Business Excellence Management Christian Haltner.

1. Business Excellence Management Christian Haltner. CREDIT SUISSE Director Formalities Competence Centre Brandschenkestrasse 25 CH8070 Zürich Tel: +41 01 333 87 55 E-Mail: christian.haltner@credit-suisse.com Homepage: www.credit-suisse.com 1956 Jahrgang Ausbildung zum Primarlehrer 1978 Primarlehrer in Zürich • Eintritt in die CREDIT SUISSE, Bankausbildung - Geschäftsleiter Leasing-Gesellschaft - Human Ressource Manager - Director Formalities Competence Centre a. Präsident der Schulpräsidenten des Kanton ZürichOberstlt im Generalstab der Schweizer Armee

2. LEAN SIGMA METHODSOperational Excellence Zürich, 30th of June 2005 Christian Haltner

3. CONTENTS • The Methods’ role in Operational Excellence • Understanding the Method (DMAIC) • Winning with the method!

4. THE METHODS’ ROLE IN OPERATIONAL EXCELLENCE

5. THE METHODS ARE DEPLOYED WITHIN A TRANSFORMATIONAL CONTEXT Committed Leadership StrategicFactors CustomerFocus Strategic Alignment Full TimeResourcing,Organisation BusinessProcess Framework Control/ Implement Analyse/ Explore Improve/ Develop Define Measure Systematic Approach to Change Benefits & Tracking Performance Management Capabilities, Learning & Knowledge Deployment Management SupportingInfrastructure

6. METHOD - Lean Sigma consists of two core project methodologies, underpinned by Process Management DMAIC - Define / Measure / Analyse / Improve / Control Improve existing processes, products and systems. DMEDI - Define / Measure / Explore / Develop / Implement). Also known as DFLS (Design for Lean Sigma). Create new processes, products and systems. Design Process (DFLS) Improvement Process (DMAIC) Process Management

7. 1.0 Define 2.0 Measure 3.0 Analyse 4.0 Improve 5.0 Control Validate Business Opportunity Build Effective Teams Document and Analyse Processes Define Customer Requirements Stakeholders & communications Project Reporting Determine What to Measure Manage Measurement Understand Variation Determine Sigma Performance Process Stratification and Analysis Determine Root Causes Validate Root Causes Manage Creativity Generate Improvement Ideas Evaluate and Select Solutions Present Recommendations Implement Change Develop and Execute Pilot Plan Plan and Implement Solution Process Integration Closure and Recognition Phase Steps • Baseline performance • Input, process, and output indicators • Operational definitions • Data collection formats and plans • Problem statement • Data analysis • Validated root causes • Solution Report • Process maps & documentation • Process Owner committed • Organisation structure impacts • Pilot results • Implementation Plan • Risk analysis • Process control • IT requirements • Training plan • Communication plan • Benefits schedule • New process documentation • Agreed measures & targets • Replication opportunities • Project charter • Action plan • Process maps • Quick wins • Voice of Customer • Effective team • Stakeholder plan Deliverables METHOD - a structured improvement method with clear steps, deliverables & an extensive toolkit

8. APPLYING THE METHOD FOR RESULTS • Rigorous – Stick to the method, it works • Uncompromising – Pick projects that are your priorities; stop them if they are not going to deliver • Continuous – Push continually for learning, stretch the team’s thinking; change comes in waves Whilst the method is proven; it requires managers to apply it without deviating from its principles

9. IMPROVING EXISTING PROCESSES: DMAIC 1.0 Define Opportunities 5.0 Control Performance 2.0 Measure Performance 3.0 Analyze Opportunity 4.0 Improve Performance The Define Milestone (supported by evidence at the Tollgate Review) “When you have mobilised your team, understood the process, understood the Critical to Quality (CTQ) requirements, and agreed with your sponsor, process owner, project owner and key stakeholders the target of improvement and associated benefits”

10. Project charter as re-approved after "Measure" PROJECT CHARTER PILOT AREA “COMPLIANCE – RELATIONSHIP OPENING” Status 03.09.04 Reduce errors regarding basic formalities in relationship opening process Business Case Opportunity Statement • By reducing formalities error rate in relationship opening process the following benefits are achieved: • Savings in Formalities Control (less re-checks of incorrect cases) • Time savings for RMs (less rework) • Moreover reducing the error rate will lead to an increased external and internal customer satisfaction. Furthermore it will reduce the operational and reputation risks CSFS is faced to. All errors cause non value-added work for the RMs and Formalities Control. Not approved relationships mean operational and reputation risks for CSFS. Goal Statement (to be verified) Project Scope Formalities related error rate in the relationship opening process has to be sustainably reduced Definition of error rate: Number of cases with an error in relation to the number of new relationship opened The project scope contains: Relationship opening process Start: „Gather client’s basic information“ End : „Receive formalities in Formalities Control“ Clients in BU11 (BD – onshore) and BU12 (SC – on- and offshore) Supporting Tools: HOST/Intranet, Compliance Tool, FrontNet/RoT and Formalities Project Plan Project Team Project Sponsor: Project Owner: Master Black Belt: Project Manager: Team Members: Experts:4) Advisory Board: May Jun Jul Aug Sep 05/25 Define Measure Analyze Improve Control 05/07 07/09 08/18 tbd Tollgate Review Kick-off 1) Second level benefit 2) Market Area 1: SC 3) Agreement on the Swiss banks‘ code of conduct with regard to exercise of due diligence 4) On demand

