Applying Six Sigma to Put the Metrics in Place and Streamline Processes
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Transcript of Applying Six Sigma to Put the Metrics in Place and Streamline Processes
Measuring Performance
Applying Six Sigma to Put the Metrics in Place and Streamline Processes
May 12, 2006
Anthony Savarese, DTCCGlynis Aquino, DTCC
2May 12, 2006
Today’s PresentationToday’s Presentation
• DTCC Background
• Approach to Quality
• Achieving Corporate Goals with Six Sigma
• Case Studies: Metrics Based Approach
• Lessons Learned
• Questions
• DTCC Background
• Approach to Quality
• Achieving Corporate Goals with Six Sigma
• Case Studies: Metrics Based Approach
• Lessons Learned
• Questions
3May 12, 2006
What is DTCC?What is DTCC?
•Largest post-trade financial services infrastructure organization in the world.
•Provides “cradle-to-grave” management of securities.
•Primary business focus: clearance, settlement and asset servicing for virtually all equity and fixed income securities.
•We are industry owned.
•Largest post-trade financial services infrastructure organization in the world.
•Provides “cradle-to-grave” management of securities.
•Primary business focus: clearance, settlement and asset servicing for virtually all equity and fixed income securities.
•We are industry owned.
4May 12, 2006
Our CustomersOur Customers
NYSE / NASD
Mutual Funds
Insurance Companies
Trust Companies
NYSE / NASD
Mutual Funds
Insurance Companies
Trust Companies
More than 11,000 companies within
the global financial services industryBanks
Broker / Dealers
Investment Managers
Securities Firms
Banks
Broker / Dealers
Investment Managers
Securities Firms
5May 12, 2006
Mission StatementMission Statement
By 2005, be seen as the provider of choice
worldwide for investment servicing solutions through leadership, innovation and
technology
By 2005, be seen as the provider of choice
worldwide for investment servicing solutions through leadership, innovation and
technology
6May 12, 2006
2005 Performance Highlights2005 Performance Highlights
Total number of shares traded: 853 billion6.8 billion: Total number of
transactions processed
$127.5 trillion: Financial obligations eliminated through netting
Value of securities on deposit: $31.2 trillion
Rebates, discounts and interest given back to customers:
$528 million
Value of securities settled through DTCC: $1.4 quadrillion
$1.7 trillion: Value of mutual fund transactions processed
7May 12, 2006
Today’s PresentationToday’s Presentation
• DTCC Background
• Approach to Quality
• Achieving Corporate Goals with Six Sigma
• Case Studies: Metrics Based Approach
• Lessons Learned
• Questions
• DTCC Background
• Approach to Quality
• Achieving Corporate Goals with Six Sigma
• Case Studies: Metrics Based Approach
• Lessons Learned
• Questions
8May 12, 2006
Approach to QualityApproach to Quality
• 1980’s• Quality Circles• Employee Participation Program
• 1990’s• Continuous Improvement Program• Cost of Non Conformance• Work Process Improvement
• 2000 – Six Sigma Launch & Quality Council• 2001 – Central Quality Office• 2002 – Six Sigma Infrastructure Teams• 2005 – Lean & Balanced Business Scorecard• 2006 – Cross-functional projects tied to goals
• 1980’s• Quality Circles• Employee Participation Program
• 1990’s• Continuous Improvement Program• Cost of Non Conformance• Work Process Improvement
• 2000 – Six Sigma Launch & Quality Council• 2001 – Central Quality Office• 2002 – Six Sigma Infrastructure Teams• 2005 – Lean & Balanced Business Scorecard• 2006 – Cross-functional projects tied to goals
SixSigma
9May 12, 2006
Creating a Quality CultureCreating a Quality Culture
•145 projects completed
•83 trained professionals
•$17,000,000 in accumulated savings
•145 projects completed
•83 trained professionals
•$17,000,000 in accumulated savings
Embedding Six Sigma – over 600 employees participating in process
re-engineering
10May 12, 2006
Project Selection CriteriaProject Selection Criteria
• Revenue Enhancement / Cost Reduction
• Customer Satisfaction• Defect Reduction• Cycle Time Reduction• Risk Reduction• Employee Satisfaction• Length of Time
needed to Complete Project
• Expected time to see results
• Tied to Strategy
• Revenue Enhancement / Cost Reduction
• Customer Satisfaction• Defect Reduction• Cycle Time Reduction• Risk Reduction• Employee Satisfaction• Length of Time
needed to Complete Project
• Expected time to see results
• Tied to Strategy
11May 12, 2006
Measuring SuccessMeasuring Success
•Critical Customer Requirements
