Transforming a Large-Enterprise Mailroom:

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1 Transforming a Large-Enterprise Mailroom: DATAMARK delivers a facility-managed solution Insurance and Financial Services Case Study

2 CASE STUDY BACKGROUND The client is a highly successful, 90-year-old insurance and financial services company with more than 20,000 employees. More than half of these work at the corporate headquarters. The company serves more than 8 million customers world-wide. The client recognized that its headquarters mailroom operation had grown to a point where it lacked ideal levels of efficiency, quality and cost-effectiveness. The mailroom had become a very complex and expensive function, particularly as the company expanded over the years into multiple financial service lines. Inbound mail volumes range from 600,000 to 1 million pieces monthly, and the number of documents processed each month ranges from 800,000 to 1.2 million. The mailroom was not a part of the company's core business, and, as such, was identified as a process that would be better off outsourced to a company with specialization in digital mailroom management and document processing. As the company explored solutions, it determined that an on-site (facility-managed) outsourced mailroom would be preferable. This was due to the company's desire to keep the mailroom visible at headquarters, and to meet the company's comfort level for workflow oversight and accessibility, physical security and other factors. After a competitive process, the company selected DATAMARK to implement and manage a digital mailroom solution at its headquarters. The mailroom was identified as a process that would be better off outsourced to a company with specialization in digital mailroom management and document processing. Elements of a Digital Mailroom Solution This graphic illustrates a typical digital mailroom workflow. Inbound Letters, Faxes, E-Docs Manual and Automated Identification, Sorting, Distribution Imaging, Data Extraction and Validation via OCR, ICR, etc. Automated Routing Via Business Rules Physical and Digital Storage and Retrieval PROCESS ANALYSIS A DATAMARK consulting team was assembled to perform an analysis of the existing mailroom process. The team included a business process engineer, an industrial engineer, a software engineer and a technology specialist. The analysis was the first step in DATAMARK's Evolution Solution, a proprietary, step-by-step framework for seamlessly implementing outsourced processes. The analysis incorporated a methodology known as PREP, an acronym for Plan, Review, Evaluate and Propose. After spending several weeks examining the client's existing mailroom, the DATAMARK team identified issues at every step of the mailroom process that presented opportunities for improvement. These issues included a floor plan that was not optimized for efficiency, a lack of volume data for efficient scheduling of staff, and an underutilization of mailroom automation and document processing technologies DATAMARK, Inc.

3 The sections below detail the issues affecting each sub process and describe solutions DATAMARK implemented to improve the efficiency, quality and cost-effectiveness of the client's mailroom. ANALYSIS: INBOUND MAIL Issues: The mailroom needed improved methods for tracking mail and monitoring volumes. Implement a barcode Document Tracking System (DTS) Use DTS to monitor productivity throughout process Use DTS volume counts for downstream staff scheduling The analysis was the first step in DATAMARK's Evolution Solution, a proprietary, step-by-step framework for seamlessly implementing outsourced processes. ANALYSIS: DOCUMENT SORTING AND PREPARATION Issues: Improvements were needed in the staffing of sorting and preparation stations. The mailroom needed specialized furniture and an improved floor plan to promote efficient workflow. Reconfigure functions to minimize paper movement between rooms Reconfigure floor space to optimize workflow Add sorting stations and other specialized furniture to improve accuracy and reduce touches ANALYSIS: SCANNING Issues: The client was underutilizing available technologies for image quality. The scanning workflow needed a standardization of processes. The pre-scan and scanning workstations needed improvements in workflow configuration. Automate process to fix images Relocate pre-scan stations to align with scanning operators Realign scanning stations to follow document flow ANALYSIS: INDEXING Issues: The client was underutilizing available technologies for improving index efficiencies. There was a need for improved staffing, work routing and standardized quality auditing. Upgrade document capture servers DATAMARK, Inc.

4 Enable available quality modules in data capture software Enable advanced background lookups in data capture software Automate prioritization and assignment of work based on skill set Implement standardized quality audit for all indexers ANALYSIS: QUALITY ASSURANCE Issues: The client did not have standardized tools or processes for quality measurements. The client did not have a department specifically dedicated to quality assurance. Because of this, feedback on performance was irregular and inconsistent. Establish standardized, proactive Quality Assurance program for all processes Offer pay incentives to processors for high quality scores Online quality tracking and analysis tools Daily quality monitoring Adding sorting stations and other specialized mailroom furniture improved accuracy and reduced touches. ANALYSIS: STAFFING AND TRAINING Issues: Because of the volume tracking issues, planning for appropriate staff numbers was difficult. Also, the client needed a consistent staff training program with measurable outcomes. Establish two shifts for indexing Staff part-time employees to assist at peak times Consolidate mailroom functions to group skill sets and leverage cross training Establish formal, documented training programs PROCESS MIGRATION After the analysis of the project and the development of solutions to improve every process, DATAMARK launched the implementation of the client's new mailroom. DATAMARK's goal was to ensure that the migration was completely seamless and maintained excellent levels of quality and customer service at all times. DATAMARK guided the transition using its Process Migration Methodology (PMM), an element of the Evolution Solution. DATAMARK's PMM is a highly detailed, step-by-step procedure for successfully transitioning to an outsourced business process. The foundations behind PMM include: Complete visibility from start to finish Clearly identified functions, steps and roles Clear understanding of process inputs and outputs Constant quality monitoring and open communication PROCESS MIGRATION: HUMAN RESOURCE ISSUES An important component in a seamless transition to an improved business process is the ability to retain experienced and talented employees, whenever possible. This was of extreme importance to both the client's human resources department and DATAMARK. The two entities worked closely and DATAMARK, Inc.

