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Six Sigma Sample Project

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Six Sigma Sample Project

  1. 1. Six Sigma Sample Project: Redesigning the Fulfillment Process of a professional services company Executive Summary & Project Narrative Andreas Freund, PhD, San Diego
  2. 2. Six Sigma Sample Project: Executive Summary Business Case • Main Revenue driver – Oder Fulfillment process – selected for project • Company wide revenue gains of up to $7,8M p.a. if fill rate targets of 75%-80% are met • Scope focused on one business unit only – migration of approach to other units will be assessed Findings Highlights • One process tried to serve two products – consulting & staff augmentation • No process visibility & thus no accountability • No standard operating procedures (SOP) • No process artifacts • No VOC aligned with process Improvement Highlights • One-to-Two – order fulfillment process now two separate processes – by subject area. Project focused on one of the two new processes • Less process steps for new process • Process Dashboard to improve accountability; SOPs & Required Artifacts to standardize & ensure repeatability Results • Control Period March/April 2010 • Key KPI improved from 58% (2009) to 66% - within target range for one BU 65%-70% • Cycle time of new process improved by 28% • Standardization reduced variance by 67% • Revenue increased in control period relative to a lower KPI of 58% (2009) by over $350k Project Results
  3. 3. Fulfillment Process generates 100% of annual revenue - $37,3M FYTD Request for Service Network Order Fulfillment Process Engagement Across several practice areas:  Business units 1 -4 Key process KPIis significantly varying between practice areas (35%-70%) and below target rates for 3 out of 4 practice areas
  4. 4. FYTD 2009 [June-30] M2 LSG FS Tech SSG Projects booked 225 62 96 8 59 Revenue 37,300,000$ 7,513,711$ Average per Project 165,778$ 121,189$ Current Fill rate 62% 58% 64% 35% 70% Target Fill Rate Min. 70% 65% 70% 50% 80% Target Fill Rate Max 75% 70% 75% 60% 85% Revenue Potential Min. 4,567,178$ 914,976$ Revenue Potential Max. 7,766,689$ 1,563,337$ The business case for the project shows anticipated revenue gains of up to $7.8M Assumptions: • Project limited to BU 1 as pilot practice area. Roll-out to other BUs will be assessed later • Project cost will be covered by run-rate. IT spending, as likely the main cost driver of solution, cannot currently be reliably estimated • If IT solution is necessary, current legacy IT system(s) will be integrated into new solution Risk & Scenario Analysis: • Risk: Insufficient process adoption; IT cost overrun • Mitigation: Dedicated change management team in place; Using open source software in a hosted environment should reduce cost risks Company BU 1 BU 2 BU 3 BU 4
  5. 5. The order fulfillment process can be divided into 4 main process phases Project Launch • Information Gathering • Engagement Definition Identification & Evaluation • Selection • Identification Present-to- close • Presentation & Interview • Booking & Documentation • Onboarding Engagement Management • Management & Execution High-Level process characteristics:  Highly- manual, people centric and sequential sales process  Many external factors influence process outcome  Technology systems support process only at specific, limited points  Lack of process specific (voice-of-the-process) metrics – existing VOC data not statistically relevant  Process execution & use of tools (incl. technology) differs between and within practice areas – no standardization and no apparent process ownership across the organization
  6. 6. The Define phase brought significant insights into process issue root causes Insufficient Fill-Rate Environment People Machine Material Method Measurement Project is not well defined Lack of features in Einstein Lack of cooperation between people (x) Insufficient level of training Sales Skills Client does not have enough time for consultative approach Client does not perceive M2 as consulting firm We are generalists in business development We are generalists in consulting services M2 has confused identity Projects are both consultative and staff augmentation Misalignment of firm culture to the actual services you are selling Unclear strategic direction from Senior Management (x) Changing market landscape (n) Business Model Consultants are not real stakeholders (n) Business Model does not make clear distinction (x) Current Market Conditions (n) Historical geographic sales focus Unclear recruitment strategy Very broad product offering Unclear strategic direction from Senior Management (x)No consistency in how personal evaluation tool is used (x) No global visibility in internal talent leading to underutilization (x) Recruiting is done by business unit (x) Moved forward with people we had when changing business model We do not say no to anything Large Database of consultants (x) Did not fit the people to