Foundations of Excellence

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BAE Systems provide us with quick and easy solutions that balance both precision and simplicity.

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Foundations of Excellence

  1. 1. Foundations of Excellence Quick and Easy Solutions *Includes a follow-up WebinarSlide Main Title Andrew Muras Systems Engineering Solutions 4319 Greenwood Lane Grapevine, TX 76051 817.481.2997 andrew.muras@baesystems.com 118 August, 2010/Unclassified COMPANY PRIVATE Copyright BAE Systems 2010
  2. 2. !!! WARNING !!! !!! POWERPOINT IN USE !!! THIS INFORMATION IS BEING PRESENTED IN POWERPOINT  WHICH HAS BEEN DETERMINED BY THE ARMY TO BE THE  NUMBER ONE CAUSE FOR DECREASED COMMON SENSE.   PROLONGED EXPOSURE TO POWERPOINT HAS BEEN LINKED TO  COGNITIVE ATROPHY WHICH IS THE DEGENERATION OF  COGNITIVE SKILLS DUE TO EXPOSURE TO NONSENSICAL CANINE  AND EQUINE PRESENTATIONS. IF YOU EXPERIENCE DIZZYNESS, DROWSENESS, OR SYMPTOMS OF ADD /ADHD, IMMEDIATELY STAND UP AND LEAVE  THE PRESENTATION.  SEEK FRESH AIR AND CONTACT THE “PREVENT POWERPOINT ABUSE” HOTLINE AT 1‐900‐DOG‐ PONY.18 August, 2010/Unclassified COMPANY PRIVATE Copyright BAE Systems 2010 2
  3. 3. OverviewFastTrack first developed in 1992Hundreds of Implementations12 – 15 to 1 Return on InvestmentSingle week implementation resultsFree, Web-based software toolMultiple Applications:• Process Analysis & Improvement Published in June 2009• Back Office and Manufacturing www.simpleprocessmgmt.com• Customer & product Profitability Over two dozen articles published:• Capacity Analysis • Journal of Corporate Accounting and Finance• Performance Metrics • IT Financial Management Association Journal • Petroleum Accounting and Financial Management• Shared Services Journal• Outsourcing Analysis • Shared Services News • Measured Quarterly 18 August, 2010/Unclassified COMPANY PRIVATE Copyright BAE Systems 2010 3
  4. 4. Sample Clients18 August, 2010/Unclassified COMPANY PRIVATE Copyright BAE Systems 2010 4
  5. 5. Best Practices for the Back Office1. Governance – Run it like a business2. Performance Management – Passion for metrics3. Service Definition – Know thyself4. Customer Relationship – Focus on communication5. Chargebacks & Funding – Transparency to drive behaviors6. Technology & Systems – Consolidate, standardize and optimize/automate7. Workforce – Hire for attitude and train for aptitude8. Continuous Improvement – Create a culture that rewards improvement9. Implementation – Mandate from the top 18 August, 2010/Unclassified COMPANY PRIVATE Copyright BAE Systems 2010 5
  6. 6. Top-down/Bottoms Up- Data-Focused Two-stop shop solution - Passion for Operational & Metrics Strategic metrics Balanced Data to support other Balanced Scorecard metrics Scorecard Benchmarks Defined Service Defines/Quantifies Portfolio services Svc Service costs/metrics Catalogue Responsibilities ABM Focus on Customer Provides all supporting Communication SLA data IDs activities & ABM in concert with a scorecard SLA commitments Process yields significant benefits* Process Outputs – ABM supports improvements in operational efficiencies, Transparency to Chargebacks Drive Behavior whereas a scorecard Best Practices supports a change in strategy Target/Outsource Costs Chargebacks – Scorecards without activity- Capacity & budgeting Separate Shd based models rely on error- Insight Svcs budget prone allocations Culture of Continuous * North American Survey reported in CMA Process improvement Improvement initiatives/NVA Management Activities Time Input: No •Prepare Paychecks Exception Reporting; Time Input: Payroll •Audit & Correct Timesheets Direct Input; Supv./ Yes Paper Timesheets Input •Process & Audit Personnel Actions Time Input: System Delivery to HR Personnel Agenda Dept. Input Dept. Approval •Enter & Audit Payroll Deductions All Employees Payroll for Auditing No •Correct Paycheck Error ROI/Bus case data HR Benefits Report No Yes Yes Generate System Delivery to Supervisor Approval Dept. Approval Make Corrections Edit Run Payroll for Auditing Enter New Hires, Promotions & Transfers 100% Audit Complete & Correct? HR Personnel Agenda (Daily) ESS Deduction Changes No 5% (200 timesheets) Audit Actions & Chgs.; Re-Audit Timesheets (150 records) Yes Trackdown Errors Enter Changes Regarding Benefits HR Benefits Report Generate Edit Run No Term. (CS3) Make Corrections(Daily; 5-7 per Pay Period) Enter All Other Payroll Deductions Paper Emp. Changes Timesheet or Dept.100%No Complete & Correct? Yes Error? Audit Audit Actions & Chgs.; Re-Audit Timesheets (750 records) Process Maps Trackdown Errors Yes No Enter Terminations Paper (CS3) Term. No Update Yes Timesheet or Dept. Error? Complete & Correct? 100% Audit Payroll Print Manual Checks Make Corrections & Voids No Yes Hand Sort by Department (2 people, Update Disburse Yes Correct? 100% Print Check and Advices Disburse 3 hours)54% Direct Deposit Payroll 46% Paychecks 18 August, 2010/Unclassified COMPANY PRIVATE Copyright BAE Systems 2010 6
