions to ask: What value does this activity add? Which stakeholder benefits? Does the client care enough to pay for it? Actions that can be taken Combined Run in parallel rather than serial Completed faster or with reduced labor costs through automation Eliminated 20

16 Agenda Overview of process mapping Process Mapping How To Let s try this out 22

17 Exercise: Analyzing Process Maps Purpose To practice analyzing process maps and making choices based on the results of mapping Instructions Take five minutes to review the Sample Group Lending process map handout. Consider the strengths and weaknesses of the process. What aspects do you consider efficient? Why? What aspects do you consider inefficient? Why? Discuss in plenary. 23

18 Internal Processes Activity Handout: Sample Group Lending Process Map Simplified process map from group formation to loan disbursement for institution employing a group lending methodology. Prior Activities Area Selection to locate Branch Projection Meeting Group Formation and Training Loan Application Loan Disbursement LO goes to clients homes to recruit, assess, explain Between 1 and 3 months Week 1 After GRT Group formed Training and Memorization of Rules Group Test Center mtg 1 week of mandatory savings Week 2 Week 3-4 Week 5-6 Week 7-8 Group proposes loanee to center LO visits houses 2 members apply for loan 1st pair of loans disbursed 2 more members apply 2nd pair of loans disbursed last member applies last member receives loan HO decides where to locate branch LO fills out application LO brings application form to Branch Loans disbursed at branch Projection meeting held by HO staff Group Test given by HO staff or other BM BM signs and sends to HO Scoring Several unit mgrs approve, send back to BM

19 By examining the levels of approval that are necessary for each loan, we can evaluate the efficiency of this institution Loan applications go through 6 levels for approval from the group up across functional areas in the Head Office General Body Executive Committee Executive Director s Office Finance Unit Internal Audit Monitoring HRD Health Micro Enterprise Information Tech Women in Development Zonal Manager Branch Manager Loan Officer Center 5-member group 25

20 Time When compared with a local competitor, this institution does not fair well Our Institution Competitor While loans at our institution go through 6 levels for approval; Disbursement at branch by BM Zonal Manager approves Finance Manager approves there are only 3 at a competing institution. The time taken from HO approves HO staff scores applicant Disbursement application to disbursement for 5 members is about 6-7 weeks at our institution and only 1 Branch approves LO reviews and approves Center approves loan applicants BM reviews and approves LO reviews and approves 20-member group approves week at the competitor. 5-member group proposes 2 members 5 members apply for loan 26