Demonstrating Customer Value

Six Sigma in Action:

A Six Sigma in Action summary offers an example of the value a Six Sigma project can bring to a customer.
Master Black Belt: Steven Bonacorsi

Six Sigma in Action:

System Lease Cost Reduction

Customer Profile 27,000 seat network equipment company based in San Jose, CA Business Problem & Impact
Currently the average monthly buyout rate of un-recovered leased systems is at 37%, which results in the client having to spend money for lost or outdated technology. This is well above the industry standard of 10 -15%. In addition, 50% of the clients systems required a lease extension for added cost.
Root Cause Analysis
Buyouts
100% 80%
ge l on no er yed Us plo em r sh f re Re se No spon Re s oe no e av th

200

60% 40% 20%

rs he Ot

Measure & Analyze

Initially, lease buyout and extension baseline process sigma was about 1.8. Primary root causes were identified to be users no longer with the company, users who did not respond, and users who said they no longer had the equipment.

100

d er Us tem s sy

0 Count Percent
94 36.3 80 30.9 79 30.5 6 2.3

0%

Improve & Control

In close coordination with the client and the lease vendor, the GE team updated the termination process to include explicit instructions on equipment returns, automatic notifications and follow up reminders. The streamlined process was documented and training provided to key participants
60% 50%
51% 36% 36% 30%

Buyout Run Rate

Buyout Rate

40% 30% 20% 10% 00%

38% 29% 20% 19% 14% 15% 23% 16% 14%

Results/Benefits
Buyout/extension rate was reduced to 12%, and the outdated systems that the client needed to extend or purchase from the leasing company was cut by over 50%, saving over $2.3M

Jan- Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan01 02 EOL Month

An annual savings of US$2.3 million to the customer!