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D. M. A. E. C. CL Testbed Data Project Redesign. Topics. Define Charter History Current Charter Multi Generational Plan Measure Data Collection Plan Analyze Micro Problem Statement Engineering Solution Implementation Control Error Reduction Progress

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D

M

A

E

C

CL Testbed Data Project Redesign


Topics
Topics

  • Define

    • Charter History

    • Current Charter

    • Multi Generational Plan

  • Measure

    • Data Collection Plan

  • Analyze

    • Micro Problem Statement

  • Engineering

    • Solution

    • Implementation

  • Control

    • Error Reduction Progress

    • Delayed Funding Error Progress


Project team
Project Team

ChampionGreg Geppert

Process OwnerDan Cobb

Core Team

QAC: Robert Firestine

Centralized

Sales: Joe Scaggs

IREP: Kim Belicose

Jeanette Shaffer


Team charter problem statement
Team Charter - Problem Statement

  • Centralized Sales has experienced delays in funding as well as errors on documents that has resulted in a significant impact to our customers.

  • These errors have occurred internally as well as externally, with impact to funding, processing, and post close. On the average, over 24% of all loans funded have errors. It affects the entire business and decreases the customer experience, reduces sales and raises cost because of rework.

  • Errors on critical documents have to be corrected by IREP. There is additional time associated with how long it takes to re-execute the document

    • Document time frame is approximately 2 days

  • This increases the time in dealing with this situation internally as well as externally in dealing with re-executing documents

    • Document time frame is approximately 4 hours between IREP and Centralized Sales



D m aic measure what irep and direct lending data told us
DMAIC - Measure What IREP and Direct Lending Data Told Us

Data Source: IREP & Direct Lending

Date Collected: January 1- January 31, 2006

Number of Loans with Errors: 85

Number of Loan Closed: 249

Number of Issues not shown 14

Overall Error Rate 34%

Collection Method: Excel Spreadsheet Log

60 Document are executed

incorrectly resulting in

24% error rate in 5 key categories


D m aic measure how our customer s are impacted
DMAIC - Measure How Our Customer’s are Impacted

Data Source: IREP & Direct Lending

Date Collected: January 1- January 31, 2006

Number of Loans Delayed: 46

Number of Loan Closed: 249

Number of Issues Not Shown 10

Overall Error Rate 18%

Collection Method: Excel Spreadsheet Log

26 Delayed funding errors resulted

in 10% of monthly loans taking

2 additional days added to rescission in

4 key categories


D m aic measure how often do these errors occur
DMAIC - Measure How Often Do These Errors Occur?

Data Source: IREP & Direct Lending

Date Collected: January 1- Apr 30, 2006

Total Number of Errors: 250

Number of Loan Closed: 828

Number of Issues Not Shown 69

Overall Error Rate 30%

Collection Method: Excel Spreadsheet Log

Over the last 4 months, 181 documents

were not executed correctly resulting in

an average of 22% error rate


D m aic measure how often do delays occur
DMAIC - Measure How Often Do Delays Occur?

Data Source: IREP & Direct Lending

Date Collected: January 1- Apr 30, 2006

Total Number of Errors: 91

Number of Loan Closed: 828

Number of Issues Not Shown 47

Overall Error Rate 11%

Collection Method: Excel Spreadsheet Log

Over the last 4 months, 44 delayed

funding occurred resulting in an average

of 5% error rate


Dm a ic analyze y f x
DMAIC – Analyze Y = f(x)

Micro Problem Statement 1Y= Why are there errors on 24% of RE and PHL documents that are prepared and funded by Centralized Sales and IREP?

X= Sales & Processing Input Errors

X= ILC Document Execution Errors

X= Poor Communication Between IREP with ILC & Centralized Sales with Customers

Micro Problem Statement 2Y= Why was 3% or $3,317,945 of all loans funded delayed beyond the 3 day rescission period?

X = Poor Communication by ILC in Loan Closing in Executing Documents

X= Employee Input Errors Resulting in Error on DocumentsX= Signing and Dating Errors

X = Reclosing Loans


Process solution 1 standardized script for scheduling calls

DMAIC - Improve What is the data telling us?

ProcessSolution 1:Standardized Script for Scheduling Calls

  • IREP schedulers to call ILC to review checklist and confirm with closing agent HSBC expectations in meeting standards and guidelines

  • IREP schedulers to call ILC to review critical documents after closing prior to approving funding.

  • Centralized sales schedulers will confirm checklist with customer to review loan and critical documents prior to loan closing.

