Leveraging Lean Thinking In Credit Unions: A Randolph-Brooks Federal Credit Union Case Study
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Leveraging Lean Thinking In Credit Unions: A Randolph-Brooks Federal Credit Union Case Study

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In this presentation, Peter Farrow of Randolph-Brooks Federal Credit Union shares the basics of “Lean for Credit Unions.” He also discusses some of the reasons Randolph-Brooks considered Lean and ...

In this presentation, Peter Farrow of Randolph-Brooks Federal Credit Union shares the basics of “Lean for Credit Unions.” He also discusses some of the reasons Randolph-Brooks considered Lean and ways Lean can be beneficial to any credit union.

Peter presents three detailed case studies from Randolph-Brooks and the results they achieved:
– Branch Channel Lending
– Call Center Member Service
– Branch Workforce Management

He gives an overview of Lean in IT and a few reasons Randolph-Brooks chose to implement Lean in IT. Peter also shares some helpful tips for getting started with your own improvement initiatives.

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Leveraging Lean Thinking In Credit Unions: A Randolph-Brooks Federal Credit Union Case Study Presentation Transcript

  • 1. Leveraging Lean Thinking In Credit Unions:A Randolph-Brooks Federal Credit UnionCase StudyPresented by: Peter Farrow, Vice President & Chief InformationOfficer – Randolph-Brooks Federal Credit Union
  • 2. Your Presenter Today Peter Farrow, Vice President & Chief Information Officer Randolph-Brooks Federal Credit Union• Joined RBFCU in 2004 to establish a formal Project Management function• Selected in 2007 to create a formal Process Improvement program• Over 18 years of Credit Union experience• Masters in Technology and Masters of Business Administration © 2010 Guidon Performance Solutions, LLC. All rights reserved. 2
  • 3. What We’ll Cover Today• RBFCU Overview• What is Lean?• Why Lean in Credit Unions?• 3 Case Studies – Branch Channel Lending – Call Center Member Service – Branch Workforce Management• Why Lean in IT?• Getting Started © 2010 Guidon Performance Solutions, LLC. All rights reserved. 3
  • 4. RBFCU General Overview• Founded in 1952 by military personnel• $4 Billion CU serving more than 325,000 members• 36 branches – Ten underserved areas – Three to five new branches being built per year – Three in-school branches• 1,000+ employees – Average tenure of senior staff = 15 years – 5 or more years of service = 40% of employees – Part time = approximately 10% of employees © 2010 Guidon Performance Solutions, LLC. All rights reserved. 4
  • 5. What is Lean?• Provides WHAT the member wants• WHERE the member wants it• WHEN the member wants it• In the MANNER they want it While utilizing minimum resources and minimizing member effort. Specifies value from the standpoint of the member. © 2010 Guidon Performance Solutions, LLC. All rights reserved. 5
  • 6. Why Lean in Credit Unions?Membership is growing Confidence and safetyMembers expect superior service Growing spectrum of products – complexity and scaleRegulatory environment is more complex Sound processes, controls, costsReturn on Assets for many Credit Unionsis stretched thin Low interest rates, more members, more services The pace of change requires new thinking © 2010 Guidon Performance Solutions, LLC. All rights reserved. 6
  • 7. LEAN is all about Identifying and Eliminating Waste• “Waste” is seen differently in LEAN• Traditionally, waste has been Over Producing viewed as an object. It is Over Work In very easy to envision a barrel Processing Process of scrap metal or plastic and identify it as waste. Errors & Rework Transport• In LEAN thinking, the term waste actually refers not to Waiting Excess Motion the physical material but rather the relationship of the resource to the member. In LEAN, waste is measured as consumption of resources – time and capital © 2010 Guidon Performance Solutions, LLC. All rights reserved. 7
  • 8. Examples of Waste in Credit Unions • Member waiting for Over service Producing • Cumbersome transactions Over Work InProcessing Process • Duplication of information • Searching for informationErrors & Transport to answer a questionRework • Reports created, not used Waiting Excess • Transportation costs Motion • File maintenance and retention It’s all about core member value © 2010 Guidon Performance Solutions, LLC. All rights reserved. 8
