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Best practices on cost reduction using Lean Six Sigma
Best practices on cost reduction using Lean Six Sigma
Best practices on cost reduction using Lean Six Sigma
Best practices on cost reduction using Lean Six Sigma
Best practices on cost reduction using Lean Six Sigma
Best practices on cost reduction using Lean Six Sigma
Best practices on cost reduction using Lean Six Sigma
Best practices on cost reduction using Lean Six Sigma
Best practices on cost reduction using Lean Six Sigma
Best practices on cost reduction using Lean Six Sigma
Best practices on cost reduction using Lean Six Sigma
Best practices on cost reduction using Lean Six Sigma
Best practices on cost reduction using Lean Six Sigma
Best practices on cost reduction using Lean Six Sigma
Best practices on cost reduction using Lean Six Sigma
Best practices on cost reduction using Lean Six Sigma
Best practices on cost reduction using Lean Six Sigma
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Best practices on cost reduction using Lean Six Sigma


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  • 1. Best practices on cost reduction using Lean Six Sigma
  • 2. CenturyLink Overview
    • CenturyLink formed from the merger of two large telecom providers
    • $8.8 billion of revenue and $3.8 billion of EBITDA
    • Headquarter: Monroe, LA
    • S&P 500 company / expected to be Fortune 500
  • 3. Leading Communications Provider
  • 4. EMBARQ BPI Evolution
    • 2005 – 2006 EMBARQ separates from Sprint
    • - EMBARQ formed through spin-off from Sprint
    • - Focus on spin-off activities
    • 2006 – 2007 Shotgun approach
    • - Heavy training/tool focus through Six Sigma
    • - Put it in the business & let them go
    • - Limited quantifiable benefit
    • 2007 - 2008 Business partnership
    • - Moving away from tool focus
    • - Lots of projects
    • - Kaizen implemented to drive quick results
    • - Great business benefits, but lost in the business
    • 2008 - 2009 Heavy initiative focus
    • - No tool focus (use the tools where appropriate)
    • - Don’t use the words Lean or Six Sigma (BPI only)
    • - Big quantifiable results!!!
  • 5. Business Process Improvement: Looking Back
    • Partnering with business units to work on business unit specific initiatives
      • Wholesale
        • Completed 2 Kaizen events: VoIP, Switch Access PIU
        • Future areas of focus include: Fiber Access, ICB Special Pricing, Sonet Services
      • Consumer
        • Completed 1 Kaizen event: Call Escalation
        • Future areas of focus include: Compensation Cycle Time, IVR, Sales Reporting
      • Business
        • Limited opportunities identified
        • Currently conducting analysis of operating metrics within sales support and care function
      • Network
        • Completed 3 Kaizen Events: Ethernet Provisioning, Fiber to the Premise (FTTP), ACTL POI
        • Future areas of focus include: NSM and Production Planning assessment
      • Revenue Management
        • Completed BPM build for auto promo code process
        • Future areas of focus include: 7 Additional BPM builds
      • IT
        • Currently addressing Asset Recovery processes
        • Future areas of focus include: adding additional areas for asset management
  • 6. BPI Program Goals
    • Aggressively drive an enterprise-wide process improvement initiative
      • Agreed upon financial targets and timelines to realize those targets
      • Focused on helping achieve 2009/2010 business-wide targets
      • Develop detailed design information for the individual processes (sub-processes) that result in the highest financial and/or customer impact
      • Support execution/implementation of the new processes, including communications, management of organizational change and formal documentation of new processes
    • Focus on end-to-end efforts in addition to BU issues
      • Look specifically for agreement on key processes to attack for the initiative
      • Business-centric issues prioritized between each other to ensure optimal benefit
      • Create end-to-end design documentation including linkages to growth and expense target plans, initial financial justification and determination of which of the sub-processes require detailed design documents
    • Ensure that gains are recognized and sustainable
      • Establish a program management function to ensure that the process changes hold and, as importantly, that the planned benefits are being achieved
  • 7. Phase 1
    • Establish and prioritize the list of end-to-end processes to be reviewed
    • Allocate team members based upon highest return/highest impact processes
    Concurrently: Establish impacts to the overall enterprise and the associated interactions
  • 8. The Business Process Improvement Approach High Speed Internet Identification of core focus areas within & across lanes EMBARQ BPI Analysis Improvement Opportunities & Roadmaps New Build Economics Supplier Contracts Parts & Materials Customer Contracts Extensive Data Collection Overall Objective: Identify tangible improvement opportunities aligned to EMBARQ’s 3 year operating plan
  • 9. What we’ve heard …
    • Several broad themes span the individual BPI process areas.
