Download - Dell Business Process Improvement
Dell Confidential
Dell Business Process ImprovementSam Decker & Allen Crane
2Dell Confidential
Michael Dell Quote -- Men’s Health
Why did the better-funded ventures fail?
“A lack of good data. Think about most meetings. If you don't have any facts, you don't have any data. Then it's just a bunch of guys sitting around talking.
[Another problem is] a lack of commitment to making good decisions based on data. Emotions are good. They're important. But they're not really useful when you're trying to make decisions.
In fitness, you can measure your pulse. You can measure your speed. In business, you can measure your orders, customer satisfaction, and cycle time--how long it takes for an order to be filled. Somebody has a problem, how long does it take to resolve it? If somebody needs a spare part, how long does it take to ship it? How long does it take to design a product?
If you can reduce cycle time, you take out costs, you take out inefficiency. Everything can be more efficient. There's no such thing as ‘We're done.’ ”
3Dell Confidential
Agenda
Sam Decker
•What is BPI at Dell?
•Why BPI in Marketing?
• Dell’s Big 7 BPI Strategic Drivers
Allen Crane
• Driving “What’s in it for me”
• Examples of BPI in Use at Dell
4Dell Confidential
What is BPI?
• BPI is Dell’s approach to 6 sigma
– Follow DMAICR rigor
– Use data to remove emotions in decision making and focus on vital few factors (X’s)
• A structured methodology to understand and improve processes
– Y = f (x): identify root causes (causation) and establish cause/effect correlations to address customer’s pain points
• A set of tools and applications that drive the customer experience and key business metrics
• Method to produce statistically validated improvements and financially validated cost savings
5Dell Confidential
$0$200$400$600$800
$1,000$1,200$1,400
1999 2000 2001 2002 2003
BP
I Be
ne
fits
$M
040080012001600200024002800
Cer
tifi
ed
Be
lts
Financial Benefits, $M Certified Belts
Dell’s BPI Status After 5 Years?
DAO Port /Dim
Mfg only
All WW Mfg + PG + Supply Chain
All WW Fulfillment Ops (incl.
Sales, Mfg, PG, SCM)
BPI is part of key initiatives for the at Dell
for all functions and businesses
BPI is a key element of the
Winning Culture!
6Dell Confidential
Marketing and BPI
7Dell Confidential
Why BPI in Marketing? Promotes Growth
1. Measurable processes
2. Measurable outcomes
3. Predictable revenue
4. Accurate forecasts
5. Increased investment
6. Increased net income
This works in an organization with…• Foundation & Democracy of Measures• Culture of Continuous Improvement
Predictable Marketing Machine…
8Dell Confidential
Why BPI in Marketing? Marketing Scaling
$-
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
$45,000
$50,000
Q1 Q2 Q3 Q4 Q1-2 Q2-2 Q3-2 Q4-2
Quarter
Ma
rke
tin
g E
xp
en
se
$-
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000
Re
ve
nu
e
Revenue
100% ScalingMarketing Expense = Revenue X 10%
85% ScalingMktg$ Growth = Rev$ Growth X 85%
Sample data
Non-scalingexpense
Scalingexpense
9Dell Confidential
Three Ways to Achieve Marketing Scaling
1. Revenue Growth
2. Spend EfficiencyTomorrow’s marketing dollar can buy more than than yesterday’s dollar
3. Spend EffectivenessTomorrow’s marketing dollar drives more revenue that yesterday’s dollar
GreaterVariability
10Dell Confidential
BPI Opportunity: End-to-end process management
CustomerService
TechSupport
Product & Mfg
Marketing Phone & Online
Process A
Process B
Process C
Process D
Shipping
Owner
OwnerOwner
Owner Owner
Owner
Customer Experience• Supports process owners by providing expertise on process design & automation
• Manages governance structure & process register
Process owners work as cross-functional team to resolve end-to-end process problems
Owner Owner Owner OwnerOwner
CustomerProcesses
Functions
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Big 7 BPI Strategic Drivers
12Dell Confidential
1. Executive Leadership / Development
2. Measurement Systems
3. Strategic Business Linkage
4. P&L Mapped Financial Results
5. Organizational Development
6. Recognition
7. Communication
(X’s)
Big 7 BPI Strategic Drivers
Winning BPI
Culture
Y = f(x)
(Y’s)
13Dell Confidential
Sr. Leadership ‘walks the talk’
“If you are not currently involved in a BPI project, I would encourage you to
learn more and participate in this important process.”
