1

Price Support (Vendor Rebates)

Registration

Cindy ReeseBlack BeltFinance – Western Region

3

Project Definition

Problem Statement:

IKON does not currently take advantage of all price support (vendor credits) opportunities. Project targets Oracle based former SE region.

Project Definition:

Determine why reps are not registering qualified customers for vendor price support program in the former SE Region and correct the issue.

4

Project Definition

Project Metric “Y”:

Y1 = Qualified customers not registered for vendor price support (Discrete)

GOAL = 100% Registration of Qualified Customers IKON benefits by over achieving corporate purchasing

commitments above customer commitments – 100% is target

Defect Definition: Qualified Customer Not Registered = DEFECT

Leveragability: Replicate success in all regions

5

Financial Benefits - Baseline

Former SE Region E-IKON Opportunity =

$295k (does not include Central)

Coverage Date – 10/01/2002 to 10/31/2003

Excludes Accessories, IMS and ITT’s

Canon $245

Ricoh $50

6

VPS Collection Project Progress

0

20

40

60

80

100

120

Thousands

Collected

SUCCESS To DATE

SUCCESS To DATE

$112,000 Collected from original testing – not part of SE baseline

7

Capability

DPMO = 52,966

Zst = 3.1 Total

85459

44452

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

DPMO

Ricoh

Canon

2.8

3.1

2.6

2.7

2.8

2.9

3

3.1

Zst

Ricoh

Canon

8

Cumulative Financial Benefit

$0

$200,000

$400,000

$600,000

$800,000

Cumulative Benefit

$151K

$57K

$295K

$112K

$615K

9

Project Team

Champions – Linda Frisinger, Bruce Fiscus Financial Analyst – Trish Daly Black Belt – Cindy Reese Process Owner – Linda Frisinger Master Black Belt – Bob Conrad Team Members:

IT Support – Ben Rotz, Matthew Grimm, Glenn Crosen, Linda Hampel

VCS Specialist – JoAnn Walton (SE), Kit Roedemeier (Central) Sales – Karl Lamb, Ryan Dingley (St. Louis), Kent Clark (NAM) Financial Project MGR – Raman Singh Programmer – Harmeet Arora IMS Analyst – Kevin Merrill

10

Risk Priorities for Registration

648 90053006722 4.8 6.639.149.5

100.0 95.2 88.6 49.5

14000

12000

10000

8000

6000

4000

2000

0

100

80

60

40

20

0

Defect

CountPercentCum %

Perc

ent

Coun

t

Pareto Chart for Key Process

Includes Accountability

11

Preliminary Recommendations

1. Create report to catch all qualified customers not registered and register them

4. Create accountability in sales management

5. Create accountability in sales force via chargebacks

3. Improve the registration process

7. Create proactive reporting tools and audit function

2. Train reps and management

6. Centralize the VCS team

8. Increase Ricoh window to 60 days = Canon

12

DATA COLLECTION PLAN

Customer CommitmentInvoice Info

VPS Credit Filing and Receipts

Invoice CostInformation

Registered Customers, Attainment

ACCESS DATA BASE

ORACLE OSO

VCTS

ORACLE FINANCIAL

VENDOR REPORTS

SOURCES FOR VENDOR PRICING SUPPORT DATA BASE

SIC CodeOrganization Information

IKONICS

13

Quote Created inOracle - Sales Docs

Created

Sales DocsTaken to

Customer to Sign

Does CustomerQualify for VPS?

VendorRegistrationCreated andSubmitted toBid Analyst

CustomerNeeds

AnalysisCompletedPurchasing

LevelDetermined

VPGM ApprovedRegistrationFaxed or E-

mailed to VCS

Rep CompletesOrder in Oracle

and SubmitsDocuments to OC

Is VendorRegistrationApproved by

VPGM?

Yes

No

No

Yes

PROCESS MAP - SALES REP REGISTRATION OF CUSTOMER

Does IKON Provide Reps With Tools and Resources Necessary to Determine Customer Qualifies for Vendor Price Support?