•Critical Business Requirements
•Industry and Regulatory Standards
•Critical Customer Requirements
•Critical Business Requirements
•Industry and Regulatory Standards
Corporate
Goals
Corporate
Strategy
12May 12, 2006
Today’s PresentationToday’s Presentation
• DTCC Background
• Approach to Quality
• Achieving Corporate Goals with Six Sigma
• Case Studies: Metrics Based Approach
• Lessons Learned
• Questions
• DTCC Background
• Approach to Quality
• Achieving Corporate Goals with Six Sigma
• Case Studies: Metrics Based Approach
• Lessons Learned
• Questions
13May 12, 2006
Corporate GoalsCorporate Goals
•Stakeholder/Financial
•Customer/Service Delivery
•Strategic Positioning
•Employee/Learning and Growth
•Stakeholder/Financial
•Customer/Service Delivery
•Strategic Positioning
•Employee/Learning and Growth
14May 12, 2006
Voice of the Customer - VOCVoice of the Customer - VOC
•Survey metrics
•Relationship management
•Customer focus groups
•Advisory groups
•Incident management repositories
•Survey metrics
•Relationship management
•Customer focus groups
•Advisory groups
•Incident management repositories
15May 12, 2006
Voice of the Business - VOBVoice of the Business - VOB
• Balanced Business Scorecard
• Benchmarks and metrics
• Financial reports
• Regulators/Risk
• Action plans
• Balanced Business Scorecard
• Benchmarks and metrics
• Financial reports
• Regulators/Risk
• Action plans
16May 12, 2006
Voice of the EmployeeVoice of the Employee
•Employee survey
•Townhalls
•Employee action teams
•Skills based development plans
•Six Sigma Idea Generation forms
•Employee survey
•Townhalls
•Employee action teams
•Skills based development plans
•Six Sigma Idea Generation forms
17May 12, 2006
Enabling EmployeesEnabling Employees
•Skills based competencies and curriculum
•Various levels of process metrics training
•Quality Council sponsorship of projects and process metrics
•Education and awareness through• Townhall meetings• Direct reports meetings• Communication campaigns
•Goals planning process
•Skills based competencies and curriculum
•Various levels of process metrics training
•Quality Council sponsorship of projects and process metrics
•Education and awareness through• Townhall meetings• Direct reports meetings• Communication campaigns
•Goals planning process
18May 12, 2006
Achieving Corporate GoalsAchieving Corporate Goals
• Using metrics to determine performance gaps
• Assessing overall business impact• Launching refinement projects• Monitoring to ensure gains are
sustained• Leveraging improvements across
multiple business units• Delighting our customers
• Using metrics to determine performance gaps
• Assessing overall business impact• Launching refinement projects• Monitoring to ensure gains are
sustained• Leveraging improvements across
multiple business units• Delighting our customers
19May 12, 2006
Today’s PresentationToday’s Presentation
• DTCC Background
• Approach to Quality
• Achieving Corporate Goals with Six Sigma
• Case Studies: Metrics Based Approach
• Lessons Learned
• Questions
• DTCC Background
• Approach to Quality
• Achieving Corporate Goals with Six Sigma
• Case Studies: Metrics Based Approach
• Lessons Learned
• Questions
20May 12, 2006
Case StudiesCase Studies
Corporate Goal
Tactic Project Objective
Maintain Operational Excellence in
Customer Critical Processes
Customer Sales and On-boarding
Reduce cycle time for customer onboarding
Meet and Exceed Customer Service Level Expectations
Problem ResolutionReduce cycle time for
resolution of customer inquiries
Customer / Service Delivery
21May 12, 2006
Proactive Front End• Client project timelines, critical path
• Set & manage client expectations
• Profiled hunt list
Measure On-time performance• Trends, Root Cause Analysis
• Jeopardies, Action limits
• % Planned vs. Actual Completion
Moving from• Next available prospect in queue
• serial flow
Moving to• “Choose” to “Use” focus
• Trending root causes of delays
• A targeted, tiered project portfolio view
Action and Improvements • Act on Jeopardies
• Data-driven improvements
“Choose”
“Use”
Parallel processes• Member & DEA Questionnaires
• Credit approval & Implementation
PM
RM
DEAs
Service Bureaus
RS
CR
Ops
T-ORR
IA
Legal
Onboarding Team
PIP
Sr. Mgmt
Clients
Clients
Case Study 1:Customer Sales and OnboardingCase Study 1:Customer Sales and Onboarding
22May 12, 2006
Customer Sales and Onboarding:Process Flow ImplementationCustomer Sales and Onboarding:Process Flow Implementation
Approval
Relationship
Collateral
Use
RFARFRMembership Appl,Legal, Tax Docs
DomesticEntity?