the model (x) We are very opportunistic We have large consultant database (x) We are reactive not proactive We don’t say no (legacy clients) We have a large consultant data base (x) Client does not perceive value in consultative approach It is perceived that it is expensive to train people Lack of assessment of training needs Lack of consensus on strategic direction There is no vision of M2 strategy (x) Lack of a method on how to achieve agreement on strategic vision (c) No internal champion for training (x) No definition of what skill sets are required to be successful by role No gap analysis of training needs No training strategy (x) Have insufficient subject area expertise Because we are generalists (same root causes as below) Consultant pool is unwieldy Pool is too big Pool is stale There is no real barrier to entry We cannot say no Made decision that there is value in network breadth (c) It cannot harm us (c) Insufficient data management (x) The size of the task No internal ownership (x) Home grown system No unified policy of using EinsteinThree business units operating differently (x) There is no understanding of why business units operate differently Business Units are growing on their own Type of clients for each (n) No ownership of which processes should be unified (x) No consensus on what Einstein should do Level of customization of current newer system would be too high (n) We are opportunistic (x) Lack of skill sets Lack of experience (n) Lack of consultant availability (n) Lack of Urgency (x) Lack of attention to detail (x) Lack of or Miscommunication between people Lack of confidence Lack of Trust Lack of adoption of best-practices (x) Client does not like being sold to (x) Not a peer-to-peer relationship with client (x) Moving too fast in selling to client Need to move fast Not perceived as consulting company but staffing company (see known root causes under material) Client does not feel heard Consultants are not a fit Mismatch between skill set, expectations & budget Demand on client side for 100% match is higher (n)Expectations set during sales call Because this is our business model (x) The speed of competition (n) We do not hear the client Lack of knowledge in methodology (x) Try to sell better solution that meets needs but client does not want Look for capability first and then budget (x) We are generalists (see root causes for this point under materials) Insufficient level of trust between BDM and CSM Nature of BDM-CSM structure Different customers (client vs. consultant) (c) Lack of understanding of process timelines Because processes are different between BU’s (x) Lack of visibility into process (x) Client experience working with consultants (n) Lack of specific subject matter knowledge (BDM) to understand business problem Client skill set requirements is too unique Lack of specific subject matter knowledge (CSM) to understand business problem and vet consultant Insufficient tools to support specific enough search (x) Lack of subject matter expertise (BDM/CSM) (x) Qualification of client to buy a consultant (x) Business Problem was not properly understood Language between client and BDM does not align Things are taken for granted Move too fast to close project (see root causes above under “need to move fast”) No consistent metrics (x) Lack of accountablity No consistent metrics to measure results (x) Inconsistent execution of business processes between and within BUs (x) Lack of subject matter expertise (x) We are generalists (see root causes under material) Insufficient visibility into process (x) Lack of adoption of best-practices (x)Input * Project idea after client approaches M2 with a problem Quantification: # of project ideation from client * Project idea after M2 BDM approaches client Quantification: # of project ideation from M2 * Consultants for project Quantification: # of consultants approached Process * Project Launch * Consultant ID & Evaluation * Present-to-Close Output * Booked Projects Quantification: # of booked project to total number of launched project = Fill-rate * Proper Consultant for Project Quantification: CSI Score, EOE score (to-be-defined); # of extensions per selected consultant; # of consultants released from projects to booked projects * Revenue Quantification: TCOR (total cost of revenue) Customer Business Client Customerrequirements with voice - Do you really understand my business problem - Timely delivery of consultant that fits within culture - Proper definition of project deliverables - Meeting budget needs - "If it's going wrong, make it right" Basic requirements withoutvoice - Competitively priced - Highest quality of talent - High-touch service Subconsciousexpectations - On time and on budget - Building internal project sponsor brand - Consultant needs little or no internal support VOC summary Timely delivery of the right talent to solve the right problem effectively, in time and on budget Life Sciences& Growth Business Unitof M2 commitment [in plain language