Read the case study "Apply Lean Six Sigma in a Financial Services Firms" (found below) and address the following questions in essay form:

1. How was the lean effort at the financial services firm structured organizationally?
2. What role did the Kaizen event play in improving the way that the project was structured?
3. After the team had narrowed the focus to nine "quick hit" projects, what were the most significant results (outline for four of the projects)? Which lean tools may/could have been used in order to realize these results?

Applying Lean Six Sigma in a Financial Services Firm

This case study focuses on the fund accounting department of a financial services institution that is responsible for supplying net asset values(NAVs) to theNASDAQ stock exchangefor more than700 mutual fundsat the closeof each tradingday. The department's accountants calculate the NAV based onseveral inputs, such as the number of trades that day, expenses paid, and dividends, for mutual funds of more than 200 clients. Performance is measured by the timeliness of the NAV released to NASDAQ and its accuracy. The organization invested in extensive technology upgrades to boostefficiency and processcontrol with thegoals of improvingquality and clientexperience, and wasachieving timeliness and accuracy goals more than 99 percent of the time. However, two key questions remained unanswered, "Are we effective at what we are doing?" that is, what was the cost to the business in attaining 99percent accuracy and timeliness? And, "Do we know our operational risk points?" Working with a consulting firm, the organization decided to introduce Lean Six Sigma to address these questions. The first step was forming a cross-functional team comprised of fund account-ing, quality,and the centraloperations employees. Theteam created flowchartsthat defined the steps performed from the start of the business day until the NAVs were published to NASDAQ at the close of the day. During this time, the team also collected relevant data such as trade volume and rework and reject rates for each process step, as well as process touch time and wait time whenever possible. The goal was toidentify areas thatpresented high levelsof risk (i.e.,generating an error or missing a step) or processing touch time. The team also collected information and data feeds coming into the department. It was important to understand thetimeline for thesedata feeds aswell as theiraccuracy as theycould either delay or affect rework rates. The next step involved a kaizen event, which identified 30 possible improvement items andranked them basedon impact (highvs. low) andease of implementation (easyvs. difficult). Ultimately,the projects weredivided into twocategories: quick-hit projectsthat they couldrealistically solve andimplement within 90days, as wellas longer, strategicinfrastructure improvements thatrequired additional time to address. The team quickly recognized that longer-term strategic projects improvingerror tracking, creatinga capacity model,and developing a project management processwere necessary to answer the fundamental questions.Actively measuring theseerrors would allowmanagers to quickly identify process steps that present high levels of risk. The capacity model would help define utilization rates for each fund accountant and team. Ultimately, the project management process will ensure a robust process for getting everyone involved in process improvement. Eventually, nine quick hit projects were selected from the original list of 30. The projects were dividedamong the originalfive team members,and subject-matter expertsand information technologyresources were assignedto each project.The projects predominantly focused on simplifying, eliminating, or automating process steps. The goals were to increase capacity by eliminating non-value-added activities and reducing operational risk through simplification and automation of steps. Four of the nine projects are highlighted below.

1. Eliminating line-by-line comparisonof pre- andpost-trial balances. In the past, a fund accountant reviewed all inputs and outputs to the fund daily to ensurethat the NAVwas calculated correctly,a time-consuming, high-riskprocess. The improvement team developed a new value to be calculated on the pre- and post-trial balances to allow a quick comparison, thus eliminating the need for line-by-line reviews.

2. Simplifying the corporateaction (CA) reviewprocess. To ensurethat the correctCAs (example: dividenddistribution) were appliedto the funds,employees manually reviewed information from the core system and verified this information witha second source.Not only wasthis process cumbersome,but because itrelied on peopleto catch discrepancies, fourinspection and sign-off points were needed to ensure quality of information. The team developed a new daily automated report to compare the required values from thesystem to asecondary source, highlightingany discrepancies. Sinceits implementation, therehave been zeroerrors in theapplication of CA and a daily time savings of four hours.

3. Creating an automatic feed of expense payments. Each day expense reports by fundwere hand deliveredto the fundaccountants, who thenmanually entered theinformation into thecore system. Managerswould verify theinformation for accuracylater in theprocess. The teamredesigned the processto automatically feedthe expense informationfrom the originalsource daily, thuseliminating the needfor distribution, entry,and verification steps.

4. Eliminating manual pricechange sheets. Inthe past, fundaccountants created daily spreadsheets to calculate the percentage change in the NAV by comparing each day's price to that of the previous day. This time-consuming, manual process introduced the possibility of data entry errors and miscalculations. Theimprovement team redesignedand automated thereport to replace the manual process. Now a percent NAV change report is generated daily, thus reducing or eliminating miscalculations and rework.

Since the solutionswere implemented, theorganization has sustainedthe improvements withrandom audits ofwork product toensure that employeescontinue to follow the newly designed processes. To maintain project momentum as well asensure buy-in frommanagers, a steeringcommittee was formedof managers and executives from various levels in the organization. The kaizen team provided weeklyupdates on thestatus of theproject. This ensured thatall key stakeholders were kept up to date on the status of the project and the logic behind the solutions developed by the teams. In justfour months, fromthe time theproject began untilthe nine projectswere completed, the organization realized a savings of $225,000. As a secondary benefit, members ofthe five subject-matter expertteams developed amore detailed understanding of how their co-workers performed daily tasks and how their work products and quality were dependent upon one another. Afterthe projects wereunder way, theconsulting firm conductedLean Six SigmaGreen Belt trainingfor the membersof the originalcross-functional team so that these individuals could begin work on the larger-scale projects. That was soon followed by Champion training to provide the organization's leaders with a clearer picture of their roles and responsibilities, as well as tips for coaching and mentoring the Green Belts in the future. The quick success ofthe project teamsdemonstrated how basicLean Six Sigma principles could be used to simplify work and enhance controls. Managers beganto identify furtherimprovement opportunities andwork with theGreen Belts to vet the ideas and assign resources to develop and implement solutions.