Lean Fulfillment in Financial Services WCBFs 4 th Annual Lean Six Sigma Summit May 1, 2008, Track I...
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Transcript of Lean Fulfillment in Financial Services WCBFs 4 th Annual Lean Six Sigma Summit May 1, 2008, Track I...
Lean Fulfillment in Financial Services
WCBF’s 4th Annual Lean Six Sigma SummitMay 1, 2008, Track I
Aaron Bruner, PE
Nathan Guerdet
Wells Fargo Financial
2
Introducing Wells Fargo Financial – Retail Services
Our financing allows clients such as Slumberland to offer “12 Months No Interest and No Payments”
We maintain clients by funding and servicing their customers’ transactions
We Provide Private Label Credit Card Services for Clients
3
Introducing the Forms Management Department
Documents and forms managed in Des Moines We supply forms to 30,000 retailer locations Paper applications are supplied so that customers can
apply for financing and agree to program terms
Wells Fargo Financial Retailer Services in Des Moines
4
Forms Management –Overview
We have custom applications for over 200 large clients We also provide applications for many industry programs We manage the print, storage, fulfillment and shipping of
all paper documents
Paper Credit Card Application
5
Forms Process Improvement was Necessary
1 to 10 year inventory on hand High scrape rate Too many rush orders – Large re-supply project in early ‘08 Complex ordering process Poor cost management
Pallets of Forms Stored in the Building Basment
6
Process work-out with all team members Build SIPOC Create detailed process flow chart CTQ chart Fishbone diagram Record data Develop vendor selection proposal Roll-out new processes for future state Six sigma control chart Results
Supply Chain Project Steps
7
S.I.P.O.C.
Forms Process From Supplier to Customers
8
Detailed Process Flow Chart
Too Many Process Steps
9
Right Sized Inventory
Cycle time
Quality
Cost
•Inventory turns•Decrease process time
•Forecast with 80% accuracy•Less than 10% spoilage
•Limit cost of safety stock•Keep cost of production even throughout the year
Critical to Quality
Measurements Materials People
MachinesMethodsEnvironment
Output
Cause & Effect / Fishbone Diagram
X – Major variable
x – Minor variable
N – Noise (something that can’t be controlled)
Communication between groups is limited.
Within each industry app type, there are different versions for each tier.
High Inventory
levels
XXLow stock notification fromInfo-Plus is “off”
“Fully loaded” cost of producing stock is not taken into consideration.
No disciplined forecasting process
Seasonality for industries causing spikes in usage
It’s “cheaper” to produce larger quantities.
We save money by making fewer shipments to dealers so we send
large quantities.
Sales, Marketing dictates how much supply should
be sent to dealers but don’t pay for shipping or
production
The annex cannot produce 28” apps so larger quantities are produced to accommodate for outsourcing lead time
Info-Plus software is inadequate as an inventory management tool.
XX
X
x
NX
x
x
x
Impact
Implementation
3
1
4
High Low
Easy
Hard
2
Measurements Materials People
MachinesMethodsEnvironment
Output
Communication between groups is limited.
Within each industry app type, there are different versions for each tier.
High Inventory
levels
43Low stock notification fromInfo-Plus is “off”
“Fully loaded” cost of producing stock is not taken into consideration.
No disciplined forecasting process
Seasonality for industries causing spikes in usage
It’s “cheaper” to produce larger quantities.
We save money by making fewer shipments to dealers so we send
large quantities.
Sales, Marketing dictates how much supply should
be sent to dealers but don’t pay for shipping or
production
The annex cannot produce 28” apps so larger quantities are produced to accommodate for outsourcing lead time
Info-Plus software is inadequate as an inventory management tool.
3
1
3
3
4
1
1
1
Cause & Effect / Fishbone Diagram
12
Application demand has increased significantly, but supply process has not adapted
Data Collection
In-house Process Could Not Handle 2 Million Apps
13
In-house supply process
Data Collection
In-house Process
1. Submit order to printer
2. Ship forms to Retailer
3. Store in Retailer basement
4. Send some forms to “Annex”
5. Submit some orders to “Annex”
6. “Annex” send to basement
7. Replenish remaining orders from basement
Poor In-house Fulfillment Process
14
In-house Supply Process
Data Collection
Flooring Retailer Example
1. Retailer submitted 400 apps in ‘07
2. 6 week re-order point 1800
3. Recorded on-hand inventory 4200
4. Actual on hand inventory 40000
i.e.: Demand and Supply Problem Exists
Wasted Supply Building up in Basement
15
2 Outside and 1 Inside Print Vendor 5 Inventory Storage Locations
Supplier & Inventory Locations
Basement6th FloorIn-House Vendor
Vendor 2
Vendor 1
16
Currently have 3 print vendors and store the supplies in 5 different locations
Coordinating Pricing, inventorying, billing, reporting, and tracking very difficult and expensive
There are no formal contracts in place to control costs and govern the relationships
High Level Problem Summary
17
We need to reduce order-to-delivery cycle time and the overall cost of forms
Need more accurate order and inventory management Need web-based, automated ordering to reduce costs Retailer needs to integrate and enhance its forms supply
chain processes to better align with its strategic direction of JIT supplies while reducing costs
Selection Criteria
18
Sent request for proposal to 5 vendors Vendor must have proven advanced technical solutions Must have business leaders who understand and are
committed to providing leading edge solutions Must have cost improvement execution for their
