click here to view this exclusive presentation.ppt
DESCRIPTION
TRANSCRIPT
Driving Business Growth and Operational Excellence in Retail
Thomas McCarty
Jones Lang LaSalle
2
Introductions
Tom McCarty
• Managing Director, Six Sigma Deployment Leader, Jones Lang LaSalle, Inc
• Co-Author of "The New Six Sigma“, Lead Author of “The Six Sigma Black Belt Handbook”
• 15 years experience in leading Six Sigma Business Improvement Initiatives
- working with numerous executive teams across multiple industries- Helping formulate and drive strategic plans, lean process designs,
and focused Six Sigma implementation plans- A variety of industry and functional expertise to assist leaders in
enhancing their business performance and financial results- [email protected]
3
Agenda
• A customer driven model for six sigma lean implementation
• Aligning strategic objectives and six sigma projects to drive growth
• Case Studies
• Keys to success in retail
44
Jones Lang LaSalle
• 1,800+ project managers• 18,000 projects annually• $10 billion currently in progress
• 2,000 transaction specialists• 14,000 transactions annually• 170+ million s.f.• 450+ markets globally
• 400 million s.f. worldwide• 12,000 properties / 8,000+
employees• 5 million calls annually• 86 countries
• 170 lease admin professionals• 76 corporate clients• 27,000+ leases administered
annually
• 160+ consultants worldwide• 97 million s.f. managed by occupancy
planning team• Other services include Six Sigma,
workplace solutions and development asset strategies
• 500+ finance experts worldwide• $85 billion in capital market transactions
annually• Relationships with 10,000 investors
Corporate Real EstateSolutions
StrategicConsulting
TransactionManagement
Project Management
LeaseAdministration
CorporateFinance
IntegratedFacility
Management
5
Concept Analysis ResearchSite & Store Criteria
Growth Strategy
Market Planning &Competition Analysis
DevelopmentTeam Building
Site Location & Preliminary Negotiation (Pipeline Development)
Corporate Approval
Site Acquisition Lease /Purchase Negotiation& ExecutionArchitecture
& Engineering
Permitting & BiddingStore Design / Signage
Store Construction
Turnover to Operations & Punchlist Coordination
Store Opening
Asset ManagementFacilities ManagementLease Administration
DispositionsRenewalsRelocations
A holistic approach to process
6
The world’s top brands trust Jones Lang LaSalle
7
Client Driven Six Sigma (CDSS)
Six Sigma at Jones Lang LaSalle is an integrated process improvement system that drives breakthrough performance for our customers.
Five Focus Areas of Client Driven Six Sigma
ClientDriven
SixSigma
ClientDriven
SixSigma
ClientDriven
SixSigma
*Define, Measure, Analyze, Improve, Control
• An overall methodology that drives business improvement.
• A proven tool set for eliminating process variation (defects) and dramatically reducing process cycle times
• A proven tool set for integrating best practice process with IT tools
• A Continuous Improvement Process that focuses an organization on: Customer requirements Process alignment Analytical rigor Timely execution
8
Six Sigma Lean Process Design
IV. Data & Best Practices IntegrationIV. Data & Best Practices Integration
III. DMAIC* Data Collection & AnalysisIII. DMAIC* Data Collection & Analysis
Team A Team B Team C Team D
II. Lean Design Launch WorkshopsII. Lean Design Launch Workshops
Sub-Process A Sub-Process B Region A Region B
V. Lean Breakthrough Process DesignV. Lean Breakthrough Process DesignSub-Process B Region A Region B
VI. Implementation TeamVI. Implementation TeamTeam ATraining
Team B Documentation
Team CRegional Rollout
JLL Subject Matter Experts
Siren Subject Matter Experts
Regional Representation
IV. Data & Best Practices IntegrationIV. Data & Best Practices Integration
III. DMAIC* Data Collection & AnalysisIII. DMAIC* Data Collection & Analysis
Team A Team B Team C Team D
II. Lean Design Launch WorkshopsII. Lean Design Launch Workshops
Sub-Process A Sub-Process B Region A Region B
V. Lean Breakthrough Process DesignV. Lean Breakthrough Process DesignSub-Process B Region A Region B
VI. Implementation TeamVI. Implementation TeamTeam ATraining
Team B Documentation
Team CRegional Rollout
JLL Subject Matter Experts
Siren Subject Matter Experts
Regional Representation
I. Sponsor Launch Workshop
I. Sponsor Launch Workshop
Lea
dersh
ip a
nd
Go
vern
an
ce
Sub-Process A Sub-Process B Region A Region B
*Define, Measure, Analyze, Improve, Control
Pro
ject
Mg
mt
an
d B
lack
Bel
t C
oa
chin
g
VII. Pilot ProgramVII. Pilot ProgramTeam A
Training/ CoachingTeam B
Data Collection/ AnalyzeTeam C
Process Refinement
STAGE TWO
STAGE ONE
9
Aligning strategic objectives and projects
•Speed and cost of store refurbishments
•Improve quality and speed of service response
Speed and quality of store refresh
Improve customer experience
•Branch quality audits
•Speed and cost of store refurbishments
Quality of store interiors and exteriors
Improve brand image
•Time to market cycle time reduction projects
# of new store openings
Time to market
Accelerate revenue growth
•Reduce costs to service stores
•Reduce rent expense
Cost of store maintenance
Reduce operating expenses
Potential ProjectsKey MetricStrategic Objective
10
Reduce operating expenses
1111
The engineer needs good support from planning, procurement, their supervisor, etc. to complete the work efficiently and effectively.
