Targeting and Improving your most Critical Core Processes

Moving to a Process Excellence World:Targeting and Improving your most Critical Core Processes

Joseph P. Linnehan William E. WelkerMBB; VUE Deployment Manager MBBThe Vanguard Group The Vanguard Group

WCBF 2nd Annual ConferenceSix Sigma for Financial ServicesNew York City, New YorkJune 22-23, 2005

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•VUE: Vanguard and Six Sigma

•Why move to a Process Excellence Approach

•The Components of Process Excellence

•Vanguard Case Study

•Lessons Learned

Agenda

•Vanguard Unmatchable Excellence: Vanguard and Six Sigma




•Lessons Learned

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•Lessons Learned

Vanguard Unmatchable ExcellenceVanguard Unmatchable ExcellenceVanguard and Six SigmaVanguard and Six Sigma

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•Lessons Learned

To be the world's highest-value provider of

investment services.

To be the world's highest-value provider of

investment services.

Corporate Mission

Value Proposition

The Vanguard Group

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•Lessons Learned

Malvern

Melbourne•

Brussels•

Chilean Advisor •

DublinOperations •

Tokyo•

Singapore•

CharlotteScottsdale

••

Vanguard Worldwide Locations

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•Lessons Learned

$900+ billion in assets under management 17 million clients 11,000+ crew members Leading provider of diverse & disciplined investment offerings

Funds/Brokerage/Annuities/Insurance/Asset MgtCollege Savings/Financial Planning/AdviceCash Management/Exchange Traded FundsInstitutional (Defined Benefit, Defined Contributions, NQP)

Malvern, Pennsylvania

Charlotte,North Carolina

Scottsdale, Arizona

Vanguard Domestic Locations

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•Lessons Learned

The Evolution of VUE

Phase 3: Program Evolution

End-to-End Process Focus

Full Crew Involvement

Building upon DMAIC Foundation

Flexible solutions business results

2000 2001 2002 2003 2004 2005…

Phase 1: Awareness

“Why Six Sigma at Vanguard?”

Dashboard Creation and Implementation

Introduction to Bratton and DMAIC

Phase 2: Infrastructure

Strong DMAIC Foundation

Training

VUE Framework & Program Structure

ContinuousImprovement

ProcessExcellence

BusinessProcesses

CrewEngagement

EverydayExcellence

VUE Today

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•Lessons Learned

The Process Excellence ApproachThe Process Excellence ApproachWhy are we doing it?Why are we doing it?

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•Lessons Learned

The Problem…

Typical Department

Without direction from the business, improvement tends to be organized around multiple functions. In this scenario, the question has to be asked: “Is the business getting the biggest bang for the buck?”

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•Lessons Learned

The Solution…

Opportunity ListOpportunity #1Opportunity #2Opportunity #3Opportunity #4Opportunity #5

• Client• Crew• Process• Business• Risk

VOICES:

(CTQ’s)

Opportunity ListOpportunity #1Opportunity #2Opportunity #3Opportunity #4Opportunity #5

By understanding how it delivers value to the client and which core processes are most critical to satisfying client needs, a business unit organizes and focuses resources on what matters most.

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•Lessons Learned

The Components of Process ExcellenceThe Components of Process ExcellenceWhat are they?What are they?

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•Lessons Learned

• Stabilize Process• Repeatable and Predictable

• Optimize Process• Incremental Change

• Design Process• Radical Change

• Build out the measurement framework

• Process map the current state of the prioritized processes

• Identify core processes• Target critical core

processes

GatherVoices

Improve

Measure Map

Identify&

Prioritize

• Voice of Crew• Voice of Client

• Voice of Business• Voice of Risk

People

Process Tech

Enablers

Process Excellence

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•Lessons Learned

Process Excellence• Work Breakdown Structure

Engagement Execution Impact

• Client•• CrewCrew• Process• Business• Risk

VOICES:

Re-evaluate

•BrokenWindows

•POWER

•DMAIC

•ProcessDesign

Methodologyto Fix the Problem

BusinessResults

Identify &Prioritize

Map

Measure

Process ExcellenceMethodology Improve Initiative 1

...

