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Transcript of Inaccurate Cycle Billing Records in OMD - Northeast Black Belt: Jim Palmer Division:...
Inaccurate Cycle Billing Records in OMD - Northeast
Black Belt: Jim Palmer Division: Operations/NortheastBU – Steering Comm Presentation
2
Agenda
Original Project Charter & Final Updated Benefits & Sigma calculations
The Project Story – Finding the Right Path
The Critical X’s we can’t directly effect - at the Start of the process Document completion by Sales Reps Order Coordinator document review There are other projects working on Sales Documentation
The Critical X’s we can – A Safety Net at the End of the process The Root Cause we can effect – Data entry errors Where we found the Project’s Savings Where we implemented the Improvement
The “Best” End State process
2nd Project Leveragability Expanding Fields Tested and Territory covered –
All OMD Contracts; B&W Overage Rates by Segment, other data validation Document Imaging Solutions – The Florida Solution
Sample Report
3
Original Project Charter
PROBLEM STATEMENT: Inaccuracies in the Northeast Region Cycle Billing records result in lost revenue and impact IKON’s ability to forecast future revenue. These inaccuracies could include over-billing and under-billing of customers.
PROJECT OBJECTIVE: Correct the Base and Overage rates and other product coding in the Cycle billing records and insure the use of coding that is appropriate for equipment type and segment.
PROJECT BENEFITS: Based on a prior review completed in the Connecticut marketplace there is a 2% to 5% error rate in existing billings. The Northeast Region has approximately $200mm in Aftermarket revenue. 70%, $140mm, is billed to the customer by IOSC. The remaining $60mm is billed directly by the Region. A 1% positive improvement in billing rates could result in $2 million in increased revenue.
PROJECT METRIC “Y”: Accurate pricing and coding leading to increased revenue and improved customer service.
ORIGINAL DEFECT DEFINITION: Inaccurate pricing and coding in cycle records.
New Defect Definition: Any Color record with an Overage Rate below $0.06 per copy
4
Documents Reviewed & OI Benefits Obtained
Agenda
Northeast Mid Atlantic Florida Total
Total Items Reviewed 98 33 60 191
Missing Documents 30 8 10 48No Color Pricing on documents 19 2 2 23
Low Color Rate is approved 4 0 1 5
No Potential for Generating Benefit 53 10 13 7654% 30% 22% 40%
Insufficient Click volume to calulate benefit 19 19Actual Usage below Contract Min 19 3 3 25
Corrections Made but No OI Benefit 19 3 22 4419% 9% 37% 23%
Corrections with OI Benefit 26 20 25 7127% 61% 42% 37%
Total Potential OI Benefit 282,327$ 148,289$ N/A 430,616$
Project OI Benefit from Corrected Items 113,665$ 93,464$ 51,345$ 258,474$
This benefit calculation is based on Historical Average Monthly Click volumes multiplied by the change in Overage Rate Pricing that resulted from our corrections then projected for a 12 month period.
The Florida Potential Benefit amount was not calculated due to lack of Copy Volumes on numerous items.
The Fla Total Serial number count of all Color contracts was not compiled. The first file used was the Defect Only file
The "Total Potential" benefit was the hypothetical benefit assuming (1) we were able to find copies of all necessary Sales Documents and (2) all documents carried IKON's Aftermarket Price Book Recommended pricing.
The Contracts Changed amount is lower than Potential as a result of (1) copies of actual Contracts not found, (2) no Correct Color pricing found on documents or (3) actual click volume below contract minimum.
