Abstract. Applying Value Management to organize and improve the Claim Management activities of a company

Transcription

1 Abstract Applying Value Management to organize and improve the Claim Management activities of a company by Dipl. rer. oec. Axel Peter Ried and Dipl. Kfm. Christian Ried Many companies are losing a tremendous amount of money because their Claim Management is not organized the right way. The target of Claim Management is to prevent any losses of a company which may occur because the machine, the building or something else is not completed on time as defined in the contract. Also functions may not work or will be missing, so that the client has the option to claim for losses, penalties etc. In order to prevent the undesired and in fact unnecessary problems, VM is an excellent tool: to improve the effectiveness of the Claim Management and more important to find ways which prevent that any customer will be able to claim at all because there are no reasons for claims anymore VM makes sure that by defining the desired functions at the very beginning of a project and by defining comprehensive project contracts all agreed targets will be achieved completely. Doing this consequently by using the VM techniques makes sure that there will be no client claims any more in the future. The authors of this paper have completed very many projects of this kind and will present their findings and experience.

2 Applying Value Management to organize and improve the Claim Management activities of a company by Dipl. rer. oec. Axel Peter Ried and Dipl. Kfm. Christian Ried presented at the SAVE Value Summit 2014 June 23 25, 2014 Oak Brook, IL, USA Copyright by RMM Ried Management Methods, Hamburg, Germany, 2013

3 VM job plan including Change Management 1. Information Phase / definition and analysis of the present situation 2. Target Definition Phase what to achieve 3. Development of solutions / Creativity Phase 4. Solution assessment and definition of the new process steps 5. Implementation of solutions / Implementation Control Implementation of Change Management

4 1. Information Phase / definition and analysis of the present situation Our customer is a leading worldwide acting German special machine tool company (very much customized). The company is in business for over 50 years and makes very good profit (average profit: 15% before tax) despite the claim problems. Average client claims value per year: 6 8 Mio Euro The present process to acquire requests for quotations to prepare offers to negotiate contracts to define contract details and conditions has been applied for more than 10 years. Everybody in the company was very much familiar with the process steps and somehow liked the way it was. Knowing this at the beginning of this VM-project already showed that it would be not so easy to implement new processes successfully. Change Management would have to become a substantial part of the program.

5 Main results of the present situation analysis main customers: automotive OEMs and 1 st tier suppliers very customized machines with very challenging requirements sales department is very active, very well structured and very successful average contract value: 4 8 Mio Euro very difficult procedures to finally substantialize the contracts very often functions, specifications and customer requirements not sufficiently defined everybody is happy when contracts will be signed by the clients of our customer, despite the fact that many items are not finalized the way they should conditions for pre-checks and final checks of the special purpose machines very often not available or poorly defined extremely short delivery times, even if some functions are not yet working or specifications are not yet met consequence: machines will be delivered to the clients field just to meet the delivery date this means 2-4 machine experts have to go to and stay with the customers for periods of 4-8 weeks until the machines can meet the customer checks and the contract conditions completely sales managers and engineers are somehow reluctant (or afraid) to clear all requirements consequently and detailed with the customer before the contracts are signed changes of customer requirements, which come in after the contract is closed, will be accepted very often free of charge and without schedule changes as machines do not pass the final checks by the customers, penalties have to be paid the calculated profit margin cannot be achieved however, the market likes the special purpose machines of our client, because once the machines are finally running the efficiency is just outstanding and extremely competitive

6 2. Target Definition Phase what to achieve Change the existing procedure and process steps o of acquisition o of preparing offers o of contract negotiations o of defining contract details and conditions Prevent client claims at all by consequently following the new procedure and process steps. Reduce claims to < 1% of total sales volume 3. Development of solutions / Creativity Phase The team developed 38 different ideas including 15 ideas how to integrate the changes in the company effectively. 4. Solution assessment and definition of the new process steps It was decided to apply completely new procedures and process steps, including new forms which will have to be used obligatorily. 5. Implementation of Solutions / Implementation Control - Implementation of Change Management The top management of our client decided to start the new procedure right away. All involved managers of the different departments were thoroughly trained in the new process including very intensive discussions to eliminate all negative arguments. As it was apparent that the new process was causing a complete change of everything that was practiced for the last 10 years, a special Change Management training was designed. Everybody had to participate. Specific tests were organized to check if the changes had been understood and had been accepted individually. The Change Management training included two essential elements: Understanding the logic of change on a general level, and in particular the fact that implementing something new (in this case a new project approach) will always result in letting something go (in this case the very much appreciated practice of not confronting the client with open issues). Understanding the own inner attitude and style of communication when having to deliver difficult messages and learning how to this in a way that the client will fell respected and appreciated but in the same time challenged with open issues that have to be clarified. While the first element of the change approach was relatively easy to accept by everybody (it s just another theory), the second part was the harder. Here people had to reflect their own conflict style (what is my inner natural tendency to do this). They had to realize that in fact they avoided entering difficult conversations, already during the sales phase, but also in the project and delivery phase and this created the basis for many of the claims in the past. Consequently people had to decide for themselves to leave their comfort zone and enter into the difficult field of confronting others respectfully. This was done by a mixed training approach, using some easy personality test (Blake/Mouton: Conflict Style Inventory), theory impulses but most importantly active lab experiments with colleagues. Participants trained how to find a way of confronting others that fitted to their personal style without feeling too much stress when delivering difficult messages.

7 Illustration 1: Basic scheme for difficult conversations As a result, people felt a lot of relief because on one side they understood what created their stress and how, and on the other side they identified ways to bring up their topics with the clients so that they could resolve difficult issues of the projects, avoiding further claim risks. During the first year (2013) of the consequent application of the new process the client claims were reduced from 7 Mio Euro to 0,5 Mio Euro. Thank you very much for your attention.