ProcessSolution2:Updated Standards for Loan Agreement, Loan Summary, & Mortgage Statement

  • Policy and guidelines on handling of legal documents have been clarified to provide a better understanding of properly executing documents


Process solution 3 implement error report at all touch points

DMAIC - Improve What is the data telling us?

ProcessSolution 3:Implement Error Report at All Touch points

  • Error tracking reporting will be put in place to report error that occur during Post Close of the loans process. This areas include Processing (Front & Back End Operations)


Technical solution 1 irep introduced ocr software

DMAIC - Improve What is the data telling us?

Technical Solution 1:IREP introduced OCR software

  • IREP uses OCR to scan and paste legal descriptions of properties onto titles to reduce spelling errors on title reports & other critical documents.

Technical Solution 2:Error Tracking Enhancements

  • Introduction of an error tracking database that will allow for the tracking of a loan during its lifecycle. It will allow for the updating, changes and correction on the status of a loan as it relates to an error. This error tracking database also has a reporting feature built in.

  • Addition technical solutions will be implemented Approximately, Nov 7, 2006 by the systemic implementation of new form design that would result in an increased in accuracy.


Dma i c improve annualized benefits of process solutions
DMAIC – Improve Annualized Benefits of Process Solutions


Dma i c improve annualized benefits of technical solutions
DMAIC – Improve Annualized Benefits of Technical Solutions

* Benefits are not able to be calculated based on inconsistency of data provided


Dma i c improve implementation timelines
DMAIC – Improve Implementation Timelines


Dma i c improve goals
DMAIC – Improve Goals

Process improvements will reduce error rate to 15% by correcting the following areas:

  • Incorrectly executed loan documents,

  • Errors in Sales, Process, Funding and IREP touch points

  • Reduction in internal and external man hours spent in resolving issues

  • Technical solutions will deliver an additional 5% reduction in

    • Prevention of error as it relates to scheduling and error prevention

    • Reduction in internal and external man hours spent in resolving issues


  • Dmai c control error reduction process quality snap shot
    DMAIC – ControlError Reduction Process Quality Snap Shot

    Process & Technical Solution Implemented


    Dmai c control delayed funding reduction process quality snap shot
    DMAIC – ControlDelayed Funding Reduction Process Quality Snap Shot

    Process & Technical Solution Implemented


    Supporting documentation
    Supporting Documentation

    • Business Case

    • Project Scope

    • SIPOC

    • CTQ

    • Process Flow Charts

    • Data Collection Plan

    • Pareto Root Cause

    • Fish Bone Root Cause

    • Y=f(x) Root Causes

    • Leveraging Best Practices

    • Scoring Solution Matrix

    • Cost Benefit Analysis


    Team charter business case
    Team Charter - Business Case

    • HSBC’s Strategic Business Objectives are at the core of driving Centralized Sales goals and objectives. Centralized Sales mission in driving a relative new business channel is to streamline the business through efficiencies, productivity & turn-time. Centralized Sales vision is to meet the strategic needs and goals of the business by reducing errors, improving processes & adding to the customer experience.

    • Centralized Sales & IREP have significant challenges in the execution of loan documents, value added customer experience, & a high degree of customers reclosing loans. This has resulted in poor communication between all stakeholders and has impacted the customer experience, IREP & Centralized Sales.

    • Error reduction within Centralized Sales & IREP will greatly reduce the amount of delayed funding issues and increase productivity within the Direct Lending Channel. These efforts will provide process improvement opportunities as well as increased sales through efficiencies. By streamlining this process and business channel. Direct Lending goal is to be a significant contributor to HSBC North America.


    Team charter project scope
    Team Charter - Project Scope

    In

    Out

    • Eliminate delayed funding issues & reduce non-delayed funding issues in executing loan document as it relates to Centralized Sales and IREP

    • Increase accuracy of titles / appraisals to effectively secure HSBC interests

    • Identify Service Level Agreements and manage relationships to that expectation

    • Reduce internal & external errors by adding process and technical solutions

    • Action Plans for IREP.

