july, 2006 proprietary and confidential
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July, 2006Proprietary and Confidential
General Electric
Client Deliverable & Case Study
2 © Lean Horizons, LLC 2006. All Rights Reserved.
Provide a brief overview of the project’s historical foundations
Discuss the magnitude of the available opportunities in non-manufacturing Lean process transformation
Highlight the aggressive program that was launched to combat non-manufacturing process waste
Preview the extensive benefits that were captured during the program and the impact on scalable growth
Summary Discussion Document Goals & Objectives
Using Lean To Transform Non-Manufacturing Processes
3 © Lean Horizons, LLC 2006. All Rights Reserved.
Consumer Finance: Credit Approval Process Improvement
LeadGeneration
ApplicationReceipt
ApplicationApproval
Welcome KitDelivery
DealerTraining
Execute FirstTransaction
Multiple Distribution Channels
Target Customers
$16 Billion In Assets
Assist Dealers Move “Big Ticket” Products With Credit
63-Day Lead Time For Dealer Enrollment
LongLead Times
HighlyComplex
GrowthBottleneck
How Can Lean Drive Growth In Consumer Finance?
-- General Electric Consumer Finance Landscape -- -- LHC Deliverables --
Institutionalize Lean in all non-manufacturing arenas
Train leaders & managers on core Lean tools & disciplines
Global financial process simplification in North America, Asia and Europe
Create standard work for all non-manufacturing processes
Waste removal to drive profitable growth
Strategically use credit processes to increase dealer annual sales
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General Electric: Consumer Finance Deliverable Executive Summary
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General Electric: Consumer Finance Deliverable Executive Summary
General Electric Sample Deliverables: Lean Transforming Consumer Finance
Activation: Reduce Lead Time 30%
Enrollment: Reduce Lead Time 80%
Prospect:Reduced Lead Time: 92%
Current State VSM Future State VSM
12 days to 1
New standard work
Lean mindset
21 days to 4
Process simplification
Process digitization
New marketing content
New value proposition
Rapid notification
$500 Million In New Dealer Volume Per Year
11% Apps Increase$72,000,000
15% Activation Lift$84,000,000
12% Sales Lift$60,000,000
$216,000,000 Incremental Volume – Reduced Growth Bottlenecks
Dealer Benefit
44% increase in consumer purchase order size
24% increase in credit approval closure rate
36% increase in per-dealer annual sales+
GE Global Benefits
Unqualified Lean success in non-manufacturing arena
Lean removing barriers in high-growth industry
Standard work ensures repeatable, consistent year-over-year improvements
5 © Lean Horizons, LLC 2006. All Rights Reserved.
General Electric Challenge: Achieving Lean Non-Manufacturing Benefits
Observation Description
Manufacturing
& Six Sigma
Six Sigma has been used successfully to transform GE’s manufacturing operations
Six Sigma penetration in non-manufacturing arena limited
Role of Lean Seen as a catalyst for growth and waste
removal across the enterprise for non-manufacturing operations
Non-Manufacturing
Exposure
Teams in non-manufacturing operations vocal about need for new tools and disciplines to remove waste
Key Challenge Educate extended team on one Lean vision
and required journey
How Can Lean Assist Non-Manufacturing Divisions?
Where To Begin? What Division?
How Best To Educate GE On Lean?
Most Appropriate Starting Point
Rapid Benefits Capture ToIncrease Buy-In
What Is The Right Non-Manufacturing Course?
Prove Power Of Lean For RemainingDivisions
Although highly successful with manufacturing-based six-sigma improvements, GE required new tools and disciplines to accelerate non-manufacturing growth and profitability.
6 © Lean Horizons, LLC 2006. All Rights Reserved.
