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Lean Fulfillment in Financial Services WCBFs 4 th Annual Lean Six Sigma Summit May 1, 2008, Track I Aaron Bruner, PE Nathan Guerdet Wells Fargo Financial.

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Presentation on theme: "Lean Fulfillment in Financial Services WCBFs 4 th Annual Lean Six Sigma Summit May 1, 2008, Track I Aaron Bruner, PE Nathan Guerdet Wells Fargo Financial."— Presentation transcript:

1 Lean Fulfillment in Financial Services WCBFs 4 th Annual Lean Six Sigma Summit May 1, 2008, Track I Aaron Bruner, PE Nathan Guerdet Wells Fargo Financial

2 2 Introducing Wells Fargo Financial – Retail Services Our financing allows clients such as Slumberland to offer 12 Months No Interest and No Payments We maintain clients by funding and servicing their customers transactions We Provide Private Label Credit Card Services for Clients

3 3 Introducing the Forms Management Department Documents and forms managed in Des Moines We supply forms to 30,000 retailer locations Paper applications are supplied so that customers can apply for financing and agree to program terms Wells Fargo Financial Retailer Services in Des Moines

4 4 Forms Management –Overview We have custom applications for over 200 large clients We also provide applications for many industry programs We manage the print, storage, fulfillment and shipping of all paper documents Paper Credit Card Application

5 5 Forms Process Improvement was Necessary 1 to 10 year inventory on hand High scrape rate Too many rush orders – Large re-supply project in early 08 Complex ordering process Poor cost management Pallets of Forms Stored in the Building Basment

6 6 Process work-out with all team members Build SIPOC Create detailed process flow chart CTQ chart Fishbone diagram Record data Develop vendor selection proposal Roll-out new processes for future state Six sigma control chart Results Supply Chain Project Steps

7 7 S.I.P.O.C. Forms Process From Supplier to Customers

8 8 Detailed Process Flow Chart Too Many Process Steps

9 9 Right Sized Inventory Cycle time Quality Cost Inventory turns Decrease process time Forecast with 80% accuracy Less than 10% spoilage Limit cost of safety stock Keep cost of production even throughout the year Critical to Quality

10 Measurements MaterialsPeople MachinesMethodsEnvironment Output Cause & Effect / Fishbone Diagram X – Major variable x – Minor variable N – Noise (something that cant be controlled) Communication between groups is limited. Within each industry app type, there are different versions for each tier. High Inventory levels XX Low stock notification from Info-Plus is off Fully loaded cost of producing stock is not taken into consideration. No disciplined forecasting process Seasonality for industries causing spikes in usage Its cheaper to produce larger quantities. We save money by making fewer shipments to dealers so we send large quantities. Sales, Marketing dictates how much supply should be sent to dealers but dont pay for shipping or production The annex cannot produce 28 apps so larger quantities are produced to accommodate for outsourcing lead time Info-Plus software is inadequate as an inventory management tool. X X X x N X x x x

11 Measurements MaterialsPeople MachinesMethodsEnvironment Output Communication between groups is limited. Within each industry app type, there are different versions for each tier. High Inventory levels 43 Low stock notification from Info-Plus is off Fully loaded cost of producing stock is not taken into consideration. No disciplined forecasting process Seasonality for industries causing spikes in usage Its cheaper to produce larger quantities. We save money by making fewer shipments to dealers so we send large quantities. Sales, Marketing dictates how much supply should be sent to dealers but dont pay for shipping or production The annex cannot produce 28 apps so larger quantities are produced to accommodate for outsourcing lead time Info-Plus software is inadequate as an inventory management tool Cause & Effect / Fishbone Diagram

12 12 Application demand has increased significantly, but supply process has not adapted Data Collection In-house Process Could Not Handle 2 Million Apps

13 13 In-house supply process Data Collection In-house Process 1.Submit order to printer 2.Ship forms to Retailer 3.Store in Retailer basement 4.Send some forms to Annex 5.Submit some orders to Annex 6.Annex send to basement 7.Replenish remaining orders from basement Poor In-house Fulfillment Process

14 14 In-house Supply Process Data Collection Flooring Retailer Example 1.Retailer submitted 400 apps in week re-order point Recorded on-hand inventory Actual on hand inventory i.e.: Demand and Supply Problem Exists Wasted Supply Building up in Basement

15 15 2 Outside and 1 Inside Print Vendor 5 Inventory Storage Locations Supplier & Inventory Locations Basement 6 th Floor In-House Vendor Vendor 2 Vendor 1

16 16 Currently have 3 print vendors and store the supplies in 5 different locations Coordinating Pricing, inventorying, billing, reporting, and tracking very difficult and expensive There are no formal contracts in place to control costs and govern the relationships High Level Problem Summary

17 17 We need to reduce order-to-delivery cycle time and the overall cost of forms Need more accurate order and inventory management Need web-based, automated ordering to reduce costs Retailer needs to integrate and enhance its forms supply chain processes to better align with its strategic direction of JIT supplies while reducing costs Selection Criteria

18 18 Sent request for proposal to 5 vendors Vendor must have proven advanced technical solutions Must have business leaders who understand and are committed to providing leading edge solutions Must have cost improvement execution for their customers Weighted-factor Analysis on many criteria Vendor Selection

19 Questions Later…. RFP Q&A Results Show:Score 1.Vendor 2 - Sigler Vendor 1 - Stone WF A, D, & P group FedEx Kinkos In-House Annex19.49 See Addendum 3 for Q&A Pricing Matrix Results Show: 1.Sigler can provide the online ordering, billing, and inventory tracking that we desire 2.Sigler is very price competitive 3.Shipping costs at Sigler are the same as the Annex Note:We implemented a UPS Shipping Station utilizing Wells Fargos discount at Siglers facility RFP Results

20 20 Cost Of 2,500 Apps To Produce, Inventory, And Ship Within One Year Without Allocation

21 21 29% Cost Savings Using Vendor 2 Data Table: Collect Cost Data by Program

22 22 Vendor Selection Barcode Ready (Formscap e compatible) One Stop Online Orders, Printing, Storing, Fulfillment and Shipping Source UPS Ship Station – Able to use WF discount and save 33% on all of our shipping costs ($150,000 annually)

23 23 Using our new preferred supplier as our one print source, we estimate cost savings of over $270,000 in 2008 and an increase in the service we provide our customers Cost Saving Results Savings of: $273,433

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27 27 Reduce order-to-delivery cycle time Reduce overall costs of forms Reduced cycle time for dealers to go live by 95% in Q Increase inventory turn times while maximizing print volume discounts Allows us to track inventory at each dealer location whereby reducing opportunities for scrap Reconcile invoices much quicker Anticipate our customer needs an become pro-active in managing them Results

28 28 Questions


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