July, 2006 Proprietary and Confidential

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July, 2006 Proprietary and Confidential

  1. 1. General Electric Client Deliverable & Case Study July, 2006 Proprietary and Confidential
  2. 2. Summary Discussion Document Goals & Objectives  Provide a brief overview of the project’s historical foundations  Discuss the magnitude of the available opportunities in non- manufacturing Lean process transformation  Highlight the aggressive program that was launched to combat non- manufacturing process waste  Preview the extensive benefits that were captured during the program and the impact on scalable growth Using Lean To Transform Non-Manufacturing Processes 2 © Lean Horizons, LLC 2006. All Rights Reserved.
  3. 3. General Electric: Consumer Finance Deliverable Executive Summary Consumer Finance: Credit Approval Process Improvement -- General Electric Consumer Finance Landscape -- -- LHC Deliverables -- $16 Billion In Assets 1  Institutionalize Lean in all Multiple Distribution Channels non-manufacturing arenas 2  Train leaders & managers on Lead Application Application Welcome Kit Dealer Execute First core Lean tools & disciplines Generation Receipt Approval Delivery Training Transaction 3  Global financial process Target Customers simplification in North America, Asia and Europe 4  Create standard work for all Assist Dealers Move “Big Ticket” Products With Credit non-manufacturing processes 63-Day Lead Time For Dealer Enrollment 5  Waste removal to drive profitable growth Long Highly Growth 6  Strategically use credit Lead Times Complex Bottleneck processes to increase dealer How Can Lean Drive Growth In Consumer Finance? annual sales 3 © Lean Horizons, LLC 2006. All Rights Reserved.
  4. 4. General Electric: Consumer Finance Deliverable Executive Summary General Electric Sample Deliverables: Lean Transforming Consumer Finance Dealer Benefit Current State VSM Future State VSM  44% increase in consumer purchase order size  24% increase in credit Prospect: Enrollment: Activation: approval closure rate Reduced Lead Time: 92% Reduce Lead Time 80% Reduce Lead Time 30%  36% increase in per-dealer 12 days to 1 21 days to 4 New marketing content annual sales+ New standard work Process simplification New value proposition Lean mindset Process digitization Rapid notification GE Global Benefits $500 Million In New Dealer Volume Per Year  Unqualified Lean success in non-manufacturing arena  Lean removing barriers in 11% Apps Increase 15% Activation Lift 12% Sales Lift high-growth industry $72,000,000 $84,000,000 $60,000,000  Standard work ensures repeatable, consistent year- over-year improvements $216,000,000 Incremental Volume – Reduced Growth Bottlenecks 4 © Lean Horizons, LLC 2006. All Rights Reserved.
  5. 5. Although highly successful with manufacturing-based six-sigma improvements, GE required new tools and disciplines to accelerate non-manufacturing growth and profitability. General Electric Challenge: Achieving Lean Non-Manufacturing Benefits What Is The Right Non-Manufacturing Course? Observation Description  Six Sigma has been used successfully to Manufacturing transform GE’s manufacturing operations Where To Begin? What Division? & Six Sigma  Six Sigma penetration in non- manufacturing arena limited  Seen as a catalyst for growth and waste How Best To Educate GE On Lean? Role of Lean removal across the enterprise for non- manufacturing operations Non-  Teams in non-manufacturing operations Most Appropriate Starting Point Manufacturing vocal about need for new tools and Exposure disciplines to remove waste  Educate extended team on one Lean vision Rapid Benefits Capture To Key Challenge Increase Buy-In and required journey Prove Power Of Lean For Remaining How Can Lean Assist Non-Manufacturing Divisions? Divisions 5 © Lean Horizons, LLC 2006. All Rights Reserved.