OpportunitiesFor

Improvement

Initiative 2

Initiative 3

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•Lessons Learned

Process Excellence at VanguardProcess Excellence at VanguardHow is it going?How is it going?

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•Lessons Learned

Process Excellence at Vanguard

Identify Map Measure Improve

CRG

Core

HNW

IRPS

Intermediaries

IAM

Marketing

Sales

IP&S

VBS

AMS

RRC

Finance

HR

IT

CRG

Core

HNW

IRPS

Intermediaries

IAM

Marketing

Sales

IP&S

VBS

AMS

RRC

Finance

HR

IT

Process Excellence is Process Excellence is rolling out throughout rolling out throughout the company the company ……

Vanguard Business

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•Lessons Learned

Process Excellence in IRPS• Identify and Prioritize

Relationship Management

Transition Services

Education and Advice

Data Mgmt and Transaction Processing

Client Acquisition

Strategic Planning

Governing Processes

Budgeting

Integrated Retirement Plan Solutions (IRPS) Process Model

Risk Management

Enabling Processes

Accounting Institutional

Systems Compliance

Core Processes

Product and Service

Development

Portfolio Management

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•Lessons Learned

Process Excellence in IRPS• Process Targeting

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•Lessons Learned

Process Excellence in IRPS• Process Targeting

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•Lessons Learned

Process Excellence in IRPS• Map

Plan Sponsor Consultant Prior Recordkeeper Law Firm Participant Recordkeeping

Services Implementation

Services Client Services Relationship Manager Account Administrator Project Lead IT Department of Labor

Suppliers Inputs Process Outputs Clients

Client Request

Plan Document Installment Data Systems/Tech Request ERISA Guideline Resources Budget Procedures Requirements

Check/ACH/Wire Internal Reports External Reports Confirmations Notification Tax Forms Part Forms Installment

Services Manual

workarounds Compliance

Participant Plan Sponsor Bank Client Services Relationship Managers Account Administrator Project Lead Funding Group (DB) Selected Transaction Participant Services Inst. Control Systems Consultant Auditors Third Party Vendor IRS Department of Labor Mail Operations

Gather Requirements

Systems and Communication

Set-Up

Test Service

Convert Data

Elevate Service

Set Up Service Process

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•Lessons Learned

Process Excellence in IRPS• Measure

Opportunities for Process Excellence Data Analysis FMEA

Points of Pain

Total Weighting

Inaccurate & Incomplete SRD High High High 27Client or Prior Recordkeeper Data Validity

High High High 27

Reduce Handoffs in Build Teams Low High High 21Rejected CDST Requests High High Low 21Plan Freeze Payment Practices Low High Medium 13Early identification of missing/incorrect Participant data

High Medium Low 13

Installment Processing Error High Low Low 11System Set-Up Medium Low Medium 7Inconsistent Approvals Medium Low Low 5


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•Lessons Learned

Process Excellence in IRPS• Improve

DMAIC Projects

• Inaccurate and Incomplete SRD

• Client or Prior Recordkeeper Data Validity

• System Set-Up

Power

• Plan Freeze Payment Practices

• Early identification of missing/incorrect Participant data

• Inconsistent Approval

Broken Windows

• Rejected CDST Request

• Installment Processing Error (clarify transaction code)

Organizational Opportunities

• Reduce Handoffs in Build Teams


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•Lessons Learned

Process Excellence at VanguardProcess Excellence at VanguardWhat have we learned?What have we learned?

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•Lessons Learned

Lessons Learned

•Process Excellence is a journey, not a destination. Therefore, don’t bite off too much, Process Excellence generates significant change.

•Process Excellence “cuts through” functional organizations by viewing Vanguard from an “end-to-end” process perspective, thereby providing a clear “line of sight” for the Crew.

•Process Excellence provides a consistent and repeatable approach to process-centered thinking while leveraging the same quality tools that are taught and used today in VUE.

•Process Excellence requires total top-down commitment, including senior Process Owners who are held accountable.

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•Lessons Learned

Questions?Questions?

Thank You!