Improving marketing operations with six sigma

Platinum Sponsors
Improving Marketing Operations with
Six Sigma and Affinium Plan
John Derrico, Senior Director Marketing Operations
Medco Health Solutions, Inc

Medco is a registered trademark of Medco Health Solutions, Inc.© 2007 Medco Health Solutions, Inc. All rights reserved.Distribution prohibited without prior consent.
Overview
• About Medco Health Solutions
• Marketing challenges across the spectrum of
Marketing Operations
• Six Sigma overview and application with
Affinium Plan (DMAIC)
• Fundamentals for continuous process
improvement
• Appendix

Medco Health Solutions, Inc.
(NYSE: MHS)
• Medco is a leading pharmacy benefit manager (PBM), with one of
the nation's largest mail order pharmacy operations. Through
advanced pharmacy, Medco helps to improve the health and lower
the total cost of care for clients and their members.
• Medco helps to ensure that millions of Americans have access to
affordable, high-quality prescription healthcare. It is more than our
business-it's our calling.
• Scope
- About 1/3 of the companies on the Fortune 500 list are Medco clients.
- Medco provides pharmacy benefit management services for
approximately 1 in 5 Americans.
- Medco employs more than 20,000 people nationwide, including more
than 2,400 pharmacists and more than 500 nurses.
- Medco’s 2007 net revenues were $44.5 billion.
- In 2007 Medco managed nearly 560 million prescriptions of which 94.8
m, were fulfilled by our Mail order pharmacies
Information from the Medco Health Solutions investor web site (4.11.2008). URL, http://phx.corporate-ir.net/phoenix.zhtml?c=131268&p=irol-homeProfile

The Medco Goals
How we do it: We know our customers so intimately and serve them so
well that we are their most trusted advisor and the preferred provider of
safe, effective pharmacy benefit management services.
Customer Intimacy
• Develop Scalable Solutions:
Serve the needs of many with the
flexibility to meet specific customer
requirements
• Execute Solutions: quickly, easily,
and flawlessly
Core Values
• Speed without compromise:
Delivering quality on time
• Strength through teamwork:
Collaborating at all times
What we do: We’re in the business of keeping prescription drug benefits
affordable for America.

Medco’s Process and Quality History
• History:
- Ernest A. Codman award for re-engineering pharmacy
processes to dramatically reduce medication dispensing errors
and improve patient safety. (2004)
- URAC (an independent evaluator of health care quality) awarded
Medco its inaugural PBM Accreditation for being clinically
focused and meeting quality standards for consumer protection
and empowerment. (2007)
- URAC’s Drug Therapy Management (DTM) Accreditation for its
clinical management and member engagement programs that
improve pharmacy care and prescription drug safety. (2007)
• Utilize Six Sigma to quantify performance, improve
efficiency, and continually enhance quality.
• Supporting culture and deep core competencies in the
areas of process efficiency and cost reduction.

Medco’s Marketing Operations –
Challenges & Solutions
• Original Challenge
- Increase Productivity
- Mange Operational Costs
- Manage defects (and implement
process improvements)
• New Challenge
- Visibility to all Marketing Operations
- Processes must meet audit standards
- Expand the platform for productivity
- Intuitive and easy to use
- A.Campaign
- E.Message
- Launch
Affinium Plan
for List Pull
Operations Only
Solution
Extend
Affinium Plan
across the
“Spectrum of
Marketing
Operations”

Spectrum of Marketing Operations
Request
Creative
Composition
Digital Asset
Management
List Selection
Criteria
Production Presentment Response /
Analytics
- Storage
- Version Control
Unica Affinium Toolset [Plan, Campaign & E-Message]
Document Composition and Document Storage Applications
Lettershop, OB-IB Phone Vendors/Systems
Customer Service Platform
- Lettershop
Instructions and
Approvals
- Requirements
- Development
- File Transfer
- Copy
- Design
- Review
- Approvals
-Communication
Request
Information
-Mail Drop
-IB Phone
-OB Phone
-Email
-IVRU
Integration and consolidation of operations for effective execution
Systems&DB’s
Supporting Db’s and
Reporting/Analytical
Toolsets
-Capture Response
-Campaign Results
Reporting
-Response Modelling

What is Six Sigma?
• Six Sigma as the system
- Six Sigma (σ) is a comprehensive and
flexible system for achieving, sustaining and
maximizing business success. Six σ is
uniquely driven by a close understanding of
customer needs, disciplined use of facts,
data and statistical analysis and diligent
attention to managing, improving and
reinventing business processes
from the Six Sigma way by Peter S. Pande, Robert P. Newman & Roland R. Cavanaugh

How Six Sigma ‘Drives’
• Six Sigma is the engine
- Business performance improvement … using
fact based management … via a
comprehensive collection of tools…focusing
on Top Level Indicators or business
objectives (TLI’s) …. to provide increased
customer value (internal & external)

Prerequisite for Six Sigma Use
1. The savings are greater than the process
2. Data will be used to drive decisions (COPQ,
TAT)
3. Collaboration around the P’s & Q’s
4. Standard Repeatable Process (↓Defects &
remove NVA Processes)
Gain consensus that fact driven
management will yield measurable results

