Guidon And RBFCU Lean For Credit Unions Webinar

Leveraging Lean Thinking In 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– Call Center Member Service

– Branch Workforce Management

• Getting Started

• Questions

2© 2008 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group

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

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

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

Randy Smith, President/CEO, Randolph-Brooks Federal Credit Union

• President and CEO of RBFCU since 1987 having prior served 5 yearsas 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

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 Managementfunction

• 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 …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

6© 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.

What does the member value?

OPERATIONAL LEAD TIMEOPERATIONAL LEAD TIME

Wasted Time & Activity

Core Process Value

Excessive Motion

(Walking to Next Task, etc.)

Defective Process

(Identifying, Handling, Fixing)

Missing Mail final

Backlog of

requests


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.

Missing

InformationWaiting

for next Process

Mail final

Documents

to internal

representative

Review/QA

Getting to Core Value

Traditional Car Rental Process

From gate torental counter

Wait in lineat rentalcounter

At counterFrom

counterto bus

Take busto terminal

Locatecar

� Confirm reservation


Fromgate

to bus

Takebus

to car

Driveto exit

car

Driveto exit

� Review & sign paperwork

� Credit card imprint

� Receive rental contract

� Receive car assignment

LEAN is all about identifying and eliminating waste

“Waste” is seen differently in LEAN…

• Traditionally, waste has been viewed as an object. It is very easy to envision a barrel of scrap metal or plastic and identify it as waste.

• In LEAN thinking, the term waste

OverProducing

Work InProcess

Over Processing

Errors & Rework

Transport

• In LEAN thinking, the term waste actually refers not to the physical material but rather the relationship of the resource to the member.

WaitingExcessMotion


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

Examples of Waste in Credit Unions

• Member waiting for service

• Cumbersome transactions

• Two forms, similar info

• Searching for information to answer a question

OverProducing

Work InProcess

Over Processing

Errors & Rework

Transport

• Reports created, not used

• Walk to/from the copier

• Misapplied loan payment

• File maintenance and retention


It’s all about core member value

Rework

WaitingExcessMotion

Transport

Lean Improvement

Metric Benchmark Gains

25% 50% 75% 100%0%

Labor Capacity

Lead Time/Delivery

Errors and Rework

“Lean Adopters Identify More Waste and Operate More

Efficiently”

What others say about Lean


Revenue Growth

Errors and Rework

Decision Points

Handoff Reduction

“Lean Is Inexpensive and Generates Solid Returns”

Corporate Executive Board, Operations Council™2006 Study on Lean Manufacturing for Financial Services

Improving the Member Experience

“The secret is in the dirt.”

-Ben Hogan

Your most powerful Your most powerful competitive advantages are where the work gets done

12

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

eliminate waste.

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

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• Information Systems: Help Desk

• Branch Vision Planning Session

• Member Services: Asset Protection

• 5S Project


Video ConferencingBranch 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 officer capacity

• Members experienced significant variation in the time to complete the process


• Cross functional team from branches and Lending Department took on the challenge of eliminating waste and standardizing the process.

• Team gathered for a 5-day “Kaizen” event to review the video conferencing process, specifically those that did not add value

• Reduced member wait/hold time by 30%

• Improved lending productivity by 17%

• Decreased forms/paper and associated printing (23 hrs/month)

• Developed training on new process for branches and lending center

Approach Results

Video ConferencingBranch Channel Loan Origination


specifically those that did not add value branches and lending center

Kaizen – A collaborative Lean methodology to rapidly identify and eliminate waste. Typical event duration is 4-5 days. Improvements are implemented or tested during the week to evaluate impact.

Since then

• Expanded from 6 to 17 Branches with Video Lending

• Average number of video conference calls increased from approximately 250 to 2,000 per month.

Since then

• Expanded from 6 to 17 Branches with Video Lending

• Average number of video conference calls increased from approximately 250 to 2,000 per month.

Member Service Call Center

Context and Challenge

• 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 challengeschallenges

• The call center needed to reduce transfers, ensure capacity was available for growth while maintaining high levels of member service


Member Service Call Center

A Kaizen team from including the Member Service Center, IT, Consumer Lending, Card Services and Accounting met for a 5-day improvement event. Key steps included:

Map/Quantify the member experience

Identify waste

Metric Before After

Transfer Rate

50% 20%

Inbound Calls

Reduced 28%

Abandon 8.9% 5%

Approach Results


Creativity before Capital$430K Savings

Identify/Prioritize improvements

• “Just do It”

• Process change to reduce steps and improve flow

• “5S” to improve efficiency of work environment

• Leverage existing technology (simplify screens, IVR)

Simulate/Pilot best ideas to gage impact

Establish training document

Report Out and Celebrate

AbandonRate

8.9% 5%

HandleTime

169 sec 150 Sec

Branch Workforce Management (in process)

Context and Challenge • 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


• Assessed branch processes, overall performance, and opportunities

• Launched a LeanSigma Workforce Management Project

Branch Workforce Management

• Simplified scheduling model that matches current scheduling outputs

• After 3 months, piloted the workforce management tool with 4 Branches:

• Tool reveals potential savings of10-20%

• Managers can use the tool to match capacity to volume

• Currently testing the resource planning

Approach Results

• Developed models/tools to assist with allocation of resources by branch, day/hour

• Pilot and roll-out tool; adjust schedules and metrics


• Currently testing the resource planning model across remaining 27 Branches

Anticipate 10-20% resource savings over the next two years while still maintaining member

service expectations.

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• 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?

© 2008 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.22© 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.

Guidon Performance Solutions

Thank YouThank YouGuidon Performance Solutions

866-986-4414 or [email protected]

www.guidonps.com

© 2008 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.23© 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.

Guidon And RBFCU Lean For Credit Unions Webinar

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