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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
Sponsored by the International Standard for Lean Six Sigma, e-Zsigma http://www.e-zsigma.com, IQPC, and PEX Network.

Please contact Lean Six Sigma Master Black Belt, Steven Bonacorsi, Owner of the Lean Six Sigma Group to have your project case studies to be added to the Lean Six Sigma Group Library. Steve Bonacorsi sbonacorsi@comcast.net

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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Root Cause Analysisleased systems is at 37%, which results in the client having to Buyoutsspend money for lost or outdated technology.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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