1. © 2003 Six Sigma Academy0 Impact and Depth Projects General Case Studies Champion Workshop

2. © 2002-2003 Six Sigma Academy1 Project Case Studies The purpose of this section is demonstrate to varying detail the breadth and depth of projects tackled using the Breakthrough Strategy. Included are projects that apply to a variety of industries and processes. The tools used range from simple lean applications to more complex business process Design for Six Sigma. These 8 project examples are not specific to the financial services field, but are intended to broaden your thoughts about the application of this methodology. Section One – Impact Projects Focus on Projects and business cases that had a profound effect of evolving the concept of Six Sigma from a manufacturing/back office process improvement tool suite to a business improvement problem solving approach. Section Two – Depth Projects Focus on Projects and business cases that show a depth and variation of the tools used to solve business problems through a wide range of processes and industries.

3. © 2003 Six Sigma Academy2 Impact Projects Short Case Studies

4. © 2002-2003 Six Sigma Academy3 Impact Projects Focus on Projects and business cases that had a profound effect of evolving the concept of Six Sigma from a manufacturing/back office process improvement tool suite to a business improvement problem solving approach. The examples chosen: Pricing Sales Force Effectiveness Financial Closing Process Reduction of Teller Transactions Adhesive Delivery Logistics

5. © 2002-2003 Six Sigma Academy4 Client:GE Challenge:Gain a 2 –2.5% increase in price of goods and services. Goal: Negotiate price increases with large clients while maintaining positive relationships Results: Initially, identified as a huge success… 2.50% price increase year over year. (Equivalent to $4.4MM in margin)… actual results in terms of landed/pocket price a different story. Pricing

6. © 2002-2003 Six Sigma Academy5 Pricing Initially, the 2.5% price increase was hailed as a big success. However, once the idea of landed price was understood and Calculated, a different story emerged.

7. © 2002-2003 Six Sigma Academy6 Pricing Six Sigma was a natural way for the organization to deal with the gaps identified by the waterfall… Once the data was collected and verified, each of the waterfall elements were addressed either by policy (pricing changes by sales force) or via green/black belt projects. The 1999 price increase process netted the business $3.7MM in Contribution Margin.

8. © 2002-2003 Six Sigma Academy7 Client:Multiple Challenge:Understand the amount of time spent by the sales force with the decision makers – clients… and increase this time. (In one example the time spent with decision makers was 5% and the other firm found their first quartile sales force spent 14% of their time with decision makers). Goal:Increase the time spent with the client and specifically increase the time spent with the decision makers at the client. Results:The first organization increased the time spent with decision makers from 5% to 22%. The second organization is working a current project – current projections show the increasing the time spent from 14% to 30% in trials. Sales Force Effectiveness

9. © 2002-2003 Six Sigma Academy8 The sales force effectiveness approach was started in both companies well after the organizations started Six Sigma. What was typified as the “art of selling,” was not an acceptable reason for why some salespeople met their goals while others did not. The first example brought the business estimated additional revenue of $39MM (20% increase) with a reduction of sales staff of 15%. The second business identified is still implementing the changes, but expect to drive $500MM in increased sales the first year without adding sales professionals. Sales Force Effectiveness

10. © 2002-2003 Six Sigma Academy9 Client:Large conglomerate Challenge:Reduce the quarterly closing cycle time from 30 days to 5 days. (this included affiliate closing cycles which were never included previously.) Goal:Reduce the amount of time and associated headcount to accurately close the quarterly books Results:Multiple projects (typically green belt, though the process was led by a Black Belt)… the results were a 3 day close in 9 months. Financial Closing Process

11. © 2002-2003 Six Sigma Academy10 This mega-project dubbed, “Free nights and weekends,” was one of the first finance organizational projects. The genesis of this project was a CFO who had as her background a MBB certification, asking why the processes of finance took so much time, were fraught with rework and caused as much stress to the finance organization. The P&L impact of these projects is not readily available, but it can be estimated that over $1MM in cost was removed. Financial Closing Process

12. © 2002-2003 Six Sigma Academy11 Client:Large Financial Service Corporation Challenge:Bank teller transactions are the highest cost and seemingly low value to the client relationship. Nearly 2/3’s of all the teller transactions could be accomplished using an ATM…yet only about 35% of the total are accomplished using the ATM. Goal:Shift 80% of all transfer-eligible transactions to ATMs and manage the teller workforce to maximize service while minimizing cost. Results:Through the adoption of waste elimination, variation reduction tools and implementing a queuing model, the results were a 65% transfer of transactions and a reduction of labor costs by 50%. Reduction of Teller Transactions

13. © 2002-2003 Six Sigma Academy12 Reduction of Teller Transactions This mega-project included the use of sophisticated analysis to understand time-based forecasting and queuing theory. Determining this load and the reasons for the load, specific information technology projects, lean projects, and variability reduction projects were launched. The P&L impact of these changes to this bank were in the tens of millions of dollars

