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Lean Six Sigma Black Belt

Story Board

Quick Win Opportunities Background The Home Loan Lean Six Sigma project was initiated because the Global Consumer Home Loan division was performing well below customer expectations Project Description Simco International has declined from being the 3rd largest financial services provider to the 6th in the world. Lean Six Sigma teams were formed to address this issue. On investigation, it was learned that poor Customer Service is the primary reason for this decline. Business Case By increasing customer satisfaction, SI will be able to re-capture market share and ultimately increase revenues while improving business process efficiencies Problem Statement It takes 22 days for SI to process new home loans while competitors take 15 days. This does not meet CTQ performance and has led to loss of revenues of $26.2 million and $2.6 million in process inefficiencies per year. Project Goals Reduce home loan processing time by 37% to 15 days within 3 months. Reduce process inefficiencies by 50% within 3 months. Project Scope Area of Focus: Consumer Home Loan processes in Singapore, Chicago, and London Start Point: When Customer requests a Loan Stop Point: Receipt of the home loan acceptance or rejection package by the Customer Financial Benefits Increased revenues by $20 million and reduced process costs by $650,000
Quick Win Easy To Reversible Fast To Implement Implement Yes Yes Yes Within Teams Control Yes Cheap To Implement Yes

Customer to mail application directly to LP Gather additional information from Customer via phone






SI CTQ Determination
Segment External Customer Issue It takes too long to process loans
There are too many errors on the final determination packages It is very difficult to reach anyone at SI No clear roles and responsibilities to who owns the loan process Too much time is spent reviewing the application


Customer Need Reduce loan processing cycle time Reduce errors on final determination package

External Internal

Contact with SI personnel on first call Responsibilities and roles clearly defined and documented Reduce time to review loan application


CTQ 15 day loan processing cycle time 100% accuracy on final determination package 100% first call contact 100% documentation of roles and responsibilities 2 day loan reviewing time

Conclusion Project teams were constituted based on Individual Profile and Team Profile Evaluations The SIPOC and the As-Is process was mapped to understand the process. Quick win opportunities were identified and implemented A Stakeholder Management Plan was developed based on the Stakeholder Map A Communication Plan was developed to keep Stakeholders informed Responses to VOC questions determined the CTQs

Histogram Baseline Performance Chicago Final Determination Package Accuracy 240 loans, 72 defects, 7 critical data fields DPMO = 42,857; Sigma Performance = 3.2
LSL = 10 USL = 15

Chicago Loan Processing Cycle Time Singapore Total Cycle Time Process Capability Ppk = -0.03 The Singapore Home Loan process is not capable of meeting customer requirements Series4, 105, 30

1. 2. 3. 4.

There was no data set less than the CTQ of 15 days The p-value of zero indicates that the curve is not normal There is a large amount of spread in the variation of cycle time Two loans took considerably longer time to process than the rest

Individuals: Singapore Total Cycle Time

Mean CL: 15.42

Series3, 105, 1 Series4, 105, 18

MR: Singapore Total Cycle Time

Series1, 105, 5 Series3, 105, 0

Conclusion: The process is not in statistical control because 4 out of 5 data points are on the same side of the centre line which is indicative of special cause variation. Singapore Home Loan process is not capable of meeting customer requirement

Cause and Effect Analysis Lean Process Analysis (As-Is) Lead Time = 19 days Average Work Completion Rate = 4 Process Cycle Efficiency = 5% Box Plot

Pareto Chart

Number of Errors

Chicago Cycle Time, 3, 4

Singapore Cycle Time, 7, 4

London Cycle Time, 11, 4

Application Fields

Conclusion 1. Loan Amount and Name fields account for 86% of the final loan determination package errors. 2. Chicago Office has the highest averages and outliers 3. Chicago and Singapore have significant variation in the data 4. London variation is below both Chicago and Singapore and is below the CTQ of 15 days

