NETWORKING EVENTS - SIG

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Carlsbad, CAOctober 18-20, 2016

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How Strategic Sourcing Can Use QA to Increase

Value

August 30, 2016

6

Presenters

7

Ted ArdeleanDirector, R&D and MarketingCanon Business Process Services

As Director of R&D for New Services,

Ted works with client service delivery

teams, operations, technology

partners, and customers to research

and develop new services. Ted’s 25

year of business experience includes

financial and operational

management in outsourcing,

management consulting, and

manufacturing.

Jason SteinerSr. Operational Excellence LeaderSix Sigma Black BeltCanon Business Process Services

As a Sr. Operational Excellence Leader,

Jason leads continuous process

improvement initiatives and trains Canon

client service managers on the use of Six

Sigma methodology. Jason has over 20

years of experience working with senior

management to help drive change

management by diagnosing operational

challenges, identifying root causes and

appropriate solutions, and implementing

change leading to increased efficiencies and

positive measurable outcomes.

AGENDA Use of QA methods to increase value

QA methods

Takeaways

8

ABOUT CANON BUSINESS PROCESS SERVICES

9

Subsidiary of Canon U.S.A., a Canon Group Company IAOP Top 100 Global

Outsourcing Leader 2007 to

2016Services

• Business Process Outsourcing: Accounts Payable and

T&E, Student Financial Aid, Claims Processing, Auto Finance

• Document Process Management: Imaging, Print, Mail/S&R,

Records Management

• Discovery Services: Consulting, electronic discovery

• Office Services: Reception, Hospitality, A/V, Concierge

• Facilities Support: Campus Logistics Management, Inventory

and Material Control

Service Delivery

• On-site, off-site, off-shore processing center

• Six-sigma process excellence based methodology

• Customized, technology enabled

© 2016 Canon Business Process Services, Inc. All rights reserved.

ADVANCING BUSINESS PERFORMANCE TO A HIGHER LEVEL

~4,500 Employees in US

I n c r e a s e v a l u e f r o m

s u p p l i e r s a n d r e d u c e

P 2 P w o r k l o a d

01

10

QA for process excel lence

By the late 1990s, two thirds of Fortune 500 companies had incorporated Six Sigma

projects by 2000, the discipline grew into an industry

Quality Assurance – the maintenance of a desired level of quality in a service or product,

especially by means of attention to every stage of the process from production start to

delivery end

Methods & Techniques

Six Sigma

Kaizen

Lean

Etc.

11

Popularized by CEO of General Electric Jack Welch in 1995 he claimed it led to $750M in

cost savings

12

How QA f i ts into S2P?

CPO th inking• #1 CPO focus – cost savings and / or avoidance

• Better collaboration with business, suppliers

• Improving supplier performance

Relevant• Diminishing returns from the established sourcing

strategies

• QA methods provide insight and data into services

purchased which then lead to new cost reduction

opportunities

• Risk mitigation

• QA projects do not require substantial resources,

are short and easy to implement

Source: Zycus 2016 CPO Survey

Top 5 focus areas for 2016

1. Cost savings

2. Procurement process efficiency

3. Supplier performance improvement

4. Collaboration with others functions

5. Spend under management

0%

10%

20%

30%

40%

50%

60%

70%

80%

#1 Cost Savings #2 Supplier QualityPerformance

Which KPI does your organization use to measure procurement’s success?

Executives Practitioners

Source: Oxford Economics

13

Increase suppl ier value

Increasing Outsourcing

• “Lift & Shift” not focused on process

efficiency

• SLAs and requirements based on historic

data

• QA projects focus on process efficiency

• QA projects produce accurate transaction

data that lead to setting the right SLA and

resources

Savings Leakage Cost Reduction Opportunity

How QA projects benefit Strategic Sourcing

• A source for cost reduction

• More value from suppliers and improved relations

• Less contract rework – get it right the first time

• Better fit suppliers

• Help improve S2P process

• Reduces risk

14

When to use QA projects

• SLAs are not met

• Cost above benchmark data

• Before outsourcing

• Before buying technology

• Before a major change - in

workflow, layout, location,

workforce, etc.

15

• Problem is urgent – fix it now

• Large upside potential

• Persistent recurring problem,

unknown root cause

Time and Cost of QA Projects

16

QA project cost – varies depending on scope of projects. Many projects

require 1 SME and as little as 1 week

17

Pol l Question

Has your S2P function used process improvement methods (such as Six Sigma)

to reduce costs either in your own S2P process or in the services you source?

