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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