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Lean Service Update – CWU 29 th May 2012 IN CONFIDENCE

Lean Service Update – CWU 29 th May 2012 IN CONFIDENCE. CE Benefits from Wave 1. LEAN is expected to deliver 0.4% RFT improvement at Group-level 0.3% L2C and 0.5% T2R during 12/13 Two sub-waves impact RFT basket. UK Voice CT has reduced by 14%

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Lean Service Update – CWU 29 th May 2012 IN CONFIDENCE

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  1. Lean Service Update – CWU 29th May 2012IN CONFIDENCE

  2. CE Benefits from Wave 1 LEAN is expected to deliver 0.4% RFT improvement at Group-level • 0.3% L2C and 0.5% T2R during 12/13 • Two sub-waves impact RFT basket UK Voice • CT has reduced by 14% • driven by Lean and openreach’s reduced appointment book • Further analysis will confirm impact of Lean on CT and RFT UK Mobile • CT reduced from 83 to 47 days • Further analysis will validate that CT improvement is sustainable and confirm impact on RFT

  3. CE Impact of the sub-waves • Wave 1 CE commitments are all forecast to be met during realisation phase • CE Journey Owners engaged to assess RFT impact of Wave 1

  4. Progress on wave 1 – FTE and efficiencies 49 32 13 45 66 67 0 67 38 38 0 38 12 12 0 12 42 46 1 47 Additional Wave 1 Cash Benefits Sub-con Opex: £0.3m p.a. Switch: £297k p.a. from Wipro (11 sub-contract FTE reduction effective from 31/05/2012) Other Opex: £0.9m p.a. Switch: £600k p.a. from c3,000 fewer FE visits @£200 (being validated with FE) UK Mobile: £313k p.a. reduction in ASG costs through fewer Bridge cases (to be validated) Vendor Opex: £TBC p.a. VoIP: Reduction of Vendor Spend (ALU on BBT, TCS for NOAS and Verint for Call Recording); Further reduction in IPX; (TBC) – awaiting confirmation via Finance Capex: £1.8m p.a. UK Data: Cisco kit worth £0.9m now recovered for re-use on customer premises. Further £1.1m available to recover

  5. Wave 1 Closure Plan Benefits Realisation Ops & PMO finalise Actuals for all Lenses in line with month end process Operations PIR - Operations hold review workshops & complete Closure template Wave 1 Closure Report finalised per sub wave 11 -13 June Individual Director sign off calls Communications & Recognition Directors communicate to in scope teams about the end of wave and recognise star contributors 20 June - Steering Board Sign-off • 14 June – Programme Board sign off of overall Wave 1 Closure Report

  6. Wave 1 Sustainability

  7. Maintaining and building momentum after the end of a wave: MD role and resourcing Coaching cascade MD Process confirmation cascade Start doing this! Plan your schedule of director performance dialogue visits (1/ month/ director) Lean Practice Support Wave 1: 2FTE to support GMs and directors Further 2 FTE to support mid-June onwards Wave 2: 7 FTE to support GMs and directors • Questions to ask your directors in their 1:1s • When was your last performance dialogue with GMs? • What key improvements are you working on with your team as a result? • What Lean tools are you using? • When did you last attend a performance dialogue with your GMs’ teams and how did you coach them? • What is your schedule for attending your GMs’ performance dialogues? Can I arrange to attend one • What is your schedule for doing Go See with your wider team? Operational Change Agents Wave 1: OCAs to coach and build Lean in FLM teams (20% time) M. Cook P. Stewart Voice P. Stewart Data P. Weir D. Anderson HR BPs working with GMs to close outstanding gaps Reinforce requirement with directors Process confirmation: the method we use for ensuring standards are maintained and improved

  8. Wave 2 Readiness

  9. Wave 2 - Method Changes and Progress update Manager Boot Camp 9th-11th May Method Update Feedback A full learning review of Wave 1 has been undertaken between the BT Method team and KPMG. Minor improvements have been required to the LWOW method with the following changes implemented around waste identification and commitment approach for Wave 2: “Awesome - should happen more than once.” “A lot of information to take on board. Size of the task is immense but left feeling energized and looking forward to starting!” “The airplane exercise puts the message of how small changes can make big improvements across very powerfully. “ “Still concerned on how I will be able to allocate 50% of my time” “My biggest concern is conveying LEAN to my team members - changing their culture and re-iterating that LEAN is here to stay and everyone will play a vital part in the on-going process change” “Coaching session was too short . It was at the end of day when energy levels were lowest” Wave Approach – the Re-design period has been extended to two weeks following learning from Wave 1 that there was too much to cover within the time allocated. Week 1 current condition playback, Week 2 True North, target condition and commitment focussed. Process Tool – taking Wave 1 learning and method input from KPMG the process mapping tool of choice has been changed for Wave 2 from IDEF to Four Fields Mapping and has been well received at boot camps. Hypothesis based data collection – following method recommendations from KPMG Wave 2 data collection is more closely targeted ,based on hypothesis agreed with Operations. Wave 1 collected significant amounts of data that was not directly helpful for waste identification. Statistics Data book- KPMG have recommended the creation of a data book per sub-wave that is being used for Wave 2. The data books are split in to value streams and LWOW . Feelings after manager boot camp Excitement Commitment deck – significant joint work undertaken between BT method team and KPMG to provide detailed commitment templates for current state and future state to provide greater clarity on the ‘Ask’ at the start of each sub wave. Confidence Understanding of role Rating of training sessions Current State Commitment deck : Current Process Performance - specific data now required covering speed, quality and costs of the current operation. Current State Commitment deck : Effort Loss Waterfall – data required showing how total FTE time is spent today.

