1. Six Sigma Project: Midwest Bank
Dr. Ron Lembke
Managing for Quality

2. Cash Problems Commercial Processing Department (CPD) Project team
4.26 sigma already
One error lost $280k last year
Project team
Project coordinator – from project office
Operations financial manager – financial impact analysis, equipment purchasing
Assistant VP – subject matter expert from CPD
Team supervisor – subject matter expert from CPD
Project coordinator with bank-wide knowledge
CPD project analyst – Six Sigma analyst
Data integrity, graphical analysis, data stratification
Champions: Senior VP, VP over CPD
Created problem definition statement
Responsible for processes involved
Week-long six sigma training

3. Define Stage Two largest sources of errors:
Cash Strapping
Deposit processing
Don’t affect each other, separate causes for errors
Problem Statement:
150 internal and external errors, lead to bank losses of $400,000, and significant risk exposure.
Goal of $0 losses from CDP operations
Objective to reduce internal error ratio by 50% and losses by 50% in 12 months.
Projects will reduce loss expense, and risk exposure, and increase customer satisfaction

4. Project Goals Risk mitigation – difficult to quantify
Dollar losses – easy to measure
Number of errors – easy to measure
Approved project launch, moved to Measure stage

5. Measure Stage XY matrix – Cause & Effect p. 533
Agree on CTQs that impact customers
Ys: risk mitigation, error reduction, reducing dollar
Studied workflows, look for root causes
Subject Matter experts- “tribal knowledge”
XY matrix – Cause & Effect p. 533
Rank factors for potential error causes Xs
Potential customer outputs Ys
Rate importance of Y’s 1-10 “Output Rating”
Association Table: Impact of the X’s on each Y: 1-10
Rank = 9*9 + 10* *10

6. Analysis Stage Gathered data to assess impact of Xs on Ys.
48 hours of team time!
Many, many graphs
Indications of problems with manual strapping process (putting bands around money)
Tribal knowledge: Insufficient staffing?
Look for more longitudinal data
100 graphs created
Data in single strands
Paired interactions

7. Analysis, Continued
Correlations between human factors and manual processes
Many manual steps in handling cash
cash strapping errors per year
Deposits –larger dollar loss per manual error
Concerned about # errors, not size

8. Failure Modes and Effects Analysis
Laid out steps from process map
Concentrated on inputs
Figure out effects of each possible error
Each process step ranked on Risk Product Number(RPN) :
SEV - Severity of error
OCC - Occurrence – how often
DET - Detection – how likely to figure out
SEV*OCC*DET
Know what we have to look at

9. Improve Phase Countermeasures – how to fix? Countermeasures Tree
For each problem, find root causes
Each root cause, list countermeasures
Practical ways to implement coutermeasures
Effectiveness x Feasibility (1to 5 scale)

10. Five Major Countermeasures
Cash strapping machine
$5 charge for clients with incorrect deposits
Benchmarking – will customers accept?
Eliminate double keying of deposits
Vacation schedules to reduce errors by subs
Dollar loss corrective actions

11. Control Phase Implementation left to subject matter experts
Minor suggestions implemented immediately
Pilot study
$5 charge reduced errors 44% by corporate clients
$280,000 loss was from an incorrect deposit
Dollar loss corrective action hardest to impelement
Overall errors down 30%
Dollar losses down 57%