Lean Six Sigma Initiative

1. Lean Six Sigma Initiative Manual Invoice Processing ASK QUESTIONS THROUGHOUT PRESENTATION � BUT ONLY HAVE 20 MIN. These slides were condensed from a larger presentation Kick off meeting was 10/27/06 with Matt and Jennifer MAIN POINT � REMOVE MANUAL INVOICE PROCESSING FROM ACCT MGRS PLATE � THEN HELP GSG PROCESS FASTERASK QUESTIONS THROUGHOUT PRESENTATION � BUT ONLY HAVE 20 MIN. These slides were condensed from a larger presentation Kick off meeting was 10/27/06 with Matt and Jennifer MAIN POINT � REMOVE MANUAL INVOICE PROCESSING FROM ACCT MGRS PLATE � THEN HELP GSG PROCESS FASTER

2. � 2007 BroadSource, Inc. DEFINITIONS Lean Eliminate non-value-add activities Eliminate waste Just in Time (JIT) delivery; customer pull Lean can be used to: Eliminate excess inventory Reduce waiting time or delay Create continuous flow Six Sigma Improve quality Reduce defects �Voice of the customer� � meeting customer requirements �Voice of the data� � data driven problem solving Six Sigma can be used to: Reduce number of defects per opportunity Reduce variation in a process Lean � JIT � Toyota is know for this. Lean � focus on many small, simple problems. Six Sigma � focus on few large, complex problems.Lean � JIT � Toyota is know for this. Lean � focus on many small, simple problems. Six Sigma � focus on few large, complex problems.

3. � 2007 BroadSource, Inc. DMAIC METHODOLOGY Define state the problem in a measurable way identify the key output (Y) Measure collect data to understand current process identify possible inputs (X�s) to the Y Analyze document the process narrow down the inputs (X�s) Improve identify possible solutions assess risks pilot and implement Control document lessons learned implement ongoing measurement quantify improvement Will use DMAIC for both the LEAN and Six Sigma phases X�s and Y�s pertain mostly to Six Sigma phaseWill use DMAIC for both the LEAN and Six Sigma phases X�s and Y�s pertain mostly to Six Sigma phase

4. � 2007 BroadSource, Inc. INITIATIVE OVERVIEW Lean Eliminate business non-value-add activities Eliminate waste Create continuous flow Use Customer A as a pilot Six Sigma Improve process once GSG has completed several iterations of data entry Reduce variation Reduce number of defects Roll out to all customers

5. � 2007 BroadSource, Inc. DEFINEProblem Statement Problem Statement - Account Managers spent 26% of their time from 12/19/2005 to 10/26/2006 processing manual invoices which takes time away from finding savings opportunities for customers. Goal Statement Account Managers will spend no more than 5% of their time processing manual invoices by 6/30/07 Voice of the Customer Decreasing Account Management time on non-value add or business non-value add tasks and increasing time on value-add tasks will increase customer satisfaction. Potential Financial Benefit Increase revenue Reduce costs Ability to scale Operations Mention how the Problem Statement was made up by interviewing Vinnie / Steven and narrowing the problem Changed goal statement % since it was un-realistic to have 0% for the Lean phaseMention how the Problem Statement was made up by interviewing Vinnie / Steven and narrowing the problem Changed goal statement % since it was un-realistic to have 0% for the Lean phase

6. � 2007 BroadSource, Inc. DEFINESIPOC Diagram MAIN POINT � high level process made up of 5 tasks SIPOC tool helps define boundaries of projectMAIN POINT � high level process made up of 5 tasks SIPOC tool helps define boundaries of project

7. � 2007 BroadSource, Inc. WORK TRACKER � ANALYSIS ONLY AS GOOD AS THE DATA ENTERED!!!!! Initially ran from 1/1/02 to 10/26/06 but had to use a new start date to include �opening / sorting mail� task Highlighted tasks correspond to �manual invoice processing� � see SIPOC diagram Manual Inv Processing � TOO MANY HOURS Yellow tasks � TOO FEW HOURS VA � if you stop, would your external customers complain? BNVA � if you stop, would your internal customers complain? NVA � if you stop, would any customer complain?WORK TRACKER � ANALYSIS ONLY AS GOOD AS THE DATA ENTERED!!!!! Initially ran from 1/1/02 to 10/26/06 but had to use a new start date to include �opening / sorting mail� task Highlighted tasks correspond to �manual invoice processing� � see SIPOC diagram Manual Inv Processing � TOO MANY HOURS Yellow tasks � TOO FEW HOURS VA � if you stop, would your external customers complain? BNVA � if you stop, would your internal customers complain? NVA � if you stop, would any customer complain?