  • 9. Lean Improvement Metric Benchmark Gains What others say about Lean 0% 25% 50% 75% 100% “Lean Adopters Identify MoreLabor Capacity Waste and Operate More Efficiently”Lead Time/DeliveryErrors and Rework “Lean Is Inexpensive andRevenue Growth Generates Solid Returns”Handoff Reduction Corporate Executive Board, Operations Council™ 2006 Study on Lean Manufacturing for Financial ServicesDecision Points © 2010 Guidon Performance Solutions, LLC. All rights reserved. 9
  • 10. Lean Projects at RBFCU• Member Service Center: Outbound Calls• Consumer Lending: Video Conferencing• Human Resources: Recruitment• Records and Research: Document Imaging• Information Systems: Help Desk• Branch Vision Planning Session• Member Services: Asset Protection• 5S Project• Core Platform Process Review• Resource Planning Model © 2010 Guidon Performance Solutions, LLC. All rights reserved. 10
  • 11. Kaizen Breakthrough ExperienceTeam-based energy and creativity drives immediateprocess improvement Day 1 Day 2 Day 3 Day 4 Day…• Introductions • Team • Continue • Refine • Future State• LeanSigma® Formulates Hands-on Improvements Process Transformation Improvement Workplace • Continuous• Lean Improvements • Make Improvement Production Hands-on • Report Out: System Workplace• LeanSigma® Improvements • Present Tools Results• SIPOC • Establish Standard Work • Next Steps• Site Tour Result• Observations • Celebrate! and Quick Kills • Document New Standard• Analyze Operation Current State At the end of the week, the Kaizen team will have achieved dramatic operational improvements © 2010 Guidon Performance Solutions, LLC. All rights reserved. 11
  • 12. Video Conferencing – Branch Channel Loan Origination• Context and Challenge – New video conference service for loan origination process at the branches – Pilot results showed high member acceptance – Demand for service was growing and threatened to exceed the loan officer capacity – Members experienced significant variation in the time to complete the process © 2010 Guidon Performance Solutions, LLC. All rights reserved. 12
  • 13. Video Conferencing – Branch Channel Loan OriginationApproach Results• Cross functional team from branches • Reduced member wait/hold time by and Lending Department took on the 30% challenge of eliminating waste and • Improved lending productivity by 17% standardizing the process • Decreased forms/paper and• Team gathered for a 5-day “Kaizen” associated printing (23 hrs/month) event to review the video conferencing process, specifically • Developed training on new process those that did not add value for branches and lending centerKaizen – A collaborative Lean Since thenmethodology to rapidly identify and • Expanded from 6 to 17 Brancheseliminate waste. Typical event duration with Video Lendingis 4-5 days. Improvements areimplemented or tested during the week • Average number of video conferenceto evaluate impact. calls increased from approximately 250 to 3,000 per month. © 2010 Guidon Performance Solutions, LLC. All rights reserved. 13
  • 14. Member Service Call Center• Context and Challenge – The Member Service Center outbound transfer call volume had risen to 37% – Service level objectives were not being met; the call abandonment rate was 8.9% – Approximately 50% of the transferred calls were due to training challenges – The call center needed to reduce transfers, ensure capacity was available for growth while maintaining high levels of member service © 2010 Guidon Performance Solutions, LLC. All rights reserved. 14
  • 15. Member Service Call CenterApproach ResultsA Kaizen team from including the Member Metric Before AfterService Center, IT, Consumer Lending,Card Services and Accounting met for a 5- Transfer 50% 20%day improvement event. Key steps Rateincluded: Inbound Reduced 28%Map/Quantify the member experience CallsIdentify waste Abandon 8.9% 5%Identify/Prioritize improvements • “Just do It” Rate • Process change to reduce steps Handle 169 sec 150 Sec and improve flow Time • “5S” to improve efficiency of work environment • Leverage existing technology (simplify screens, IVR) Creativity before CapitalSimulate/Pilot best ideas to gage impact $430K SavingsEstablish training documentReport Out and Celebrate © 2010 Guidon Performance Solutions, LLC. All rights reserved. 15
