RECENT PROJECTS
Below are a few recent projects using both the DMAIC and DMADV methodology.
Customer Hardware Conversions and Upgrades
Customer Hardware Conversions and Upgrades
Project Length: 5 Months
LSS Process: DMAIC
Business Impact: Reduce the hours for conversions by 20%. (Efficiency increase of 576 labor hours per year - $19,900). Reduce the cycle time from 60 to 30 days, doubling capacity ($1.1 million booked last year). Transfer one FTE to the Systems Integration Group. Accelerate billing of hardware, software and services to the customer. Reduce end of month inventory by $200,000 by billing clients earlier.
Problem Statement: It takes too long to load software on new servers for customers. The Company must purchase hardware and Cache’ licenses then float the cost of these licenses until the HW/SW is installed at the customer site. Services in support of server builds are not billed to the customer until the customer takes the server live. Revenue can be expended but not billed for a period of 60-120 days.
Goal Statement: Reduce the time required to perform a conversion from 40 hours to 32 hours. Reduce the cycle time of each conversion from approximately 60 days to 30 days, allowing early revenue recognition and increased capability for additional conversions. Free up one staff member for reassignment.
Project Summary: This project required reviewing the existing HW conversion process within the Company to reduce the cycle time and advance revenue recognition. The team, led by the Black Belt, mapped the existing process in detail, and then added timeframes for each process step, creating a value stream map. The team then used the fishbone diagram to evaluate potential root causes as to why the conversion process takes so long.
Total First Year Savings: $407,135
Project Length: 5 Months
LSS Process: DMAIC
Business Impact: Reduce the hours for conversions by 20%. (Efficiency increase of 576 labor hours per year - $19,900). Reduce the cycle time from 60 to 30 days, doubling capacity ($1.1 million booked last year). Transfer one FTE to the Systems Integration Group. Accelerate billing of hardware, software and services to the customer. Reduce end of month inventory by $200,000 by billing clients earlier.
Problem Statement: It takes too long to load software on new servers for customers. The Company must purchase hardware and Cache’ licenses then float the cost of these licenses until the HW/SW is installed at the customer site. Services in support of server builds are not billed to the customer until the customer takes the server live. Revenue can be expended but not billed for a period of 60-120 days.
Goal Statement: Reduce the time required to perform a conversion from 40 hours to 32 hours. Reduce the cycle time of each conversion from approximately 60 days to 30 days, allowing early revenue recognition and increased capability for additional conversions. Free up one staff member for reassignment.
Project Summary: This project required reviewing the existing HW conversion process within the Company to reduce the cycle time and advance revenue recognition. The team, led by the Black Belt, mapped the existing process in detail, and then added timeframes for each process step, creating a value stream map. The team then used the fishbone diagram to evaluate potential root causes as to why the conversion process takes so long.
Total First Year Savings: $407,135
CPR Delivery and Adoption Process
CPR Delivery and Adoption Process
CPR Delivery and Adoption Process
Project Length: 12 Months
LSS Process: DMADV
Business Impact: The Company has new sales projections for CPR of $100 million for the next three years. To support growth initiatives the Company must improve the quality and outcomes of the implementation process while driving service profitability. Finance projects that a 50% decrease in install cycle time would accelerate $14M in revenue recognition in the first year alone. In addition, the maintenance dollars would then be recognized sooner.
Problem Statement: The sales to revenue cycle for CPR implementations has historically been 36 months, CPR implementations lack defined processes, are not predictable in outcome nor schedule, and do not result in consistent reference customers.
Goal Statement: Design an implementation process based on VOC that will decrease the cycle time by 50% and enable clients to derive value based upon their defined measures.
Project Summary: This project was to design a new implementation process for the CPR product with the goal of reducing the implementation time by 50% and increasing the customer’s use of the application (adoption). The team began this project by interviewing customers to determine, “what we do well”, “what we don’t do well”, and “what don’t we do that we should”. The results of this survey were affinitized and used to create a customer loyalty model. This model became the basis of a detailed survey emailed to 70 customers.
Once the CPR Implementation process was chosen the team began 30+ interviews of staff involved in various phases of that process to collect comments on problems and issues with the current process. The team then began to design a new process based on the survey results and critical to quality (CTQ) measures. The team identified five subprojects which are required to ensure the cycle time and adoption goals of the project are met. These projects are currently under development and include:
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Organizational Change Management for our clients
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Fusing the Sales and Implementation team to ensure a seamless transition
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Developing automated tools to speed the Analysts tasks
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Developing an 80% complete configuration to speed implementation
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Developing a training program to ensure all Analysts are trusted experts who execute projects consistently
The team anticipated the savings shown in the chart below using simulation software. The company sold the product line (and the new process) to another company before any new client purchases.