14. © 2003 Six Sigma Academy13 Depth Projects Longer Case Studies

15. © 2002-2003 Six Sigma Academy14 Depth Projects Focus on Projects and business cases that show a depth and variation of the tools used to solve business problems through a wide range of processes and industries. The examples chosen: Branch Office Rework Increase Market Share

16. © 2003 Six Sigma Academy15 Branch Office Rework

17. © 2002-2003 Six Sigma Academy16 Define Branch Office redundancy and rework result in $7 million of excess expense over a budget of $200 million as well as client dissatisfaction. Problem Statement Objective Identify and reduce the cause for work redundancy and rework by 70% for a savings of > $4.9 million. Critical to Quality - CTQ Percentage of redundant and rework expense. Client satisfaction measured by errors generated per 100 clients. Cycle time measured by marketing policy as 14 calendar days. Current/Goal/Stretch Goal 35,000DPMO - Current 10,500DPMO – Goal 10,500DPMO – Final Actual Benefits Achieved $5 million annualized savings 80% reduction in branch redundancy and rework expense No decrease in cycle time

18. © 2002-2003 Six Sigma Academy17 High Level Process Map Start Stop No Yes Branch i Branch i+1 Rework Rework Analysis The network consisted of over 200 branches. The average branch revenue was ~ $125,000,000. The average rework expense per branch was ~ $125,000. The Focus Was on Representative Branches With the Eventual Goal to Understand Common Operations and Sources of Redundancy to Create System Wide Mistake Proofing Strategies

19. © 2002-2003 Six Sigma Academy18 Data Collection Data Collection Focused On The Following Inputs: (1) Annual Sales (2) Geographical Region (3) Client Affluence Level Under $10 million $10-25 Million >$25 million NE SE NW SW Central NE SE NW SW Central NE SE NW SW Central >$5 MM $1-5MM <$500K -$1MM $100K-$499K <$100K Outputs Were Redundant Operations,rework Types, Frequency and Expense As Well As Cycle Time

20. © 2002-2003 Six Sigma Academy19 Defect Analysis By Branch Branch Six (Sales Revenue Less Than $10 MM and Located in the Northeast) Had the Most Redundant Operations

21. © 2002-2003 Six Sigma Academy20 Defect Analysis By Redundancy For Branch Six Duplicated Reports Had the Highest Incident Rate

22. © 2002-2003 Six Sigma Academy21 Analysis Of Redundant Operation By Sales Several Analyses Were Conducted To Determine The Key Process Input Variables (KPIVs)…Finally, It Was Found Branch Sales Level and Region Were Significant (East and West Coast As Well As Central United States) …These Were Incorporated Into an Optimization Experiment

23. © 2002-2003 Six Sigma Academy22 Building The Optimization Model Region Is the Most Important Variable Estimated Regression Coefficients for % Redundancy Term Coef SE Coef T P Constant 1.8983 0.1315 14.433 0.000 Sales 0.0167 0.1293 0.129 0.901 Region 1.5833 0.1293 12.244 0.000 Sales*Sales 0.0710 0.1906 0.373 0.720 Region*Region 0.7710 0.1906 4.045 0.005 Sales*Region -0.1000 0.1584 -0.631 0.548 S = 0.3168 R-Sq = 96.1% R-Sq(adj) = 93.3%

24. © 2002-2003 Six Sigma Academy23 Optimization To Reduce Redundancy Redundancy Should Be Eliminated By Branch On a Regional Basis Across All Branches

25. © 2002-2003 Six Sigma Academy24 Business Benefits Redundant Work Was Consolidated by Geographical Region … 40 Branches Were Consolidated Leaving Just 160 in the Network. $5 Million Annualized Savings 80% Reduction in Branch Redundancy and Rewok No Decrease in Cycle Time

26. © 2003 Six Sigma Academy25 Adhesive Project Example

27. © 2002-2003 Six Sigma Academy26 Problem Statement The amount of adhesive consumed in the assembly operation is higher than specified by engineering, resulting in significantly higher production expenses, which impact profitability of the product. Target: Identify the causes of excessive adhesive consumption and reduce the usage of adhesive in the assembly line operation by 400%. Critical To Quality - CTQ Applying the specified amount of adhesive is essential to bond strength. Applying excessive adhesive causes costs to exceed targets. Benefits Achieved $500,000 savings in material costs for adhesive.