Yes
No
AR
ApprovedMember
Page 1
Customer Onboarding Process - Illustrative
For Broker/Dealers
CompleteApplcationRequest
Prospect
Prep &Return
Questionnaire
DEA
Outside CounselReview
Legal
Account Execs - Rel. Mgmt.
Prospect
Membership Services (MS)
DEA
Legal
Implementation Admin (IA)
PIP / ESC
Operations
Update MasterFiles
Operations
Assign IDs
Operations
Application Pre-Qual for CR, Legal,
Tax
MS
Credit Risk (CR)
Install DTCC Conn,NEO, Net Adm, Net
Planning
PIP / ESC / COMM
Senior Management
IM orFTS?
No
Yes
Onboarding ProjectPlanning
AE / RM
Kickoff PlanningMeeting / Call with
Prospect
AE / RM
Execute and Manage Project
RM
Send DEAQuestionnaire
MS
Ops Forms toProspect
RM
Send out LegalAgreements
MS
DistributeQuestionnaire andMembership Form
MS
PrepareQuestionnair
e & MemForm
Prospect
Receive and CheckQuestionnaire and
Mem Form
MS
Activate
Operations
Collateral Check
RM
Membership ApprovalDecision
MBS Sr. Mgmt.
Credit Risk Review
CR
Credit CollateralDeposit
Operations
Provide CollateralDeposit
Prospect
Order Connectivity& Install Lines
PIP / ESC / COMM
DistributeOperations Doc
RM
DistributeConnectivity
OrdersRM
Non-Tech ORR,Train & Activ. Pln
RM
Receive and CheckLegal Agreements
MS
Trade Inputverification for IM,
FTS
ORR
Yes
Provide OpsForms
Prospect
Sign LegalAgreements
Prospect
ConnectivityProposal &
Forms to ProspectRM
ProvideConnectivity
Forms
Prospect
DEA?
Yes
No
Tech ORR
ILLUSTRATIVE
23May 12, 2006
Customer Sales and Onboarding:Metrics Report - Illustrative View
Customer Sales and Onboarding:Metrics Report - Illustrative View
Customer Onboarding Process Performance - Illustrative Future Scenario - Current Date 3/17/2006*Start M1 (Days) M2 M3 (Days) M4 M5 M6 M7
Plan / Actual
ProspectC
urr
ent
Sta
tus
(3/1
7/06
)
Req
ues
ted
Tar
get
A
ctiv
atio
n
Ch
oo
se D
ate
- K
icko
ff M
eeti
ng
Qu
esti
on
-nai
re
Su
bm
itta
l (D
ays)
Qu
esti
on
-nai
re
Ret
urn
ed (
Day
s)
Ag
reem
ent
Ret
urn
ed w
ith
F
inan
cial
s (D
ays)
Cre
dit
Ap
pro
val
(Day
s)
Op
s C
om
ple
te
(Day
s)
Co
nn
ect
Co
mp
lete
(D
ays)
Act
ivat
e -
To
tal
"Cri
tica
l Pat
h"
(Day
s)
To
tal T
asks
Tas
ks C
om
ple
te
on
-tim
e
% C
om
ple
te o
n-
tim
e
% C
om
ple
te Comments - Address delays and reasons for
delays or tasks not completed on time
plan Lincoln 12/10/05 07/01/05 23 11 40 34 19 63 87 46
actual LincolnR
12/10/05 07/01/05 24 50 45 32 17 70 135 46 40 87 100Billing, but late due to Connectivity Issues
plan Reagan 01/10/06 07/10/05 23 11 40 21 19 63 69 47
actual ReaganY
01/10/06 07/10/05 21 20 36 19 55 40 35 88 85Restructured, needs funding
plan Madison 05/01/06 07/20/05 23 11 40 34 19 33 77 50actual Madison G 05/01/06 07/20/05 25 25 33 50 28 31 75 50 50 100 100 Billingplan Hamilton 1/4//2006 08/01/05 23 40 21 19 33 64 48actual Hamilton G 1/4//2006 08/01/05 36 50 20 18 30 60 48 46 96 100 Billingplan Washington 01/15/06 08/01/05 23 11 40 21 19 33 74 50
actual WashingtonR
01/15/06 08/01/05 20 24 30 25 16 35 75 50 25 50 100Billing, but significant delays ealrier in process
plan Kennedy 02/01/06 08/15/05 23 11 40 34 19 33 126 50actual Kennedy Y 02/01/06 08/15/05 30 15 57 15 23 34 139 50 45 90 100 Billingplan Roosevelt 04/17/06 09/07/05 23 11 40 21 19 63 79 49actual Roosevelt G 04/17/06 09/07/05 27 12 42 25 19 40 73 49 49 100 100 Billingplan Nixon 03/15/06 09/09/05 23 11 40 21 19 63 69 49
actual NixonR
03/15/06 09/09/05 40 10 55 20 18 35 30 86 71Issues with IM & custom software
plan Jefferson 03/01/06 09/10/05 23 11 40 34 19 33 126 47actual Jefferson R 03/01/06 09/10/05 17 37 20 19 95 43 not yet approvedplan Adams 03/15/06 11/15/05 23 11 40 21 19 63 94 49