14

Next Step – FMEA Top Item Testing - Lack of Training

Test all defects for rep tenure

Determine correlation between defect

probability and tenure to support recommendation for organized training

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Significant X - Rep Tenure SLG

400003000020000100000

25

20

15

10

5

0

Credit

Rep

Ten

ure

(Yea

rs)

Credit Lost vs Rep Tenure - SLG• Avg Tenure = 7.1 yrs

• Avg Credit = $1.9k

• Total Missed = $238k

• 63% of Total Lost $

• 92.5% of Total Defect Count

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Significant X - Rep Tenure Commercial Accounts

• Avg Tenure = 7.2 yrs

• Avg Credit = $13k

• Total Missed = $139k

• 37% of Total Lost $

• 7.5% of Total Defect Count171272

70000

60000

50000

40000

30000

20000

10000

0

Rep Tenure Commercial

Cre

dit

Mis

sed

Credit Lost vs Rep Tenure - Commercial

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Next Steps - Training

Document VPS Course inside SFP Training For CORE Training

Roll Out Expected in 2nd QTR FY2004

Owner - Alanna Mahone

Create Course Inside Workflow Training For Sales Management and Tenured Reps –

Roll Out when workflow programming is complete

Owner – Alanna Mahone

Integrate VPS Forecasting in RAP Session

Roll Out with Work Flow

Owner – Alanna Mahone

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Process Map – Rep RegistrationS

ale

s R

ep

Bid

A

na

ly

st

Ord

er

Co

ord

in

ato

r

Ve

nd

or C

re

dit

Sp

ec

ia

lis

t

Ca

sh

A

p

Cu

sto

me

r

VP

GM

Le

as

in

g (J

eff C

ity

)

Billin

g (H

ou

sto

n)

IO

S

Meets with IKONRep to Determine

Needs

Signs SFPDocuments

Quote Created inOracle - Sales Docs

Created

Sales DocsTaken to

Customer to Sign

Does CustomerQualify for VPS?

VendorRegistrationCreated andSubmitted toBid Analyst

Submits VendorRegistration

Form to VPGMfor Approval

VPGM ReviewsVendor

Registration Form

Is PurchasingLevel Valid?

CustomerNeeds

AnalysisCompletedPurchasing

LevelDetermined

Signs asAuthorized

Declines - SendsBack to Rep to

Justify

Returns Signed/Declined Vendor

RegistrationForm to Rep

VPGM ApprovedRegistrationFaxed or E-

mailed to VCS

Rep CompletesOrder in Oracle

and SubmitsDocuments to OC

OC ReviewsOrder for

Completeness

Is VendorRegistrationApproved by

VPGM?

ReviewsApproved

VendorRegistrationDocument

Is OrderComplete?

Yes

No

OC ChecklistCompleted

OC CompletesOrder in Oracle

Does OrderHave LeasingDocuments

Yes

No

Leasing TeamReviews LeasePerforms CLAS

Input

Billing Enters M/A

Completes OrderFiles

Does Orderhave M/A?

No

Yes

Yes

No

Is FormComplete/Correct?

Is VendorRicoh orCanon

Ricoh - InputVendor

RegistrationForm Into ROL

Canon - FaxForm to Canon

No

Yes

Ricoh

Canon

Lease ProcessedThrough

IKONICS andFiled

Ve

nd

or

Vendor Approvesor DeclinesRegistration

Vendor VerifiesAmount Due andRemits On Line

VCS RemitsResults to Rep

System RunsUpload from

Oracle to VCTSto Record

Expected Credit

No

Yes

Yes

No

Ricoh - InputVendor CreditsDue Into ROL

Canon - VCSCreates

Spreadsheet andE-Mails to Canon

Cash ApApplies Credits

to VCTS

VCS RunsException Report

to look forUnfunded Credits

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Recommendation – Registration Process

