Guidon And Rbfcu Lean For Credit Unions Webinar

Leveraging Lean Thinking In
Credit Unions
Deliver Great Member Service While Keeping
Expenses Down
September 30, 2009

Agenda
• Introduction
• What is Lean
• Why Lean in Credit Unions
• 3 Case Studies
– Branch Channel Lending
– Call Center Member Service
– Branch Workforce Management
• Getting Started
• Questions

© 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.
© 2008 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group
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With You Today
Larry Mead, Vice President, Guidon Performance Solutions, LLC
• Over 15 years of experience in application of Lean and Six Sigma
• Co-founder of Guidon Performance Solutions – the pioneer in
applying LeanSigma® in non-industrial and non-traditional companies
• Client experience in financial services, insurance, healthcare, media,
and information technology
• Masters of Engineering

Randy Smith, President/CEO, Randolph-Brooks Federal Credit Union
• President and CEO of RBFCU since 1987 having prior served 5 years
as VP Finance
• Elected in 2008 to the CUNA Mutual Board of Directors and the
NAFCU Board of Directors
• 27 year career in the United States Air Force (active and reserves)
• Masters of Business Administration
• Certified Public Accountant

© 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 3

With You Today
Jimmy O. Junkin, Senior Vice-President of Finance and
Administration, Randolph-Brooks Federal Credit Union
• Joined RBFCU in 1993 as Senior Vice President of Finance and
Administration which also includes the Process Improvement function
• Previously a partner at Ernst & Young whose clients included RBFCU and
many other financial institutions
• Certified Public Accountant
• Masters in Public Accountancy

Peter Farrow, Vice-President Process Improvement and Project
Management, Randolph-Brooks Federal Credit Union
• Joined RBFCU in 2004 to establish a new Project Management
function
• Selected in 2007 to establish a formal Process Improvement function
• 17 years of Credit Union experience
• Master in Technology and Masters of Business Administration


What is Lean?
• Provides What the member wants
• Where the member wants it
• When the member wants it
• In the Manner they want it

While utilizing minimum resources
and minimizing member effort.

Specifies Value from the standpoint
of the member.


Why Lean in Credit Unions?
Membership is growing
Confidence and safety …
Members expect superior service
Growing spectrum of products …
complexity and scale
Regulatory environment is more complex
Sound processes, controls, costs …
Return on Assets for many Credit Unions is
stretched thin
Low interest rates, more members, more
services …

The pace of change requires new thinking


What does the member value?
Wasted Time & Activity
Core Process Value

Backlog of Excessive Motion Defective Process
requests (Walking to Next Task, etc.) (Identifying, Handling, Fixing)

OPERATIONAL LEAD TIME

Missing Waiting Review/QA Mail final
Information for next Process Documents
to internal
representative
The key is to reduce processes and effort to “core value.”
Lean is simply about creating more value for members by
eliminating waste… simultaneously improving service,
cost, and quality.


Getting to Core Value

Traditional Car Rental Process
Wait in line From Take bus
From gate to
at rental At counter counter to terminal
rental counter
counter to bus

Confirm
reservation Locate
car
Review & sign
paperwork
Credit card
From Take Drive
Drive imprint
gate bus to exit
to exit Receive rental
to bus to car
contract
Receive car
assignment


LEAN is all about identifying and eliminating waste

“Waste” is seen differently in
LEAN… Over
Producing
• Traditionally, waste has been Over Work In
viewed as an object. It is very easy Processing Process

to envision a barrel of scrap metal
or plastic and identify it as waste. Errors &
Transport
Rework
• In LEAN thinking, the term waste
actually refers not to the physical Excess
Waiting
material but rather the relationship Motion

of the resource to the member.

In LEAN, waste is measured as consumption of
resources – time and capital


Examples of Waste in Credit Unions

• Member waiting for
Over service
Producing
• Cumbersome transactions
Over Work In
Processing Process • Two forms, similar info
• Searching for information
Errors &
Transport
to answer a question
Rework
• Reports created, not used
Waiting
Excess • Walk to/from the copier
Motion
• Misapplied loan payment
• File maintenance and
retention

It’s all about core member value


Lean Improvement
Metric Benchmark Gains What others say about Lean

0% 25% 50% 75% 100% “Lean Adopters Identify More
Labor Capacity
Waste and Operate More
Efficiently”
Lead Time/Delivery

Errors and Rework
“Lean Is Inexpensive and
Revenue Growth Generates Solid Returns”

Handoff Reduction
Corporate Executive Board, Operations Council™
2006 Study on Lean Manufacturing for Financial Services
Decision Points


Improving the Member Experience

“The secret is in the dirt.”
-Ben Hogan

Your most powerful
competitive advantages are
where the work gets done

LEAN involves a set of principles, tools, and
methods to see and then collaboratively
eliminate waste.