Mean Options Chicago LP Cycle Time

Singapore Total Cycle Time

y = 1.205x + 7.8334 R = 0.4708

Day - LP Staffing: Overstaffed

Singapore LP Cycle Time Day - LP Staffing: Understaffed A possible positive correlation exists between the Singapore LP Cycle Time and Total Cycle Time Regression Analysis 1. The regression analysis proved that 47% of the variation in Singapore Total Cycle Time is Accounted for by the LP Cycle Time 2. P-Value is less than 0.5, the two data sets are statistically different 2 Sample t-Test 1. P-Value = 0; this implies that there is statistical difference between the Ave Chicago LP Cycle Time and Ave London LP Cycle Time 2. The average of the Chicago LP Cycle time is considerably higher than that of London ANOVA 1. P-Value is less than 0.5 implies that at least one set of means are not equal 2. Ave Chicago LP Cycle Time is different from that of London and Singapore Chi-Square Test P-Value is less than 0.5 which indicates that Loan Accuracy between Chicago and London locations are statistically different Validated Root Causes Root Cause Non Value-Added Process Steps Staffing numbers not aligned with Peak Volume Incoming Applications are inaccurate No process controls Too much interdepartmental processing time Tool Used Lean Process Analysis Cause and Effect Diagram Multi-vari Chart Cause and Effect Diagram Process Map Cause and Effect Diagram Process Map Lean Process Analysis Box Plot Correlation Analysis Regression Analysis 2 Sample t-Test ANOVA

Solution Selection Having prioritized solutions from generated ideas, we arrived the following solutions through the solution prioritization matrix: 1. Have Loan Processors determine loan qualification 2. Develop email/internet based system to exchange information and eliminate paper work 3. Combine LP and MSA processes to eliminate MSA from loan processing 4. Develop online application submission with mandatory fields and accuracy checks Cost/Benefit Analysis Gross Benefits $6.5 million (approximate) Implementation Cost $376,200 Net Benefits - $6.1 million (approximate) Mitigating Risk: Summary of FMEA
Potential Failure Mode RPN System does not accept application 243 1. Recommended Action Auto notification of system down 2. Manual submission of application Internal audit, document procedures Add procedure for mailing, internal audit

Run Chart: Chicago Loan Processing Cycle Time (CTQ = 15 Days)

Mean: 8.98

Loan is incorrectly denied Final package is not sent

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Chicago Loan Processing Cycle Time (CTQ = 15 Days)

Chicago LP Loan Reviewing Time (CTQ = 2 Days)

Chicago Loan Processing Cycle Time Count = 50; Mean = 8.980; Stdev = 2.290; Range = 11.00 Minimum = 5; Maximum = 16; Q1 = 7; Median = 9; Q3 = 10 Anderson-Darling Normality Test: A-Squared = 0.844441; p-value = 0.0276

Chicago LP Loan Reviewing Time Count = 50; Mean = 1.520; Stdev = 0.614120; Minimum = 1; Maximum = 3; Q1 = 1; Median = 1; Q3 = 2 Anderson-Darling Normality Test: A-Squared = 6.341; P-Value = 0.0000

Sigma Performance for Chicago Final Determination Package Accuracy Defects = 5; Units = 30; Opportunities = 7; DPMO = 23,810; Sigma = 3.48 Conclusion 1. The performance of the Chicago Final Determination Accuracy improved from 3.2 to 3.48 2. The Chicago Home LoSan Processing cycle time did not meet CTQ of 15 days. One loan took longer than 15 days to process. However, there is an improvement. 3. Chicago LP Loan Reviewing time did not meet CTQ 2 days. Three loans took longer than 2 days to review. Next Steps 1. Review process to determine cause of accuracy defects 2. Determine why the single loan did not meet the 15 day loan processing cycle CTQ 3. Investigate issues with loan reviewing time. Could it be with learning new technology?



Chicago Loan Processing Cycle Time (Sigma = 3.48)
Run Chart: Chicago Loan Processing Cycle Time (CTQ = 15 Days)

Mean: 8.98

Mean = 8.980 Stdev = 2.290 N = 50

Run Chart: Chicago LP Loan Reviewing Time (CTQ = 2 Days)

Mean: 1.52

Chicago Loan Processing Cycle Time (CTQ = 15 Days)

Chicago Loan Processing Cycle Time (Sigma = 3.48)

Chicago Loan Reviewing Time (Sigma = 3.05)

Loan Fields (CTQ = 100% Accuracy)

Conclusion 1. The process monitoring plan was introduced to ensure that process remains in control and is stable 2. Process Reviews have been instituted on a monthly basis 3. The Dashboard which represents the new Baseline Performance was developed and presented 4. Procedures was documented and handed over to Process Owners 5. The Response Planning procedure was developed and handed over to Process Owners 6. The solution transfer plan was also developed. The materials included all project outcomes, project binders, process monitoring plans and training materials

Chicago Final Package Determination Package Accuracy (Sigma = 3.48)

Number of Errors (CTQ = 100% Accuracy)