Inaccurate Cycle Billing Records in OMD - Northeast Black Belt: Jim Palmer Division: Operations/Northeast BU – Steering Comm Presentation

2 Agenda n Original Project Charter & Final Updated Benefits & Sigma calculations n The Project Story – Finding the Right Path n The Critical X’s we can’t directly effect - at the Start of the process n Document completion by Sales Reps n Order Coordinator document review n There are other projects working on Sales Documentation n The Critical X’s we can – A Safety Net at the End of the process n The Root Cause we can effect – Data entry errors n Where we found the Project’s Savings n Where we implemented the Improvement n The “Best” End State process n 2nd Project Leveragability n Expanding Fields Tested and Territory covered – n All OMD Contracts; B&W Overage Rates by Segment, other data validation n Document Imaging Solutions – The Florida Solution Sample Report

3 Original Project Charter n PROBLEM STATEMENT: Inaccuracies in the Northeast Region Cycle Billing records result in lost revenue and impact IKON’s ability to forecast future revenue. These inaccuracies could include over-billing and under-billing of customers. n PROJECT OBJECTIVE: Correct the Base and Overage rates and other product coding in the Cycle billing records and insure the use of coding that is appropriate for equipment type and segment. n PROJECT BENEFITS: Based on a prior review completed in the Connecticut marketplace there is a 2% to 5% error rate in existing billings. The Northeast Region has approximately $200mm in Aftermarket revenue. 70%, $140mm, is billed to the customer by IOSC. The remaining $60mm is billed directly by the Region. A 1% positive improvement in billing rates could result in $2 million in increased revenue. n PROJECT METRIC “Y”: Accurate pricing and coding leading to increased revenue and improved customer service. n ORIGINAL DEFECT DEFINITION: Inaccurate pricing and coding in cycle records. n New Defect Definition: Any Color record with an Overage Rate below $0.06 per copy

4 Documents Reviewed & OI Benefits Obtained Agenda

5 Sigma Calculations Before and After Total Items: Total count of serial numbers of Color equipment in original files. “Individual” and “Group Individual” items only Install dates from Jan thru Nov 2003 Defects: items with Color Overage Rates below $0.06 per page. 131 original Defects; 68 Defects corrected; 63 Defects remaining

6 The Project Story: Finding the “Right” path n Phase 1: Original Scope - Boiling the Ocean n Too many fields in database to test in 4 to 6 months n 170,000+ MIF in NE with multiple data fields n Phase 2 – Narrow scope to Color Overage Pricing – where the money is n Compare the OMD price to Aftermarket Price Book n Could show how much discounting is happening but n No way to Confirm the price in OMD is “Right or Wrong” n Phase 3 – Look to Commissions group for the “Right Price” n Researched the full Document Life Cycle from Sales to Invoicing n Commissions is the only group with mandated “Price Policing” authority n But they don’t “Test” every price – few Major Accts & No CPC testing ability n Phase 4 – Tightest focus n Compare pricing in OMD to the Original Sales Documents n The only way to prove The Price is Right APB Chi APC Tool

7 X’s and Critical X’s Both In and Out of Scope Details on key points are on next 3 slides. 28 potential “X’s”; 7 Critical “X’s”; 4 In Scope & 3 Out of Scope.

8 X’s and Critical X’s Where we looked for the problem n Sales - The source of the documents n Inconsistent completion of Service Contract document led to investigation of existence of any Policy on this topic – None found. n Also led to discussions with IKON Univ re Sales Rep training on How To Complete Documents – There was none. n Discussed with IKON Univ the potential to include this topic in future training. n Sales Mgmt – The 1 st line of review of Sales Documents n Compared the Color Ovg price in OMD to Aftermarket Price Book n Could show how much discounting is happening but n No way to Confirm the price in OMD is “Right or Wrong”

9 X’s and Critical X’s Where we looked for the problem n Commissions – the only group with mandated “Price Policing” authority n Commissions uses exactly the same documents as Cycle Billing. n Tried to base a solution on assumption that Commissions had significantly better data entry/interpretation accuracy. n Tested the Commissions reps on Color Overage data entry error rate n Found they were only slightly better than Cycle Billing reps. n There was no existing “Data Accuracy Testing” process n Commissions was moving to Macon and so did our discussion n Macon Commissions had no plans to implement any data accuracy testing APB Chi APC Tool

10 X’s and Critical X’s Where we looked for the problem n Documents - n There is no policy defining specific Service documents where pricing must be written. n Sales reps often put hand written notes on documents covering color overage rates. n Documents are “one size fits all” and present difficulties with dual meter combination color & B&W machines with 2 overage rates. n Cycle Billing Reps – No mandated Price policing policy n Numerous data entry errors n Too often CBR’s must rely on “interpretation” of written notes and comments to determine the color overage pricing. n Cycle Billing Mgmt – n There is some data validity testing being completed but n There was no testing done to validate B&W or Color Overage Rates APB Chi APC Tool

11 A Map of the Life of Sales Documents We are putting a control at the back end of the process The “Best” place for a Control is at the Front End of the process “We are waiting too long in the Document Processing Cycle before we do any detailed Service Pricing review.”

12 The Best End State Process  The Sales team gets specific training about how to complete Service Contract documents.  What pricing details to include and where to write it  Specific direction that this is “Required” not “recommended”  The Order Coordinators strictly review these documents  Use the Aftermarket Price Comparison tool to confirm pricing  Enforce Sales / Service Manager Discount Approval policy  Kick back any documents that don’t follow the policy Agenda APC Tool

13 Our Simple Solution n Run a Color Overage Rate Exception: n Every Sunday looking back 14 days n Focusing on every contract that has been updated during the most recent 14 days: n This will give the report a self-auditing function.. n The report will look at New Contract setup, renewals and any other updates: n This will find any newly created problems BEFORE they reach a customer n Find the errors while the source Sales Docs are still on the Billing Rep’s desk. n The report is now running for ALL OMD Contract groups in IKON Agenda

14 Chi Square test on Final Errors Found Return

15 End of Presentation n All following slides are for reference purposes only