3645
56
13
33
37
$27
$93
$49
$78
2003 2004 2005 2006
Originations
Assets
Customers: $56 million
Retail Outlets: 40,000
Dealers: 130,000
Brokers: 14,000
Branches: 420
ATM’s 2,600
Fast-Growing, Focused Global Operation
After careful review and analysis, GE chose Consumer Finance as the pilot location for Non-Manufacturing Lean based on new-discipline requirements and the need to support rapid growth.
General Electric Consumer Finance: Global Reach, Rapid Growth
-- Assets & Originations -- -- Global Business Reach --
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PLCC
Bank Cards
Personal Loans
Sales Finance
Mortgages
Auto
Deposits &Insurance
Retailers
Dealers
Brokers
Telemarketing
Branches
ATM/Kiosks
Internet
Focused Provider Of Consumer Finance ProductsCustomer Channel Acquisition – 96% B2B
GE Product Focus
GE Product Focus
$16 Billion In Assets – 33% Three-Year Growth127,000 Dealers – 4.8 Million Customers & Growing
Consumer Finance Business Model: “Helping Dealers With Big-Ticket Sales”
GE’s Consumer Finance group is a fast-growing, global operation that assists dealers with big-ticket sales through a number of financial vehicles.
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-- Comprehensive Dealer Surveys -- -- Survey Results -- -- Key Improvement Areas --
New-Dealer Enrollment
Funding Processes
New Product Availability
“Enrollment A Showstopper”
What GE Heard From The Survey Results
“Your enrollment process takes far too long”
“The welcome package is just too confusing”
“Training is a huge problem”
“There is just too much paperwork, need to simplify”
“We need more financing options”
Critical Impacts
Growth Limitations
Consumer Satisfaction
Business Scalability
Market Reputation
How To Correct
Consumer Finance Customer-Facing Issues: Growth-Limiting Problems
Although historical growth has been impressive, future growth prospects are limited due to a number of identified process and customer service performance issues.
9 © Lean Horizons, LLC 2006. All Rights Reserved.
LeadGenerated
ApplicationReceived
ApplicationApproved
DealerTraining
FirstTransaction
Welcome KitDelivered
Critical Evaluation Of Dealer Enrollment Process
Only 40% Of Dealers Transact
Every Month
Dealer Enrollment Process Sluggish
& Needlessly Complex
23,000 DealersAdded Each Year
Dealer Additions Often Pointless; Enrollment Process A Transactions Barrier
GE not “user friendly” to wide range of dealers
No use in adding dealers when they will not transact
Existing process effectiveness lagging current growth rates
Six Sigma alone will not correct high-waste processes & procedures
Considered a strong hurdle to future growth
Rapid need for new waste removal tools and disciplines
Consumer Finance Customer-Facing Issues: “The Transactions Barrier”
In fact, the dealer enrollment process within Consumer Finance had become a powerful barrier to new transactions; dealers had significant problems battling the slow and highly complex process.
10 © Lean Horizons, LLC 2006. All Rights Reserved.
Architecting The Vision: GE’s Engagement Of LHC To Address The Issues
Right Focus on Vision Architecture
Right Structure To increase Value
Strategic growth engine Strategic Lean deployment Lean enterprise implementation Improved Customer experience – Every time Culture change to continuously remove waste
Breakthrough performance level opportunities High-priority high-waste value stream identification Unmet market needs hindered by flexibility Finance execution requirements/New tools Change management application to shift attitudes
Most Appropriate Lean Vision
Current Environment & Available Opportunity
Generate Fact-Based Vision To Drive Business
Creating The Lean Business Vision
Lean Vision To Eliminate Waste & Remove Growth Barriers
AvailableProfitableGrowth
CurrentRevenue
Industry& MarketPotential
AppropriateLean Vision
To OvercomeBarriers ToProfitableGrowth
To address these critical issues and ensure deployment of a scalable growth model, Consumer Finance engaged LHC to evaluate existing dealer enrollment processes, deploy appropriate Lean tools and remove all barriers to profitable growth.
11 © Lean Horizons, LLC 2006. All Rights Reserved.
