Telstra / TeleTech Value Chain removes $5M in costs per annum

Telstra Customer Care (a business unit in Telstra Retail) was the Managing Participant in a value chain improvement project that focused on removing costs and improving the technical support for Telstra BigPond internet users. Telstra outsources this technical support to TeleTech International, which operates call centres all over the world. TeleTech has a great reputation for service, quality and efficiency with their clients — but as with all Call Centres, they are under unrelenting pressure to improve service and reduce costs.

Telstra asked Teletech to help them substantially reduce the overall cost of technical support in their operations. This level of improvement could not be done alone, so Telstra and Teletech decided to adopt Alitek’s Value Chain Improvement processes to kick-start a major cost removal exercise.

The strategic alliance fostered greater understanding between Teletech’s and Telstra’s staff. In some cases it involved exchange of staff members to promote the transfer of knowledge. It was vital to get some early wins, so small groups of people from both companies worked together to identify the few key opportunities where some major savings could be made in the short term.

Within two months the teams had identified an initial $300,000/month of cost savings, while maintaining customer satisfaction.

These “quick wins” gave the teams the confidence to look into more significant cost removal initiatives.

By the end of the 12 month value chain project, Telstra and Teletech had removed approximately $5,000,000 in costs, returning them 30 times the cost of the project.

Alitek’s Value Chain Improvement process is all about Cost Removal and Innovation, rather than simply cost cutting. Many cost cutting exercises fail because:

• by cutting costs they also cut service, so customer and staff satisfaction suffer
• “cost cutting” often only means “cost transfer”—individual companies try to benefit by aggressive negotiations with customers or suppliers, so that in the long run no one benefits.

In contrast, Alitek’s Value Chain processes remove costs completely. Opportunities for cost removal are identified by:

• treating the value chain as the competitive entity, rather than the individual companies in the value chain, and seeking to optimise the value criteria of the end-customer of the chain.
• setting up cross-company teams to identify opportunities for cost savings that had never been considered before. eg. by sharing data or knowledge that will allow all companies to improve their performance.

How can I find out more about applying the Value Chain Improvement process to my business?

Email The Simpler Business Institute to discuss how you can apply the Value Chain Improvement process to your business.

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