Inventory Management Concepts
Inventory management and supply chain management are the backbone of any business operations. With the development of technology and availability of process driven software applications, inventory management has undergone revolutionary changes. In the last decade or so we have seen adaptation of enhanced customer service concept on the part of the manufacturers agreeing to manage […]
SIPOC Methodology – A High-Level Process Map
The SIPOC methodology is one of the most useful concepts in the hand of a BPM expert. The idea behind the SIPOC methodology is to view each process as a different organization in itself. Each process therefore has its own suppliers, inputs and corresponding customers and outputs. The aggregation of all these processes is the […]
Importance of Project Management for Organizations
Project management is the art of managing the project and its deliverables with a view to produce finished products or service. There are many ways in which a project can be carried out and the way in which it is executed is project management. Project management includes: identifying requirements, establishing clear and achievable objectives, balancing […]
Six Sigma: Deliverables at the end of the Define Phase
Well Defined Scope of the Project: A well-defined scope of the project is perhaps the most important deliverable of the Define phase. Scope document goes a long way in finding the solution. A lot of organizations resources have been wasted and no substantial results have been obtained because of the failure to correctly scope a […]
Tips for Writing Effective Problem and Goals Statement
Although the Six Sigma process has tried to make the process of developing problem and goal statements into a science, however in reality it still remains an art. This combined with the fact that goal and problem statements go a long way into the execution of the project make it important to understand what are […]
As children, we have always had to prove to our teachers or our parents that we have been working. The homework book was proof that we have spent our time productively and would often calm down angry parents and teachers. It seems like the same principles also apply in corporate life! Harvard Business Review has come up with the latest article on the benefits of operational transparency. Ever since this article has come out, operational transparency has become the latest buzzword in the corporate world. In this article, we will have a closer look at what operational transparency is. We will try to understand how it can be implemented and what its limitations are.
Harvard Business Review has used complex numbers to prove a phenomenon that many of us know intuitively. For instance, it is a known fact that people hate to wait. This is exactly what is the gist of operational transparency. Operational transparency can be defined as a situation wherein the customer knows exactly what stage of service delivery they are on.
For instance, when we order food in a restaurant, for 10 minutes, we don’t really know what is happening. Sometimes we wonder whether our order is being worked upon at all. Many times we may feel that the order was created in a rush, i.e. due process was not followed, and hence the quality is inferior. To counter this problem, many restaurants have started placing a glass façade in front of their kitchens. This allows the customers to see their order being prepared.
The Harvard study just concluded that if a customer was made to wait the same amount of time in both restaurants, they would be less satisfied when they don’t have the information about their order. On the other hand, when they can see their order being prepared, they are willing to wait longer since they can see that progress is actually being made and work is being done on their order.
In the previous century, businesses used to be transparent because of their small scale. However, ever since mass-production has become rampant, there is a huge gap between the producers and the consumers. This has created dehumanization of the entire production experience.
The Harvard study conducted research to find out that both the employee and the consumer were happier when they were interacting face to face.
Operational transparency has a huge impact on the satisfaction levels of the customers as well as employees.
This is the reason why companies like Amazon try to provide transparency to their customers. An order from Amazon does not magically fallout from the sky. Instead, it goes through several stages.
Amazon has created a digital map of each of these stages and customers are kept aware of the stage that their order is in. Since the customers know exactly when their order has been picked, packed or shipped, they are not restless or eager to receive their product.
The application of operational transparency has to be customized based on the industry. For instance, we just provided examples of the restaurant industry and the e-commerce portals where the concept has been successfully deployed.
The software development industry is another place where this model is being exhaustively used. Under the traditional development model, the customers would give their requirements to the development team and then wouldn’t hear from them until the product was ready for testing.
If the development team did face any challenges or delays, it was up to them to fix the problem and deliver on schedule. As far as the customers were concerned, the entire development process was a black box. This is no longer the case.
All across the world, software companies are ensuring that their customers remain more involved in the development process. This is because once they are a part of the journey, they are more empathetic towards the challenges which were faced by the development team and therefore reported higher rates of satisfaction.
The theory of operational transparency is fundamentally changing the way many business entities operate. However, there are limits to the application of this theory. For instance, it is a known fact that just like people don’t like to wait, no one likes if someone is watching over their shoulder all the time either! Hence, companies need to make sure that they share information without exerting their employees or making them uncomfortable.
Also, increased operational transparency means that customers also tend to get dissatisfied sooner. Hence, if there is an incompetent employee who is dealing with the customers, they will quickly understand that they are receiving poor service. On the other hand, the service provider may take a long time to find the root cause and fix the problem.
The bottom line is that operational transparency needs to be included in day to day operations. The inclusion of operational transparency does not need an overhaul of the entire business. It can be accomplished quite easily without disturbing the business operations.
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