Date Re-Keyed8 Times
Pre-Lean Dealer Enrollment Current State: Complex, Wasteful & Costly
Over 300Forms
Over 55Entry Points
3,000 ComponentsIn Welcome Kits
63-Day Enrollment Completion Process
Far TooComplex For
ManyDealers
StrongBarrier To
FutureGrowth
LHC deployed their proprietary suite of Lean assessment processes, diagnostics and waste removal techniques in order to rapidly quantify dealer enrollment breakpoints and lost-profit sinkholes.
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Before After Dealer activation kit was highly unorganized and complex with no real distinguishable features
External design features developed
Internal organization and packaging replaced
All non value-added materials eliminated to reduce complexity
Package now differentiated as a true GE product
Dealers now have access to clear instructions
Dealers eager to use the process; are no longer overwhelmed
Lean Success Example: Kaikaku-Level Changes To Dealer Activation Kits
As an example, highly complex dealer activation kits were subjected to a number of Kaikaku and Kaizen-level redesign processes; dealers now have very simple, highly differentiated activation kits that encourage enrollment and activation.
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Before After Dealer activation cycle time of 35 days unacceptable
Move to same-day shipments
Overnight vs. ground analysis
Revised training schedules and procedures
Differentiated activation binder and welcome kit
Average activation period now 1-7 days and falling
Moving to pure 1-day capability
Lean Success Example: Revolutionary Dealer Activation Cycle Time Reduction
In addition, significant reductions in the dealer activation cycle removed a significant barrier to future growth.
Faster Activation – Faster New-Credit Flow
Faster New-Credit Flow – Removal Of Key Growth Barrier
35Days
1-7Days
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Prospecting Enrollment Activation
End-To-End Dealer Activation Cycle
92%Reduction
80%Reduction
30%Reduction
36% Annual Sales Boost
12 days to 1
New standard work
Lean mindset
21 days to 4
Process simplification
Process digitization
New marketing content
New value proposition
Rapid notification
-- Activation Cycle Reduction -- -- Dealer Benefits --
Combined Benefits: Activation Cycle Compression Driving Dealer Sales
With a radical compression of the activation cycle through Lean tools & disciplines, a wide variety of dealers are increasing annual sales through participation in the GE credit program.
15 © Lean Horizons, LLC 2006. All Rights Reserved.
By deploying the complete suite of Lean tools, disciplines and practices, GE reaped a $200 million annual benefit and removed critical bottlenecks from their growth roadmap.
Summary: Lean Disciplines Driving $200 Million In Annual Realized Benefits
Activation: Reduce Lead Time 30%
Enrollment: Reduce Lead Time 80%
Prospect:Reduced Lead Time: 92%
Current State VSM Future State VSM
12 days to 1
New standard work
Lean mindset
21 days to 4
Process simplification
Process digitization
New marketing content
New value proposition
Rapid notification
$500 Million In New Dealer Volume Per Year
11% Apps Increase$72,000,000
15% Activation Lift$84,000,000
12% Sales Lift$60,000,000
$216,000,000 Incremental Volume – Reduced Growth Bottlenecks
Dealer Benefit
44% increase in consumer purchase order size
24% increase in credit approval closure rate
36% increase in per-dealer annual sales+
GE Global Benefits
Unqualified Lean success in non-manufacturing arena
Lean removing barriers in high-growth industry
Standard work ensures repeatable, consistent year-over-year improvements
16 © Lean Horizons, LLC 2006. All Rights Reserved.
A
B
Q1 & Q2
2006
Q3 & Q4
2006
Reduce Mexico mortgage application cycle time
Decrease Australia branch loan processing cycle time
Improve US Corporate card new client integration time
UK home lending same day offer
Moving forward, GE is rapidly expanding LHC’s global deployment; Consumer Finance successes will be repeated in a number of locations including Mexico, Australia and the United Kingdom.
Moving Beyond 2006: Migrating Lean To Additional Finance Processes