Michael Dell 7/13/2001 Webcast
On BPI… “Pervasive, Simple, Direct, Proactive, Systemic, Rewarding Experience for Employees, Foundation for All Business Improvement, Embraced by All Levels and Functions.”
Kevin Rollins 11/26/2001 BPI 2nd Annual Banquet
1. Executive Leadership and Development Y = f(x)
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Executives engaged in BPI program and projects
President/CEOPresident/CEO
Executive ChampionsExecutive
Champions
BPI ChampionsBPI Champions
Area Champions
Area Champions
Master Black Belts
Master Black Belts
Executive Sponsor
Executive Sponsor
Chartering Manager
Chartering Manager
Project Lead & Team MembersProject Lead & Team Members
Area Champion
Area Champion
Project MentorProject Mentor
BPI Facilitator
BPI Facilitator
Financial Analyst
Financial Analyst
BPI Project StructureBPI Program Structure
1. Executive Leadership and DevelopmentY = f(x)
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Hierarchical Metrics: Report on Y’s…Manage X’s
x x xPlacement
On Site
PlacementOn Site Compet.Compet. PricePrice
x x x
x x x
Online Operating IncomeOnline Operating IncomeY
ConversionConversionVisits
ContentContent Visit Quality
Visit Quality UptimeUptimeX
X1AccuracyAccuracy OffersOffers Persuasive
Copy
PersuasiveCopy
X2
Exec
Mgr
Leading Indicators
Lagging Indicators
Weekly/Q
trly Scorecards
Daily D
ashboards
Y1
2. Measurement SystemsY = f(x)
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Cascading Planning Approach
Division / Segment Strategic Plan
Functional Initiatives
Work Group Initiatives
Division / Segment Key Initiatives
Functional Strategic Plans
Black/Green Belt BPIs
Black Belt BPIs Green/Yellow Belt BPIs
Y = f(x) 3. Strategic Business Linkage
17Dell Confidential
Project Benefitting P&L Benefit In AnnualizedNumber Org Line Item Type Plan? Savings Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q412345 SALES Revenue Hard Q3 (July) $1,000,000 $300,000 $250,000 $250,000 20000012345 CARE Local Base Soft $200,000 $50,000 $50,000 $50,000 5000012345 SALES Local Base Avoidance $30,000 $7,500 $10,000 $7,500 5000
FY04 FY05
Central Data Repository
Common Web-based input of projects & benefits
Automated reporting
Quick turn ad-hoc ability
Standardized Reporting
Reporting / Analysis
Y = f(x) 4. P&L Mapped Results
18Dell Confidential
Beginning 12 Months 18-24 Months
Evolution of BPI & Professional Development...
BPI seen as an opportunity for professional development (part-time project manager).
Use Green Belts to drive high priority projects, or make those projects Green Belt.
BPI leaders absorbed back into business leadership
Y = f(x) 5. Organizational Development
19Dell Confidential
Knowledge andComprehension
Application and Analysis
Synthesis & Evaluation
Individual Contributor
YellowBelt
BPI BasicGreenBelt
BlackBelt
MBB
1 day 1 week 1 year min.