  7. 7. Industry Adoption of ABM & BSC18 August, 2010/Unclassified COMPANY PRIVATE Copyright BAE Systems 2010 7
  8. 8. The ABM Cross Resources are consumed by Activities which are consumed by Products & Services Resources Cost Assignment View - Activity Based Costing (ABC) Outputs and Cost Drivers Activities Performance Measures What Activities & Services/ Products Cost? Services Process View - Activity Based Management (ABM) Sound Business Decisions What Are the Causal Quality Improvements Factors? How Well Are Activities Performed?18 August, 2010/Unclassified COMPANY PRIVATE Copyright BAE Systems 2010 8
  9. 9. Traditional Vs. ABM View Traditional Accounting View Activity Based Management View of Purchasing Department of Purchasing Department Salaries . . . . . . . . . . . . $ 375,000 Select Suppliers . . . . . . .$ 82,000 Benefits . . . . . . . . . . . . 92,000 Procure Material . . . . . . 175,000 Supplies . . . . . . . . . . . . 47,000 Certify Vendors . . . . . . . 92,500 Telephone . . . . . . . . . . 8,500 Expedite Shortages . . . . 142,500 Utilities . . . . . . . . . . . . 16,000 Resolve Problems . . . . . 83,000 Depreciation . . . . . . . . 23,500 Travel . . . . . . . . . . . . . 13,000 Total $575,000 Total $ 575,00018 August, 2010/Unclassified COMPANY PRIVATE Copyright BAE Systems 2010 9
  10. 10. Activity Based Management - Unit Costs and Benchmarks - Activity Based Management View Output/ Purchasing Department Year Unit Cost Select Suppliers . . . . . . . $ 82,000 200 $410/Supplier Procure Material . . . . . . . 175,000 2,000 $87.50/PO Certify Vendors ....... 92,500 20 $4,625/Vendor Expedite Material . . . . . . . 142,500 300 $475/Expedited PO Resolve Problem . . . . . . . 83,000 200 $415/Blocked PO Departmental Benchmark? Total $ 575,000 $575,000 2,000 POs = $287.50 per PO18 August, 2010/Unclassified COMPANY PRIVATE Copyright BAE Systems 2010 10
  11. 11. Identifies True CustomerCosts, Benchmarks, BestPractices, & SLA Data Volume Business Business Business Unit Cost Unit A Unit B Unit C Select 200 100 70 30 Suppliers $410/Supplier $41,000 $28,700 $12,300 Procure 2,000 500 1200 300 Material $87.50/PO $43,750 $105,000 $26,250 Certify 20 15 4 1 Vendors $4,625/Vendor $69,375 $18,500 $4,625 Expedite 300 150 100 50 Materials $475/Expedited PO $71,250 $47,500 $23,750 Resolve 200 125 60 15 Problems $415/Blocked PO $51,875 $24,900 $6,225 $277,250 $224,600 $73,150 Totals $554.50/PO $187.17/PO $243.83/PO18 August, 2010/Unclassified COMPANY PRIVATE Copyright BAE Systems 2010 11
  12. 12. Example Procure-to-Pay Process Develop Process Warehousing Pay Requisitions / PO / Receiving Vendor Requirements 23% 39% 22% 16% $100,000 $10,000 Unit Cost/ Unit Cost $1,000 Line Item A.$ 530 $100 B.$ 230 $10 C. $ 80 $1 1 2 3 4 5 6 7 8 9 10 Activity18 August, 2010/Unclassified COMPANY PRIVATE Copyright BAE Systems 2010 2007 12
  13. 13. ABC Chargeback vs ‘Regular’ % Difference Between ABC and Avg Line Item Chargebacks80%60%40%20% 0% BU A BU B BU C BU D BU E BU F BU G BU H BU I BU J BU K BU L BU M BU N BU O BU P BU Q-20%-40%-60%18 August, 2010/Unclassified COMPANY PRIVATE Copyright BAE Systems 2010 13
  14. 14. Balancing Precision & Simplicity: The Simple Approach to SLAs and Chargebacks• Develop rates and costs (i.e., chargebacks) once per year• Minimize service options/levels• Customer coordination is a must• Integrate improvement as a fundamental element (customer partnerships help)• Minimize cross charging• No weekly time charging• May not include facilities costs• Charge actual costs versus “market” pricing• Will evolve over time Documents & SLAs & Process & Transactions Chargebacks Communications Tool 18 August, 2010/Unclassified COMPANY PRIVATE Copyright BAE Systems 2010 14

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