11. Key Result of DEFINE: CTQs - Critical to Quality “CRITICAL TO QUALITY” SETS THE STAGE FOR IMPROVING THE PROCESS TOWARDS THE “REAL” CUSTOMER NEEDS Approved by Tollgate Review on May 25, 2004 Status 03.09.2004  VoC – Voice of the customer CCC – Critical customer criteria CTQs - Critical to quality Bank Client • “I just opened my account and now it’s blocked!”1) • “Why are you coming back concerning this formalities issue – I thought we dealt with it already.”1) • Client wants the relationship to be at his disposal • Client wants to open a new relationship easily without a lot of administration • % of relationships opened without being blocked • % of relationships opened without having to contact the client for more infor-mation after he signed formalities Formalities Control / CSFS • CSFS has to accord CDB032) • CSFS must not go into reputation risk (meet internal directives) • Errorless signed formalities have to be submitted to formalities control as quick as possible after the case has been opened – time limit is 10 working days • % of relationships opened without any error3) regarding formalities 1) Typical customer reactions; source: Interviews with RMs 2) Agreement on the Swiss bank’s code of conduct with regard to the exercise of due diligence 3) CDB03-error - no submission within 10 working days, CDB03-error, Risk Case, MB/ME-error

12. DEFINE - “QUICK WIN” OPPORTUNITIES Criteria for Defining an Improvement Opportunity as a Quick Win • Easy to Implement: making the change or improvement does not require a great deal of coordination and planning. • Fast to Implement: making the change or improvement does not require a great deal of time. • Cheap to Implement: the change or improvement does not require a large investment of capital, of human resource or of equipment or technology. • Any change must be reversible!

13. IMPROVEMENT PROCESS: DMAIC 2.0 Measure Performance 1.0 Define Opportunities 5.0 Control Performance 3.0 Analyze Opportunity 4.0 Improve Performance The Measure Milestone (supported by evidence at the Tollgate Review) “When the baseline for your performance against identified CTQs has been measured, and contributing factors are being measured with rigour“

14. Histogram Pareto Chart Scatter Diagram Run Chart MEASURE - DISPLAYING DATA

15. IMPROVEMENT PROCESS: DMAIC 3.0 Analyze Opportunity 2.0 Measure Performance 1.0 Define Opportunities 5.0 Control Performance 4.0 Improve Performance The Analyse Milestone “When the root causes, and their contribution to the overall problem have been proven beyond reasonable doubt using data and process analysis”

16. CAUSES EFFECT Problem Statement Salespeople ANALYSE - CAUSE & EFFECT DIAGRAM Receipt process Rushed salespeople Hourly completion required Analysis was unable to verify 40% of January receipts. Rushed Too many sales Not enough sales coverage at peak times The cause & effect diagram assists in reaching a common understanding of the problem and exposes the potential drivers of the problem.

17. ANALYZE: Potential root causes POTENTIAL ROOT CAUSES Status 03.09.04 Root causes (factors; X's) Problem (output, Y) Forms CLFF / Requirements Process / Tools Available tools with "process support" are not strictly used (or not rolled-out yet); process is not guided enough Forms are unclear tofulfill • High error case numbers (i.e. error rates) • High variation of output It is not clear which forms to use (for a correct set of forms) Changes of requirements / modifications of forms In-process quality assurance High number of "not common" relationship openings ("complex" client types) Low management attention / problem is not visible enough Low priority, missing carefulness RMs / assistants are not trained and assisted well enough No exploitation learning curve effect cause of too less cases per RM / ass. Client Submitter Management

18. IMPROVEMENT PROCESS: DMAIC 4.0 Improve Performance 3.0 Analyze Opportunity 2.0 Measure Performance 5.0 Control Performance 1.0 Define Opportunities The Improve Milestone “When the team and the stakeholders have evaluated solution possibilities and methodically selected and agreed with stakeholders the most suitable”

19. IMPROVE - SOURCES OF SOLUTIONS Best practices Root cause analysis Ideas from other projects Generate improvement ideas Project goals Problem identification Patternbreaking techniques Mind mapping Performance targets Discoveries during analysis Benchmarking ideas

20. IMPROVEMENT PROCESS: DMAIC 5.0 Control Performance 2.0 Measure Performance 3.0 Analyze Opportunity 1.0 Define Opportunities 4.0 Improve Performance Main Activities • Anticipate Change Management Needs • Consider Piloting the Solution • Standardise & Document Processes & Control Plan • Mitigate Implementation Risks • Develop Implementation Plan • Implement & Monitor Processes/ Control & Replicate • Closure & Recognition Key Deliverables • Pilot to Confirm Solution Impact • Process Control Plan • Standard Procedures • Improved Process & Bottom Line Impact • System to “Hold the Gains” The Control Milestones Control 1: When the agreed solution(s) is fully described in terms of process, people, IT, infrastr. Control 2: When the plan on how to implement, and the handover criteria are fully detailed & agreed Control 3: When the details of how the new solution will be controlled including target performance, unacceptable performance and route to implement corrective action are documented Control 4: When the new solution, or implementation of solution, has been formally handed over Control 5: When the solution is fully implemented and benefits have begun Control 6: When sustainable benefits have been independently verified

21. CONTROL - CRITICAL ELEMENTS OF AN IMPLEMENTATION PLAN • Potential Problem Analysis • Process Control Plan • Training Plan • Communication Plan • Change Management Plan • Budget and Benefits Case • Resource Allocation Scheme • Detailed Implementation Work Plan • ACCOUNTABILITY for Action