Yes

No

Not sure, Don’t know

Q A M e t h o d s

5 S + 1

02

18

19

5S+1 Event

• Used to identify and correct workplace inefficiencies before tackling more complex issues

20

5S+1 Event


• Aims to improve efficiencies by:

• Reviewing and adjusting operational flow, and

• Focusing on standardization and organization

21

5S+1 Event





• Establishes these focus points as part of on-going management

22

5S+1 Event





• Establishes these focus points as part of on-going management

• Typically conducted as a 2 – 3 day event

23

5S+1 Event

5S+1 creates the foundation on which all processes are established, operated, and continuously optimized over time

24

5S+1 Case Study

7,200/ Labor hours saved per year

C H A L L E N G E

Examine peak and average workflow within the mail and reprographics

center supporting airplane crew scheduling to identify opportunities for

improved equipment and labor utilization while maintaining high levels

of performance against client SLAs.

F I N D I N G S

CBPS discovered a cluttered customer service area, a disjointed layout

leading to excessive workflow steps, excessive supply inventory, multiple

handling throughout the overall process, as well as safety issues.

R E S U L T S

• Recouped 24 labor hours per day (equivalent to 3-4 FTE )

• Recouped 1,000 square feet of prime workspace at $40 per square foot

• Consolidated production into one room increasing safety, security, and control

A Leading Airline

Q A M e t h o d s

K A I Z E N

02

25

26

Kaizen

• Kaizen events are short duration projects (2-3 days) in which multi-functional teams focus on and improve specific operational processes

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwiVnfGftejKAhXKOhQKHXHSCgcQjRwIBw&url=http://www.ndivision.com/Careers/KaiZen.aspx&bvm=bv.113370389,d.bGg&psig=AFQjCNHJ74MxY9OJiM_is4u73DFVXl3_sw&ust=1455029394857470

27

Kaizen


• KAI = “To Take Apart”

ZEN = “To Make Good”


28

Kaizen




• We analyze (take apart) the elements of a process or system to see how it works, then discover how to influence or improve it (make good, or make it better)


29

Kaizen




• We analyze (take apart) the elements of a process or system to see how it works, then discover how to influence or improve it (make good, or make it better)

• Ideal when root causes are unknown


30

Typical Kaizen Event Timel ine

Charter Development

Walk & Map the Current

Process

Analyze Data & Eliminate

Waste

Design Future Process

Document Continuous

Improvement Plan

Implement Improvements

& Measure Results

Report Results

Days 1-2 Days 2-3Pre-Event Post-Event

31

Kaizen Case Study

$1 Million/ Inventory Savings

A leading Healthcare Provider

C H A L L E N G E

Medical supplies order rate was increasing but the usage was not.

Frequent supply stock-outs. Reduce inventory cost and their

corresponding expenses without jeopardizing patient services.

F I N D I N G S

Discovered a broken supplies distribution process. Several manually

identified errors which required requisition reprints, environmental

factors contributing to stock failures, no end-to-end accountability in the

process, and no single source of job information.

R E S U L T S

• Full implementation of recommendations resulted in $1M savings

• Improved case carts picking time by 56% and reduced error rate to zero.

• Defined a new process for managing date sensitive supplies.

Q A M e t h o d s

D M A I C

02

32

33

DMAIC (Six Sigma)

• A measurement-based strategy that focuses on process improvement and defect and/or variation reduction

DEFINE

MEASURE

ANALYZE

IMPROVE

CONTROL

Six Sigma6σ

34

DMAIC (Six Sigma)


• Structured and data driven

• Measures process capability DEFINE

MEASURE

ANALYZE

IMPROVE

CONTROL

Six Sigma6σ

35

DMAIC (Six Sigma)



• Measures process capability

• Used when an existing product or process is not meeting expectations or is not performing adequately

DEFINE

MEASURE

ANALYZE

IMPROVE

CONTROL

Six Sigma6σ

36

DMAIC (Six Sigma)



• Measures process capability

• Used when an existing product or process is not meeting expectations or is not performing adequately

• Complex problem

• High risk

• Root cause / solution unknown

DEFINE

MEASURE

ANALYZE

IMPROVE

CONTROL

Six Sigma6σ

37

DMAIC (Six Sigma)

Define the problem, the project goals,

and the customer

deliverables

38

DMAIC (Six Sigma)


and the customer

deliverables

Measure the process to determine

current performance

; quantify the problem

39

DMAIC (Six Sigma)


and the customer

deliverables


current performance


Analyze the data and

determine the root

causes of the problem

40

DMAIC (Six Sigma)


and the customer

deliverables


current performance



determine the root


Improve the process by identifying,

implementing,and

verifying a solution to reduce or

eliminate the problem

41

DMAIC (Six Sigma)


and the customer

deliverables


current performance



determine the root


Improve the process by identifying,

implementing,and

verifying a solution to reduce or

eliminate the problem

Control future

process performance to maintain

gains achieved

CONFIDENTIAL 42

DMAIC Case Study

68%/ Efficiency Improvement

C H A L L E N G E

Reduce unscheduled hours and overtime expense without negatively

affecting SLAs. Identify root-cause of excessive work hour variance to

plan.

