Process Improvements With Measurable Results
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Self-funding, non-technology enterprise-wide operations improvement initiative for a branded consumer lending and financial services firm in North American. Objectives: Improve service; reduce costs; enhance company-wide operational effectiveness
Scope of Project:
- Loan origination and servicing
- Collections operations
- Inbound call center
- End-to-end Information technology
- Finance operations
- Sales & marketing
- Audit, compliance, and legal operations
- Human resources
- Enterprise-wide shared services
- Operating cost 15%
- Annual savings $148M
- Head count 14%
- Break even point 5 mos.
- ROI (12 month) 5.0x
- Revenue per employee25%
- Call center average handle time10%
In one fell swoop, ClientCo, one of the nation's leaders in originating and servicing student loans saw its business model upended by a new Health Care Bill. No longer would banks be allowed to act as the primary distribution channel for ClientCo products. Overnight, senior management had to transform the company to a direct-to-borrower, or business to consumer model. Wall Street was watching, too. Major commitments had been made to slash costs, improve earnings and ratchet up service – all at once, and within the next twelve months. Annual operating expense had to come down by at least 25% and revenue had to continue to grow. ClientCo senior management interviewed two firms and selected The Lab to assist. The effort included every business area within ClientCo.
The 8-week Analysis & Design [A&D] effort highlighted over 600 non-technology improvements and established a 10-month, self-funding implementation work plan. The Lab implemented the process improvement initiative in two phases—with five business areas addressed in each phase, while cross-area improvements were also delivered. Examples:
- Average Handle Time - Process improvements, including call scripting, job aids, and intraday management of capacity relative to call volumes, combined with capacity planning tools and enhanced representative management techniques enabled a 10% reduction in average handle time [AHT] at an early checkpoint, corresponding to a 10% increase in disposable capacity.
- Units Per Hour - Capacity analysis built on operator observations was coupled with process and work flow improvements, generating UPH reductions that delivered over 8% excess capacity in the loan servicing organization.
- Collections Processes - New regulations required a makeover of existing operations. Process improvements related to call scripting, effective pre-call and skip tracing research, work flow and account segmentation, effective standards and training, and representative management techniques enabled a 10% head count reduction for enterprise-wide Collections operations.
- Finance Operations - Process improvements related to vendor management and accountabilities combined with functional realignment within Finance and Procurement organizations delivered 30% reductions in the associated head count.
- Organization Redesign - An enterprise-wide analysis of reporting relationships factored internal and external benchmarks and varied analytic tools and organization design approaches, resulting in recommendations for up to $36 million in management reductions.
The Lab worked side by side with internal improvement teams and area managers to deliver and exceed the promised benefits. Over the course of the assignment, ClientCo hit its earnings goals and the stock price rose over 40%. Competitors lagged the overall market.