  6. 6. After careful review and analysis, GE chose Consumer Finance as the pilot location for Non-Manufacturing Lean based on new-discipline requirements and the need to support rapid growth. General Electric Consumer Finance: Global Reach, Rapid Growth -- Assets & Originations -- -- Global Business Reach -- $93 $78  Customers: $56 million 37  Retail Outlets: 40,000 33 $49  Dealers: 130,000 13  Brokers: 14,000 $27 56 36 45  Branches: 420  ATM’s 2,600 2003 2004 2005 2006 Originations Assets Fast-Growing, Focused Global Operation 6 © Lean Horizons, LLC 2006. All Rights Reserved.
  7. 7. GE’s Consumer Finance group is a fast-growing, global operation that assists dealers with big-ticket sales through a number of financial vehicles. Consumer Finance Business Model: “Helping Dealers With Big-Ticket Sales” PLCC Retailers GE Product Focus Dealers Bank Cards Brokers Personal Loans Mail Sales Finance Telemarketing GE Product Focus Mortgages Branches Auto ATM/Kiosks Deposits & Internet Insurance $16 Billion In Assets – 33% Three-Year Growth Focused Provider Of Consumer Finance Products 127,000 Dealers – 4.8 Million Customers & Growing Customer Channel Acquisition – 96% B2B 7 © Lean Horizons, LLC 2006. All Rights Reserved.
  8. 8. Although historical growth has been impressive, future growth prospects are limited due to a number of identified process and customer service performance issues. Consumer Finance Customer-Facing Issues: Growth-Limiting Problems -- Comprehensive Dealer Surveys -- -- Survey Results -- -- Key Improvement Areas --  New-Dealer Enrollment  Funding Processes  New Product Availability “Enrollment A Showstopper” What GE Heard From The Survey Results Critical Impacts “Your enrollment process takes far too long” Growth Limitations “The welcome package is just too confusing” Consumer Satisfaction “Training is a huge problem” Business Scalability “There is just too much paperwork, need to simplify” Market Reputation “We need more financing options” How To Correct 8 © Lean Horizons, LLC 2006. All Rights Reserved.
  9. 9. In fact, the dealer enrollment process within Consumer Finance had become a powerful barrier to new transactions; dealers had significant problems battling the slow and highly complex process. Consumer Finance Customer-Facing Issues: “The Transactions Barrier” Critical Evaluation Of Dealer Enrollment Process  GE not “user friendly” to wide range of dealers Lead Application Application Welcome Kit Dealer First Generated Received Approved Delivered Training Transaction  No use in adding dealers when they will not transact  Existing process effectiveness lagging current growth rates  Six Sigma alone will not correct high-waste Dealer Enrollment Only 40% Of processes & procedures 23,000 Dealers Process Sluggish Dealers Transact Added Each Year & Needlessly Complex Every Month  Considered a strong hurdle to future growth  Rapid need for new waste removal tools and Dealer Additions Often Pointless; Enrollment Process A Transactions Barrier disciplines 9 © Lean Horizons, LLC 2006. All Rights Reserved.
  10. 10. To address these critical issues and ensure deployment of a scalable growth model, Consumer Finance engaged LHC to evaluate existing dealer enrollment processes, deploy appropriate Lean tools and remove all barriers to profitable growth. Architecting The Vision: GE’s Engagement Of LHC To Address The Issues Current Environment & Available Opportunity Creating The Lean Business Vision Right Focus on Vision Architecture Available  Strategic growth engine Profitable  Strategic Lean deployment Growth  Lean enterprise implementation  Improved Customer experience – Every time  Culture change to continuously remove waste Industry Right Structure To increase Value & Market Appropriate Potential Lean Vision  Breakthrough performance level opportunities Current To Overcome  High-priority high-waste value stream identification Revenue Barriers To  Unmet market needs hindered by flexibility Profitable Growth  Finance execution requirements/New tools  Change management application to shift attitudes Most Appropriate Lean Vision Lean Vision To Eliminate Waste & Remove Growth Barriers Generate Fact-Based Vision To Drive Business 10 © Lean Horizons, LLC 2006. All Rights Reserved.