The engineer needs the right skills to be able to perform the work
I need the right skills and support to complete the work efficiently and effectively.
Engineer
The supervisor has the support to perform the work in an effective and efficient manner
The supervisor receives the information necessary to enter all needed information into the work order system
The supervisor and their staff have the right skills to be able to process and complete the work as requested
The supervisor has the right sized staff to complete the work orders assigned to him in a timely manner.
I need the appropriate staffing, skills, and support to complete the work order
Supervisor
Actual contract cost, labor cost and/or materials costs are recorded in the work order system for the work order
Work order has customer approval to complete work after estimate is provided to them.
Correct accounting information is present in the work order system for the work order
The work order needs to indicate the customer's accounting information, have appropriate approvals, and have accurate actuals entered so that the customer can be charged appropriately.
Finance
Work completed as quickly at the lowest possible cost
Work completed meeting my request
Work completed quickly
I want my work order completed quickly with quality work and as cost effectively as possible.
Customer
Translate key issue into requirementsWhat is the key issue?"In order to meet my expectations you must...?"
Critical Customer RequirementKey Customer Issue(s)Voice of the Customer
Critical Customer Requirements
Service response quality and cycle timeDefine
1212
81 9Work Order Priority
81 9Request Source
81 9Work Type
0 0Estimated Labor
27 3Customer
81 9Supervisor
27 3Estimated Time
9 1Space Type
27 3Location of Work
27 3Parts Required
27 3CMMS
9 1Tools Required
TotalCorrelation of Input to OutputInput/Process Indicators
<<<<<<<<Importance 9
<<<<Output IndicatorsQualityCost
Work Order Cycle Time
Cause & Effect Diagram
Service response quality and cycle timeDefine
1313
Record characteristic from random 'WO Number' selected
4/25/2008Leon Franklin
100CalculatedCalculated Metric: (Work Order Closed Timestamp) - (Request Timestamp)
Total Cycle Time
Record characteristic from random 'WO Number' selected
4/25/2008Leon Franklin
100CalculatedCalculated Metric: (Target Start Date Entry Timestamp) - (Planning Complete Timestamp)
Time to Schedule
Record characteristic from random 'WO Number' selected
4/25/2008Leon Franklin
100CMMSSystem generated timestamp when a work order is created
Request Timestamp
Record characteristic from random 'WO Number' selected
4/25/2008Leon Franklin
100CMMSCreation source populated in CMMS when work order is created
Request Source
Record characteristic from random 'WO Number' selected
4/25/2008Leon Franklin
100CMMSType category assigned to the work order in the CMMS
Work Type
Record characteristic from random 'WO Number' selected
4/25/2008Leon Franklin
100CMMSSupervisor assigned to the work order in the CMMS
Supervisor
Record characteristic from random 'WO Number' selected
4/25/2008Leon Franklin
100CMMSWork order priority assigned to the work order in the CMMS
WO Priority
Random sample from work orders "Closed" in March 2008
4/25/2008Leon Franklin
100CMMSWork order number assigned to the work order when the work order is created
WO Number
HOW WILL COLLECTED
WHEN WILL
COLLECT
WHO WILL
COLLECTSAMPLE SIZE
DATA SOURCEOPERATIONAL DEFINITIONMEASUREMENT
Data Measurement Plan
Service response quality and cycle timeMeasure
1414
Service response quality and cycle timeAnalyze
1515
Six Sigma – Case Study Analyze
1616
Six Sigma – Case Study Improve
04583.513.520 Weighted Sum
011 8
Time to Close (1.0 day potential reduction in total cycle time)
00.5 0.5 7
Time to Plan (.5 day potential reduction in total cycle time)
01.5 1.5 9
Time to Approve (1.5 day potential reduction in total cycle time)
02 210
Time to Estimate (2 day potential reduction in total cycle time)
Status Quo
Have each other
supervisor spend a day
with supervisor US2034-2J
Standardize Twice Daily Work Order
Closure Times for
supervisors (no meetings)
Standardize development
and use of Planning
Templates for supervisors
Standardized use of Daily
Work Review Meetings w/
primary approvers for supervisors
Standardized use of
Estimating Cheatsheets
for supervisors
Importance Rating (1-10)
Performance Criteria
Solution Selection Matrix
1717
Six Sigma – Case Study Control
Reducing Lease Expense…….The Transaction Quality Score
19
Transaction Performance Drivers
Transaction Quality Score
CostFlexibility
Landlord
Restrictions
Client
Requirements
Major Category
What are the sub-categories?