AdvancedMethods
Statistics
1 week 1 week 1 weekOnline
People Manager
Driving BPIBPI
Sponsor
1 or 2 daysOnline
Executive Development
Driving BPIBPI
Sponsor
1 or 2 days
ExecutiveBelt
3 days
ExecutiveBelt
Online project completion& EB certified
GB Project& Certified
BB Project& Certified
MBB Training &Development
BPI Training Roadmap at Dell
Y = f(x) 5. Organizational Development
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“Living plaque” with achievement plates
Monthly executive BPI reviews
Monthly BPI newsletter announcing new Belts
Green belt cubicle flags identifying BPI leaders
Monetary reward for upon certification
Public recognition at project leader’s staff meeting
BPI cross-functional sharing meetings
Contests with grand prize opportunities
Y = f(x) 6. Recognition
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General Information Area Specific Info Project Details
• Training Courses
• BPI Certification Announcement
• Awards Presentation
• Brown Bags
• Monthly Executive Sponsor + Area Champion Meetings
• BPI Area Champion Weekly Meeting
• BPI Newsletter
• BPI Area Champion Meetings
• Weekly Business Updates
• Area Champion / Exec 1x1
• Quarterly Review for BPI
• Quarterly Exec BPI Dashboard
• BPI Project Leadership Review
• AD Hoc project request
• Contract
• Final Presentation
• Recognition Presentation Info
• AD Hoc project request
• Meetings with Finance
• Project tracking tool
Y = f(x) 7. Communication
BP
I & P
roject team
Organization-w
ide
22Dell Confidential
Agenda
Sam Decker
•What is BPI at Dell?
•Marketing and BPI – Why?
• Dell’s Big 7 BPI Strategic Drivers
Allen Crane
• Driving “What’s in it for me”
• Examples of BPI in Use at Dell
23Dell Confidential
Most BPI Projects Fit Into One of 4 Main Categories
Customer Experience
OpEx Reduction
COGS Optimization
Revenue Generation
• Services Attach Rate Improvements
• Customer Segmentation
• Pricing Optimization
• Component Cost Forecast Process
• Fix first time -- eliminate redundancies + second touches
• Marketing return on investment
• Rebate process improvements
• Customer satisfaction Improvements
• Call handling metrics
24Dell Confidential
Key Motivations to Building BPI
“Focus on getting engagement at each level and let certifications take care of themselves”
#1 – Selecting the right leader is key to a successful BPI program
BPI…“What’s in it for me?”
• Top Leadership
– Operating Income maximization
– Customer Experience
– Employee Accountability and Problem Solving Culture
• Mid–Managers
– Time Savings, Project Efficiency
– Solid Execution and Project Management
– Clearly Defined Mertics for all projects
• Front-Lines
– Reward “fire prevention”, not just “fire fighting”
– Don’t just feed them for a day...teach them how to fish!
25Dell Confidential
How Much is a 1% Productivity Improvement Worth?
Sales
Cost of Goods
Gross Margin
Operating Expense
Operating Income
100
60
40
30
10
101.0
59.4
41.6
29.7
11.9
+1%
-1%
-1%
+4% GM improvement
+19% OpInc improvement
Revenue Generation
COGS Optimization
OpEx Reduction
BPI Target Areas
26Dell Confidential
How Much is a 1% Customer Loyalty Improvement Worth?
50 to new customers ($10 cost per contact)
Sales of 100 widgets
50 to retained customers (at $1 cost per
contact)
49 to new customers ($10 cost per contact)
51 to retained customers (at $1 cost per
contact)
$50 + $500 = $550 $51 + $490 = $541
1.6% Cost per Contact Savings
+1% pt customer retention
Customer Experience
27Dell Confidential
BPI tools in use – Segmentation DOE
• Narrow the universe of all customers
• Identify the groups of customers that contribute a disproportionate percentage of profits
– Could also be type / category of purchase, preferences, market segment, etc.
– Segmentation must be targetable and actionable
Pro
fita
bil
ity
Purchase Behavior
High
Low
Low Involvementor Frequency
High Involvementor Frequency
Lo
w I
nv
olv
eme
nt
Pu
rch
ase
Mid
-ran
ge
pri
ced
pu
rch
ase
Hig
h-e
nd
pu
rch
ase
Mu
ltip
le P
urc
has
e
Customer PopulationIllustrative Purposes
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BPI tools in use: Segmentation DOE
• Execute design of experiments test to measure effectiveness and efficiency of marketing / sales variables on various cells.