customers Weighted-factor Analysis on many criteria
Vendor Selection
19
145 Questions Later….
RFP Q&A Results Show: Score
1. Vendor 2 - Sigler 39.682. Vendor 1 - Stone 39.683. WF A, D, & P group 35.694. FedEx Kinko’s 32.575. In-House Annex 19.49
See Addendum 3 for Q&A
RFP SCORE
Stone Printing39.68
Sigler39.68
WF A, D, & P group35.69 FedEx Kinko’s
32.57
Annex19.49
0
5
10
15
20
25
30
35
40
45
Higher = Better Score
Checklist of NeedsSigler Annex
Web Based Ordering
Web Based Inventory
Real-Time Inventory
Customized Invoicing
Monthly Invoicing Summary
Invoicing by Product or Client
Provide Itemized Reports of Orders
Provide Itemized Reports of Shipments
Provide Itemized Reports of Printing
Will our print jobs be printed by you
Pricing Matrix Results Show:
1. Sigler can provide the online ordering, billing, and inventory tracking that we desire
2. Sigler is very price competitive
3. Shipping costs at Sigler are the same as the Annex
Note: We implemented a UPS Shipping Station utilizing Wells Fargo’s discount at Sigler’s facility
RFP Results
20
Total Cost per App
Stone$0.511
Sigler$0.394
Annex$0.289
WF AD&P$0.713
FedEx$0.855
$0.000
$0.100
$0.200
$0.300
$0.400
$0.500
$0.600
$0.700
$0.800
$0.900
Fully Loaded Cost
Cost Of 2,500 Apps To Produce, Inventory, And Ship Within One Year
Without Allocation
21
Actual Industry Program Printing Costs
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
Pre
ferr
ed -
Aut
o
Pre
ferr
ed -
Ele
ctro
nic/
App
lianc
e
Pre
ferr
ed -
Hea
lthca
re
Pre
ferr
ed -
Hom
eF
urni
shin
gs
Pre
ferr
ed -
Jew
elry
Pre
ferr
ed -
Oth
er
Pre
ferr
ed -
Rec
reat
ion
Tot
al C
osts
Sigler Annex
Printing Cost Per Industry
Industry CIT Actual App Print Qty Sigler Annex Money SavedPreferred - Auto 65,000 $4,789.20 $6,971.90 $2,182.70Preferred - Electronic/Appliance 40,000 $2,947.20 $4,290.40 $1,343.20Preferred - Healthcare 75,000 $5,047.50 $6,736.50 $1,689.00Preferred - Home Furnishings 325,000 $21,872.50 $29,191.50 $7,319.00Preferred - Jewelry 100,000 $6,730.00 $8,982.00 $2,252.00Preferred - Other 70,000 $5,157.60 $7,508.20 $2,350.60Preferred - Recreation 30,000 $2,628.00 $4,184.40 $1,556.40
705,000 $49,172.00 $67,864.90Discount if paid w/in 10 days 2%
$48,188.56Cost Per 0.068$ 0.096$
Print Cost Savings $19,676.34Cost Savings 29%
Without Allocation #'s
CIT Quoted Prices
29% Cost Savings
Using Vendor 2
Data Table:
Collect Cost Data by Program
22
Vendor Selection
Barcode Ready
(Formscape
compatible)
One Stop Online Orders,
Printing, Storing,
Fulfillment and Shipping Source
UPS Ship Station – Able to use WF
discount and save 33% on all of our shipping
costs ($150,000 annually)
23
Using our new preferred supplier as our one print source, we estimate cost savings of over $270,000 in 2008 and an increase in the service we provide our customers
Cost Saving Results
Printing of Apps Orders in 2007
$638,629
$365,196
$9,000$-
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
Vendor 1 Vendor 2 In-house
$'s
Sp
ent
on
Ap
p P
rin
tin
g
Savings of: $273,433
24
Price Per Control Chart
(1.00)
(0.50)
-
0.50
1.00
1.50
2.00
0 20 40 60 80 100 120 140 160 180 200
25
Price per App Order
0
10
20
30
40
50
60
70
80
- 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 2.00
Std Dev
Fre
que
ncy
26
ROP's
0
20000
40000
60000
80000
100000
120000
140000
160000
App Type
RO
P's
0
50000
100000
150000
200000
250000
300000
350000
Est
imat
es
27
Reduce order-to-delivery cycle time Reduce overall costs of forms Reduced cycle time for dealers to go “live” by 95% in Q1
2008 Increase inventory turn times while maximizing print
volume discounts Allows us to track inventory at each dealer location
whereby reducing opportunities for scrap Reconcile invoices much quicker Anticipate our customer needs an become pro-active in
managing them
Results
28
Questions