understandable to the customer] Help to properly frame business problem, develop deliverable to overcome the problem and provision the right talent in a timely manner to solve the problem with a tangible ROI 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 0 10 20 30 40 50 60 70 80 90 #Observations Group Distribution for CT Matrix - Business Client 0 100 200 300 400 500 600 ImportanceScoreonVOC Process Steps Pareto Chart - Ranked CTsRelative Importance to customer 8 10 6 8 8 8 8 6 9 9 8 Process Input Do you really understand my business problem Timely delivery of consultant that fits within culture Proper definition of project deliverables Meeting budget needs "If it's going wrong, make it right" Competitively priced Highest quality of talent High-touch service On time and on budget Building internal project sponsor brand Consultant needs little or no support Total Score Define Project with client 9 5 9 6 2 4 7 7 6 7 7 543 Communication between CSM & BDM - Launch 5 7 3 6 2 3 4 1 6 4 2 360 Interview Consultants 6 6 1 2 1 2 9 2 5 3 5 350 Conduct Consultant Search 2 9 1 5 1 2 8 2 7 1 2 340 Select Consultants for interviews 4 6 1 7 1 3 8 1 5 1 3 334 Create Client Presentation 5 5 2 4 1 3 7 6 4 2 2 328 Communication between CSM & BDM - Consultant 3 7 1 5 1 3 6 1 5 2 4 321 Consultant Interview with Client 9 4 3 2 1 5 4 5 2 2 2 308 Onboard consultant to project/client 2 3 3 1 3 1 1 4 1 6 4 231 Client approve of project specs 7 1 4 3 1 2 1 1 2 1 2 195 Improvement measures to be implemented over the next 2 – 6 months were initially developed for “Lack of adoption of best-practices”
  7. 7. Focusing on lower effort, high impact items yielded 16 possible improvement measures Further dedicated solution refinement & creation of implementation roadmap to flesh out the suggested improvement measures is currently underway Most important measures identified & implemented during project Differentiate products (staffing vs. consulting) engagement within business process Create Standard Operating Procedures & Artifacts for each process step (tools & best-practice case samples) Process dashboard to create process visibility (across multiple processes) New Process Flow with reduced number of process steps to reduce lead times  Process improvements after differentiation between products (consulting vs. staff augmentation) will focus on “staff augmentation”  Standard Operating Procedures, Required Artifacts and the Process Dashboard allow for process standardization & process monitoring
  8. 8. Improvement measures during first phase yielded measurable improvements Control Sample Analysis Business Unit LSG Date Range: 3/1/2010 - 4/30/2010 Total Sample Size 54 Total Pending Projects 16 Total Projects Lost 13 Total Projects Booked 25 Statistical Sample Error 14% Fill Rate 2009 58% Fill-Rate Sample 66% +/- Absolute Improvement 8% Relative Improvement 13% Delta to Min. Target -1% Fill-Rate LSG Target Min. 65% Fill-Rate LSG Target Max. 70% Fill Rate – 2009 vs. 2010 Sample Process Lead times in days for booked projects – 2009 vs. 2010 Sample State of Project Measures Total Lead Time - Booking 2009 Analysis Absolute Improvement Relative Improvement Mean 10.1 14.0 -4.0 28% Median 9.0 6.0 3.0 -50% 1-sigma 7.1 21.5 -14.4 67% Booked Average Revenue per project (2009 Value) 121,000$ Total Projects either booked or lost in Sample 38 Total Projects booked in Sample with 2009 Fill Rate 22 Total Projects booked in Sample 25 Net Project Gain 3 Net Revenue Gain in Sample compared to 2009 363,000$ Extrapolated Net Revenue Gain for 2010 2,178,000$ Extrapolated Net Revenue Gain for 2010 for 2009 project activity 1,007,528$ Expected Revenue gain before project - Minimal Target 915,000$ Normalized Net Revenue Effect KPI improved to 66%, above lower bound of target range (65% - 70%) Projected net revenue gain in 2010 based on sample is $1M within BU 1 Average process lead time/sigma interval reduced vs. 2009 by 28%/67% 1 BU 1 BU 1
  9. 9. The control plan is based on dashboards, SOPs and questionnaires to verify VOC • Standard Operating Procedures based on process artifacts • Provisioning of usable templates Standardization • Process Dashboard of cycle time for process steps together with process owners to ensure accountability Process Visibility • Cycle time capture in IT –Tool • Project Initiation Artifact sheet Required Process Artifacts • Internal & External Questionnaires to be used at regular intervals to readjust process Continuous Verification of VOC Nr. Answer 1 No 2 No 3 No Type of Project Consulting Project Do the roles & responsibilities of the assistance you need correspond to a staff position that exists in your organization? Question Do you need assistance in day-to-day or project activities in your devision/department/group? Do you have a job description for the assistance you seek? Questions to determine if project is talent-on-demand or consulting project CSM Project_Name Company Project_Status Started Spec_Sent Spec_Signed Resumes_Sent Booked