0 to 100 Score is based on a weighted average of
the major categories
Major Category
The quality of the store lease has significant impact on both store operating expense and revenue
20
Tool Example
Metric CategoryMajor
Weighting Score Methodology Score Total
Cost 30%
Cost Adherence 30%
1) above targeted range2) within targeted range3) below targeted range
3 30.00
SUB TOTAL 30% 3 30.00
Flexibility 30%
Renewal 10%
1) no renewal2) renewal at market3) renewal with extra favorable terms
1 5.00
Expansion 10%
1) no expansion2) expansion with many restrictions3) expansion with few restrictions
2 8.00
Assignment and Subletting 10%
1) no right2) right with many restrictions3) right with few restrictions
3 10.00
SUB TOTAL 30% 6 23.00
Landlord Restrictions 20%
Competitor Leasing Restrictions 10%
1) no restrictions2) in but with minimal restrictions3) in with significant restrictions
1 5.00
Building Name Restrictions 5%
1) no restrictions2) in with minimal restrictions3) in with significant restrictions
2 4.00
Other Leasing Restrictions 5%
1) in with significant restrictions2) in with minimal restrictions3) no restrictions
3 5.00
SUB TOTAL 20% 6 14.00
Client Specific Requirements 20%
Signage 10%
1) no signage rights2) signage rights with limitations3) lobby or building signage rights
2 8.00
Parking 5%
1) no parking rights2) few spaces and no caps on parking rates3) many spaces and/or caps on parking rates
3 5.00
Other (Includes a listing of multiple areas of measurement)
5%
1) below average2) average3) above average
2 4.00
SUB TOTAL 20% 7 17.00
TOTAL100% 22 84.00
21
Accelerate revenue growth
22
Retail Store Development Pipeline
Construction Approval (6)
Permits Approved (8)
Lease Negotiated (11)
Site Approval (15)
Market Identification (30)
Retail New Openings Time to Market Reduction
24
How has overall cycle time and variation changed over 18 months?•
Ope
ning
s
• H2 ’06
• H1 ’07
•O
peni
ngs
•O
peni
ngs
• # of Days
• H1 ’06
• Mean = 6.8 months
• USL = 6 months
• Variation = between 150 to 600 days
# o
f T
ran
sact
ion
s
# o
f T
ran
sact
ion
s
# o
f T
ran
sact
ion
s
• # of Days
• # of Days
25
Overview of phases and end to end performance
• Areas of highest variation:
• Site Selection
• CAPX Approval
• Lease execution
• (Branch Opening)
26
Process critical path & duration limits (t1 – t7) by phase
t7
t6
t5
t4
t3
t2
t1Total process duration “spec” limit = 180
days
27
Construction Completion taking too long / high variation
• Median = 80 days• USL = 60 days• Variation = 60 to 130 days
60 days
Root Causes:• Lack of regional Architect model / permit expedition
process• Regional variation in permit approval time• TM to PM handoff processImprovements:• Regional “multi-site” architect model• TM to PM handoff process streamlining and training
28
Improvement opportunities per phaseUSL
60 days
• CRE• submitt
al
CRE to DGM Submittal
Governance over broker performance
No site requirements standard package
Experience level & negotiation skills of TM
Lease requires too many changes to fit the needs of transaction
Architect’s regional familiarity
TM to PM handoff process
DGM Approval DGM Approval to CAPX submit
CAPEX Approval
CAPX approval to Lease Execute
45 d15 d
14 d14 d
30 d… USL …
… median …60 d
15 d21 d
22 d65 d
RGM approval repeats decision making completed by DGM
Project approval process streamlining Measurement system not subtracting project “on hold” periods
Measurement system tracks time from date of final not initial submittal
• Construct.• Complete
Lease Executeto …
60 d
80 d
t1 t2 t3 t4 t5 t6
Effort
Impa
ctL
OW
HIG
H
HIGH LOWBranch Opening:Delay in start of business license application
29
Improve brand image
30
Store refurbishments process improvement project
Where have we been? Where are we at? Where are we going?
Commitment Construction Close-OutDesignScope
DevelopmentPre- Planning Commitment Construction Close-OutDesign
Scope Development
Pre- Planning
The process was undocumented, unclear and regionalized.
Involved field professionals to document a refined process.
