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Six Sigma Financial Case Study
Financial Example
By Joe Barckett
A large Finance company needed to reduce financial risk due to lack of proof of ownership on leased vehicles. While the dollar percentage of the total vehicle portfolio was slightly less than 2%, the dollar value of risk was in the tens of millions.
It was decided by management to utilize the Six Sigma DMAIC improvement process to reduce the percentage and reduce the dollars at risk. With the help of SAI Global, the company formed a Six Sigma team that included operators and managers.
As the team worked their way through the DMAIC process they accomplished the following:
During the Define Phase, the team outlined the scope of the project and set a goal of 25% reduction in the portfolio percentage. This would result in a risk savings of more than $10MM. In addition, through value add analysis of the current process map, a savings in excess of $100,000 in waste costs was identified that would be returned to the bottom line. A SIPOC was developed and Quick Wins were identified.
In the Measure Phase, from the three metrics defined as input, process and output, six key ones were identified, and data collection methods were put in place to collect baseline data. The data that was collected validated the potential savings and showed a stable process.
The Analyze Phase utilized the data collected and through the stratification plan developed in the measure phase identified potential root causes. Further data collection and Pareto analysis validated three key root causes that accounted for over 70% of the problem.
During the Improve Phase, the team utilized benchmarking in their search for creative solutions for each validated root cause. They also utilized the "parking lot" flip charts where solutions that were thought of during previous phases had been placed. The improvement tool, Affinity diagram, helped them generate multiple solutions for each root cause. The solutions were then ranked and along with the quick wins, presented to management during the Improve tollgate review. The list of solutions included Information Technology solutions and process change solutions. Management then made the decision as to which of the solutions they wanted implemented and the team proceeded to implement the selected solutions.
Lastly, in the Control Phase, documentation was updated, a new process map was developed and a control plan put in place to hold the gains made. The Control plan utilized SPC and auditing techniques to ensure the process is followed and performance maintained.
The Results of Applying the Six Sigma DMAIC Process:
The following chart shows the reduction in the percentage of dollars at risk.
The team exceeded their goal of 25% reduction and reduced the dollars at risk by more than 50% to date.
The bottom line savings in waste costs also exceeded the goal of $100,000.
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