  10. How Wave 2 Operational Change Agents are feeling (end of Bootcamp)… “Lean is the realisation for positive on-going work improvement” “Time spent as an OCA is the best time I’ve ever had in my 7 year career with BT” “It’s a little step every day. How hard can it truly be?” “Happy with the methods, nervous about getting started. I believe it will work if truly supported from above” “Really, really excited!!! Nervous, but excited” “I feel safe to make a mistake” “First time excited that BT will be the best place to work and provide best quality services for the customer” “An amazing experience” “This feels like a real opportunity to make a difference” “Great – first time BT has challenged the process being a failure rather than people” “I’m really excited to be going back and taking the learning back to my own team” “I have been pleasantly surprised by the enthusiasm shown by the teams within my area and other areas” “Ready to help the company change” “Fantastic week, excited and energised for the Lean journey ahead” “Really looking forward to rolling Lean out to my team after the great time in Wave 1” “Ready to help the company change” “One of the real benefits this week is having the opportunity to listen to the people who went through this on wave 1” “I doubt the sustainability of Lean” “Very excited about the potential for positive change with this unified team approach” “Day 1 confusedDay 2 bemusedDay 3 enthused” “It’s great to see BT take the leap of faith and buy into the long term journey to exceed your competition and put Telco’s on the map when it comes to operational excellence” “Looking forward to continuous improvement” “Positive ”

  11. External insight from Nestlé Visit

  12. Nestle visit to BT In March, approximately 40 BT people visited the Nestle factory in York to learn more about Lean and get fresh ideas, Nestle are ten years into their lean journey… …On Monday 14th, Nestle came to visit BT to learn more about virtual working in a Lean environment as they explore introducing virtual working for their teams • As part of a reciprocal knowledge sharing relationship we’re developing with Nestle, they share the following insights with us about our Lean implementation. • They recognised: • Our focus on Lean • Buy-in from business • Buy-in from Senior leaders • Ability to execute virtual huddles & performance boards • The standard automated performance boards • Our team members are motivated and behind the Lean programme • Involvement of teams and how our teams feel passionate about solving issues

  13. Back-up

  14. BT Mobile - SMEAS The top graph shows all orders that were in the system prior to the Lean wave and their cycle time. The sample is made up of 573 orders with an average cycle time of 83 days minus customer delays The bottom graph shows the cycle time of orders entered following the wave and is based on a sample size of 219 orders with an average cycle time of 47 days minus customer delays Additional orders and time are required to confirm whether the cycle time improvement is stable and sustainable

  15. UK Voice – Big & Large Switch Due to the complex nature of the CSS (workflow) system data is only available for all of the queues (4000+) back until 31/12/11.The sample size from 31/1/2011 to 28/01/12 is 269 with an average of 26.8 days Since the 28/01/12 the average cycle time is 12 days with a sample size of 13146

  16. UK Voice – ISDN30 Due to the complex nature of the CSS (workflow) system data is only available for all of the queues (4000+) back until 31/12/11.The sample size from 31/1/2011 to 28/01/12 is 1012 with an average of 17.5 days Since the 28/01/12 the average cycle time is 14 days with a sample size of 35970 transactions

  17. UK Voice – PSTN/ISDN2 Due to the complex nature of the CSS (workflow) system data is only available for all of the queues (4000+) back until 31/12/11.The sample size from 31/1/2011 to 28/01/12 is 4781 with an average of 21 days Since the 28/01/12 the average cycle time is 10 days with a sample size of 702485

  18. Switch sub-wave: -Managed Business Networks - CT

  19. TIS: VoIP CE Target Condition 1 Implementation

  20. Wave 1 Service Delivery – Performance against Plan Service Delivery - Additional Wave 1 Cash Benefits Other Opex: £0.3m p.a. UK Mobile: £313k p.a. reduction in ASG costs through fewer Bridge cases (to be validated) Capex: £1.8m p.a. UK Data: Cisco kit worth £0.9m now recovered for re-use on customer premises. Further £1.1m available to recover Service Management - Additional Wave 1 Cash Benefits Sub-con Opex: £0.3m p.a. Switch: £297k p.a. from Wipro (11 sub-contract FTE reduction effective from 31/05/12) Other Opex: £0.6m p.a. Switch: £600k p.a. from c3,000 fewer FE visits @£200 (being validated with FE) Service Infrastructure - Additional Wave 1 Cash Benefits Vendor Opex: £TBC p.a. VoIP: Reduction of Vendor Spend (ALU on BBT, TCS for NOAS and Verint for Call Recording); Further reduction in IPX; (TBC) – awaiting confirmation via Finance

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