Completed Lost Lost_Detail Start_Date John Doe Business Program Manager LPL Financial Active 1/27/2010 1/28/2010 1/29/2010 1/29/2010 Check list to provide to CSM Nr. Answer 1 2 3 4 5 6 7 8 9 10 11 12 13 If known and available, list names of possible talent + contact data, if not in Einstein How many talents have to be provided? Differentiate by job title Timeline to provide talent (give drop-dead date) Question Does the hiring manager have a written job description? Yes, please, provide. Does it need changes (additions/deletions/changes)? Have these changes been provided? Please, provide discussed changes. If not provided, will these changes be available within 48 hours? If no job description is available, which job title does the position correpond to? Do we know industry, function, functional and overall experience required and special requirements (certifications, specific areas/systems/methodologies)? Yes, please, provide. What is the available billing rate? Hourly, daily, weekly, flat Is the billing rate comparable to recently placed talent in similar positions and background? Expected duration of the placement? Number of weekly/monthly hours? M² Customer Questionnaires for the Talent Order Fulfillment Process The goal of the questionnaires is to understand the voice-of-the-customer with regard to two critical process phases: 1. Working with the client to define the project 2. The presentation of the consultant to a client Questionnaire 1: Determining performance of defining the project The questionnaire is aimed to identify the client perception of how well M² defined the project along several dimensions. The questionnaire is to be used after the delivery of the project spec either in person or over the phone at the end of a meeting. The questionnaire should not take longer than 2 – 3 minutes to complete. The questionnaire should be completed for each project where a spec is presented. On a scale from 1 to 5 with 1 strongly disagree to 5 strongly agree, how important (to the customer) are the following statements regarding M2 ’s documenting of customer requirements? Nr. Statement Score 1 M² listened and fully understood the business problem I am trying to solve 2 M²’s project specification document carefully defined the project scope and the skills & experience required for the consultant selected to complete this project. 3 M²'s project specification clearly defined the project deliverables and the measures of project success. Are there other factors that are important to you in terms of project definition, consultant delivery and project execution Questionnaire 2: Determining performance of delivering the right consultant The questionnaire is aimed to identify the client perception of how well M² did in delivering a consultant to the customer along several dimensions. The questionnaire is to be used after the consultant interview either in person or over the phone at the end of a meeting. The questionnaire should not take longer than 1 – 2 minutes to complete. Resume Of Jane Doe What are you? Mergers & Acquisitions, Corporate Strategy, and Financial Solutions Design Executive Executive Summary Summary: senior executive with over twenty years of experience in a full spectrum of accounting and financial methods and disciplines at renowned companies such as Drexel Burnham Lambert, Goldman Sacks and Citicorp Industries: Successfully executed 10 M&A transactions with accumulated valuation of over $4Bn within Financial Services and the Life Sciences sector Range of Deliverables: Proven record of project and program management excellence delivering improved or accelerated growth metrics; numerous commendations for creating and implementing strategic initiatives, assessing and executing business opportunities in M&A and restructuring contexts, and developing structured actionable programs Technologies: Microsoft Office, Excel, Factset, SDC/Prism, DRI McGraw Hill, Geo Carson, Bloomberg, Peoplesoft E1, SRC, Hyperion Key Areas of Expertise (bullets only)  M&A  FP&A  Restructuring  SOX Compliance Professional Experience INDEPENDENT CONSULTANT, CA 2007 to Present DIRECTV, Los Angeles, CA 2008 - 2009 World's largest satellite TV provider with more than $17B in annual US revenues. Business Operations Improvement Strategist Leadership: Quantitative and strategy analyses (IT systems and business processes). Created improved 10k and 10q SEC reporting solution design and implementation plans using Lean Six Sigma methods and BPM software (KNOA). Summary of Results Created Hyperion solution redesign and business process improvement plan for a network of nearly 30 FP&A sites (1,400+ system users); plan detailed more than $4M in annual cost savings on a projected investment of less than $2M. LIFE TECHNOLOGIES, CARLSBAD, CA 2004 to 2007 Director of Finance Global Operations/FP&A Director of Corporate Compliance GOLDMAN SACHS & CO. NY, NY 1997 to 2003 Investment Banking Analyst/Associate CITICORP NY, NY Accountant/Analyst 1991 to 1996