Term Project Call Center Operations 1 Term Project

Term Project – Call Center Operations 1 Term Project – Call Center Operations SOM 686, Fall 2006 Darren Mitchell Hayden Gilbert Serge Suprun

Term Project – Call Center Operations Agenda 2 q q q q q Overview Call Center Statistics (October), Definitions & Forecast Process View of the Call Center Competencies, Architecture, Three Key Measures & Little’s Law Call Center Flow, Delays, Queues & Process Attributes Flow Rate-related Measures of Call Center Capacity Flow Time-related Measures of Customer Delay Inventory-related Measures of Customer Queues Performance Improvements & Managing Capacity

Term Project – Call Center Operations Overview 3 Time Warner Cable Los Angeles – Bought Adelphia – Exchanged properties with Comcast – Now provides cable, internet & telephone services to over 2 million customers. q Time Warner Advanced support is local – Teamed up with outsourced partner to provide basic support for all three products. q Basic support includes: billing, basic repair, changes to the accounts & general questions. q Outsourced partner provides basic support from 3 call center locations: USA, Canada & Argentina. q

Term Project – Call Center Operations Overview 4 q q q Call Center in Argentina supports English & Spanish-speaking customers. There are 36 agents employed in the center – 12 are Spanish only – 24 are bilingual On average, the call center handles 40, 000 calls per month. However, over last 2 months handled calls were 36. 5% over forecast. Service level suffered over past 2 months too – In October, only 32. 4% of calls were answered within appropriate time limit.

Term Project – Call Center Operations Call Center Statistics (October) and Definitions 5 DATE FCAST NCO % O/U FCAST ABA SVL% ABA% ASA (Seconds) Hold (seconds) Hand (seconds) 10/1/2006 952 1, 385 45. 5% 595 12. 9% 43. 0% 664 82 510 10/2/2006 1, 473 1, 877 27. 4% 560 14. 0% 29. 8% 481 90 500 10/3/2006 1, 362 1, 688 23. 9% 241 31. 8% 14. 3% 205 86 489 ************ ************ ************ ************ ************ ************ ************ ************ 10/30/2006 1, 473 2, 008 36. 3% 386 38. 1% 19. 2% 285 75 476 10/31/2006 1, 263 2, 237 77. 1% 238 46. 5% 10. 6% 156 73 447 41, 168 54, 494 32. 4% 11, 118 37. 7% 20. 4% 241 74 462 q q q NCO – number of calls offered ABA – number of calls abandoned; ABA% - percentage of calls abandoned SVL – service level ASA – average speed of answer Hand – average handle time

Term Project – Call Center Operations Forecast 6 Past 2 months, Argentina used naïve forecast: – (Based on the last year historical data) – Forecast didn’t take into the account recent product changes & integration projects – As a result October call volume was 32. 4% over forecast. q We are suggesting to use Moving average forecast. q Ex: q MA 103 = (A 10+ A 9+ A 8)/3, using last months data is (54, 494+56, 221+50, 221)/3=53, 636 q Therefore, F 11=53, 636. November forecast should be for 53, 636 calls. This would allow Argentina to staff appropriately.

Term Project – Call Center Operations Process View of the Call Center 7 Process Inputs q q q Outputs Inputs/Outputs – customers calling for service/customers completed the call Flow Units – customers Network of Activities and Buffers – answering customers’ calls Resources – customer service agents (CSA), phone automated system (PAS), etc. Information Structure – account management system, reference materials, etc.

Term Project – Call Center Operations Call Center Competencies and Architecture 8 4 Dimensions for measuring the competence of the call center: – Process Cost – Process Flow Time – Process Flexibility – Process Quality. q Argentina call center focuses on the low cost. – Call center provides high-quality Spanish support. q Argentina call center process architecture is defined by the types of resources (CSA, PAS, etc). – Call center falls somewhere along the spectrum between two extremes (flow shop and job shop). – Flow shop fits better, as call center uses specialized resources that perform limited tasks & produce large volumes with high precision and speed. q

Term Project – Call Center Operations Three Key Call Center Measures 9 Flow Time = Time Customer spends: – In automated phone system – Waiting in the queue for an agent – Talking to an agent. Ex: October Average PAS time is 46, Queue average waiting time is 32 & handle time is 462 seconds. T=540 seconds q Flow Rate = Number of customers that flow through a specific point in the call center process per unit of time. q Inventory = Total number of customers present within call center boundaries. Ex: Argentina call center is 24/7 & call patterns are very different. Therefore, to simplify calculations we will use I=27 customers q

Term Project – Call Center Operations Little’s Law 10 Throughput = Average number of customers that flow through the call center per unit of time. q Little’s Law - Average inventory (=) Throughput (x) Average flow time. – I=Rx. T q Ex: We identified: T = 540 seconds (9 min) I = 27 customers. Therefore, R = I/T R = 27/9 R = 3 customers/minute

