1. Lean
Financial Services
June, 2010

2. Chris Vogel
- founder Compass Affiliates, providing management consulting for Lean leadership and design.
Former Senior Vice President of Wells Fargo, Chris conducts Lean readiness assessments & action planning, provides Lean implementation consulting, works with leaders to develop Lean cultural systems, standardized Gemba walks, and leader development planning.

3. Discussion Overview Lean Lean Leadership Policy Deployment Planning
Wells Fargo Case Study
Motivations and opportunities for change
Changing the Document Management culture
Where Wells started
An example of the first major transformation
What was learned and what was done next
Results
Myths, Achievements and Challenges
Where to start
Questions

4. Lean
What is it not?
It is not tools, projects, cost cutting or people reductions
It is not a way to make people work harder
It is not a passive activity practiced by one group and not another
It is not a transition to the next “method”
What is it?
It is a total company system connecting Purpose, People, Process and all departments to increase Customer value, profitability and growth

5. Wells Fargo Case Study Who is Document Management?
Document Management is an operations team providing paper imaging, electronic document routing, data lifting and document storage services to the Home and Consumer Finance division of Wells Fargo. Services provided were integrated with back-end and front-end transactional processing. The Home and Consumer Finance division included the following groups; Home Mortgage, Financial, Insurance, Home Equity Lending, Credit Cards, Student Loans, Trust Services.
To serve our internal Business Partners we had operations in NC, MN and Iowa. We had 1,200 team members providing services over two shifts, six days a week.
Processes were continuously improved in partnership with business partners to provide the most quality centric, secure and cost effective value, meeting the needs of Customers.

6. Conditions Motivating Change
Organic growth of imaging and data lifting across unconnected groups
Technical infrastructure was becoming highly variable in design increasing cost
Operations disciplines were defined by each separate process and department
Volume nearly tripled to a record high following the Federal Reserve’s response to the 911 attacks

7. Opportunities for Lean
Departments were merged into a single division allowing a central vision to develop
The value of work effort was not clearly identifiable
Many, many handoffs
Processes were designed around batching work
Work inventory was stored in rooms out of the way and out of site until it was processed
Defect rates and service performance were hard to measure
Without adequate processes, management was required to respond to the “loudest” priority

8. Where Did We Start? Began value stream mapping our process
Made our processes obvious; and started changing them
Built our Operational Excellence (Lean) Model

9. Began Value Stream Mapping Our Process
We engaged external vsm expertise to help us get started and to teach us the discipline
Began conducting Kaizen events, created change proposals began day implementations (short cycles of improvement)
Made Our Processes Obvious
Started to create flow and began shrinking batch sizes
Began physically connecting processes and making operations visible
Began to exchange post process auditing for a balance of in-process quality
Began to explore work standardization through 5S
Created initial baseline reporting for similar functions

10. Built Our Operational Excellence (Lean) Model
Created our Operational Excellence (Lean) visual model for reference, training, and communication
We started experimenting with different training exercises to discourage batching and show the benefits of standardization
We began creating production teams and breaking down the independent contributor system

11. Continuous Improvement Process
We followed the typical high-level Continuous Improvement Process
Identified Goals
Mapped Current State
Identified Waste
Mapped Future State
Implemented

12. Present State Value Stream Map
Legend
CT = Cycle Time
C0 = change over time
UT = uptime
FPY = first pass yield

13. Future State Value Stream Map
Legend
CT = Cycle Time
C0 = change over time
UT = uptime
FPY = first pass yield

14. Operational Flow – Before9 9
PSS
1200 ft. File Travel
8 Back Flows
9 Intersections 10 9 9
Validation 7 6 12 8 8 1 13 8 8 11 2 3 3 4 4 5 5 5 5 5 5

15. Operational Flow – After
Door
Receiving
PSS
Milk Runs
Conv Imaging Module
Govt Imaging Module
Govt Match
Loan Packages Out
Elevator
Freight
Assurance
Quality
File Room
Docs Buildout
Future Final
Design Objectives:
Critical path is consolidated into main production space.
Elimination of backflows and intersections.
Circular flow from monument (freight elevator).
75% reduction in travel.

16. Transformational Timeline
Analysis & Design
Layout
Prototype
Full Volume
Add Capacity
Transition and Stabilize Environment
Timing:
Key Themes:
8 week weeks weeks weeks weeks
Physical Layout
Cost Projections
Current flow analysis
Purchase equipment
Setup physical Space
Recruit team
Train operators
Test receiving and imaging line
Document results
Go/NoGo Decision
Build out space on lines to handle the co-location volume and timeline.
Convert all MPLS volume to new flow design

17. Initial State

18. First Generation Flow
Lean Imaging Flow (Scanning, QC and Reconstruct)

19. Year 1 – First Imaging Line

20. Imaging Lines – Year 2 Better
IMAGING TEAM STRAIGHT LINE PROCESSING – NOTE CONVEYOR BELT MOVEMENT OF PACKAGES

21. Second Generation Flow
Imaging Flow (Scanning, QC and Reconstruct)

22. Imaging Cells – Year 4
ADR CELLS – LARGE VIEW

23. Andon shows normal vs. abnormal for administrative work

24. What Did We Learn?
People need to envision their efforts fitting into an overall vision or Lean operational model
Staff have kaizen knowledge and are very willing to contribute
In order to be successful, all team members must contribute as a learning organization therefore a learning strategy was required
Batching work is a natural tendency for people and requires a conscious choice to overcome
Leadership at all levels needed to spend dedicated time on the floor to understand and respond to the needs of the system
If you cannot differentiate abnormal from normal operating conditions, you don’t have standardized work and cannot kaizen
Check / Adjust is just as important as Plan / Do