actual AdamsR
03/15/06 11/15/05 20 0 40 14 25 22 88 51
Recent SD, wants to use unapproved Service Bureau
Benchmark - Planned Average 23 11 40 26 19 48 87 49Benchmark - Actual Average (Complete) 26 16 43 23 17 37 93 41 36 88 85
Take Rate - # Paying Onboards / # Onboards in Pipeline 16 out of 10 complete and billed
Legend Blue Not ApplicableGreen On-time and on target YellowAlert, some delays or tasks not on-time RedMiissed target, major delays or significant % not on-time
* For Illustration only - NOT real project plans nor actual results
24May 12, 2006
Customer Sales and Onboarding:Metrics Report - Illustrative View
Customer Sales and Onboarding:Metrics Report - Illustrative View
Lincoln Onboard
0
20
40
60
80
100
120
140
160
Day
s
Actual 24 50 45 32 17 70 135
Plan 23 11 40 34 19 63 87
Question-naire Submittal
Question-naire Returned
Agreement Returned with
FinancialsCredit Approval Ops Complete Connect Complete
Activate - Total "Critical Path"
Adams Onboard
0
10
20
30
40
50
60
70
80
90
100
Day
s
Actual 20 0 40 14
Plan 23 11 40 21 19 63 94
Question-naire Submittal
Question-naire Returned
Agreement Returned with
FinancialsCredit Approval Ops Complete Connect Complete
Activate - Total "Critical Path"
% On-Time Completion
0.00
20.00
40.00
60.00
80.00
100.00
120.00
Linco
ln
Reagan
Mad
ison
Hamilton
Wash
ingto
n
Kenne
dy
Rooseve
lt
Nixon
Jeffe
rson
Adam
s% T
asks
Co
mp
lete
d O
n-T
ime
Pareto of Delay Causes
0
10
20
30
40
50
60
70
80
Day
s
0.00
0.20
0.40
0.60
0.80
1.00
1.20
Delay Days 73 53 45 22 18 15 13 10 6
Cumulative Contribution 0.29 0.49 0.67 0.76 0.83 0.89 0.94 0.98 1.00
Customer Business
Credit Risk Group Operations Connectivity LegalService Bureau
MembershipApproval by
Sr. Mgmt
25May 12, 2006
Case Study 2: Problem ResolutionCase Study 2: Problem Resolution
Key Drivers of SatisfactionCommitment to quality
Customer serviceCommunication with the customer
Sense of urgencyAbility to increase operational efficiencies
PROBLEM RESOLUTION
Key Drivers of SatisfactionCommitment to quality
Customer serviceCommunication with the customer
Sense of urgencyAbility to increase operational efficiencies
PROBLEM RESOLUTION
26May 12, 2006
Problem Resolution:Metrics Based ApproachProblem Resolution:Metrics Based Approach
•Implemented internal SLA’s and dashboard
•Implemented customer facing metrics dashboard
•Implemented internal SLA’s and dashboard
•Implemented customer facing metrics dashboard
For March 2006 Month Month MonthElectronic Inquiries Jan-06 Feb-06 Mar-06Metric Baseline Goal Actual Actual ActualType 1 Average Cycle Time (Days) 2.3 Days 1.9 1.6 1.6 1.5
Type 2 Average Cycle Time (Days) 3.0 Days 2.5 3.0 2.8 2.1
Type 3 Average Cycle Time (Days) 2.6 Days 2.2 3.3 2.9 2.5
Percentage of Inquiries Closed in 6 or More Days – A BBS Benchmark
15.6% 13.3% 16.7% 13.5% 8.8%
Percentage of Reopens – A BBS Benchmark 4.1% 3.1% 4.2% 4.5% 2.0%
Percentage of Unnecessary Inquiries – A BBS Benchmark
29.8% 23.8% 30.0% 33.4% 35.7%
Phone InquiriesMetric Baseline Goal Actual Actual ActualAverage Speed to Answer (Average Hold Time) (Seconds)
0:00:26 00:00:20 00:00:40 00:00:24 00:00:23
Service Factor (Percent of Calls Answered Within 60 Seconds)
84.2% 87.0% 74.1% 86.2% 86.1%
QualityMetric Baseline Goal Actual Actual ActualE-Survey Overall Satisfaction with Department – A BBS Benchmark
80% 83% 78% 84% 82%
E-Survey Satisfaction with Problem Resolution ('Demonstrated commitment and urgency when resolving problems')
81% 85% 76% 84% 80%
Green: Goal met or exceeded
Yellow: Within 10% of goal