5 cooperatively to ensure that the client's employees had favorable options and incentives for remaining a part of the mailroom staff. The specifics of managing the human side of a process migration are detailed in a separate DATAMARK case study. PROCESS IMPROVEMENTS: MEASURES OF A SUCCESSFUL TRANSITION The most visible measure of the successful transition due to DATAMARK's improvements has been the significant reduction in the number of staff required for the mailroom. The original number of staff was 240. This number decreased to 150 to 180 (depending on mail volume fluctuations) a 25 percent to 38 percent reduction in the number of required workers. The reduction in staff alone delivered enormous savings in annual payroll costs. Redesigning the workflow and incorporating mailroom-specific furniture significantly reduced the amount of square footage required for the mailroom. The mailroom space dropped from 32,000 to 21,500 square feet a 33 percent reduction in size. ADDITIONAL PROCESS IMPROVEMENTS DATAMARK's philosophy of seeking new and continuous improvements in business processes has led to many success stories delivered by this client relationship, from the mailroom itself to several downstream business processes. They include: An important component in a seamless transition to an improved business process is the ability to retain experienced and talented employees. A new system of form codes for document preparation and indexing for the client's banking division. This improvement allows bank personnel to route documents rapidly to downstream processors, saving significant labor hours. A recommended process change in the handling and delivery of outbound correspondence, so that letters could be metered at a lower postage rate. Anticipated savings for the client is estimated at $6,500 a year. A study of the client's internal logistics led to recommendations for the standardization of mail drop locations, with end-to-end tracking of each delivery item. The study also created suggestions for improved coordination with the client's copier services vendor. DATAMARK estimates a 30 percent improvement in operational efficiency when all recommendations are implemented. A business continuity plan that anticipated the effects of a severe ice storm that shut down roads and highways. DATAMARK planned for mail pickup and staffing to ensure that critical financial services documents would be processed on time, protecting the client from unexpected transaction costs, and helping to maintain a high level of customer satisfaction. CONCLUSION By all measures, the new mailroom process has delivered significant savings by reducing the number of staff and square footage required for the facility. Also, a proactive Quality Assurance program is now in place, delivering significant improvements in processing quality, turnaround time and customer service. This study illustrates a common scenario faced by large organizations across all industry sectors: back-office business processes such as mailroom become expensive and unmanageable as more staff and space are added to handle ever-growing volumes of work. DATAMARK identified the problems holding back the performance of the mailroom and presented appropriate solutions. DATAMARK followed through with the implementation of a streamlined, costsaving, facility-managed mailroom. In this case, the client made the wise decision to turn over a noncore business function to a specialist DATAMARK, Inc.

6 THE BOTTOM LINE A snapshot of the client's monthly mailroom activity, and results produced by a DATAMARK transformation Average Monthly Document Volumes Physical mail: 600,000 to 1 million pieces Documents processed: 800,000 to 1.2 million Images Processed: 4 to 5 million Before (Client-Managed) Staff: 240 Mailroom size: 32,000 sq. ft. After (DATAMARK-Managed) Staff: , depending on volume Mailroom size: 21,500 sq. ft. Estimated Annual Cost Savings (Reduction in payroll and benefit costs, value of reclaimed facility space) $3 million to $4.5 million ABOUT DATAMARK DATAMARK is a leading provider of digital mailroom management, data entry, document processing and business process re-engineering solutions for Fortune 500 companies, government agencies and other large organizations. Founded in 1989, our company is the strategic business process outsourcing partner for Top 10 companies across several industry sectors, including transportation and logistics, healthcare, insurance, banking and financial services. With onshore and offshore centers, DATAMARK delivers process optimization, technology and Enterprise Content Management solutions to help organizations achieve efficiency and profitability in all back-office business functions. For more information on how DATAMARK s business processing solutions can reduce operating costs while improving efficiency, flexibility, and customer satisfaction, call or DATAMARK, Inc. 123 W. Mills Ave., 4th Floor El Paso, TX USA DATAMARK, Inc.

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