IBM Credit examined the process and changed it so that each credit request was logged into a computer system so that each department could record an application’s status as soon as it was completed and sent it to the next department.
In this way, sales representatives could call the credit office and quickly learn the status of each application.
IBM used some sophisticated management science queuing theory analysis to balance workloads and staff across the different departments so that no applications would be overloaded.
They also introduced performance standards for each department (e.g., the pricing decision had to be completed within one day after that department received an application).
However, process times got worse, even though each department was achieving almost 100 percent compliance on its performance goals.
After some investigation, managers found that when people got busy, they conveniently found errors that forced them to return the credit request to the previous department for correction, thereby removing it from their time measurements.