Financial Services by sdsdfqw21


Financial Services
October, 2010

                     Page 1
                      Chris Vogel
                      - Owner Compass Affiliates,
                      providing management consulting
                      for Lean leadership and design.

Former Senior Vice President of Wells Fargo, Chris
conducts Lean readiness assessments & action planning,
provides Lean implementation consulting, works with
leaders to develop Lean cultural systems, standardized
Gemba walks, and leader development planning.
                                                     Page 2
Discussion Overview
 • Lean
 • Lean Leadership
 • Policy Deployment Planning
 • Wells Fargo Case Study
    • Motivations and opportunities for change
    • Changing the Document Management culture
    • Where Wells started
    • An example of the first major transformation
    • What was learned and what was done next
    • Results
 • Myths, Achievements and Challenges
 • Where to start
 • Questions
                                                     Page 3
• What is it not?
  – It is not tools, projects, cost cutting or people
  – It is not a way to make people work harder
  – It is not a passive activity practiced by one group and
    not another
  – It is not a transition to the next “method”

• What is it?
  – It is a total company system connecting Purpose,
    People, Process and all departments to increase
    Customer value, profitability and growth

                                                         Page 4
• Traditional Manager
   – Very hierarchical, vertical organizational structure
   – Works from their office, meeting rooms and conference
   – Primarily concerned with own functional area
   – Not overly concerned with process if results are met
   – Provides direction (leads by telling)

• Lean Leader
   – Flattened organizational structure
   – “Goes to see” in work area
   – Total systems thinker
   – Approves process as well as tracking results
   – Asks good questions (leads by teaching)                 Page 5
Lean Case Study
Who Is Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a diversified financial
services company providing banking, insurance, investments, mortgage
and consumer finance through almost 6,000 stores, the Internet and other
distribution channels across North America and internationally.

The company is headquartered in San Francisco, but is decentralized so
every local Wells Fargo store is a headquarters for satisfying customers'
financial needs and helping them succeed financially. Wells Fargo has
$540 billion in assets and 158,000 team members across our 80+
businesses. Wells is the United States' 25th largest employer. Is ranked
fifth in assets and sixth in market value of our stock among our peers as
of June 30, 2007.

Vision: Wells wants to satisfy all of their customers’ financial needs, help
them succeed financially, be the premier provider of financial services in
every one of our markets, and be known as one of America’s great
                                                                       Page 6
Wells Fargo Case Study
Who is Document Management?
Document Management is an operations team providing paper
imaging, electronic document routing, data lifting and document storage
services to the Home and Consumer Finance division of Wells Fargo.
Services provided were integrated with back-end and front-end
transactional processing. The Home and Consumer Finance division
included the following groups; Home Mortgage, Financial, Insurance,
Home Equity Lending, Credit Cards, Student Loans, Trust Services.

To serve our internal Business Partners we had operations in NC, MN
and Iowa. We had 1,200 team members providing services over two
shifts, six days a week.

Processes were continuously improved in partnership with business
partners to provide the most quality centric, secure and cost effective
value, meeting the needs of Customers.
                                                                    Page 7
Conditions Motivating Change

• Organic growth of imaging and data lifting across unconnected

• Technical infrastructure was becoming highly variable in design
  increasing cost

• Operations disciplines were defined by each separate process
  and department

• Volume nearly tripled to a record high following the Federal
  Reserve’s response to the 911 attacks

                                                                 Page 8
Opportunities for Lean
• Departments were merged into a single division allowing a
 central vision to develop
• The value of work effort was not clearly identifiable
• Many, many handoffs
• Processes were designed around batching work
• Work inventory was stored in rooms out of the way and out of
 site until it was processed
• Defect rates and service performance were hard to measure
• Without adequate processes, management was required to
 respond to the “loudest” priority

                                                              Page 9
Where Did We Start?

