© 2002 Six Sigma Academy ADT Business Unit Results Paul Gillard.

© 2002 Six Sigma Academy

ADT Business Unit Results

Paul Gillard


ADT US Highlights

~$264 M in observed improvement opportunities identified~$264 M in observed improvement opportunities identified~$264 M in observed improvement opportunities identified~$264 M in observed improvement opportunities identified

Business $ Revenue EBIT Margin

Field SSOs $2.86B $.84B 22%

•Five Major Regions (144 Districts/250 SSOs)•16,200 employees

Targeted Functions Assessment Location

Sales (Charlotte)

Admin/HR Data (Nashville)

Installation (Atlanta)

Service (Memphis)

Call Monitoring (Jacksonville)

National Sales Center (Indianapolis)

Distribution (CDC) (Memphis)

Dean Seavers

Nancy Chisholm

Mike O’Reilly

Tim Wahl


Cost of Poor Quality Heuristic

Non Competitive

Industry Average

World Class

% of Sales

>40%

25 - 40%

15 - 25%

5 - 15%

<1%

Dollars Left On Table

Sigma Level

Defect Free

Defects Per

Million2

3

4

5

6

65%

93%

99.4%

99.976%

99.9997%

308,537

66,807

6,210

233

3.4

Cost of Poor QualityKey Six Sigma Statistics

CompanyStatus

?

Assumed Most Processes Were Running at Between 4-5 SigmaAssumed Most Processes Were Running at Between 4-5 SigmaAssumed Most Processes Were Running at Between 4-5 SigmaAssumed Most Processes Were Running at Between 4-5 Sigma


Poor Quality Changes Behaviors

3 4 5 6

Sigma Scale of Measure

Restaurant BillsDoctor Prescription WritingPayroll Processing

Order Writeup

Wire Transfers

Airline Baggage Handling

IRS - Tax Advice (phone-in)

(140,000 PPM)

Best-in-Class

Average Company

Industry Six Sigma Levels


Potential Project List

Six Sigma may be leveraged by Tyco recapture dollars left on the table! Six Sigma may be leveraged by Tyco recapture dollars left on the table! Six Sigma may be leveraged by Tyco recapture dollars left on the table! Six Sigma may be leveraged by Tyco recapture dollars left on the table!


Reduce Discontinuances (Discos)

Problem Statement: • 86% RIF retention rate results in severe erosion of ANSC ($323M net of resales).

CTQ: (Critical To Quality):• Service and product quality.

Defect Definition:• Undesirable discontinuances due controllable product or service related issues.

Project Objective:• 93% company wide retention rate.

Current Goal:• Reduce discos by 50% within residential,

Small Business and Core Commercial lines of business.

Cost Benefits:• $98MM EBIT impact.

Internal/External Client Benefits:• Improve net income and cash flow• Revenue growth.

Dependencies:• Clear end-to-end view of customer

experience.• Willingness to make reasonable

customer concessions.• Ability to drive necessary changes across

the enterprise.


Margin

NationalCore

Commercial

ANSC/ADSC

Sales/Resales

Install

Service Satisfaction

Strategic GoalStrategic Goal

Business ChannelsBusiness Channels

Revenue DriversRevenue Drivers

Residential Disco’s Project Clusters

Billing ResponseTime

TechnicalSupport

Drill DownDrill Down

Potential ClustersPotential Clusters Training Expectation Management

Small Business

Residential

Service

RelocationProduct

SatisfactionPerceived

Value

Etc.

Monitoring

© 2002 Six Sigma Academy1010

Numerous Potential Discos Drivers Exist Year to Date Core Billing Problem Summary 2002

0% 5% 10% 15% 20% 25% 30%

Credit Card

Install Charge

Rates

CTC Charge

Service Charge

Statement

Collections

Refunds

CXA Still Billed

Year to Date Core Service Problem Summary 2002

0% 5% 10% 15% 20% 25% 30% 35%

CMC Service

Poor Tech

Service No-Show

SSO Service

Repeat Call

Scheduling

Quality of Service Advanced multivariate Advanced multivariate statistical analyses will be statistical analyses will be

used to quantify and model used to quantify and model the direct and indirect effects the direct and indirect effects

of hypothesized drivers of of hypothesized drivers of customer dissatisfactioncustomer dissatisfaction

September 2002 Complaint Summary

Mid-West12% South-

East15%

West 16%South-

West20%

Atlantic 37%


Basic Discos Process Map

Pending Disco report

Voluntary

Relocation

Non-Pay

Collection Effort

DiscoList

ResaleEffort

Retention

Resale

Resolution

Current

Desired


Reduce Incoming Alarm Volume

Problem Statement: • CMC costs have grown in direct proportion to the number of customer accounts under management. Opportunity exists to leverage existing labor and technology to reduce ongoing operating costs.

CTQ: (Critical To Quality):• Rapid isolation and appropriate response to alarms.

Defect Definition:• Alarms received by CMC that do not require CMC “action.”

Project Objective:• Identify causes of and reduce costs (labor & technology) associated with alarms.

Current Goal:• Reduce incoming alarms and associated calls by 10%.

Cost Benefits:• $10.9M reduction in handling alarms

Internal/External Client Benefits:• Improved labor utilization.• SSO allocated cost reduction• Customer satisfaction

Dependencies:• Willingness to challenge “current thinking” using hard data.

• Upstream and downstream process improvements.


Margin

NationalCore

Commercial

ANSC/ADSC

Sales/Resales

Install

CustomerBehavior

Strategic GoalStrategic Goal

Business ChannelsBusiness Channels

Revenue DriversRevenue Drivers

Residential False Alarm CTQ Flowdown

CustomerTraining

UsagePatterns

SystemConfiguration

Drill DownDrill Down

Potential ClustersPotential Clusters Training Etc.

Small Business

Residential

Service

EquipmentAssociateTraining

SignalProcessing

Monitoring


EndProcess

Call Monitoring Overview

DiagnoseSignal

Call Home,Fire, Police etc.

Incoming Signal (ADT & Dealer

Installed Systems)

ActionRequired?

Omaha, NE

Aurora, CO

Kansas City, MO

Rochester, NY

Jacksonville, FL

Bradenton, FL

Need to identify the key Need to identify the key drivers and make drivers and make

necessary, installation, necessary, installation, service, monitoring service, monitoring and/or technology and/or technology

adjustmentsadjustments..

Yes

No


ADT Six Sigma Considerations

• Strengths– Commitment and readiness to implement six sigma– Willingness to challenge tradition and status quo

• Opportunities– Leverage improvements across all SSOs– Leverage call centers more effectively– Aggressive management of disconnects, resales and false alarms– Selection, testing and career development– Workforce management (turnover, compensation and resource allocation)

• Recommendations– Target the “big picture” opportunities consistent with business vision– Process standardization across the entire ADT enterprise– Inventory management– Address goal alignment issues to incent desired behaviors

• Obstacles– Ability to identify and engage high performers– Timing, ongoing priorities and competitive pressures– Existing goal alignment and incentives that do not reward across silo-thinking– Systems integration

© 2002 Six Sigma Academy ADT Business Unit Results Paul Gillard.

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Transcript of © 2002 Six Sigma Academy ADT Business Unit Results Paul Gillard.