Rep CreatesApplication Form inWork Flow Process

Forwards to VPGM/DFO for Approval

VPGM/DFO Reviewsand Approves

Application

Forward to VCSPersonnel

VCS Personnel ReviewApplication and

Approve

Input into Vendor OnLine System

Vendor ReviewsApplication

Provides ApprovalThrough On Line

System

VCS Personnel InputApproved RegistrationNumber and Dates into

OSO

Notifies RepApplication is Complete

12/3/20030307-027-002Work FlowDiagram

Vendor Pricing Support (Registration)

Rep Notified

Rep Notified

Rep Notified

Rep Notified

• Automated System• Feedback at Every Step• Little Input by Rep• Uses Data Directly From E-IKON• Auto Registration Upload• Paperless

Benefits

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Next Steps – Process Improvement

RD050 and MD050 approved 1-26-2004

Project classified as Major - rolled out 2x per year

BR030 must be complete to move forward – target 1-28-2004

Chuck Moyer to complete testing and training assessment which will determine date of completion (roll out)

No trial – go live as soon as complete (no choice)

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Process Map – Authorization Level

Signs asAuthorized

VPGM ReviewsVendor Registration

Form

Is PurchasingLevel Valid?

Declines - SendsBack to Rep to

JustifyYes

No

No consistency in who is reviewing and authorizing Level of RegistrationRISK if not standardized – NEW COMP PACKAGE encourages registration

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2003 CSMP Credits and Chargebacks

$0

$5

$10

$15

$20

$25

MillionsCredits

Chargebacks

Total CSMP Credits = $67m

NE Received 32.9% of Total NE Chargebacks 38.1% of

Total

MW had 21.8% of Total MW Chargebacks 12.5% of

Total

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CSMP Charge backs as a % of Credits

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

What is an acceptable level of charge backs? Is MW the Process Capability. Is aggressive better than correct? (NE reserves against charge back upon filing)

Inclu

des $

100k

in P

enalt

ies!

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Chargeback % by Approver

VP/G

M &

DO

S

VP/G

M &

DFO

VP/G

M

SM

& D

OS

SM

Non

e

DO

S

DFO

& S

M

DFO

0.08

0.07

0.06

0.05

0.04

0.03

0.02

0.01

0.00

Approver Title

Char

geb

ack

%

Boxplots of Chargeback % by Approver

(means are indicated by solid circles)

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Chargeback % vs Rep Chargeback

21

0.08

0.07

0.06

0.05

0.04

0.03

0.02

0.01

0.00

Rep Chargeback 1= yes 2= no

Char

geb

ack

%

Chargeback % by Rep Chargeback Method

(means are indicated by solid circles)

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Recommendations – Approval and Accountability Recommendation – VPGM’s Approve Registrations Surveyed South key management for approval

Recommendation – DFO’s Back up VPGM’s

SLG customers will not need VPGM approval – vendor preapproves

Implement Consistent Chargeback Policies in Order to Lower Risk to IKON (note – tested to be sure marketplaces were truly charging back as indicated by DFO – only ONE did for $17K)

- Lynn Collins to Make Final Decision based on State Law - Will role into another Six Sigma Project

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Other Steps in Process - Poka-yoke

Centralize VCS Team (cannot occur w/o programming) Lock Reps out of OSO Commitment - owned by VCS Add Analyst to Team (currently interviewing) Requested financial analyst for short term support to implement the

following:

Developing Weekly/Monthly Reporting Tools

SIC Code Review – Identify SLG/GEM not Registered Qualified not Registered – over $50k Run Rate (in place now) Forecasting Tool Expiration Report – 90 days, 60 day, 30 days out Charge back Report

Grace Period from Ricoh (Actually 30 days now – move to 60 days). Currently under review by Ricoh.

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Steps to Closure

Complete Control and Monitoring Plans

Implement and Monitor vs 100% Registration Target

Note: Achieving 100% registration with current monthly

reports identifying qualified/not registered

Transfer Ownership to Process Owner

Financial Validation (will use new reports from Anne Quigley’s group as soon as available)

Review and Sign Off – Key Personnel