SERVICE QUALITY SIX SIGMA CASE STUDIES

Elizabeth Keim
Six Sigma Master Black Belt
Integrated Quality Resources, LLC
4220 Pebble Beach Drive
Niwot, CO 80503-8359
liz.keim@worldnet.att.net

LouAnn Fox Julie S. Mazza, Esq.

Black Belt Black Belt
CNH Capital E. I. DuPont de Nemours and Company

SUMMARY

This presentation will discuss the effective use of Six Sigma tools to improve several service processes.
Each case will cover the following five steps:

• Define the problem

• Measure the defect
• Analyze the data
• Improve the process
• Control the process

KEYWORDS

Case Studies, Service, Six Sigma

INTRODUCTION

Below are two cases studies, using the Six Sigma methodology for defect reduction using Define,
Measure, Analyze, and Control, from CNH. Each will discuss the nature and quantification of the
problem and the benefits of resolving the problem. Then, each will describe the analysis done to
determine the root cause and evaluate potential solutions to the problem. Lastly, each will discuss control
mechanisms used to ensure sustainability and the results achieved.

CASE STUDIES

Asset Management Cycle Time Reduction in Posting Repossessions

LouAnn Fox, CNH Capital

SUMMARY
This presentation will discuss the effective use of the Six Sigma tools to reduce the cycle time in posting a
repossessed unit to the bid list and remarketing website. It will take you through a project CNH Capital
completed, “Asset Management Cycle Time Reduction in Posting Repossessions.” This analysis will
demonstrate how Six Sigma tools were applied to decrease cycle time 75%, from 40 days to ten days,
resulting in significant ongoing dollar savings.

INTRODUCTION

CNH Capital’s Asset Management department is responsible for managing the sale of lease returns and
repossessed equipment. Its objective is to sell the equipment quickly and at a fair price.

Given equipment depreciation schedules, the faster Asset Management can sell a piece of equipment, the
higher the sales price should be. Combined with carrying costs of holding equipment on the company’s
books, cycle time is very important, particularly as repossession inventory increases.

Equipment available for sale is communicated to dealers two main ways, through the use of a Bid List
(printed database) and through Asset Management’s website. The project specifically addresses posting
units to the Bid List and website as quickly as possible.

DEFINE & MEASURE THE PROBLEM

At the start of the project, there was no tracking mechanism in place to break apart the components of
cycle time within Asset Management. Therefore, a tracking mechanism was put in place to gather
specific information on each step of the process. In order to produce a baseline, historical data across
departments was linked, and reflected a starting point of 40 days.

The preliminary objective (before the baseline was taken) was to reduce the cycle time by ten days. After
the baseline was taken and the process was better understood, a new goal was set to drive cycle time to
eight days.

ANALYZE THE DATA

We applied various Six Sigma tools to identify Vital X’s or the root causes of the defect (cycle time
delays). A Pareto Diagram visually organized the data we had started gathering and showed more than
75% of the total process time was attributable to three steps:

• File awaiting initial review -- No parameters had been established or communicated regarding what
was an acceptable timeframe before starting work on a file.

• Establishment of a wholesale value – This step was the most time consuming step of the entire
process. It involved the associate looking up values in equipment guides and providing preliminary
information to a more knowledgeable remarketer who would then verify or adjust the pricing.

• Verification of the wholesale value – The file was transferred to the remarketer to verify or adjust
the pricing of the unit, based on the condition of the unit and knowledge of the market.

These three steps provided appropriate focus for the improve and control phases of the project.
IMPROVE THE PROCESS

Because two of the three Vital X’s related to pricing the equipment, a DOE was performed comparing the
cycle time of the then-current versus proposed pricing methodologies. Under the current method, the
associate (one person) priced all units, sent the pricing to the remarketer for verification and/or
adjustment, then received the file back to input onto the Bid List, along with additional information. The
proposed method gave each remarketer (there are five) complete responsibility for the pricing of the units
they would be selling. When complete, the remarketer forwarded the file to the associate for data entry
onto the Bid List. In addition to pricing method, file type and complexity were also examined.

The results of the DOE showed significant cycle time reduction under the proposed method. In addition
to the reallocation of the pricing responsibilities, the following changes were made over the course of the
project:

• Cycle time reporting established electronically

• Staffing changes in the associate role
• Redistribution of responsibilities within the associate role
• Operations manager added to the department
• “Complete File” checklist established for use between departments to minimize rework
• Priorities established and time frame expectations communicated to the entire team
• Lines of communication opened between departments

Median cycle time at the end of the project was ten days from file receipt to web site posting. This is still
above the eight-day target, however, time expectations were not communicated with the team until
project-end, when the control plan was shared. Therefore, cycle time was expected to decrease further
after project-end.

CONTROL THE PROCESS

A control plan was put in place, outlining each step of the process, their tolerances, measurement methods
and reaction plans. It was reviewed with each team member and their back-up people. The operations
manager is using a report that calculates median cycle time and identifies outliers. He is also posting
monthly progress in the Asset Management department’s common area, using a simple excel chart. In
addition, periodic audits are being performed to eliminate any potential conflict of interest in the pricing
area.