• Began value stream mapping our process

• Made our processes obvious; and started changing them

• Built our Operational Excellence (Lean) Model

                                                    Page 10
Began Value Stream Mapping Our Process
• We engaged external vsm expertise to help us get started and to
  teach us the discipline
• Began conducting Kaizen events, created change proposals began
  30-60 day implementations (short cycles of improvement)

Made Our Processes Obvious
• Started to create flow and began shrinking batch sizes
• Began physically connecting processes and making operations visible
• Began to exchange post process auditing for a balance of in-process
• Began to explore work standardization through 5S
• Created initial baseline reporting for similar functions
                                                                Page 11
Built Our Operational Excellence (Lean)
• Created our Operational Excellence (Lean) visual model for reference,
  training, and communication
• We started experimenting with different training exercises to
  discourage batching and show the benefits of standardization
• We began creating production teams and breaking down the
  independent contributor system

                                                                  Page 12
Continuous Improvement Process
We followed the typical high-level Continuous Improvement Process

                        Identified Goals

                     Mapped Current State

                        Identified Waste

                      Mapped Future State


                                                                Page 13
                     Present State Value Stream Map
                                                                                                                                                                                                                      VALUE STREAM MAPPING TOOL
                                                                                                                                                                                                                                          Current State Map 6/30/03

                                                                                                       Funding Systems

                                                                                            LIS                                LPS                                                                           Inventory Control                                                                       Image Capture


                                                                                                                                                                                                                    Arrow                                                                                   Kofax

                                                  Open Mail, Notes and
                     Mail In                            Checks                              Label Creation                           Receiving                      Trident Headers                  Scan Pack Creation                       Prepping                          Scanning                            Validation                         Reconstruction                        Fileroom match                   Move to Cart-CF                   Check for Requests                    Ship Off-Site

        I                                  I                                   I                                       I                                    I                                 I                                  I                                  I                                  I                                    I                                    I                                     I                               I                                  I                                I      Total Inventory WIP

                                          2250                                2250                                    2250                                 4500                               450                               9000                               3000                                100                                  900                                 4500                                  3000                             200                                200                              3000          35600

               CT                                 CT                  48               CT                       55             CT                    55           CT                   28            CT                   20            CT                277             CT                    55           CT                      45           CT                      65            CT                      42           CT                 5            CT                    5            CT                    5

               C/O                   0            C/O                    0             C/O                      0              C/O                   0            C/O                  0             C/O                  0             C/O                   0           C/O                   0            C/O                     0            C/O                     0             C/O                     0            C/O                0            C/O                   0            C/O                   0

               UT                100              UT                  95               UT                       95             UT                    90           UT                   95            UT                   99            UT                100             UT                    65           UT                      90           UT                      99            UT                      90           UT                 90           UT                    90           UT                    90

               FPY      high                      FPY        high                      FPY             high                    FPY         ?                      FPY        ?                       FPY        ?                       FPY         ?                     FPY         ?                      FPY           ?                      FPY           ?                       FPY           ?                      FPY       high                  FPY           low                  FPY           High

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  Throughput Time =

Lead Time                                1.5 hr                              1.5 hr.                                 1.5 hr.                              4 hr                              .35 hr                             12 hr.                             8 hr.                              0 hr                                 12 hr                                24 hr.                                2 hr.                           .25 hrs.                           2 hrs                                     69.1 hrs or 4.31 days

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  Value Added Time =

Process Time                   sec                      48      sec                               55      sec                         55       sec                      28       sec                       20       sec                       277       sec                      55       sec                         45       sec                         65       sec                          42       sec                      5      sec                          5     sec                          5     sec                     705 sec

                          CT = Cycle Time
                          C0 = change over time
                          UT = uptime
                          FPY = first pass yield

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         Page 14
  Future State Value Stream Map
                                                                                                                                                                                             VALUE STREAM TOOL
                                                                                                                                                                                      VALUE STREAM MAPPINGMAPPING TOOL
                                                                                                                                                                                                                Future State Map
                                                                          Funding Systems

                                                               LIS                             LPS                           SMS

                                                                                                  WF Inventory Control                                                                                 Inventory Control                                            Image Capture


                                                                                                                   Arrow                                                                                        ICS                                                        Kofax

                     Mail In                           Open Mail                    Notes and Checks                    10 Key Receiving                   Labels and Headers                   Pss Pull - Checks                              Milk Run                              Prepping                             Prep QC                             Scan                                Validate                            Reconstruct                       Ship Off-Site