Total Savings: $864,000
Improving the Customer Asset System
Project Length: 10 Months
LSS Process: DMAIC
Business Impact: The Company has discrepancies in client billing and SMAs. Corrected assets will increase annual maintenance revenue by $1.4 million dollars per year. The Company staff spend 330 hours per month reconciling assets for SMAs equating to $104,000 per year in cost avoidance.
Problem Statement: The Company is not able to tell what assets our customers have purchased. Multiple divisions within the Company update the assets. Several departments within the Company have developed their own asset systems to get around asset problems. Maintenance revenue is lost because we are not billing the client for all of their assets.
Goal Statement: There is 100% agreement between Siebel Assets, Softrax and the client site as evidenced by audits performed by the Regulatory Affairs group.
Project Summary:
The Company stores information on the software and hardware assets sold to customers for the purposes of product support and accurate maintenance billing. Ownership of the assets is distributed across numerous departments with no single owner.
The team mapped the existing process to better understand all the points where assets are updated. Analysts who enter/update assets were interviewed and a sample audit of 30 sites was performed.
The audit showed a potential of $1.2 million in additional maintenance revenue that is not currently collected. A separate group was chartered to inventory the existing assets and map those to what actually exists at the customer site. The team found $800,000 in additional maintenance revenue per year which was not billed.
Total Savings: $800,000
ICS Purchase to Application/Instrument Interface Schedule
Project Length: 11 months
LSS Process: DMAIC
Business Impact: The ability to turn an order to revenue decreases rapidly as the order ages. As the order ages, technology changes and, as a result, the actual interface code requires an upgrade or overlay which creates further delays. Of the $1,185,000 of orders submitted for cancellation recently, 95% of the orders were over 6 months old and 83% were over 1 year old.
Problem Statement: Out of a sampling of 377 orders the mean scheduling time is 68 days from the receipt of PO to the time the project is scheduled and an additional 33 days on average until development of the interface begins. We are deferring the recognition of revenue by approximately 110 days due to the time lag in scheduling orders.
Goal Statement: To reduce cycle time from receipt of PO to order scheduling date by 50%.
Project Summary: The team met in a Kaizen to complete the Define, Measure and Analyze phases of the project. During the Kaizen, the team mapped the existing process in detail for two organizations (application and instrument interface groups). The technology used by each team was totally different. The team decided to develop a process that could be used by each group independent of the underlying technology.
A new process was developed which required some changes in technology (primarily in the timekeeping and project management product). The team made the necessary changes then performed a pilot. During the pilot the team uncovered a flaw in the Clarity data which required that the pilot be restarted. During the second pilot, another problem was uncovered with Clarity. After fixing this issue, the pilot was run successfully the third time. The project is currently in the control phase monitoring the metrics put in place for the project.
Total Savings: $900,000
International Distributor Partnering Process
Project Length: 6 Months
LSS Process: DMADV
Business Impact: Our competitors are taking advantage of double digit growth internationally as evidence by Cerner’s global revenues in 2005 of over $115m. Substantial national procurements for international clinical enterprise software are in progress today. The Company has not added any new customers internationally in last 3 years.
Transitioning the international business to an appropriately formulated and targeted international distributor, and systems integrator model, where the partner prime contracts the majority of business, will deliver to the Company, growing, partner led, ILF revenues at an acceptable risk and cost. This is targeted to be $20 mill pa and growing by year 3. Continuation with the current strategy of direct sales, without substantial and high risk investment in additional direct operations will continue to result in zero growth and losses, and the Company losing any reputation as a global player in healthcare.
Problem Statement: Our current direct model is costly, has not yielded success and does not deliver the best service to client.
Goal Statement: Develop a repeatable processes for the recruitment of target distributors and SI’s in chosen markets /regions and for chosen products, the skill transfer necessary for those partners to be effective, and the on-going business management of those partners in terms of sales management, sales, implementation and account support.
Project Summary:
This project started as a Kaizen bringing together employees from all across the world. The team successfully completed the Define and Measure phases during the Kaizen. After returning home, the team continued to meet via Microsoft Life Meeting once a week to complete the Analyze and Design Phases. The team piloted the new process and completed the project in nine months.
Total Savings: $2,360,000