General Overview
• Founded in 1952 by military personnel
• $3.6 Billion CU serving more than 300,000 members
• 31 branches
– Ten underserved areas
– Three to five new branches being built per year
– Three in-school branches
• 935 employees
– Average tenure of senior staff = 15 years
– 5 or more years of service = 40% of employees
– Part time = approximately 10% of employees


Lean Projects at RBFCU

• Member Service Center: Outbound Calls
• Consumer Lending: Video Conferencing
• Human Resources: Recruitment
• Records and Research: Document Imaging
• Information Systems: Help Desk
• Branch Vision Planning Session
• Member Services: Asset Protection
• 5S Project


Video Conferencing
Branch Channel Loan Origination

Context and Challenge
• New video conference service for loan origination process at the
branches
• Pilot results showed high member acceptance
• Demand for service was growing and threatened to exceed the loan
officer capacity
• Members experienced significant variation in the time to complete
the process


Video Conferencing
Branch Channel Loan Origination

Approach Results
• Cross functional team from branches and • Reduced member wait/hold time by 30%
Lending Department took on the challenge • Improved lending productivity by 17%
of eliminating waste and standardizing the
process. • Decreased forms/paper and associated
printing (23 hrs/month)
• Team gathered for a 5-day “Kaizen” event
to review the video conferencing process, • Developed training on new process for
specifically those that did not add value branches and lending center

Kaizen – A collaborative Lean Since then
methodology to rapidly identify and • Expanded from 6 to 17 Branches
eliminate waste. Typical event duration with Video Lending
is 4-5 days. Improvements are • Average number of video conference
implemented or tested during the week calls increased from approximately
to evaluate impact. 250 to 2,000 per month.


Member Service Call Center
• The Member Service Center outbound transfer call volume had risen
to 37%
• Service level objectives were not being met; the call abandonment
rate was 8.9%
• Approximately 50% of the transferred calls were due to training
challenges
• The call center needed to reduce transfers, ensure capacity was
available for growth while maintaining high levels of member service


Member Service Call Center
Approach Results
A Kaizen team from including the Member
Service Center, IT, Consumer Lending, Card Metric Before After
Services and Accounting met for a 5-day Transfer 50% 20%
improvement event. Key steps included:
Rate
Inbound
Map/Quantify the member experience Reduced 28%
Calls
Identify waste
Abandon 8.9% 5%
Identify/Prioritize improvements Rate
• “Just do It”
• Process change to reduce steps and improve flow Handle 169 sec 150 Sec
• “5S” to improve efficiency of work environment
• Leverage existing technology (simplify screens, IVR)
Time
Simulate/Pilot best ideas to gage impact
Creativity before Capital
Establish training document
$430K Savings
Report Out and Celebrate


Branch Workforce Management (in process)
• Due to e-technologies, branch volume is declining; however, transaction
complexity has increased
• Staffing per branch was relatively flat year-to-year
• New branches are opening and require additional resources and training
• We needed to identify opportunities to simplify processes and best allocate
resources
• Core objective was to increase transactions per employee while maintaining
high levels of member service
Results
• Constructed a resource planning tool to better align resources to transaction
volumes while maintaining superior member service
• Projected savings of $1.5 million over the first two years


Branch Workforce Management
Approach Results
• Assessed branch processes, overall • Simplified scheduling model that matches
performance, and opportunities current scheduling outputs
• Launched a LeanSigma Workforce • After 3 months, piloted the workforce
Management Project management tool with 4 Branches:
• Tool reveals potential savings of
10-20%
• Managers can use the tool to match
capacity to volume
• Currently testing the resource planning
model across remaining 27 Branches

Anticipate 10-20% resource
savings over the next two years
while still maintaining member
• Developed models/tools to assist with service expectations.
allocation of resources by branch, day/hour
• Pilot and roll-out tool; adjust schedules and
metrics


How To Get Started?
• Pick a single pilot area or service – Branch Teller
Transactions, Lending Processes, Branch Capacity, IT Help
Desk, IT Application Development, Finance Reporting, …
• Develop a better understanding of member experience –
initial contact, request delays, contact points, hand-offs
• Identify waste
• Eliminate the low hanging fruit with simple creativity
• Learn and leverage Lean Principles to drive out more of the
waste and redefine the service
• If you cannot measure it, you cannot improve it
• Expand beyond pilots to encompass the whole Credit Union
… recognize that this can involve a culture shift


Questions?

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Thank You
Guidon Performance Solutions
866-986-4414 or 480-986-4414
contact@guidonps.com
www.guidonps.com

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Guidon And Rbfcu Lean For Credit Unions Webinar

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