        I                                  I                                I                                  I                                   I                                   I                                   I       I                                  I                                    I                                     I                                 I                                   I                                    I                                I      Total Inventory WIP

                                          1000                                  2                                  2                                   2                                   2                                   2   120                                    65                                   14                                 10                                   10                                  10                               200                              3000           4449

               CT                                CT                  48             CT                  55             CT                   55             CT                   28             CT                   20                   CT                    55              CT                    45             CT                    65            CT                   42             CT                   5              CT                   5            CT                    5

               C/O                   0           C/O                 0              C/O                 0              C/O                  0              C/O                  0              C/O                  0                    C/O                   0               C/O                   0              C/O                   0             C/O                  0              C/O                  0              C/O                  0            C/O                   0

               UT                100             UT                  95             UT                  95             UT                   90             UT                   95             UT                   99                   UT                    65              UT                    90             UT                    99            UT                   90             UT                   90             UT                   90           UT                    90

               FPY      high                     FPY         high                   FPY        high                    FPY        ?                        FPY        ?                        FPY        ?                              FPY         ?                         FPY         ?                        FPY         ?                       FPY        ?                        FPY         high                    FPY          low                  FPY           High

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    Throughput Time =

Lead Time                                3 hrs                            40 sec                             40 sec                              40 sec                              40 sec                              40 sec 20 min                              4.33 hours                            14 min                               10 min                             10 min                              10 min                              2 hrs                                                 .69 days
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    11.1 hrs or 4.31days

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    Value Added Time =

Process Time                   sec                      10     sec                        10      sec                        10       sec                        10       sec                        10       sec                               10       sec                         275       sec                         55       sec                       55       sec                         55      sec                          55     sec                          5     sec                     570 sec

        CT = Cycle Time
        C0 = change over time
        UT = uptime
        FPY = first pass yield

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         Page 15
   Operational Flow – Before
                               9       9            PSS
1200 ft. File Travel                       10
                               9   9
8 Back Flows                                    Validation
                       7                   6
9 Intersections                                                    12
                           8                                      1

                                                          2           3         3
                                                                          4 4
                                                              5       5         5

                                                                  5       5 5

                                                                                    Page 16
Operational Flow – After

                           Design Objectives:
                           1. Critical path is consolidated into
                               main production space.
                           2. Elimination of backflows and
                           3. Circular flow from monument
                               (freight elevator).
                           4. 75% reduction in travel.

                                                        Page 17
 Transformational Timeline

                 Analysis & Design       Layout           Prototype       Full Volume     Add Capacity

                                          Transition and Stabilize Environment

Timing:          8 week                6 weeks             8 weeks          4 weeks         12 weeks

Key Themes: • Physical Layout      • Purchase          • Test receiving   • Convert all   • Build out space
              • Cost Projections     equipment           and imaging line   MPLS            on lines to
              • Current flow       • Setup physical    • Document results   volume to       handle the co-
                analysis             Space             • Go/NoGo            new flow        location volume
                                   • Recruit team        Decision           design          and timeline.
                                   • Train operators

                                                                                                         Page 18
Initial State

     First Generation Flow
       Lean Imaging Flow (Scanning, QC and Reconstruct)

                                                                                                                           Load to cart for

Packages In   Preppers 13 loans/hour, aggregate cycle time = 55 seconds         Scanning     Validation   Reconstruction
                                                                               55 seconds   55 seconds     55 seconds

                                Cycle time               = 55 seconds
                                Throughput Time           = 14.8 minutes
                                Direct Labor             = 7.4 minutes
                                Module Capacity          = 9750 loans / month
                                One Shift Capacity        = 126,750 loans / month

                                                                                                                                Page 20
Year 1 – First Imaging Line

Imaging Lines – Year 2   Better

Second Generation Flow
Imaging Flow (Scanning, QC and Reconstruct)


                                          120 sec

                                                     120 sec

                                          Prep / Disposition
                                              120 sec

                             Work Queue                        Imaged Files

                                                                              Page 23
Imaging Cells – Year 4

Andon shows normal vs. abnormal for administrative work

What Did We Learn?
• People need to envision their efforts fitting into an overall vision or
  Lean operational model