F I N D I N G S

Discovered 56% of hours worked over schedule were directly related to

other service providers’ SLA failures. Corrections, workarounds,

leading to overtime expenditure and staffing inaccuracies.

R E S U L T S

• Reduced hours worked above plan by 68%.

• Defined new process for tracking and reporting secondary service

provider performance leading to improved SLA compliance.

A Leading Bank

CONFIDENTIAL 43

Tool set - examples

• 8 Deadly Wastes

• 5 Whys

44

The Eight Deadly Wastes

1 Defects

Type of Waste Definition

Process steps that result in scrap, rework

or re-processing

Example

Customer orders with incomplete information, rejected

drawings and documents, revisions/iterations

45


1

2

Defects

Over Production


Producing more than is required at the

current time


or re-processing

Example

Working ahead of schedule, building up large

transaction queues, keeping people “busy”



46


1

2

3

Defects

Waiting

Over Production



current time

Periods of inactivity while waiting for the

next process step to begin


or re-processing

Example



Time waiting to receive a quote from a supplier,

turnaround time to get an approval



47


1

2

3

4

Defects

Waiting

Non Value Added Processing

Over Production



current time

Unnecessary work beyond what is

needed to meet customer requirements




or re-processing

Example



Excessive information, unnecessary reports,

unnecessary approvals, excessive specifications





48


1

2

3

4

5

Defects

Waiting


Over Production

Transportation


Product moving from person to person

or between locations


current time






or re-processing

Example

Functional hand-offs (including electronic),

document movement (physical or electronic)









49


1

2

3

4

5

6

Defects

Inventory

Waiting


Over Production

Transportation





current time





Unprocessed or partially processed

materials, or undelivered finished goods


or re-processing

Example









Transactions/documents waiting in queue (e.g., incomplete

customer order, unreleased engineering drawing)



50


1

2

3

4

5

6

7

Defects

Inventory

Waiting


Over Production

Transportation

Motion


Excessive movement by people or

machines




current time








or re-processing

Example

Reaching, bending, unnecessary steps within the

office or work area













51


1

2

3

4

5

6

7

8 Employee / People

Defects

Inventory

Waiting


Over Production

Transportation

Motion



machines




current time








or re-processing

Unused creativity and underutilized

human capital

Example


office or work area













Insufficient time devoted to continuous

improvement, limited knowledge sharing

52


1

2

3

4

5

6

7

8 Employee / People

Defects

Inventory

Waiting


Over Production

Transportation

Motion



machines




current time








or re-processing

Unused creativity and underutilized

human capital

Example


office or work area













Insufficient time devoted to continuous

improvement, limited knowledge sharing

“The relentless pursuit of the elimination of waste

from every business process…”

53

Root Cause Analysis example – The 5 Why’s

Service provider keeps failing SLA for… overnight package deliveries

Why?

Worker not sure of correct name/person or location

Problem

54



Why?

Worker not sure of correct name/person or location

Why?

Name, location not identified clearly

Problem

55



Why?

Worker no sure of correct name/person or location

Why?


Why?

Information in company directory insufficient to identify the person

Problem

56



Why?

Worker no sure of correct name/person or location

Why?


Why?

Information in company directory insufficient to identify the person

Why?

Company directory set up with insufficient data fields to distinguish names/locations

Root Cause Physical location and distribution needs not accounted for in directory setup

Problem

57

Takeaways

• QA practices can find cost reduction inside the P2P process or inside the

services outsourced

• QA resources such as 6-Sigma experts can be found inside your

organization or in partnership with your service provider

• QA projects can be short, non-intrusive, and the ROI can be significant

• 3 QA methods are frequently used – 5S+1, Kaizen, DMAIC

Advancing Business Performance to a Higher Level

Thank youTed Ardelean

[email protected]

212 502-2122

Jason Steiner

[email protected]

212-502-1455

www.cbps.canon.com

mailto:[email protected]

mailto:[email protected]

http://www.cbps.canon.com/

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