25. How Did We Adjust?
We developed a training strategy for all team member levels, clearly showing expected skills and development timelines
We did training at all levels showing the pitfalls of batching and benefits of flow
We required managers to spend dedicated time on the production floor every day and IT support in operations
We realized our weakness in standardized work, trained leadership to recognize, trained staff on the value and took it to the next level
We clarified the relationship of team members and their accountabilities concerning Kaizen, variation, overburden, change approval, etc…
We evolved the Operational Excellence (Lean) model and stated the cultural norms

26. Doc Mgmt Lean System

27. Philosophical Underpinnings
Focus on business partner / customer value
People are the most critical element
A commitment to continuous improvement

28. Managerial Culture Generosity of spirit and sustained sense of trust
Accountability at all levels of the organization to improve their work
Fact based decision making
Commitment to creation of sustained learning
Problems are considered good things because they help direct us to our improvement opportunities
All support functions, technology development and projects focus on direct operational value stream improvement

29. Tools Standard Operational & Lean Product Development Tools Tools
A3 Format
Value Stream Mapping
Small lot processing
Just in time
Quality in process (jidoka) 5S
Production Boards
Andons
Standardized Work Charts
Product Development Tools
Agile Processes
Burn Down Charts
Agile activity tracking software
Tools
Flow
Pull
Gemba walks
Action Boards
Kanban
Pareto Charts
Mistake Proof (poka yoke)
PDCA discipline
Many others…..

30. Results Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Overall Improvement
Operations Cost per Image (decrease)
13%
24%
25%
34%
28%
76%
Images per FTE (increase)
(21%)
27%
30%
40%
21%
17%
168%
Image Availability Lead time (decrease)
45%
20%
31%
92%
Space Consumption
(decrease)
33%
26% 0%
50%
First Pass Yield
64.0%
78%
99.5%
99.8%
99.9%
35.9 pct pts
Business Partner Service Level Compliance
75%
99%
99.7%
49.7 pct pts
Transactional Volume
12%
(10%)
100%
111%
371%

31. What happened after that?
Creating Level Pull
Improving the connection between leadership objectives and production staff (A3 and Catch ball)
Improving synergies between operations and project management / software development initiatives
Further ingrain the cultural norm that leaders are teachers and give everyone the skills to grow knowledge
Infect others

32. What we might have changed?
Spend more time communicating the cultural vision and the mechanisms of our Lean model
Lead with the A3 Hoshin Kanri process
Involve staff earlier in the process (training, work flow design, production boards)
Train, educate, and emphasize standardized work
What Strategies Worked Well?
Start with focus on value definition
Begin value stream mapping
Focus on making work visible and connected
Continue to favor action over analysis

33. Hoshin Kanri – True North
Performance, gaps, and targets
This year's action plan
SLA
CPL
CPI
CPK
Goals
Activities J F M A S O N D
Last Year Targets: DM
98% na
$ 0.121 ?
A. Strengthen strategic planning
1. Teach Management Hoshin Kanri
WFHM $
$ 0.082
and policy deployment process
2. Require mgmt to build Mother A3s and
WFF
$ 0.076
baby A3s within departments
CCG
3. Communicate goal / strategies to staff CS
through catch ball
Last Year Actual:
99.70%
B. Deliver cost reduction 25%
1. Standardize work at all sites
99.64%
$19.03
$ 0.085
greater than budget
2. Kaizen not Kaikaku
99.8%
$ 0.063
3. Empower staff to manage muda
C. Institutionalize OE culture
1. Execute training program focus on
at all levels
OE & Muda for staff, A3 & Stan Wk for mgr
Reflection on last year's activities
2. All non-staff spends 2 days in cell
Activity
Rating
Key Results / Issues
Meet Financial Obj G
Goals met
D. Institutionalize effective BCP
1. Operationalize new Des Moines site
Stabilize ops & tech Y
Cannot easily move work between sites
and rate rally redundancies
2. Common capture platform all sites
Support CORE
Dates made, resource split effective
Engage staff in process
Idea boards put in place, don’t own muda
E. Institutionalize effective
1. Mature Lean/Agile project practices
project execution
2. Align team with function (create zones)
Pass Audit
Flying colors
3. Measure and forecast velocity
4. Create effective tracking & comm
Advance Ops Excellence
Training prgm stalled, mgrs cant do work
F. Instantiate financial allocations
1. Deliver high level KPIs
Analysis / Justification to this year's activities
and metrics
2. Roll out allocation method for all BPs
3. Standard reporting formats / goals
Cost burden to business partners limits process improvement opportunities.
Follow-up / Unresolved issues
Operations are unstable and improvements are not sustainable.
1. Catch ball may not be well understood by staff by end of 2007
We are unable to forecast project execution and deliver expected results on schedule.
2. Training program will not be well integrated with Corporate L&D team
Inconsistent communication of financial allocations, metrics, and SLAs confuse business
3. Long term second site will still need to be identified
partners and erode confidence in the corporate business model.
4. High level KPIs and operational reporting may not be synchronous
5. Intense focus on our operational needs is often an obstacle for BPs.
Signatures:
Author:
Chris Vogel
Version and date: V2
4/2/2007

34. Hoshin On Production Floor

35. Production support responds real-time to andons for administrative work

36. Employee Engagement

37. Common Myths Challenges
Operation discipline doesn’t allow for good customer service
Standardized work is an insult to personal creativity
Lean tools are designed to get rid of people
Leaders can deploy the OE system from their office
Challenges
Underestimating the criticality of standardized work
Overcoming staff perception of Lean being a people cutting method
Creating discipline for management time spent on the floor

38. Questions