28. © 2002-2003 Six Sigma Academy27 1 st Qtr UsageProjected Usage For the Year Brought in house 14,983 Gal. $174,738 56,479 Gal. $658,689 Usage Per Projected Specification 3,542 Gal. $41,305 13,353 Gal. $155,731 Adhesive Volume/Cost Total Plant Metrics âAdhesive usage and cost

29. © 2002-2003 Six Sigma Academy28 Purging process - - Leaking during application -Limit switch set up (too high causes excessive adhesive remaining in drums) excessive adhesive remaining in drums) Over use of adhesive during assembly processes Cause-Effect Diagram Machines Methods Manpower Measures - Drum’s change over process Nozzles Height - vs. Panel nest - Needed training on spec’s. Pressure set up - - In- Process Measurementsystem - Nozzles timing

30. © 2002-2003 Six Sigma Academy29 Current dimensions data: Base line

31. © 2002-2003 Six Sigma Academy30 Current Process not capable- Negative Sigma Level

32. © 2002-2003 Six Sigma Academy31 DOE - Optimize Pressure & Time Settings for the dispensing nozzles for the dispensing nozzles

33. © 2002-2003 Six Sigma Academy32 Regression Analysis: Diameter versus Pressure, Time The regression equation is Diameter = - 39.0 + 0.740 Pressure + 1.61 Time Predictor Coef SE Coef T P Constant -38.985 8.038 -4.85 0.000 Pressure 0.73956 0.09967 7.42 0.000 Time 1.6121 0.2100 7.68 0.000 S = 1.596 R-Sq = 94.0% R-Sq(adj) = 93.5% Results â Main Effects Plot â Regression Model Results used to optimize settings for nozzles

34. © 2002-2003 Six Sigma Academy33 27 mm UPPER SPEC.. 25 mm TARGET 23 mm LOWERSPEC. WRONG TOO BIG WATCH FOR THIS DEFECT WRONG TOO SMALL Visual Aid

35. © 2002-2003 Six Sigma Academy34 BEFORE CHANGING ADHESIVE DRUMS CHECK FOR: 1.The drum to be removed from the line is empty. 2.The piston is all the way down to the bottom of the drum. 3.Air pressure closed for drum to be changed 4.T-valve closed for the drum to be changed. 5.T-valve open for the remaining drum. AFTER CHANGING ADHESIVE DRUMS CHECK FOR: 1.T-valve is open for both drums. if not, 2.Air lines open for both drums; if not, one drum will pump Adhesive to the other. T-valve To avoid Adhesive spillage… LOSS$11.7/gallon There is 25% of adhesive remaining in this drum Piston is herePiston is at bottom When plate is here Visual Aids

36. © 2002-2003 Six Sigma Academy35 Material: Plexiglass 23mm27mm1000mm Measurement tool for Adhesive spots Prototype II Gage type: Go / no go Higher specification limit Lower specification limit 60mm Measurement System

37. © 2002-2003 Six Sigma Academy36 1 st Qtr Cost Improved Process Cost Difference Yearly Savings $ 0.58/panel $0.24 /panel $0.34/panel $503,000 Project Results Actions:  Material handling Changes  Optimized Application Settings Process Capability for Diameter Improved Ppk= 3.1

38. © 2003 Six Sigma Academy37 Delivery - Logistics

39. © 2002-2003 Six Sigma Academy38 Define Point one Point two Point three Trailers are not being unloaded in their scheduled window times causing extra inventory to be carried by the plant and costing the plant in switching services. Also impacts ability of plant to build vehicle in station. Problem Statement Objective Improve the live unloading of scheduled window trailers by 70% in the main plant $250 K cost savings to the plant and $250 K to company freight budget Critical to Quality - CTQ Inventory and carrying costs On-time delivery to line Metrics (Baseline/Final) 814,000DPMO - Baseline 18,000DPMO – Final Actual Benefits Achieved $1.27 M in inventory, freight, switching and late line feeds 97% defect reduction Timeframe = 6 months

40. © 2002-2003 Six Sigma Academy39 Measure Process fully mapped Subjective problem solving tools used Operational Definition established Data collected manually Process capability measured Process severely incapable

41. © 2002-2003 Six Sigma Academy40 Analyze Communication was leading cause Inconsistent or incomplete information being used Delivery times affected by many factors Data analysis determined multiple causes of defects

42. © 2002-2003 Six Sigma Academy41 Improve Eliminated unneeded process steps-used hypothesis testing to verify Corrected schedule information supplied by carrier Built and tested models to re-calculated formulas used for scheduling Asked the people why schedules were not being followed! Improvements implemented to greatly improve communication Shipping and Warehouse Formulas: Over Ship = cumulative ship supplier - cumulative required Storage area Max = (container size X numbers of containers truck ) + (container size X numbers of containers OPRES ) Storage area Min = (container size X numbers of containers OPRES )

43. © 2002-2003 Six Sigma Academy42 Control Checklists and Control plans established Policies and procedures changed Charts verify and sustain improvements Simple job aids and metrics ensure control Control Plan Approved Dept. P & P’s Approved