• Staff have kaizen knowledge and are very willing to contribute

• In order to be successful, all team members must contribute as a
  learning organization therefore a learning strategy was required

• Batching work is a natural tendency for people and requires a
  conscious choice to overcome

• Leadership at all levels needed to spend dedicated time on the floor
  to understand and respond to the needs of the system

• If you cannot differentiate abnormal from normal operating
  conditions, you don’t have standardized work and cannot kaizen

• Check / Adjust is just as important as Plan / Do                     Page 26
How Did We Adjust?
• We developed a training strategy for all team member levels, clearly
  showing expected skills and development timelines

• We did training at all levels showing the pitfalls of batching and benefits
  of flow

• We required managers to spend dedicated time on the production floor
  every day and IT support in operations

• We realized our weakness in standardized work, trained leadership to
  recognize, trained staff on the value and took it to the next level

• We clarified the relationship of team members and their accountabilities
  concerning Kaizen, variation, overburden, change approval, etc…

• We evolved the Operational Excellence (Lean) model and stated the
  cultural norms
                                                                       Page 27
   Document Mgmt System
Doc Mgmt Lean Operational Excellence System
                                                                                                               Metrics And
                                                                                                                Customer vs.
                                                                                                                Audit Trends
                                                                                                               (Consistent Data?)
 Managerial Culture


                                                         Voice of Customer                                       Experience

                                    xe                                                                           (Feedback?)

                                                                                                               Quality Audit

                                                       Production Control



                                                                      Cost Control                              Tracking &

                                                        &             Scheduling

                                             Quality Control                                                    (Standards Met?)

                                                                                                              (Process in Control?)
                            Peopl            Proces        Machines     Inputs &             -
                            People           Process        & Tech      Suppliers
                              e                s

                                                 Change Control
                                                   Change Control

                                      Change Control & Prioritization
                                                                                                          Continuous Improvement

                                     Philosophical Underpinnings
                                                                                                                                      Page 28
Philosophical Underpinnings
• Focus on business partner / customer value

• People are the most critical element

• A commitment to continuous improvement

                                               Page 29
Managerial Culture
• Generosity of spirit and sustained sense of trust

• Accountability at all levels of the organization to improve their

• Fact based decision making

• Commitment to creation of sustained learning

• Problems are considered good things because they help direct
  us to our improvement opportunities

• All support functions, technology development and projects
  focus on direct operational value stream improvement
                                                                Page 30
 Standard Operational & Lean Tools
    –   A3 Format                     –   Flow
    –   Value Stream Mapping          –   Pull
    –   Small lot processing          –   Gemba walks
    –   Just in time                  –   Action Boards
    –   Quality in process (jidoka)   –   Kanban
    –   5S                            –   Pareto Charts
    –   Production Boards             –   Mistake Proof (poka yoke)
    –   Andons                        –   PDCA discipline
    –   Standardized Work Charts      –   Many others…..

 Product Development Tools
    – Agile Processes
    – Burn Down Charts
    – Agile activity tracking

                                                               Page 31
Results                                                                      Overall
                     Year 1   Year 2   Year 3   Year 4   Year 5   Year 6   Improvement
  Cost per Image     13%      24%      25%      25%      34%      28%         76%
  Images per
                     (21%)    27%      30%      40%      21%      17%         168%
  FTE (increase)
                     45%      17%      20%      25%      28%      31%         92%
  Lead time
  Consumption        33%      26%       0%       0%       0%       0%         50%

  First Pass Yield   64.0%    78%      99.5%    99.8%    99.9%    99.9%    35.9 pct pts

  Partner Service
                     50%      75%      99%      99%      99.5%    99.7%    49.7 pct pts
                     12%      (10%)     0%      100%     111%     50%         371%

                                                                                     Page 32
What happened after that?
• Creating Level Pull

• Improving the connection between leadership objectives and
  production staff (A3 and Catch ball)

• Improving synergies between operations and project
  management / software development initiatives

• Further ingrain the cultural norm that leaders are teachers and
  give everyone the skills to grow knowledge

• Infect others

                                                              Page 33
 What we might have changed?
• Spend more time communicating the cultural vision and the
  mechanisms of our Lean model
• Lead with the A3 Hoshin Kanri process
• Involve staff earlier in the process (training, work flow design,
  production boards)
• Train, educate, and emphasize standardized work