  • 16. Branch Workforce Management• Context and Challenge – Due to e-technologies, branch volume is declining; however, transaction complexity has increased – Staffing per branch was relatively flat year-to-year – New branches are opening and require additional resources and training – We needed to identify opportunities to simplify processes and best allocate resources – Core objective was to increase transactions per employee while maintaining high levels of member service• Results – Constructed a resource planning tool to better align resources to transaction volumes while maintaining superior member service – Projected savings of $1.5 million over the first two years © 2010 Guidon Performance Solutions, LLC. All rights reserved. 16
  • 17. Branch Workforce ManagementApproach Results• Assessed branch processes, overall • Simplified scheduling model that matches performance, and opportunities current scheduling outputs• Launched a LeanSigma Workforce • After 3 months, piloted the workforce Management Project management tool with 4 branches: • Tool reveals potential savings of 10-20% • Managers can use the tool to match capacity to volume • Currently testing the resource planning model across remaining 27 branches Anticipate 10-20% resource savings over the next two years while still maintaining member• Developed models/tools to assist with service expectations. allocation of resources by branch, day/hour• Pilot and roll-out tool; adjust schedules and metrics © 2010 Guidon Performance Solutions, LLC. All rights reserved. 17
  • 18. Lean in IT• Context and Challenge – Tighter budgets and fewer resources – Ability to adapt to business and rapidly changing market • Products and services • Regulatory requirements – Project contention – Competition for resources – Delivering value to internal and external customers © 2010 Guidon Performance Solutions, LLC. All rights reserved. 18
  • 19. Why Look For A Better Way?• 32% of software projects are on-time and on-budget *• 44% are challenged (late, over budget, lack of required features)*• 24% have failed (cancelled prior to completion or delivered and never used)* *Standish Group Chaos Summary 2009 Bottom Line 68% of all projects fail in some way © 2010 Guidon Performance Solutions, LLC. All rights reserved. 19
  • 20. Traditional Waterfall Approach Business Requirements Technical Specifications Development System Testing User Testing Deployment Time Problems associated with the traditional approach: • Business needs change during the development lifecycle • High cost with delayed ROI • Lack of input from diverse user perspectives • Slow, ineffective and laborious feedback loops • Projects managed and evaluated based on “The Plan”, not value delivered © 2010 Guidon Performance Solutions, LLC. All rights reserved. 20
  • 21. Escalating Cost of Waterfall Problems Detected Cost of Change Business Technical Development System User Testing Deployment Maintenance Requirements Specifications Testing Problems go undetected until the cost of correcting them has escalated © 2010 Guidon Performance Solutions, LLC. All rights reserved. 21
  • 22. LeanSigma Software Development Principles 1. Eliminate waste Do only what is necessary 2. Build quality in Goal is to prevent bugs from getting into the code base 3. Create knowledge Collaborative team based approach 4. Defer commitment Decide as late as possible when more facts are known 5. Deliver fast Small batch sizes maximize efficiency 6. Respect people Self directed teams achieve more 7. Optimize the whole Continuously examine the process to maximize velocity All 7 rules contribute to a time based strategy – Saving time while increasing service and quality © 2010 Guidon Performance Solutions, LLC. All rights reserved. 22
  • 23. How To Get Started?• Pick a single pilot area or service – Branch Teller Transactions, Lending Processes, Branch Capacity, IT Help Desk, IT Application Development, Finance Reporting• Develop a better understanding of member experience – initial contact, request delays, contact points, hand-offs• Identify waste• Eliminate the low hanging fruit with simple creativity• Learn and leverage Lean Principles to drive out more of the waste and redefine the service• If you cannot measure it, you cannot improve it• Expand beyond pilots to encompass the whole enterprise – recognize that this can involve a culture shift © 2010 Guidon Performance Solutions, LLC. All rights reserved. 23
  • 24. Questions? © 2010 Guidon Performance Solutions, LLC. All rights reserved. 24
  • 25. Thank You Guidon Performance Solutions 866-986-4414 or 480-986-4414 contact@guidonps.com www.GuidonPS.com © 2010 Guidon Performance Solutions, LLC. All rights reserved. 25© 2008 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.