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Six Sigma Project: Midwest Bank

Six Sigma Project: Midwest Bank. Dr. Ron Lembke Managing for Quality. Cash Problems. Commercial Processing Department (CPD) 4.26 sigma already One error lost $280k last year Project team Project coordinator – from project office

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Six Sigma Project: Midwest Bank

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  1. Six Sigma Project:Midwest Bank Dr. Ron Lembke Managing for Quality

  2. Cash Problems • Commercial Processing Department (CPD) • 4.26 sigma already • One error lost $280k last year • Project team • Project coordinator – from project office • Operations financial manager – financial impact analysis, equipment purchasing • Assistant VP – subject matter expert from CPD • Team supervisor – subject matter expert from CPD • Project coordinator with bank-wide knowledge • CPD project analyst – Six Sigma analyst • Data integrity, graphical analysis, data stratification • Champions: Senior VP, VP over CPD • Created problem definition statement • Responsible for processes involved • Week-long six sigma training

  3. Define Stage • Two largest sources of errors: • Cash Strapping • Deposit processing • Don’t affect each other, separate causes for errors • Problem Statement: • 150 internal and external errors, lead to bank losses of $400,000, and significant risk exposure. • Goal of $0 losses from CDP operations • Objective to reduce internal error ratio by 50% and losses by 50% in 12 months. • Projects will reduce loss expense, and risk exposure, and increase customer satisfaction

  4. Project Goals • Risk mitigation – difficult to quantify • Dollar losses – easy to measure • Number of errors – easy to measure • Approved project launch, moved to Measure stage

  5. Measure Stage • Agree on CTQs that impact customers • Ys: risk mitigation, error reduction, reducing dollar • Studied workflows, look for root causes • Subject Matter experts- “tribal knowledge” • XY matrix – Cause & Effect p. 533 • Rank factors for potential error causes Xs • Potential customer outputs Ys • Rate importance of Y’s 1-10 “Output Rating” • Association Table: Impact of the X’s on each Y: 1-10 • Rank = 9*9 + 10*10 + 10*10

  6. Analysis Stage • Gathered data to assess impact of Xs on Ys. • 48 hours of team time! • Many, many graphs • Indications of problems with manual strapping process (putting bands around money) • Tribal knowledge: Insufficient staffing? • Look for more longitudinal data • 100 graphs created • Data in single strands • Paired interactions

  7. Analysis, Continued • Correlations between human factors and manual processes • Many manual steps in handling cash • cash strapping - 100 errors per year • Deposits –larger dollar loss per manual error • Concerned about # errors, not size

  8. Failure Modes and Effects Analysis • Laid out steps from process map • Concentrated on inputs • Figure out effects of each possible error • Each process step ranked on Risk Product Number(RPN) : • SEV - Severity of error • OCC - Occurrence – how often • DET - Detection – how likely to figure out • SEV*OCC*DET • Know what we have to look at

  9. Improve Phase • Countermeasures – how to fix? • Countermeasures Tree • For each problem, find root causes • Each root cause, list countermeasures • Practical ways to implement coutermeasures • Effectiveness x Feasibility (1to 5 scale)

  10. Five Major Countermeasures • Cash strapping machine • $5 charge for clients with incorrect deposits • Benchmarking – will customers accept? • Eliminate double keying of deposits • Vacation schedules to reduce errors by subs • Dollar loss corrective actions

  11. Control Phase • Implementation left to subject matter experts • Minor suggestions implemented immediately • Pilot study • $5 charge reduced errors 44% by corporate clients • $280,000 loss was from an incorrect deposit • Dollar loss corrective action hardest to impelement • Overall errors down 30% • Dollar losses down 57%

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