Six Sigma Sample Project

Six Sigma Sample Project:Redesigning the Fulfillment Process of a professional services company

Executive Summary & Project NarrativeAndreas Freund, PhD, San Diego

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

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

FYTD 2009 [June-30] M2 LSG FS Tech SSGProjects booked 225 62 96 8 59Revenue 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

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

The Define phase brought significant insights into process issue root causes

In su ffic ient Fill- Rate

Environment

People

M ach ine

Mat er ial

M ethod

Measurement

Proj ect i s n ot we ll d ef in ed

Lack o f f eat ure s in E in st ei n

Lac k o f c oop erat io n be tw een p eo pl e ( x)

In suf f ic ie nt l ev el o f t ra in in g

Sal es Sk il l s

C li en t do es not hav e eno ugh ti me f or c ons ul t at ive ap pro ach

Cl i ent doe s not perc ei ve M2 as co nsu lt i ng f i rm

We are gen eral is ts i n bu si ness d evel op men t

We are gen eral is ts i n co nsu lt i ng se rvic es

M 2 ha s con fu sed i den t it y

Proj ect s are b ot h con sul t at iv e and s ta ff aug ment at i on

M is al ign ment of f irm cul t ure t o th e act ual servi ce s y ou are se ll i ng

Un cl ear st rat egi c di rect i on f ro m S en io r M an age ment (x )

Ch ang in g market la nds cape ( n)

Bu sin ess M od el

Co nsu lt an t s a re n ot re al s ta keh ol ders ( n)

B usi ne ss Mo de l do es no t mak e c le ar d is ti n ct io n (x) Cu rre nt M ark et

Co ndi t io ns ( n )

Hi st or i cal geo grap hi c sal es f ocu s

Un cle ar recrui t ment st ra te gy

Ve ry br oad prod uct of f er in g

U ncl ear st rat egi c di rect i on f rom Sen io r M an age ment (x)

No co ns ist en cy i n how perso nal eva lu at io n to ol i s use d (x)

No g lo bal vis ib il i ty i n in t erna l t al ent le adi ng t o un deru ti l iza t io n (x )

R ecrui t in g is d one by bu si nes s u ni t (x )

M ove d fo rwa rd wi t h pe opl e w e had w he n cha ngi ng b usi ne ss mod el

We do n ot say no t o a nyt hi ng

La rg e Da ta bas e of c onsu lt an t s ( x)

Di d no t f i t t he pe opl e t o th e model (x)

We are very o ppo rtu ni st ic

We ha ve la rg e con su lt an t da tab ase (x)

We are react i ve no t pro act iv e

We do n’ t sa y no (le gacy c li ent s )

We have a l arge c onsu lt a nt d at a bas e (x )

C li en t do es no t perc ei ve val ue i n co nsu lt at i ve app roa ch

It is p ercei ved tha t i t i s exp ens iv e t o t rai n peo pl e

Lac k o f a ssess ment of trai ni ng n eed s

Lac k o f c onse nsu s on st rat eg ic d irec ti on

Th ere is no vi sio n of M 2 st ra te gy (x)

Lac k of a met h od o n how t o achi ev e agree ment o n st rat eg ic vi si on ( c) N o in te rn al ch amp io n f or t rai ni ng (x )

No d ef in it i on o f w hat ski l l set s are requ ire d to b e suc cess fu l by rol e

N o gap a nal ysi s of trai ni ng n eed s

N o trai ni ng s t ra te gy (x )

Hav e in suf f ic ien t s ubj ec t area e xpert i se

B ecau se w e are gen eral ist s ( sa me ro ot c aus es as bel ow )

C onsu lt an t p oo l is u nw ie ld y

Po ol i s to o bi g

Po ol is st al e

Th ere is no rea l ba rr ie r t o ent ry

We can no t say n o

M ade de ci sio n t hat th ere is va lu e in ne tw o rk b read t h ( c)

It can no t ha rm us ( c)

I nsuf f i ci ent dat a man age ment (x)

Th e s ize o f t he t ask

N o i nt ern al o wn ersh ip (x )

Ho me g row n sy st em

No u ni f ied p ol ic y of u si ng Ei ns t einThree b usi ne ss un it s op erat i ng di f fe rent l y (x)

Th ere is n o u nd erst an di ng of wh y bu sin ess u ni ts o pera te di f f erent l y

Bu sin ess U ni t s are grow i ng on th ei r ow n

Typ e of c li ent s f or each ( n )

No o wn ersh ip o f w hi ch proce sse s s hou ld b e un if i ed (x )

No c ons ensu s on w ha t E in st ei n sho ul d do

Le vel o f cu st omi zat i on of cu rren t n ew er s yst em w oul d be t o o hi gh ( n)

We are opp ort un ist i c (x )

Lac k o f s kil l se t s

Lac k o f e xperi en ce ( n)

Lack o f co nsu lt an t av ail ab il i ty (n)

La ck of U rge ncy ( x)

Lac k o f a tt en ti on t o d et ai l ( x)

Lac k o f o r M i sco mmuni ca ti on b et we en pe opl e

Lac k o f c onf i den ce

Lac k of T rus t

Lac k of a dop t io n of b est -prac t ice s (x)

C li en t doe s not li ke b ei ng sol d t o (x)

No t a pe er -t o- pee r rel at io nsh ip w i t h cli en t (x)

M ovi ng t o o f as t i n sel l in g to cl i ent

Nee d to move f ast

N ot percei ve d as co nsul t in g comp an y b ut st af f in g com pan y ( see kn ow n root cau ses

und er m at er ia l)