    • End to End Process Ownership
    • We have limited E2E process ownership and/or metrics to sustain on-going change
    • Multiple VPs touch each process
    • Competing initiatives appear across processes
    • Fixes in one area cause problems in another
    • Individual measures need to support broad process changes
    • Help Enable Change
    • People have indicated they’re ready for improvements, but …
    • Broad change causes anxiety
    • People are reluctant to suggest cross-functional change
    • “ We tried that in the past” and “It will never work” resistance
    • Need to align compensation / rewards with process goals
    • Better Forecasting is a Necessity
    • Vendor’s require excessive lead time and our costs increase due to limited forecasting
    • We’re missing revenue due to our inability to tie exhaust to customer forecast
    • Capital planning is sub-optimal
    • We overstock because of forecasting variability
    • Data Issues
    • Unnecessary truck rolls due to poor plant data quality
    • We’re not fully leveraging assets due to our inability to track them
    • We’re less efficient due to multiple re-keying and data errors during the customer provisioning process
    Common Pain Points
  • 10. Phase II
    • Capture existing processes and metrics including current costs by function
    • Identify appropriate approaches to solve associated problems
    • Provide an end-to-end graphical view of process steps and cost impact
    • Determine highest cross functional impact
    • Gain executive buy-in on proposed changes and benefits
  • 11. Phase III
    • Execute design sessions for sub-processes that were identified during Phase II
    • Develop a plan for the quantification and ongoing measurement of the planned improvements
    • Revise the end-to-end maps based upon the detailed design sessions
  • 12. Supplier Contracts
    • Key Accomplishments:
    • Contract Compliance
      • Identified root causes of violation spend
      • Updated Network methods & procedures, posted updates to Network Services intranet site and delivered training to address identified gaps
    • Supplier Management
      • Completed scorecard assessments and executive review sessions with 12 critical suppliers (integrated supplier risk management into program)
      • Integrated supplier risk management (financial & IP) into the program & executive discussions
    Planned Actual Contract Compliance: Conducted audits of non-PO violation spend in Network and Business Operations Completed as planned Held Kaizen session to align M&P’s with fiscal & sourcing policies Completed as planned Delivered training on M&P’s/policies Completed as planned Conduct ongoing quarterly audits to continually address future violations Audits suspended in 2009 due to merger/resource constraints and anticipated NewCo process changes Supplier Management: Development of scorecard/methodology Completed as planned Conduct executive review sessions with identified suppliers Completed as planned Developed 3-4 strategic-level improvement areas with each supplier Business units continue to execute on plans
  • 13. Supplier Contracts Planned Actual Reduce excess cable in field locations by $XX Recovered and used $XX of cable Conduct Clean Sweeps in 20 locations by year-end. Target recovery of $XX of unused assets.
    • Recovered to inventory - $XX plus over $XX in plug-in cards
    • Consignment sales - $XX
    • Scrap Sales - $XX
    • XX pallets of product
    Add images and plain English descriptions to the TONES catalog The majority of all items were completed by year-end (over 3000 products) Improve Supplier Performance – Delivery to Lead Time for top 8 suppliers
    • X of X currently above XX%.
    • One supplier dropped due to decreased spend.
    • Seven suppliers improved year-over-year
  • 14. Customer Contracts Initiative Before BPI After BPI Government Repository (Pramata)
    • The contract repository tool (ASP) stores contracts by year which made gathering the entire contract difficult.