• Factors can include:
– Price points
– Promotions
– Creative
– Frequency
– Recency
• Basis for more refined segmentation based on demographics, attitudes and beliefs
Pro
fita
bil
ity
High
Low
Lo
w I
nv
olv
eme
nt
Pu
rch
ase
Mid
-ran
ge
pri
ced
pu
rch
ase
Hig
h-e
nd
pu
rch
ase
Mu
ltip
le P
urc
has
e
Purchase Behavior
Low Involvementor Frequency
High Involvementor Frequency
Customer PopulationIllustrative Purposes
29Dell Confidential
What is preventing
us from selling more of
this product?
People Method
Plant/Machines MeasureMaterials (Tools to do the Job)
Sales agent behavior and
Habits
Internal Sales Reps
External Customers
PriceCompensation questions
Training Process
Product Lacks Perceived Relevance
Sales Process is
unclear
Lack of agent knowledge
Awareness, Information is
lacking
What’s in it for me?
Lack of measurement system
How do we incorporate the sales story and value
proposition everything we do?
Not leveraging best practices
Root Cause Analysis
BPI Tools in Use: Revenue Generation Fishbone
30Dell Confidential
BPI Tools in Use: Swim-lane Returns Reduction Process (Eliminated Non-Critical Touches)
Within Timeframeof Partner’s
Return Policy?
YES
CRA RequestReceived by
Brand Analyst
CustomerShips
system to Dell,Monitor to Ohio
SystemsProcessed
byDell ARC
Brand Analystcreates CRA,
sends confirm toPartner
$24.62
Partnerrelays CRA,
shippinginstructions
to end-customer
NO,REQUESTREJECTED
Refurbish& MarketSystems
TechIssue?
NO
Partnerrelays
escalationrequestto BrandAnalyst
YES
Dell SystemShipped /Invoiced
End-CustomerCalls PartnerTo Request
Return
DE
LL
AR
B/A
RC
PA
RT
NE
RD
EL
L A
CC
EN
DC
US
TO
ME
R
0 898377 888031 37 75TIMELINE (IN DAYS)
22 45
IMPROVEMENTS:• $24.62 per system
• Significant Cycle Time Reduction(89 days to 26 days)
• Reduced impact on factory(closer to standard returns processes)
• Reduced impacton Partner (customer service / inventory & logistics)
31Dell Confidential
0
100
200
300
400
500
600
2 15
28
41
54
67
80
93
106
119
132
145
158
171
184
197
210
223
236
249
262
275
288
301
314
327
340
353
366
379
392
405
418
431
444
457
470
483
496
509
522
535
548
BIN
Fre
qu
en
cy
.00%
20.00%
40.00%
60.00%
80.00%
100.00%
120.00%
0
2
4
6
8
10
12
1 15
29
43
57
71
85
99
113
127
141
155
169
183
197
211
225
239
253
267
281
295
309
323
337
351
365
379
393
407
421
435
449
463
477
491
505
519
533
547
Bin
Freq
uen
cy
.00%
20.00%
40.00%
60.00%
80.00%
100.00%
120.00%
Average89 Days
60 Days36.4%
= Days to Recovery
= Days to Recovery
45 Days28.5%
60 Days98.3%
45 Days95.3%
Source: ARB – ARB Data – 4/2003 – 7/2003
BEFORE
AFTER
BPI Tools: Pareto – Reducing Variation in Returns Process
32Dell Confidential
Kevin Rollins Quote – Fast Company
“We think that we have had an ethic of blame in business when what we need is an ethic of responsibility. So we’ve got something called Business Process Improvement. We target benefits that we can gain by doing things better.”
Kevin Rollins Fast Company, Nov 2002