What Strategies Worked Well?
• Start with focus on value definition

• Begin value stream mapping

• Focus on making work visible and connected

• Continue to favor action over analysis
                                                                      Page 34
      Hoshin Kanri – True North
Performance, gaps, and targets                                                                        This year's action plan

                                             SLA             CPL               CPI            CPK     Goals                                                 Activities                                   J    F    M    A    M     J      J    A   S    O    N    D

Last Year Targets:           DM              98%              na              $ 0.121            ?    A. Strengthen strategic planning                      1. Teach Management Hoshin Kanri
                             WFHM            98%           $ 22.69        $ 0.082                ?    and policy deployment process                         2. Require mgmt to build Mother A3s and
                             WFF             98%                ?             $ 0.076            ?                                                          baby A3s within departments
                             CCG                 ?              ?                ?               na                                                         3. Communicate goal / strategies to staff
                             CS               na              na                na               na                                                         through catch ball

Last Year Actual:            DM            99.70%               ?             $ 0.121            ?    B. Deliver cost reduction 25%                         1. Standardize work at all sites
                             WFHM          99.64%          $19.03             $ 0.085            ?    greater than budget                                   2. Kaizen not Kaikaku
                             WFF            99.8%               ?             $ 0.063            ?                                                          3. Empower staff to manage muda
                             CCG                 ?              ?                ?               na
                             CS               na              na                na               na   C. Institutionalize OE culture                        1. Execute training program focus on
                                                                                                      at all levels                                         OE & Muda for staff, A3 & Stan Wk for mgr
Reflection on last year's activities                                                                                                                        2. All non-staff spends 2 days in cell
Activity                                Rating        Key Results / Issues
Meet Financial Obj                               G    Goals met
                                                                                                      D. Institutionalize effective BCP                     1. Operationalize new Des Moines site
Stabilize ops & tech                             Y    Cannot easily move work between sites           and rate rally redundancies                           2. Common capture platform all sites

Support CORE                                     G    Dates made, resource split effective

Engage staff in process                          Y    Idea boards put in place, don’t own muda        E. Institutionalize effective                         1. Mature Lean/Agile project practices
                                                                                                      project execution                                     2. Align team with function (create zones)
Pass Audit                                       G    Flying colors                                                                                         3. Measure and forecast velocity
                                                                                                                                                            4. Create effective tracking & comm
Advance Ops Excellence                           Y    Training prgm stalled, mgrs cant do work
                                                                                                      F. Instantiate financial allocations                  1. Deliver high level KPIs
Analysis / Justification to this year's activities                                                    and metrics                                           2. Roll out allocation method for all BPs
                                                                                                                                                            3. Standard reporting formats / goals
Cost burden to business partners limits process improvement opportunities.
                                                                                                      Follow-up / Unresolved issues

                                                                                                      1. Catch ball
                                                                                                      may not be
                                                                                                      by staff by
Operations are unstable and improvements are not sustainable.                                         end of 2007

We are unable to forecast project execution and deliver expected results on schedule.                 2. Training program will not be well integrated with Corporate L&D team

Inconsistent communication of financial allocations, metrics, and SLAs confuse business               3. Long term second site will still need to be identified
partners and erode confidence in the corporate business model.
                                                                                                      4. High level KPIs and operational reporting may not be synchronous

                                                                                                      5. Intense focus on our operational needs is often an obstacle for BPs.

Signatures:                                                                                                                                                                                                  Author:        Chris Vogel
                                                                                                                                                                                                             Version and date:      Page 35   V2       4/2/2007
Hoshin On Production Floor

                             Page 36
Production support responds real-time to
    andons for administrative work

Employee Engagement

                      Page 38
Common Myths
 • Operation discipline doesn’t allow for good customer
 • Standardized work is an insult to personal creativity
 • Lean tools are designed to get rid of people
 • Leaders can deploy the OE system from their office

 • Underestimating the criticality of standardized work
 • Overcoming staff perception of Lean being a people cutting
 • Creating discipline for management time spent on the floor
Thank you!

             Page 40

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