    • Not all contracts were stored in ASP – some resided with sales personnel in the field or could not be located at all
    • Special Ts&Cs were not consistently identified and managed
    • Government contracts will be centrally stored and easily accessible.
    • Key/special terms and conditions are extracted and catalogued in a contract summary
    • Data requests can be managed quickly via repository reporting capabilities
    • Contract with Pramata is expandable to other contract types, for example supplier and real estate
    • Provided an overview and demonstration to CTL. Reviewing possible integration with their contracts
    Terms and Conditions
    • Uncertainty as to what contract documents existed
    • Terms and conditions were not consistent across documents and may have been outdated or non-applicable to today’s operating environment
    • Clear understanding of what contracting documents and gaps exist
    • Internally provided a website matching the tariffs, terms and conditions to the product Improvement recommendations prioritized and in progress
  • 15. New Build Economics Accomplishments Results
    • Stood up Capital Targeting Tool for evaluation of projects to determine economic viability
    • Billing and deposit methodology was created and implemented in cases where it was determined developer assistance was required
    • Generated shareholder value through investing only in those New Builds which offer an opportunity for an acceptable return
    • Completed cost structure reviews leading to work with vendors for cost reduction, best practice implementation and training for more efficient use of capital and labor
    • Continue project reviews for New Service Addresses in 2009
    • Continuing process improvement
    • Brings efficiency and consistency to the economic evaluation process; XX projects were reviewed from May to December
    • XX bills have been calculated and sent to developer for deposit or aid to construction
    • Projects found to be uneconomic resulted in a Cap-Ex reduction of $XX
    • The process improvement initiatives provided for a XX% cost decline in our preferred FTTP technology
    • $XX is forecast to be reviewed and billed due to economic viability
    • Reduced cycle times, economic review completed in farther in advance of project construction dates
  • 16. High Speed Internet Focus Area Initiative Objective Annual Benefit HSI Equipment Systematic CPE Recovery on Cancelled Orders Recover HSI equipment from customer if the order was cancelled. $XX Optimize Shipping Change HSI order due date & RAS date from 2 to 3 days. $XX Tangible Customer Facing Equipment Implement database to store, trace and help proactively troubleshoot new and refurbished equipment serial #’s at the household level.
    • $XX to $XX
    • Flexible pricing strategy
    • (Numbers based on CenTel current modem lease program)
    Records Clean-Up Pre-Grooming & Records Clean-Up Pilot
    • Verify and correct records and pre-groom all primary capable lines in the Gardner market.
    • Conducted pre-pilot time and motion study baseline the pilot in the Gardner market.
    • Reduced dispatches & clear times
    • Fewer trouble calls & internal calls to support groups
    0, -1, +1 MEDR Errors Address unnecessary escalations that are a result of errors in MEDR. Improve process for correcting records.
    • $XX rev opportunity
    • Fewer trouble calls
    Dispatch Reduction Cancelled Order Dispatch Reduce/eliminate rolling trucks on cancelled orders. $XX cost avoidance Cancelled Order Revenue Prevent XX% of cancelled orders due to reducing capacity management and records issues. $XX rev opportunity Dispatch Report by Tech Support Center Measurable tool to hold centers accountable by total customer experience vs. metric TBD Capacity Management Network/Marketing Communication Ensure all Business units are proactively and consistently providing campaign and utilization information TBD Underutilized Devices RCA, Identify Process Improvements and Implement changes $XX for each 1% increase in utilization Training & Communication Replacement HSI CPE Reduction Reduce unnecessary replacements through detailed agent reporting and online training. $XX Retail HSI CPE Focus Increase Retail pick up option for necessary HSI CPE replacements. $XX External Customer Training Online HSI customer training modules for key & high volume topics TBD
  • 17. Summary
    • Targeted approach worked best for EMBARQ
      • Find the 5 biggest issues confronting the business
      • Dogged approach
    • Leadership engagement the key – can’t be successful without
    • Cannot lead with the tools – goes in one ear and out the other
    • Lead with results – don’t even talk about the tools unless necessary