Lean Six Sigma (LSS): Tools and Techniques for Solving Financial Management Problems

Transcription

1 Lean Six Sigma (LSS): Tools and Techniques for Solving Financial Management Problems Presented by Mr. Ronald H. Jones LSS Master Black Belt candidate Assistant Secretary of the Army (Financial Management and Comptroller) January 19, 2012 Purpose: Provide an overview on: LSS: Why do it and what it is Case Examples Useful Tools / Techniques Key Takeaways 1

2 Agenda Why do Lean Six Sigma? What is it? Case Studies Useful Tools and Techniques Key Takeaways 2

3 Financial Benefits Achieved 38 enterprise projects successfully completed to date across the Army and multiple agencies $188M cumulative financial benefits achieved and numerous operational benefits to the Army and various agencies $M 2010 & 2011 Award Winning Projects by the HON Dr. Westphal at the Lean Six Sigma Excellence Program 3

4 4

5 5

6 6

7 ASA(FM&C) Case Study #1 Army Procurement Fraud Recoveries $150.9 Million 2010 Award Winner 2010 Lean Six Sigma Excellence Award Program by Dr. Westphal Under Secretary of the Army Project Sponsor: Ms. Monica Malia Black Belt/Team Lead: Mr. Ron Jones 7

8 Project Key Achievements Before 0% recovered funds identified as Army fraud 912 days average cycle time $160M in suspense After 100% recovered funds identified as Army fraud 93 days average cycle time (90% reduction) $14.6M returned to Army (75% in theater), $44M to Treasury, and $100M in suspense account to date Key Process Improvements Established tracking mechanisms from End-to-End Before 912 Days After 93 Days Developed Interagency Standard Procedures (MOU and SOP), reports, training for audit readiness and efficiency 4 Cases Avg 93 Days $14.6M (Army) & $44M (Treasury) & $100M from suspense account Estimated annual recoveries going forward: ~ $5-10M 9

9 To Be Process Map No Improvements to process: 1.Create Case ID # 2.Establish A/R 3.Monitor process for defects 4.Establish network to work issues Yes Interagency Process: 1.Establish MOA 2.Develop SOP 3.Use communications tree 4.Provide monthly report to track status. 100% timely resolution No Yes Cycle Time days Yes No Legend: Coordinate Interagency actions to collect funds Coordination Process Improvement Steps Process Flow 10

10 ASA(FM&C) Case Study #2 Cost Benefit Analysis (CBA) Process Improvement $2.8 Billion 2011 Award Winner 2011 Lean Six Sigma Excellence Award Program by Dr. Westphal Under Secretary of the Army Project Sponsor: Mr. Brian Jacobs Master Black Belt/Team Lead: Dr. Evelitsa Schweizerhof 11

11 12

12 13

13 14

14 15

15 16

16 17

17 Key Takeaways and Additional Opportunities Key Takeaways: Significant financial benefits have been realized through process improvements Key cost drivers have a direct tie to end-to-end life cycle processes LSS (E2E mapping and metrics) can pay big dividends for leaders/managers in a culture of savings and constrained resources Additional Key Opportunities: Intra-Government Accounts Payable/Receivable Mismatch $1B per year What LSS Can do for you: Tie cost drivers and financial benefits to the life cycle of processes Army PCS Enterprise Obligation $13M-- $130M An estimated $91M to $96M can be obtained from non-standard Accounts Receivable Deliver bottom line results tied to key Army processes Results Provide people with the right tools to tie cost drivers to life cycle processes Know-how Continuously improve processes: - Performance - Schedule - Cost - Risk Way Ahead 18

18 More Questions? Thank you ASA(FM&C) CPI/LSS Mr. Ron Jones ASA(FM&C) Master Black Belt candidate and Senior Financial Management Analyst, (703)

19 Army Procurement Fraud Recovery Problem: Army procurement fraud recovery funds are not returned to owner timely and sit in suspense Goal: Eliminate suspense; reduce time by 80% (Stretch: 30 days or less) Scope: Army procurement fraud recovery funds that arrive at DFAS. Overall Cycle time Calendar days Goal Before 100% funds sent to suspense 912 days to collect funds in suspense $45M in suspense 722 Cases Avg = 912 Days Goal = 80% improvement Stretch Goal: 30 days Findings Lack of coordination between agencies Lack of proper accounting procedures Improvements Standardize 1.Tracking number 2.Reporting procedures Control Measures MOU and SOP Site training Army HQDA Monitor Goal Before 912 Days After 93 Days 4 Cases Avg 93 Days $14.6 Million Results: $14.6M cost avoidance to date 90% reduction in time to reconcile 20

