Process Improvement

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How do you calculate "Cost per click"?

In the process we are reviewing, our claims adjusters use computers and enter data and notes in certain fields. Sometimes they enter notes duplicating data already existing in other fields.

We are looking for your ideas on how to calculate costs as it relates to computer typing and processing data on a computer? Is it as easy as salary divided by time study? Or are there better ways you have used or know about? Thanks! and Happy New Year!
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Happy New Year Marc.

Not sure I fully understand what exactly you're looking for. Can you elaborate ? Thanks !

Thanks Rami. Here's an example maybe will help: ultimately our folks type a lot of non-value added notes and enter data in many non-value added fields. When we recommend claim reps stop typing notes or stop putting data into non-value added fields inside the claims handling system, we'd like to be able to communicate a financial impact (savings, for example - by not typing XYZ, we save time and money).

I see your point now. It is honestly not a straight forward formula as everyone for example types in different speeds, different no. of letters per minute and so.

Maybe you can take the average no of letters per minute and go from there.

Do you think this has significant cost impact ? You might spend time calculating the cost impact and it will cost you more money. Just thinking loudly.

It would be interesting to see what our fellow colleagues will have to say to this.

This is what I've done in one of my previous projects:

1) Create a standard work (SW) document (sample format below)
step 1- log into system - 2 minutes- non value added (nva)
step 2- enter name - 1 minutes- value added (VA)
step 3- enter comments - 3 minutes - (nva)

2) basically the SW document should have:
task number
task description
task cycle time
categorization if task is value added or non value added

the cycle time can be captured 4 or 5 times per week based on gemba walks, so basically one person literally sits with a stopwatch next to the employee and measures the time taken for each task. If you can use a screen recorder it will make the job easier. Also, it's good to have a representative sample (your best employee, newest employee, tenured employee, etc.)

3) Once you have a month's data, you can see which tasks are taking up most time (also $) and what % of your time (or $) is spent on NVA tasks. That will tell you which areas to target for process improvements.

4) Once you have made certain improvements, update the SW document, since it should reflect the most efficient way to perform a piece of work at any given point in time. Repeat the exercise of capturing cycle time by task and again determine which areas to focus on, and basically the process will continue...


Who determines "non-value added notes"? Some rep's notes not valuable to one administrator may be valuable to another.

But if you need to calculate it, perhaps calculate the average time it takes to fill in all the fields (say 30 minutes), divide by number of fields to get an average per field (say 1 minute per field if there are 30 fields), multiply this by the number of non-value fields (say 5 fields thus 5 minutes), then multiply this by the reps salary or average reps salary per hours (say 5/60 minutes is 0.83 x $20 reps salary per hour = $1.67), and if you want to go really wild, replace number of fields with average number of characters per field to get cost per character.

Wouldn't it be easier to eliminate fields that are not adding value or are duplicated elsewhere in your claims system? Unless your adjuster’s salary is astronomical, the actual cost of inefficiently typing notes will work out to be cents and not worth the effort to enforce.

You guys are great thank you very much. I wish we could just eliminate fields! haha. Totally not an option. These are all good ideas. We've done the gemba already in the past but on a previous claims system. I guess tried and true still works for this too. I will try Sante's idea as well - could get a baseline. And yes, Ben, this is going to be just cents per. The organization that we support is newer to this type of strategic/project relationship - just want to offer them some quantification versus opinions that we are used to (I grew up in claims, too).

Thanks all! Good collaboration I appreciate it.

Marc, I would suggest using a tool such as Bizagi. You will model the process in the tool and then for each action you will capture the average duration, associated cost and iterations.

Task 1: Login
Duration: 15sec
Cost: $0.50
Iterations: 1

Task 2: Capture Notes
Duration: 120sec
Cost: $2.50
Iterations: 5

Obviously the cost is calculated from a unit cost such as hourly rate and the iterations could be the number of times this task will be initiated within a process cycle. If you then use a tool to execute the process it will tell you what the cost of each task is. If the process is model well you will have factors such as wait time to consider as well, the parameter I use in the example is just an indication and you may just probability instead of iterations to indicate how many time the task is executed i.e. 65% of the time.

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