5
Sigma CalculationsBefore and After
• Total Items: Total count of serial numbers of Color equipment in original files.•“Individual” and “Group Individual” items only• Install dates from Jan 1 2002 thru Nov 2003
• Defects: items with Color Overage Rates below $0.06 per page.•131 original Defects; 68 Defects corrected; 63 Defects remaining
Original List of Equipment Total Items Defects DPMO Z Score ST Sigma
Northeast District 1672 98 58,612 1.5811 3.0811Mid Atlantic 928 33 35,560 1.8127 3.3127
2600 131 94,173 1.6533 3.1533
After Review & Correction Total Items Defects DPMO Z Score ST Sigma
Northeast District 1672 53 31,699 1.8634 3.3634Mid Atlantic 928 10 10,776 2.3002 3.8002
2600 63 42,474 1.9784 3.4784
Sigma Level Calculations
6
The Project Story: Finding the “Right” path
Phase 1: Original Scope - Boiling the Ocean Too many fields in database to test in 4 to 6 months 170,000+ MIF in NE with multiple data fields
Phase 2 – Narrow scope to Color Overage Pricing – where the money is Compare the OMD price to Aftermarket Price Book Could show how much discounting is happening but No way to Confirm the price in OMD is “Right or Wrong”
Phase 3 – Look to Commissions group for the “Right Price” Researched the full Document Life Cycle from Sales to Invoicing Commissions is the only group with mandated “Price Policing” authority But they don’t “Test” every price – few Major Accts & No CPC testing ability
Phase 4 – Tightest focus Compare pricing in OMD to the Original Sales Documents The only way to prove The Price is Right
APB Chi
APC Tool
7
X’s and Critical X’s Both In and Out of Scope
N
S
EW
"Accurate"CustomerInvoices
SalesSales & Service
Mgmt
Cycle Billing Reps Cycle Billing Mgmt
CommissionReps
Documents
overly enthusiastic discounting
Mktplace Sales Mgmtcontrol over discounting
Poor CBR Training
Inaccuratepricing
Inaccurateproduct coding
Mktplace choice inenforcing pricing
Inaccurate dataentry
Thursday, May 13, 2004
Inaccurate Cycle Billing Coding - Northeast OMD
Inaccurate interpretationof contract details
Unclear written details notes
Overly complicatedcontract documents
Competing with something other than “Price”
Regional Mgmt reportingof Service price discounting
“Correct” policies for penalizing discounting
Timely Service Mgmt review of price discounting
Inadequate Sales Training
Receipt of Contract with ALL pricing info
Accurate review of pricing versusNat’l Price Book
Knowledge of discounting penalty policies
Training of new CBR’s
Short term controls over new CBR’s
Ongoing testing of data accuracy
Competing for major Acct Wins
Ongoing testing of data accuracy
Short term controls over new Comm Reps’s
Training of newCommission Rep’s
Commissions Mgmt
Poor Comm Rep Training
Inaccurate data entry
Inaccurate interpretationof contract details
Consistent application ofdiscounting penalty policies
Critical X’s In ScopeCritical X’s Not In Scope
Details on key points are on next 3 slides.
28 potential “X’s”; 7 Critical “X’s”; 4 In Scope & 3 Out
of Scope.
8
X’s and Critical X’s Where we looked for the problem
Sales - The source of the documents Inconsistent completion of Service Contract document led to
investigation of existence of any Policy on this topic – None found. Also led to discussions with IKON Univ re Sales Rep training on How
To Complete Documents – There was none. Discussed with IKON Univ the potential to include this topic in future
training.
Sales Mgmt – The 1st line of review of Sales Documents Compared the Color Ovg price in OMD to Aftermarket Price Book Could show how much discounting is happening but No way to Confirm the price in OMD is “Right or Wrong”
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X’s and Critical X’s Where we looked for the problem
Commissions – the only group with mandated “Price Policing” authority Commissions uses exactly the same documents as Cycle Billing. Tried to base a solution on assumption that Commissions had
significantly better data entry/interpretation accuracy. Tested the Commissions reps on Color Overage data entry error rate Found they were only slightly better than Cycle Billing reps. There was no existing “Data Accuracy Testing” process Commissions was moving to Macon and so did our discussion Macon Commissions had no plans to implement any data accuracy
testingAPB Chi
APC Tool
10
X’s and Critical X’s Where we looked for the problem
Documents - There is no policy defining specific Service documents where pricing must be
written. Sales reps often put hand written notes on documents covering color overage
rates. Documents are “one size fits all” and present difficulties with dual meter
combination color & B&W machines with 2 overage rates.
Cycle Billing Reps – No mandated Price policing policy Numerous data entry errors Too often CBR’s must rely on “interpretation” of written notes and comments
to determine the color overage pricing.