20 List of Completed and Current Projects COMPLETED Benefit (FY07-10) CURRENT Potential Benefits 1. Mass Transit Program Benefit for NAF Employees Outside the NCR 2. Fraud Recovery Process 3. Financial Analysts / Cost Estimating Guidebook for LSS 4. Policy for Army Mass Transportation Benefit Program 5. Invoice Process of Civilian Functional Training 6. Reduction of past due unimplemented AAA recommendations 7. Army GB Incentive Process 8. Army GB Recognition Process 9. LSS SOP $159.6M 1. Inter-governmental Expense/Revenue mismatch process 2. Permanent Change of Station (PCS) Enterprise - Obligations capability (GEN II) 3. Permanent Change of Station (PCS) Enterprise - Budget formulation (GEN II) $1B $13M- 130M $.6M 10. Cost and Performance Portal Web Hosting 11. CPP Software Restructure II 12. Software License Restructure 13. Utilization of DTS Reservation Module 14. Reduce cycle time for brigade operational tempo cost analysis 15. Standardize Army-DFAS Procure to Pay Cost Analysis 16. Wounded Warrior Pay Management (WWPM) 17. Budget Exhibit Elimination and Revision (DA BEAR) 18. Soldier Student Lodging 19. Management of Sale Proceeds 20. DoD/Army Cost Process 21. Standardize CARD and Reduce Cycle Time 22. Finance In-Processing 23. Budgetary and Cost Template I 24. SSC-CER/BRM Cycle Time Reduction Generation I 25. SSC-CER/BRM Cycle Time Reduction Generation II 26. Army Energy Conservation Incentive Process 27. ONS Process Map 28. GFEBS Issues Management Process 29. GFEBS FMS Training I (Business Rules) 30. GFEBS FMS Training II (Business Rules) 31. GFEBS FMS Training III (Business Rules) 32. GFEBS FMS Admin (Business Rules) 33. GFEBS FMS Materiel Funds Distribution (Business Rules) 34. GFEBS FMS Materiel Funded Requisition (Business Rules) 35. GFEBS FMS Materiel Unfunded Requisition (Business Rules) 36. GFEBS FMS Materiel Fair Share Sustainment & Prod. Sup. Orders 37. GFEBS FMS Materiel Non Standard Procurement System 38. GFEBS Year End Close Out $28.2M Operational 4. Permanent Change of Station (PCS) Enterprise -Finance In/Out Processing (GEN III) 5. OMA Budget formulation (PB/BES) 6. Subsistence in kind 7. Cost Benefit Analysis Process 8. Non-Standard Accounts Receivable Office 9. GFEBS O&S Process 10. GFEBS FMS Materiel case labor process (business rules) 11. GFEBS FMS Materiel LMP (business rules) 12. GFEBS Pre-deployment production file development process GFEBS UMD/UMC elimination Process (6 projects) Financial Improvement Plan Cost Management Enterprise Resource Planning Operational Operational Operational Operational /Financial $96M Operational 21

21 Title Owner Advisor(s) Improve Invoice Process of Civilian Functional Training Management of Sale Proceeds Streamlining Business Practices for Soldier Student Lodging Procure to Pay WAWF Software License Restructure Standardize Army DFAS Procure to Pay Cost Analysis (purchase card) Wounded Warrior Pay Management (WWPM) Mission at Landstuhl Region Department of the Army Budget Exhibit Elimination and Revision (DA BEAR) Benefit Type Cathy Rinker Snookie Parker Operational Cindy Shufflebarger Ron Jones Snookie Parker Ross Fontana Ross Fontana Revenue Generation Cost Avoidance Completed Projects Past Success Stories - Highlights FY09 FY10 FY11 What Causes the Financial Benefit? 7,650,000 3,257,100 3,368,280 Snookie Parker Savings 6,422,750 6,703,375 25,484,375 Dave Bautista Snookie Parker Savings 1,142,183 1,142,183 1,142,183 Michelle Doyle Dave Smith Maria Pangelinan Snookie Parker Savings 32,212 32,920 33,612 Snookie Parker Snookie Parker Cost Avoidance Cost Avoidance Reduce invoice payment cycle time from an average of 65 days to less than five days. Improved identification of installation level proceeds. OSD provided funds to benefiting installations. 2,987,415 2,987,415 G 3 stopped paying unnecessary lodging fees. 317, , ,929 DFAS charges less for automated transactions than for manual transactions. Army bill will decrease, but OSD Comptroller likely will reduce Army top line funding. OSD harvests the savings. Eliminated non value added/unused services. Restructured contract to realize savings. Got rid of unused licenses and received more support for existing licenses. Reduced DFAS transaction/work count charge to the Army by reducing the error rate and changing management procedures. Contract reduced to capture savings. Less Soldier time is devoted to making payments to family members due to installation of ATM machine at cashier s cage. 20,453 27,270 27,270 Less time is spent preparing budget exhibits. 22