Key improvements: Budget approvals Fixed asset updates Field process owners
Communicate successes.
Identify critical areas to focus process management.
Refocus next level of efforts for maximum results.
Documented and stabilized process with training and on-going improvement effort.
Capital Projects Delivery Process
31
Critical Customer Requirements
• Increase in sales
• Reduce customer complaints
• Sense of Third Place
• Customer confusion after renovation
Enhance customer experience
8
• Partner satisfaction
• Service with Speed
• Lack of agreement on equipment placement
• Not understanding workflow usability
Improve store efficiency along with operator experience
1
• Reduction in change orders
• Customer experience
• Partner experience
• Produce and design changes that occur during project execution
Clear alignment between scope, user expectation, and subject matter experts
3
• Deliver what and when we said it
• Conformance to budget
• Ability to operate according to plan
• Ability to trust the plans that they have been given
Enhance forecast accuracy
10
CCRsKey IssuesVoice of CustomerVotes
In order to meet my expectations, you must…
32
Store refurbishment major milestones
Commitment Construction Close-Out
DesignScope
DevelopmentPre- Planning
• Planning/ Update Start• Planning/ Update
Completion
• Scope Agreement Reached
• Phase I Budget Approval
• Schematic Review Commitment Date Set
• Schematic Review Meeting and Acceptance
• Phase II Budget Approval = Project Start
• Phase III Budget Approval• Construction Start and
End Commitment Dates Set
• Construction Start• Punch List Sign Off =
Construction Completion• Store Turnover
Acceptance
• Financial Close• Project Close
33
Budget Adherence (Minimize Variances)
Planning Efficiency (Minimize Change Orders)
Translating Major Milestones into Process Measurement
1. Annual Planning & Quarterly Updates
2. Store Turnover Acceptance
3. Satisfaction Scores
Proc
ess
Mea
sure
men
t Poi
nts
1. Phase II Budget to Actuals
2. Categorization of Change Orders
1. Schematic Design
2. Project Start to Completion
3. Construction Start to Completion
Accuracy of Cost Estimating
Accuracy of Scheduling
Operations SatisfactionTa
rget
ed
Res
ults
Objectives Met within Budget(Optimization of Capital Spend)
Schedule Adherence
(Meeting planned dates)
Schedule Efficiency
(Cycle Times)
Note: Bold in Process Measurement Points indicates Phase
Planning Approval
(Leadership Involvement)
Store Satisfaction
(Store Turnover)
34
Accelerated Process Improvement—campaign approach
• A framework used to engage field professionals in documenting a common process Process stabilization to achieve
common understanding as to when, how and why we spend capital to promote and maintain store viability
Sponsor Launch
• Performance Drivers• Leadership Message• December 2005
Lean Design Workshop
• 45 partners, cross functional & regional• Process clarification & improvements• January 2006
Process Documentation
• 28 partners, in teams by phases • Process refinement & clarification• February – April 2006
National Training Roll-Out
• 230 field professionals• May-June 2006
Process Adoption
• Bi-Weekly calls• Web-based documents• Continued training
35
Project Lead
Process Innovation
Design Lead
Process Innovation: Focused on Big Picture and Success Factors Transitions between process lead hand-offs
Process Innovation: Focused on Big Picture and Success Factors Transitions between process lead hand-offs
Phases
Capital Project Manager
Pre-PlanningScope
DevelopmentDesign Commitment Construction
Prioritize Use of Capital
Approve
RolesClose Out
Project Coordinator
Regional or Store Leader
Input
Validate Scope Limits
Initiate Project
Develop Budget
Develop Schematics
Input
Process Innovation: Phase input, output and prime objectives Set cycle time and task duration expectations
Process Innovation: Phase input, output and prime objectives Set cycle time and task duration expectations
Sign Off
Stage Construction
Order Supplies
Confirm Supplies
Manage Construction
Project Close Out
Financial Close Out
Sign Off
36
Governance Model
Project Management at
Corporate
• Change from Field driven PM (lesson learned)• Keep high level of Field SME input• Provide PM resources at corporate
Senior Leadership
Engagement
• Change from sponsorship to engagement (lesson learned)• Establish an advisory team (4 directors, 1 vp)• Monthly meetings for updates
Validate Priorities
• Conduct After Project Reviews• Analyze Ops Survey• Monitor the Scorecard
Improvement Projects
After Project Reviews Ops Survey Scorecard Concept
37
Keys to success
• Focus projects on incremental revenue and operating profits
• Build strong partnerships with marketing and store operations teams
• Create explicit linkages between performance measures and retail objectives
• Use baseline measurement to drive project business case
• Others?
Questions?
Copyright © Jones Lang LaSalle IP, Inc. 2008
Thank you
Copyright © Jones Lang LaSalle IP, Inc. 2008