Cycle Billing Mgmt – There is some data validity testing being completed but There was no testing done to validate B&W or Color Overage Rates
APB Chi
APC Tool
11
A Map of the Life of Sales Documents
Proposed Document Process Flow in NE Region - Add New Overage Exception Report to Cycle Billing
Co
ntr
acts
Pro
cess
or
Co
mm
issi
on
sg
rou
pC
om
mis
sio
ns
gro
up
Bill
ing
Dep
artm
ent
Ord
erC
oo
rdin
ato
rsS
ales
Rep
No Discount Form in Package
OC makes 2 copies ofDocuments:
- Originals are sent to Billing- 1 copy is sent to Cycle Billing
- 1 copy for OC files
Billing Dept sendsEquipment invoice
to Customer
Documents aresent to BillingCoordinators
Contracts groupenters Maintenance
data into OMD
Contracts discounted offNat'l Price Book require
Sales Mgr and Director ofService approval
Documents recvdback from
Commissions: Anycharges to Rep
Comm are processed.
Determine whetherService Contract is priced
with a discount
Obtain Discountingapprovals
If Service is discountedconfirm receipt of SignedException Approval Form
Billing Coordinatorsends equipmentinfo to IOSC for
leasing approvals
Calculate and ApproveCommission Amount
Basic Equipment dealinfo is pulled in from
data entered by OrderCoordinators and
Billing Dept into OMD
After documentreview, deal is
approved
Commissionspeople review
each transaction
Order Processorreviews
documents forCompleteness and
Accuracy
Receive Formfrom Sales
Rep
Sales Documentssent to OrderCoordinator
Contracts discountedup to 10% off Nat'l PriceBook require Sales Mgr
Approval
Billing Dept entersrest of DealEquipment
information intoOMD
Coordinator sendsDocument Package toCommissions group:
Commissions is a partof Billing Dept
Sales Rep obtainscustomer
signature onMaintenance
Contract
Determine equipmentcommission based on
Rev & GP
If No ApprovedForm - call SalesRep to get form
or noCommission will
be paid
Deliver ServiceException form
Doc Package containsApproved Exception form
After Approval,communication is
sent to SupplyChain to start
delivery process
Sales docsreceived by Order
Processor
Order Processorenters Equipmentinfo into OMD to“Stage” the deal
Send“Approved”documents
back to BillingGroup for
Processing
New processsteps shownin dark blue
OC Turnaroundtime is usually
24 to 48 Hrs
SDC Delvy timing -Core Prods 72 Hrs.Non-Core - up to 10
Days
Audit Team will receiveand review a copy of the
weekly Color OverageException report
Audit Team disperseException report tospecific Mktplace
Customer Billing Reps
CBR’s will revieworiginal docs and
correct any inaccurateoverage pricing.
CBR’s deliverException Report
responses to AuditTeam
Audit TeammaintainsException
Response recordsfor Mgmt review
We are putting a control at the back end of the process
The “Best” place for a Control is at the Front End of
the process
“We are waiting too long in the Document Processing Cycle before we do any detailed Service Pricing review.”
12
The Best End State Process
The Sales team gets specific training about how to complete Service Contract documents. What pricing details to include and where to write it Specific direction that this is “Required” not “recommended”
The Order Coordinators strictly review these documents Use the Aftermarket Price Comparison tool to confirm pricing
Enforce Sales / Service Manager Discount Approval policy
Kick back any documents that don’t follow the policy
Agenda
APC Tool
13
Our Simple Solution
Run a Color Overage Rate Exception:
Every Sunday looking back 14 days
Focusing on every contract that has been updated during the most recent 14 days: This will give the report a self-auditing function..
The report will look at New Contract setup, renewals and any other updates:
This will find any newly created problems BEFORE they reach a customer Find the errors while the source Sales Docs are still on the Billing Rep’s desk.
The report is now running for ALL OMD Contract groups in IKON
Agenda
14
Chi Square test on Final Errors Found
Return
Alpha 0.05 119
Observed Expected Chi-Square
Boston North 1 15 14.1 0.05SENE 2 10 12.1 0.37
Capital 3 14 17.4 0.67Conn 4 27 19.2 3.15
Metro NY 5 16 13.9 0.33Penn 6 12 15.3 0.73
Upstate NY 7 18 12.8 2.13Va 8 7 14.1 3.59
119 119 11.03 Total Chi-Square7 d.f
0.137 P-valueDo Not Reject Ho
Ho = There is no correlation between Marketplace and number of errors found
Chi-square Test for Total Data Entry Errors
Chi-Square Goodness of Fit Test for All Transactions in Final Northeast Corrections
15
End of Presentation
All following slides are for reference purposes only