C li en t do es no t f eel heard

Co nsu lt an ts a re n ot a f i tM isma t ch bet w een s ki ll set,

exp ect at i ons & bud get

Dema nd o n cli en t si de f or 100 % mat ch i s hi ghe r ( n)Exp ect at i ons s et

du rin g sal es cal l

Bec aus e t h is i s our bu si nes s m ode l ( x)

Th e s pee d of comp et it i on ( n)

We do n ot hea r t he cl ie nt

Lac k o f k now l edg e in me th odo lo gy (x)

Try t o sel l b et t er s ol ut io n t hat meet s ne eds bu t c li ent do es no t w ant

Loo k fo r c apab i li t y f irst and t he n bu dge t ( x )

We are ge neral i sts(see ro ot c aus es fo r t hi s po in t

un der mat er i al s)

In suf f ic ie nt l eve l of tru st bet w een B D M an d CS M Nat u re of B D M - CS M st ruc tu re

Di f fe rent cus t omers ( cl ien t v s. con su lt an t) ( c)

Lac k o f un ders t and in g of p roce ss ti mel i nes

B ecau se proc ess es are di f f erent bet w een B U ’s (x)

Lac k o f vi si bi l it y i nt o proc ess (x )

C li en t exp eri enc e w o rkin g w it h co nsu lt ant s (n)

Lac k of s pec if i c subj ec t mat t er kno w led ge (B DM ) to u nde rst and b usi nes s prob le m

Cl ie nt s ki ll s et re qui remen ts i s t oo un iq ue

Lac k o f sp eci f ic s ubj ec t mat te r k now l edg e ( C SM) t o un derst and bus in ess pro bl em and v et c onsu lt an t

In suf f i ci ent t ool s to s upp ort spec if i c eno ugh s earch (x )

Lac k o f s ubj ec t mat te r e xpert i se (B DM /CS M) ( x )

Q ua li f ica ti on o f cl i ent to b uy a co nsu lt an t (x)

B usi ne ss Prob le m w as no t pro perl y und erst oo d

Lan gua ge be tw e en cl ie nt and B D M d oes n ot a li gn

Thi ng s are ta ken f or gran te d

M ove t oo f as t t o clo se pro je ct(see ro ot c aus es abo ve un der “ne ed t o mo ve f ast ” )

No co ns ist en t me tr i cs ( x )

Lack o f ac cou nt abl i ty

N o con si st ent met ri cs t o mea sure res ul ts (x)

In cons is te nt e xec ut io n of bus in ess proc ess es be tw ee n and w i th in B U s (x )

Lac k o f s ubj ec t mat t er e xpert i se ( x)

We are ge nera li st s( see ro ot c aus es und er ma te r ia l)

In suf f ic ie nt v is ibi l it y i nt o pro cess ( x)

Lac k o f a dop ti on o f b est - pract i ces (x )Input

* Project idea after client approaches M2 with a problemQuantification: # of project ideation from client

* Project idea after M2 BDM approaches clientQuantification: # of project ideation from M2

* Consultants for projectQuantification: # of consultants approached

Process

* Project Launch

* Consultant ID & Evaluation

* Present- to-Close

Output

* Booked ProjectsQuantification: # of booked project to total number of launched project = Fill- rate

* Proper Consultant for ProjectQuantification: CSI Score, EOE score (to-be-defined); # of extensions per selected consultant; # of consultants released from projects to booked projects

* RevenueQuantification: TCOR (total cost of revenue)

Customer Business Client

Customer requirements 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 without voice- Competitively priced- Highest quality of talent- High-touch service

Subconscious expectations- On time and on budget- Building internal project sponsor brand- Consultant needs little or no internal support

VOC summaryTimely delivery of the right talent to solve the right problem effectively, in time and on budget

Life Sciences & Growth Business Unit of 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

# O

bser

vati

ons

Grou p

Distribution for CT Matrix - Business Client

0

100

200

300

400

500

600

Impo

rtan

ce Sc

ore

on V

OC

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 Projec t with client 9 5 9 6 2 4 7 7 6 7 7 543Communication 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 350Conduct 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 328Communication between CSM & BDM - Consultant 3 7 1 5 1 3 6 1 5 2 4 321Consultant Interview with Client 9 4 3 2 1 5 4 5 2 2 2 308Onboard consultant to project/c lient 2 3 3 1 3 1 1 4 1 6 4 231Client approve of projec t 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”

Voice of the Customer

• 11 distinct dimensions suggests broad spectrum of needs

• VOC needs to be verified by measurement

• Existing CSI does not align well with determined VOC

Process Flow

• Project Definition phase has highest influence on VOC

• No differentiation between product lines (staff augmentation & consulting services)

Root Causes

• Identified 28 uncontrolled root-causes showing complexity of influencing factors and the process itself

• 7 important root causes are of a strategic nature (out of scope)

Quick Wins

• 7 root causes were identified to allow for quick win (lower effort) improvements

• “Lack of adoption of best-practices” to detail” have highest impact on process

Microsoft Office Excel 97-2003 Worksheet

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

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 54Total Pending Projects 16Total Projects Lost 13Total Projects Booked 25Statistical 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 SampleState 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 38Total Projects booked in Sample with 2009 Fill Rate 22Total Projects booked in Sample 25Net Project Gain 3Net 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 1BU 1

The control plan is based on dashboards, SOPs and questionnaires to verify VOC

• Standard Operating Procedures based on process artifacts

• Provisioning of usable templatesStandardization

• 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 organizat ion?

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 DoeBusiness 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 fi nancial 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 i n 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, Hyperio n

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 an d 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 $4 M in annual cost savings on a projected investment of le ss 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