Six Sigma in Action:                 Demonstrating Customer Value              A Six Sigma in Action summary offers an exa...
Six Sigma in Action:                                                              System Lease Cost Reduction Customer Pro...
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Lease Buyout Cost Reduction Six Sigma Case Study


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Lean Six Sigma Group Free Project Case Study Overviews http://www.linkedin.com/groups/Lean-Six-Sigma-37987
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Transcript of "Lease Buyout Cost Reduction Six Sigma Case Study"

  1. 1. Six Sigma in Action: Demonstrating Customer Value A Six Sigma in Action summary offers an example of the value a Six Sigma project can bring to a customer.Master Black Belt: Steven Bonacorsi
  2. 2. Six Sigma in Action: System Lease Cost Reduction Customer Profile – 27,000 seat network equipment company based in San Jose, CABusiness Problem & ImpactCurrently the average monthly buyout rate of un-recovered Root Cause Analysisleased systems is at 37%, which results in the client having to Buyoutsspend money for lost or outdated technology. This is well 100%above the industry standard of 10 -15%. In addition, 50% of 80% 200the clients systems required a lease extension for added cost. ge r 60% l on av e no th er yed noMeasure & Analyze 100 Us plo em f re Re se No spon sh er d Us tem oe s 40% s Re syInitially, lease buyout and extension baseline process sigma 20%was about 1.8. Primary root causes were identified to be users Ot he rs 0 0%no longer with the company, users who did not respond, and Count 94 80 79 6users who said they no longer had the equipment. Percent 36.3 30.9 30.5 2.3Improve & Control Buyout Run RateIn close coordination with the client and the lease vendor, the 60%GE team updated the termination process to include explicit 50% 51% 38%instructions on equipment returns, automatic notifications and 40% 36% Buyout Rate 36% 29% 30%follow up reminders. The streamlined process was 30% 20% 23% 16% 20%documented and training provided to key participants 10% 19% 14% 14% 15%Results/Benefits 00% Jan- Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-Buyout/extension rate was reduced to 12%, and the outdated 01 EOL Month 02systems that the client needed to extend or purchase from theleasing company was cut by over 50%, saving over $2.3M An annual savings of US$2.3 million to the customer!
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