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Customer Service

Error Management in Business Process Management Improves Customer Service and the Bottom Line

  Article published in DM Direct Special Report
April 25, 2006 Issue
 
  By Mike Nejad

Many companies are struggling to improve their customer service because they are too busy grappling with errors that are occurring every day within their business processes.

A study of more than100 companies in the UK conducted by Vanson Bourne found that many are heading towards a catalog of costly and unmanaged business errors.1

Even with large investments of time, effort and technology, exceptions can occur frequently in the modern enterprise due to the constantly changing business environment. Human errors can be reduced but not eliminated.

Business errors can take many forms in different markets, but they are generated when key transactions, such as supply chain transactions or new customers, cannot be completed by core processing systems. For example, if a new order has an incorrect ZIP code error listed on behalf of a customer, the various systems involved won't be able to resolve that discrepancy and human intervention will then be required to find the correct address.

The Vanson Bourne research confirmed that the key driver for error management is customer satisfaction. Forty percent believed that the customers felt the impact first and that compliance was only a minor issue in comparison.

Despite business errors being directly linked to customer satisfaction and revenue loss, the study found that the errors are hardly ever seen as a board-level concern and are often dealt with using costly, people-intensive processes. Over half of all respondents felt that handling business errors was the responsibility of the business line manager, with just 10 percent believing that it was part of the financial director's role, confirming that the cost implications and importance of managing exceptions are being overlooked at board level.

Handling errors manually is an expensive exercise and costs enterprise companies millions of dollars every year. Yet over two thirds surveyed still take a manual approach to managing exceptions, with the worst culprits being 54 percent of retail and 52 percent of manufacturing companies that made no investment to handle exceptions at all.

Only 30 percent of companies surveyed actually considered error management to be a major problem, indicating that the true cost of managing the errors in many companies is hidden and therefore ignored. In many cases, there are so many different processes and departments within an organization that an overall picture of where and when business errors occur isn't possible; therefore, the cost of handling errors manually is hidden and no responsibility is taken to resolve them.

Specific applications for managing business process errors can identify errors in real time, allowing automatic and manual action to be taken in real time before the customer is adversely affected. Automatic handlers and extensive notification rules are used to try and resolve the error, which are then routed to the right people for resolution if required.

Although research indicates that the large companies are better at understanding the cost implications of handling errors manually, I would encourage any company, irrespective of size, to investigate how much time is spent dealing with errors in their business processes. They will then see for themselves the difference a specific and automated application can make to their bottom line.

Eight Steps to a Successful Error-Handling Framework

1. Understand that errors are a natural product of business change and improvement.

2. Adopt a holisic view of error handling. Errors must be visible at a cross-application/cross-process/cross-partner level.

3. Manage the entire error lifecycle. Good error management captures errors when they arise and routes them to the most efficient resolution path.

4. Where exceptions arise, understand and eliminate the root cause and automate where possible.

5. Separate code and content in the error manager to ease the addition of errors and resolution rules as the business changes.

6. Use a service-oriented architecture or modular approach, allowing the reuse of existing functionality as the error management process grows across processes, systems and partners.

7. Ensure that errors are visible in real time and that a feedback loop is in place to enable adaptive learning based on performance and opportunities for continual improvement.

8. Implement error management within a process or initiative and then expand systematic error management across the enterprise and to partners.

Reference:

1. Vanson Bourne. "Vitria OmniBoss Report." UK, October 31, 2005.

...............................................................................

For more information on related topics visit the following related portals...
Business Intelligence (BI), Business Process Management (BPM), CRM, Risk Management, ROI and Supply Chain.

Mike Nejad has over 20 years of experience in developing and marketing manufacturing and supply chain solutions and services. He has held various management positions at Vitria, Oracle, Computer Associates and more. He can be reached at mnejad@vitria.com.



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