  11. 11. LHC deployed their proprietary suite of Lean assessment processes, diagnostics and waste removal techniques in order to rapidly quantify dealer enrollment breakpoints and lost-profit sinkholes. Pre-Lean Dealer Enrollment Current State: Complex, Wasteful & Costly 63-Day Enrollment Completion Process Far Too Date Re-Keyed Complex For 8 Times Many Dealers Strong Barrier To Future Growth Over 300 Over 55 3,000 Components Forms Entry Points In Welcome Kits 11 © Lean Horizons, LLC 2006. All Rights Reserved.
  12. 12. As an example, highly complex dealer activation kits were subjected to a number of Kaikaku and Kaizen-level redesign processes; dealers now have very simple, highly differentiated activation kits that encourage enrollment and activation. Lean Success Example: Kaikaku-Level Changes To Dealer Activation Kits Before After  Dealer activation kit was highly unorganized and complex with no real distinguishable features  External design features developed  Internal organization and packaging replaced  All non value-added materials eliminated to reduce complexity  Package now differentiated as a true GE product  Dealers now have access to clear instructions  Dealers eager to use the process; are no longer overwhelmed 12 © Lean Horizons, LLC 2006. All Rights Reserved.
  13. 13. In addition, significant reductions in the dealer activation cycle removed a significant barrier to future growth. Lean Success Example: Revolutionary Dealer Activation Cycle Time Reduction Before After  Dealer activation cycle time of 35 days unacceptable 35 1-7  Move to same-day Days Days shipments  Overnight vs. ground analysis  Revised training schedules and procedures  Differentiated activation binder and welcome kit  Average activation period Faster Activation – Faster New-Credit Flow now 1-7 days and falling  Moving to pure 1-day Faster New-Credit Flow – Removal Of Key Growth Barrier capability 13 © Lean Horizons, LLC 2006. All Rights Reserved.
  14. 14. With a radical compression of the activation cycle through Lean tools & disciplines, a wide variety of dealers are increasing annual sales through participation in the GE credit program. Combined Benefits: Activation Cycle Compression Driving Dealer Sales -- Activation Cycle Reduction -- -- Dealer Benefits -- End-To-End Dealer Activation Cycle 36% Annual Sales Boost Prospecting Enrollment Activation 92% 80% 30% Reduction Reduction Reduction 12 days to 1 21 days to 4 New marketing content New standard work Process simplification New value proposition Lean mindset Process digitization Rapid notification 14 © Lean Horizons, LLC 2006. All Rights Reserved.
  15. 15. By deploying the complete suite of Lean tools, disciplines and practices, GE reaped a $200 million annual benefit and removed critical bottlenecks from their growth roadmap. Summary: Lean Disciplines Driving $200 Million In Annual Realized Benefits Dealer Benefit Current State VSM Future State VSM  44% increase in consumer purchase order size  24% increase in credit Prospect: Enrollment: Activation: approval closure rate Reduced Lead Time: 92% Reduce Lead Time 80% Reduce Lead Time 30%  36% increase in per-dealer 12 days to 1 21 days to 4 New marketing content annual sales+ New standard work Process simplification New value proposition Lean mindset Process digitization Rapid notification GE Global Benefits $500 Million In New Dealer Volume Per Year  Unqualified Lean success in non-manufacturing arena  Lean removing barriers in 11% Apps Increase 15% Activation Lift 12% Sales Lift high-growth industry $72,000,000 $84,000,000 $60,000,000  Standard work ensures repeatable, consistent year- over-year improvements $216,000,000 Incremental Volume – Reduced Growth Bottlenecks 15 © Lean Horizons, LLC 2006. All Rights Reserved.
  16. 16. Moving forward, GE is rapidly expanding LHC’s global deployment; Consumer Finance successes will be repeated in a number of locations including Mexico, Australia and the United Kingdom. Moving Beyond 2006: Migrating Lean To Additional Finance Processes A  Reduce Mexico mortgage application cycle time Q1 & Q2  Decrease Australia branch loan 2006 processing cycle time  Improve US Corporate card new client integration time B  UK home lending same day offer Q3 & Q4 2006 16 © Lean Horizons, LLC 2006. All Rights Reserved.

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