Applying Six Sigma –
the ‘DMAIC’ & Affinium Plan
• What is a ‘DMAIC’?
- Product/process improvement methodology
- Can be an iterative approach
- Phase Steps & Tools:
• Define - Charter, SIPOC, VOC
• Measure - Process Maps, DPMO
• Analyze - Pareto’s, Fishbone, 5 why’s
• Improve - Solution Selection Matrix
• Control - Control Charts, Control Plans

the ‘DMAIC’ & Affinium Plan (D)
• Define the Customer, their Critical to Quality
(CTQ) issues, Voice of the Customer (VOC)
and the Core Business Process involved.
- (D) who customers are -> People tab
- (D) what's in scope and the requirements for products
and services -> Templates, Custom tabs, MO’s
- (D) what their expectations are (both stated and
unstated) and how the information managed by
Affinium Plan will be used
An example of a Six Sigma tool (DMAIC) and how it can be used in conjunction with Affinium
Plan

Define Example – VOC ‘Consumability
Audit’
Request
Creative
Composition
Digital Asset
Management
List Selection
Criteria
Production
- Approvals
- Storage
- Version
control
- Lettershop
Instructions and
Approvals
- Requirements
- Development
- File Transfer
- Copy
- Design
- Review
-Approvals
- Communication
Request
Information
By aligning users to processes, modifications were
made to ease the learning curve and speed user
adoption of Affinium Plan.
-Acct Mgrs
-Product Owners
-Assessment/
Assignment Team
-Program Communication Manager
-Traffic Manager
-Editorial/ Design Team
-Creative Review Managers
-Creative Review Team
-List Pull
Team
-Production Mgrs
-Lettershops
= High Consumability
= Medium Consumability
= Low Consumability
UsersProcess

the ‘DMAIC’ & Affinium Plan (M)
• Measure the performance of the Core
Business Process involved.
- Develop a data collection plan for the process
-> Questions on the Plan templates (yes/no, drop
down, grids), Metrics, Saved Searches and
Cognos Reports
- Collect data to determine the types of defects
and metrics
• Validate how the information (data) will be used to
drive business decisions

the ‘DMAIC’ & Affinium Plan (A)
• Analyze the data collected and process
maps to determine root causes of defects
and opportunities for improvement.
- Identify gaps between current performance
and goal performance
- Prioritize opportunities to improve
- Identify sources of variation
• - > Workflow target vs actual, saved searches
and Cognos reports

the ‘DMAIC’ & Affinium Plan (I)
• Improve the target process by
designing creative solutions to fix and
prevent problems.
- Create solutions using technology and
discipline (automate where possible)
- Develop and deploy an implementation
plan
• Modify templates & MO’s
• Execute training as needed

the ‘DMAIC’ & Affinium Plan (C)
• Control the improvements to keep the
process on the new course.
- Institutionalize the improvements through
the modification of systems and structures
- Prevent reverting back to the “old way“ via
an ongoing monitoring plan
• -> Custom Searches, Cognos ‘Outlier’ reports
& training

Success Indicators
1. Application Ease of Use (in relation to user
consumability)
2. Visibility to Operations
• Process & Project Management
• Operational and Financial Measurement
3. Adherence to Internal Compliance Standards
(auditable)
4. Establish a Platform for Increased Productivity
End Result via Affinium Plan & Six Sigma
Scalable, automated processes to support future growth and to
manage operational efficiencies via a fact based approach (data)
Challenges became our measurement goals

Fundamentals for Continuous
Process Improvement
• Confirm who are the customers
• Define what it means to ‘succeed’
• Gain visibility to operations & processes
- Create a Process Control Plan
• (M3 - Map, Measure & Manage)
- Confirm the Q’s, then understand the P’s
• Assign ownership
• Data, Data, Data
• Manage and control

Appendix
• Cognos Reporting
• Control charts (mock data)

Cognos Reports via Affinium Plan
Plan Administration
Project Leads
Business
Owners
Exe.
Summary
- Monthly metric summary reports by
Business Area
- Selectable Business Area for
summary metrics, defects and
project financials
- Defects, resource and task
level information
- Transactional Level
Operational Reports
-Data Integrity
-User access level and
licensing

Location: Franklin Lakes/BBPA Display/Print Date: 2/2/2007
Owner John Derrico Favorable Results:
Metric: 1st
Pass Yield
Operational Definition Total defect free campaigns / total campaigns (production and new campaigns)
Process/Customer impact rework
Date Desc. Of OOC Assignable Cause Action Needed
2/06 Below Historical Avg.
5/06 Below Historical Avg.
11/06 Below Mean
12/06 Below Mean
1st Pass Yield
72%
61%
78%
85%
60%
73%
76%
79%
87%
78%
68%
73%
85%
88%
LCL=0.47782
CEN=0.74285
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07

Metric: Productivity
Operational Definition Hours/List Pull (does not include 1st run of new campaigns)
Process/Customer impact Internal Productivity
Date Desc. Of
OOC
Assignable Cause Action Needed
6/06 –
7/06
Above Historical
Avg.
8/06 Above Historical
Avg.
Hours Per Production List Pull
12.93
14.34
19.56
18.12 18.27
17.27
20.05
14.34
20.38
18.98
16.62
UCL=20.483
LCL=7.971
CEN=14.227
4
6
8
10
12
14
16
18
20
22
Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07

Metric: Defect Types
Operational Definition Communication defects from enrollment transfer CSG to vendor file release / total
CSG supported communications
Date Desc. Of
OOC
Assignable Cause Action Needed
Campaign In-Process Defects for May 2006
27
18
10
8
2 1
0.68
0.83
1.00
0.98
0.95
0.41
0
5
10
15
20
25
30
35
Contingency (Inputs
Not Received)
Other Process
Defects
Security Patch
Defects
IW Defects Vendor Defects List Pull Defects
Defect Type
#Observations
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1

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