Term Project – Call Center Operations Call Center Flow, Delays and Queues 11 Capacity Rp = c/Tp Customer Arrival Rate Throughput Ri Customer R = Min (Ri, Rp) Number: Ii + Ip = I Time: Ti + Tp = T In: Queue + Service =Process

Term Project – Call Center Operations Call Center Process Attributes 12 Inflow Rate Ri = Average rate of customer arrivals per unit time. – In the Argentinean call center, Ri = 5 customers/minute Processing Time Tp = Average time required by agent to process the customer. – Tp = 462 (agent) + 46 (PAS) = 508 seconds q c = Number of agents in the resource pool – c = 36 agents in Argentina q Process capacity (Rp) = Total processing rate at which customers are processed by agents in the resource pool. q – Rp = c/Tp or Rp = 36/8. 47 = 4. 25 customers/minute q Buffer capacity (K) = Maximum number of customers that can wait in queue. – K = 120 (there are 10 lines that can hold 12 each at any given time)

Term Project – Call Center Operations Flow Rate-related Measures of Call Center Capacity 13 Throughput rate (R) = Average rate at which customers flow through the call center process – R = min (Ri, Rp) – In our case, Rp is smaller, so R = Rp = 4. 25 q Capacity utilization (ρ) = Average fraction of the resource pool capacity that is occupied in processing customers – ρ = R/Rp – In our case, R = Rp and ρ = 1 q » Our resource pool is constantly busy processing customers. q Safety capacity (Rs) = Excess processing capacity available to handle the customers inflows. – Rs = Rp – Ri – In our case, Rs = 4. 25 – 5 = -0. 75 » All the available capacity is busy processing arrivals.

Term Project – Call Center Operations Flow Time-related Measures of Customer Delay 14 Average waiting time (Ti) = Time that a customer spends in queue. – Ti = 32 seconds. q Average theoretical time = Average processing time of a customer. – Tp = 462 seconds + 46 seconds (automated system) = 508 seconds q Average flow time in the process (T) = Average time that a customer spends waiting in queue & being served – T = Ti + Tp or T – 508 + 32 = 540 seconds or 9 minutes q Flow time efficiency = Proportion of time that a customer spends being served rather than waiting in queue – Tp / T =. 94 q

Term Project – Call Center Operations Inventory-related Measures of Customer Queues 15 q Average queue length = Average number of customers waiting for service – Ii = R x T i – Ii = 4. 25 x 0. 53 = 2. 25 customers waiting for service q Average number of customers in service = Average in-process inventory – Ip = R x T p – Ip = 4. 25 x 8. 47 = 35. 99 customers in service q Average total number of customers in the process – I = I i + Ip – I = 2. 25 + 35. 99 = 38. 24 customers in the process

Term Project – Call Center Operations Call Center Flow, Delays and Queues 16 Capacity Rp = c/Tp Arrival Rate Throughput Customer 5 customers/min Customer 4. 25 customers/min Number: 2. 25 + 35. 99 = 38. 24 Time: 508 + 32 = 540 seconds In: Queue + Service = Process

Term Project – Call Center Operations Performance Improvements 17 The following levers improved process performance: q Decrease variability in customer interarrival & processing times. q Decrease capacity utilization (or increase safety capacity) either by – Decreasing the arrival rate or increasing the unit processing rate – Increasing the number of servers q Synchronize the available capacity with demand.

Term Project – Call Center Operations Managing Capacity 18 q Capacity utilization (ρ = Ri/Rp ) can be reduced by increasing average processing rate (Rp) q In order to increase processing rate (Rp = c/Tp) we recommended decreasing average processing time (Tp) q To achieve a decrease in processing time: – Identified that billing & escalated calls took longer to handle in this call center vs. similar centers. – Thus recommended & implemented 2 separate hour training segments » Billing prorates explanation » How to handle escalated calls

Term Project – Call Center Operations Call Center Statistics (November) 19 DATE FCAST NCO % O/U FCAST ABA SVL% ABA% ASA Hold Hand 11/1/2006 1, 973 2, 093 6. 08% 268 47. 3% 12. 8% 167 66 449 11/2/2006 1, 986 2, 022 1. 81% 266 54. 7% 13. 2% 152 62 425 ************ ************ ************ ************ ************ ************ ************ ************ 11/25/2006 1, 368 1, 513 10. 60% 279 56. 5% 18. 4% 139 48 370 45, 381 47, 832 5. 40% 7, 080 52. 1% 14. 8% 153 58 410 Processing time decreased to 410 seconds – Tp = 410+46 = 456 seconds or 7. 6 minutes q Process capacity Rp = c/Tp or Rp = 36/456 = 4. 74 customers/minute q Result: Capacity Utilization ρ = Ri/Rp or 5/4. 74 = 1. 06 q

Term Project – Call Center Operations 20