CONCLUSION

Applying the Six Sigma methodology gave the team a structured approach to identifying and resolving
root cause issues. This project has given the Asset Management department a solid grounding in
documenting processes and managing its cycle time, which will be invaluable going forward.

Cost Reduction for Document Processing in Major Litigations

Julie S. Mazza, Esq. E.I. du Pont de Nemours and Company

SUMMARY

This presentation will discuss the application of Six Sigma methodology to the collecting and processing
of documents in major litigations. We had recognized that such collecting and processing was proving to
be increasingly complicated, costly and frustrating, and that these problems were recurring.

INTRODUCTION

Generally, document collection begins when the Legal Department receives a request for production,
either from a governmental agency or from an adversary in a pending civil case. The responsive
documents are then collected, organized, and coded into an electronic database. The actual documents,
however, are maintained only in their original, hardcopy form.

Accordingly, the process of maintaining and providing responsive documents has been entirely manual.
Because these cases typically involve millions of pages of documents, we have required the services of
numerous clerks and legal assistants, often contractors, to pull responsive documents. In serial litigation
involving “families” of cases, we have often been forced to repeat that process numerous times – thus
providing for multiple opportunities for “pulling” the wrong documents, for producing duplicate copies,
and for similar quality control issues.

DEFINE THE PROBLEM

We chose for our project one of our most significant dockets, a family of cases with a hardcopy document
depository of over four million pages. Our objective was to reduce the non-value-adding steps in the
process, thereby eliminating the opportunities for errors. By improving the quality of our document
productions, we hoped to avoid future allegations of discovery abuse, with the attendant bad publicity.
We also hoped to reduce our costs.

MEASURE THE DATA

The team consisted of the process owners, legal subject matter experts, contract clerks and an Information
Systems professional. The team mapped the entire document production process, which revealed
numerous steps of which we had not been aware. At almost every stage of the process, we found steps
being duplicated -- for example, pulling a specific document and logging it into a “pull log” – all in an
apparent effort to eliminate errors. A review of invoices revealed that the number of document
inspections had been increasing, with a resulting rise in costs, without the expected improvement in
quality.

The team also reviewed invoices from the contractor that had been managing the document collection.
We examined the data derived from these invoices, including the cost of labor and the unit costs of pages
copied and printed, to derive a per-unit cost for each page going through the entire production process.
Later, we compared that cost to the unit cost of the scanning and imaging each document.

ANALYZE THE DATA

Using FMEA and Cause & Effects analysis, the team identified the key variables affecting cost. The most
significant of those factors included:
 ♦ high turn-over of contractor clerks
♦ lack of adequate training
♦ lack of ownership in the process and inattention to the task at hand
♦ large number of documents

Based on these results, we concluded that the manual handling of the documents was the root cause of the
defects. This led us to consider scanning the documents into a database in order to reduce “paper
touches” or human error.

IMPROVE THE PROCESS

Once we factored in the one–time cost of scanning, we re-mapped the process as it would appear using
the scanned documents. The following chart summarizes the “before “ and “after” results:

Before… After…

Collect∗ Collect∗
Copy Originals∗ Image
Number Copies∗ Index∗
Stamp with Designations∗ Produce (Electronically)
Create Manual Index∗
Copy for Storage∗
Index∗
Code into Database∗
Pull for Production
Copy for Production∗
Produce (Paper)
Refile Copies
Update Database
Store & Maintain∗

∗ = Inspection Needed

The scanning solution eliminated ten (10) of the fourteen (14) steps previously required. As a result, the
unit cost of processing one page was reduced by 53%. This reflects average annual savings of
$1,130,000.

CONTROL PLAN

Several control mechanisms are being implemented to monitor the new process and ensure that the
improvements are sustained.

♦ A tracking mechanism was designed into the database of imaged documents that monitors
the costs associated with each step in the new process. This provides real time reports to
the process owners who can identify and control any “unexpected” variations in the
process.
 ♦ The process owners have direct access to invoices from the imaging contractor and can
react and control cost variations as they appear.

CONCLUSION

The Six Sigma methodology was applied successfully in this project to achieve significant improvements
with substantial cost savings. In addition, the lessons learned from this project have been translated into
opportunities for other projects in the Litigation group with similar impressive results. Lastly, to our
knowledge, this application of Six Sigma methodology to the practice of law is unique but clearly
promising for this disciple and the business of law.

OVERALL CONCLUSION

The Six Sigma problem solving methodology of Define, Measure Analyze, Improve, and Control can be
used successfully in service processes to gain significant defect reductions. The use of data to guide
decision-making ensures that the right root causes are identified and addressed. The Control phase
ensures that the improvements are sustained.

ACKNOWLEDGEMENTS

DuPont: Marjorie W. Doyle

CNH: Karen L. Niehaus