Lab: Identify Inefficiencies and Improvement Opportunities in an Existing Process
Estimated time: 30 minutes
Learning objectives
After completing this lab, you will be able to:
Analyze an existing system
Identify the inefficiencies in the existing system
Recommend improvement opportunities in the system
Identify metrics to help you validate your solution
Welcome to the lab on identifying improvement opportunities in the loan application process of a digital bank!
Exercise: Identify inefficiencies and improvement opportunities in the loan application process of a digital bank
You are tasked with analyzing and improving the process of loan applications at a digital bank. The current process involves several steps from application submission to fund disbursement. Your goal is to identify potential improvements in the existing system and identify metrics that can be used to validate the process.
Software used for this lab
We recommend using Microsoft's “Word for the Web,” one of the most used online word-processing software applications worldwide. To access this application, you will need to sign up for a free Microsoft 365 account. For instructions on how to sign up for a free account, click here. For step-by-step guidance on getting started with Word Online, click here. You can alternatively use any word-processing software or text editor for this exercise.
Template to use
If you're using Microsoft Word, you can download the Identify improvement opportunities in an existing process template.docx. Right-click the link and download the file. You can use the template to perform the tasks outlined in the lab.
If you're using any other word-processing software, you can download the PDF format. Right-click the link to open the PDF in a new tab.
Let's begin.
Instructions
Task 1: Review the current process
Review the loan process steps, starting from application submission to fund disbursement. To perform this task, an analyst would typically talk to stakeholders (loan officers, customers) to gather insights. Here are the current steps. Note the steps in the template provided.
| Process steps | Description | |
|---|---|---|
| 1. | Application submission | Customers fill out an online form and submit it along with supporting documents. |
| 2. | Document verification | Submitted documents are verified by the staff manually. |
| 3. | Credit check | A credit check is performed after document verification to assess the applicant's creditworthiness. |
| 4. | Approval decision | Loan applications are reviewed by staff members. The loan application is either approved or rejected based on the findings. |
| 5. | Funds disbursement | If approved, funds are disbursed to the customer's account. |
Task 2: Identify inefficiencies and improvement opportunities in the existing system
To find inefficiencies in the existing system, answer the following questions.
What are the common delays in each step?
Are there any steps that could be automated?
How does customer feedback reflect on the process?
Challenges faced:
Identify at least two major bottlenecks that could occur in the current process.
Propose preliminary ideas for improvement.
Write your answers in the template provided.
| Process steps | Current process | Inefficiencies | Improvement opportunities |
|---|---|---|---|
| Application submission | |||
| Document verification | |||
| Credit check | |||
| Approval decision | |||
| Funds disbursement |
Hint
Use techniques like the five whys to drill down to root causes. See the appendix for the description and example of the use of this technique.
Task 3: Identify metrics to validate your solution
Quantify improvements: While suggesting improvements, you would estimate time savings in each step after implementing the proposed changes.
Validate your solution:
How will your changes affect customer satisfaction?
Identify the metrics you will use to measure success. Consider creating key performance indicators (KPIs) like average processing time and approval rate.
List the KPIs and their objectives in the template. An example is given below.
| Key performance indicators (KPIs) | Objectives | |
|---|---|---|
| 1. | Average processing time | Measure the time taken from application submission to funds disbursement. |
| 2. | ||
| 3. |
Next steps: Continuous improvement
Your model will require further refinements. You would be monitoring the outcome of the processes to make further improvements.
More questions to consider to further refine the system.
Bottleneck analysis: What specific data can you collect to identify bottlenecks in your process?
Stakeholder engagement: How would you involve stakeholders in refining your proposed model?
Technology integration: What technology solutions (for example, automation tools) could improve efficiency?
Summary
Congratulations on completing the hands-on lab on identifying inefficiencies and improvement opportunities in an existing system.
Here is an exemplar you can refer to for the solution. Right-click the link to open the PDF in a new tab. Please remember that the exemplar is just a point of view and not a definitive solution.
Appendix
The five whys technique
The five whys method is a problem-solving technique used to identify the root cause of an issue by asking “why” multiple times (typically five). This method helps to drill down into the underlying reasons for a problem rather than just addressing its symptoms.
Steps to use the five whys technique:
Identify the problem: Clearly define the problem you are facing.
Ask why: Ask why the problem occurs and write down the answer.
Repeat: For each subsequent answer, ask “why” again. Continue this process until you reach the root cause. Typically, this takes about five iterations, but it can vary depending on the complexity of the issue.
Document findings: Record each “why” and its corresponding answer to create a clear chain of reasoning.
Develop solutions: Once you identify the root cause, brainstorm solutions to address it effectively.
Example of five whys in action:
Problem: A customer complains that their loan application was not processed on time.
Why 1: Why was the loan application not processed on time?
- Answer: Because the documents were submitted late
Why 2: Why were the documents submitted late?
- Answer: Because the customer was unsure of what documents were needed
Why 3: Why was the customer unsure of what documents were needed?
- Answer: Because the application instructions were unclear
Why 4: Why were the application instructions unclear?
- Answer: Because they were not updated to reflect recent changes in documentation requirements
Why 5: Why were they not updated?
- Answer: Because there is no regular review process for updating application instructions.