Red: 10% or more below goal
VOB
VOC
Site 1 OperationsMetric Goal
(% Within SLA)
Average Cycle Time
(Hours)
% Within SLA
Total Inquiries
Completed
Average Cycle Time
(Hours)
% Within SLA
Department 1: Percentage of Inquiries with Responses within 48 Hours
100.0% 10.4 100.0% 332 5.6 100.0%
Department 2: Percentage of Inquiries with Responses within 24 Hours
100.0% 8.7 95.7% 82 12.2 98.8%
Department 3: Percentage of Inquiries with Responses within 48 Hours
100.0% 16.2 94.2% 97 13.5 100.0%
Site 2 OperationsMetric Goal
(% Within SLA)
Average Cycle Time
(Hours)
% Within SLA
Total Inquiries
Completed
Average Cycle Time
(Hours)
% Within SLA
Department 1: Percentage of Inquiries with Responses within 48 Hours
100.0% 27.7 84.3% 369 12.6 97.0%
Department 1A: Percentage of Inquiries with Responses within 72 Hours
100.0% 27.9 97.0% 74 26.5 94.6%
February 2006
February 2006
March 2006
March 2006
27May 12, 2006
Problem Resolution:Improving Supplier Partnerships
Problem Resolution:Improving Supplier Partnerships
•Identified top 5 supplier offenders
•Communication and awareness• Employees• Suppliers
•Reduced items aged over 6 days
•Identified top 5 supplier offenders
•Communication and awareness• Employees• Suppliers
•Reduced items aged over 6 days
% Aged Items over 6 Days
Jan-06 Feb-06 Mar-06
% A
ged
Item
s O
ver
6 D
ays
Bank 1 Bank 2 Bank 3 Bank 4 Bank 5
28May 12, 2006
Problem Resolution:What Satisfied Customers are Saying
Problem Resolution:What Satisfied Customers are Saying
•“Your staff jumps through hoops for us. [There] are three that come to mind.”
•“Tom stated that he has seen a great improvement in the quality of answers to [electronic] inquiries. He would like to see turn-around time improved.”
•“Your staff jumps through hoops for us. [There] are three that come to mind.”
•“Tom stated that he has seen a great improvement in the quality of answers to [electronic] inquiries. He would like to see turn-around time improved.”
29May 12, 2006
Today’s PresentationToday’s Presentation
• DTCC Background
• Approach to Quality
• Achieving Corporate Goals with Six Sigma
• Case Studies: Metrics Based Approach
• Lessons Learned
• Questions
• DTCC Background
• Approach to Quality
• Achieving Corporate Goals with Six Sigma
• Case Studies: Metrics Based Approach
• Lessons Learned
• Questions
30May 12, 2006
Lessons LearnedLessons Learned
•Benefits - Adopting this paradigm has focused DTCC on projects that are cross-functional in nature and less down in the noise
•Aligned with corporate strategies
•Line employees get it!
•Benefits - Adopting this paradigm has focused DTCC on projects that are cross-functional in nature and less down in the noise
•Aligned with corporate strategies
•Line employees get it!
31May 12, 2006
Our Future - What We are Striving ForOur Future - What We are Striving For
•A single industry-driven strategy
•A streamlined clearance and settlement process
•Heightened global competitiveness
•Shortened settlement cycle (T+1)
•Delighted customers
•A single industry-driven strategy
•A streamlined clearance and settlement process
•Heightened global competitiveness
•Shortened settlement cycle (T+1)
•Delighted customers
32May 12, 2006
Today’s PresentationToday’s Presentation
• DTCC Background
• Approach to Quality
• Achieving Corporate Goals with Six Sigma
• Case Studies: Metrics Based Approach
• Lessons Learned
• Questions
• DTCC Background
• Approach to Quality
• Achieving Corporate Goals with Six Sigma
• Case Studies: Metrics Based Approach
• Lessons Learned
• Questions
33May 12, 2006