8. � 2007 BroadSource, Inc. MEASURE Ties back to the Problem StatementTies back to the Problem Statement

9. � 2007 BroadSource, Inc. MEASURE Customer A � by far the largest number of hoursCustomer A � by far the largest number of hours

10. � 2007 BroadSource, Inc. MEASURE Always have to question the data!!! And system that captures the data!!!! A revamped system/process can provide more reliable data Question � source of data, bias in the dataAlways have to question the data!!! And system that captures the data!!!! A revamped system/process can provide more reliable data Question � source of data, bias in the data

11. � 2007 BroadSource, Inc. ANALYZEFinal Value Add Analysis Re-did Value Add analysis after new buckets were created Value add classifications � no change Tasks that impact revenue � now 2 instead of 3Re-did Value Add analysis after new buckets were created Value add classifications � no change Tasks that impact revenue � now 2 instead of 3

12. � 2007 BroadSource, Inc. ANALYZEDetailed Process Map (from SIPOC diagram) Applies generally to ALL customers 5 major steps from earlier SIPOC diagramApplies generally to ALL customers 5 major steps from earlier SIPOC diagram

13. � 2007 BroadSource, Inc. ANALYZEDetailed Process Map (from SIPOC diagram)

14. � 2007 BroadSource, Inc. IMPROVENew Customer A �Pilot� Process Map Had to identify who would do each task (BSI or GSG).Had to identify who would do each task (BSI or GSG).

15. � 2007 BroadSource, Inc. IMPROVEFMEA exercise Failure Mode and Effect Analysis � brainstormed what could go wrong (defects) before Customer A pilot started and possible solutions to mitigate the risks This is 1 row from an entire spreadsheet of over 30 defectsThis is 1 row from an entire spreadsheet of over 30 defects

16. � 2007 BroadSource, Inc. IMPROVE Pilot with Customer A started on 11/14/06 Manual inv processing hrs have decreased since pilot startedPilot with Customer A started on 11/14/06 Manual inv processing hrs have decreased since pilot started

17. � 2007 BroadSource, Inc. CONTROLLessons Learned Regular communication needed between GSG and BSI OneSource enhancements needed �QC Complete� invoice status invoice �requires attention� flag Need another Work Tracker bucket for �GSG Review�

18. � 2007 BroadSource, Inc. CONTROLControl Plan Johnny is going to start collecting Work Tracker data at the end of June 2007 � once we have GSG processing invoices for ALL customers GOAL = 5%Johnny is going to start collecting Work Tracker data at the end of June 2007 � once we have GSG processing invoices for ALL customers GOAL = 5%

19. � 2007 BroadSource, Inc. CONTROLFinancial Benefit

20. � 2007 BroadSource, Inc. DEFINEProblem Statement Problem Statement GSG throughput rate for manual invoice processing for the Customer A pilot of 7.5 invoices per hour (8 minutes per invoice) is too low. BSI is fearful that some invoices will not be entered into OneSource in a timely fashion. This could delay the Account Managers creating customer�s AP reports which would result in late payment of invoices. Goal Statement � GSG will achieve a throughput rate of 12 invoices per hour by 9/30/2007 for all customers Voice of the Customer External customers require timely AP reports. GSG processing more invoices per day would reduce risk of not having invoices in OneSource that need to be tied to an AP report Potential Financial Benefit A higher throughput rate would decrease BSI�s costs and increase the total financial benefit from outsourcing manual invoice processing Six Sigma phase includes ALL CUSTOMERSSix Sigma phase includes ALL CUSTOMERS