    • Systemic changes to any existing systems

    • Changes in underwriting


    D maic define sipoc
    DMAIC – Define (SIPOC)


    D maic define critical to quality
    DMAIC - Define (Critical to Quality)

    IREP Manual Error Tracking

    ILC Closing Call Checklist

    Effective Communication

    Daily Call with IREP

    Correctly Executed

    Loan Documents

    Post Close Error Databases

    Processor Error Database

    Error Resolution

    Sales Error Database

    Doc Prep Error Database


    D maic define process flow as is
    DMAIC- Define (Process Flow- “As Is”)

    Mail

    RESPA’s

    Customer

    Docs

    Sales Team

    Prelim Review

    Admin Services/Correspondence

    Sales Team

    Right

    Fax

    Prelim

    Approval

    Create/Open

    File

    Clear Stips

    Underwriting

    Processing Team

    Processing Team

    Final Approval

    Final

    Approval

    Pre-Close

    Schedule Processing Team

    Underwriting

    Prepare and Print Docs

    Post Close

    Fund and Board

    Records Admin

    UM/QF File Review

    Mail Closing

    Docs

    ILC

    IREP


    D maic define process flow should be
    DMAIC- Define (Process Flow- “Should Be”)

    Mail

    RESPA’s

    Customer

    Docs

    Sales Team

    Prelim Review

    Admin Services/Correspondence

    Sales Team

    Right

    Fax

    Prelim

    Approval

    Clear

    Stips

    Create/Open

    File

    IREP OCR Solution

    Underwriting

    Processing Team

    Processing Team

    Final Approval

    Pre-Close

    Error Tracking Database

    Final

    Approval

    Schedule Processing Team

    Prepare and

    Print Docs

    Underwriting

    Error Tracking Database

    Post Close

    Fund and Board

    Post-Close

    Records Admin

    Mail Closing

    Docs

    ILC

    IREP


    D m aic measure data collection plan
    DMAIC - Measure Data Collection Plan


    D m aic measure data collection plan1
    DMAIC - Measure Data Collection Plan


    Appendix dmaic analysis pareto root cause
    Appendix DMAIC - Analysis (Pareto Root Cause)

    80 / 20 Rule – Finding Areas of Opportunity

    (Pareto Chart)

    In reviewing this project, the biggest issues that affects service level from an overall perspective between IREP

    and Direct Lending is identification verification, mortgage, and loan agreement.


    Appendix dmaic analysis pareto root cause1
    Appendix DMAIC - Analysis (Pareto Root Cause)

    When the errors are broken down into more specific area of responsibility, IREP continues to have the same

    challenges in the areas of identification verification, mortgage, and loan agreement.


    Appendix dmaic analysis pareto root cause2
    Appendix DMAIC - Analysis (Pareto Root Cause)

    When Direct Lending is specifically isolated, it is the HUD, identification verification and IN Tax worksheet

    that account for over 70% of the errors internally.

    The project that will be specifically work on will be to reduce funding related errors to zero. These error do

    have a significant impact to our customers and hinders their ability to meet their personal goals of refinancing as

    well as consolidating their accounts. Not resolving this issue will result in customers finding another finance

    company to finance with and significantly impact Direct Lending.


    Appendix dmaic analysis pareto root cause3
    Appendix DMAIC - Analysis (Pareto Root Cause)

    Breaks in the Process – Areas of Significant Impact

    (Histogram)

    In analyzing the business, it is important to note if the distribution of errors are normal or is there any areas

    that may give reason for concern. There are a great many areas that affect the business and causes the business

    not to fund loans or have delayed funding. The data presented is a normal distribution of errors, however, there

    are some reasons for concern because there exist some data outside the normal distribution.

    This is considered to be a special cause variation. What this means is that something is going on within the process

    and the issue that falls outside the normal distribution should be addressed and eliminated. Once that has occurred

    then reducing the normal distribution can be undertaken to eliminate those errors.

    For the purpose of this analysis, the areas of special cause variation include ID Verification and Mortgage.

    Those two areas fall out side of the normal distribution of occurrences and give rise to concern. These two areas

    should be addressed and eliminated first before any other areas of the process are considered. This is a

    combination of errors internally as well as externally.


    Appendix dmaic analysis pareto root cause4
    Appendix DMAIC - Analysis (Pareto Root Cause)


    Appendix dmaic analysis pareto root cause5
    Appendix DMAIC - Analysis (Pareto Root Cause)

    Direct Lending does not have the same type of concerns, their concerns are more related to the HUD statement than

    any other category. This specific area would also be considered a special cause variation and should be eliminated

    before any other area of the error process is considered. That will result in all of your data falling within a normal

    distribution of errors and will indicated that there are no outside factors that affect the process.


    Appendix dmaic analysis pareto root cause6
    Appendix DMAIC - Analysis (Pareto Root Cause)


    Appendix dmaic analysis fishbone root cause
    Appendix DMAIC - Analysis (Fishbone Root Cause)


    Appendix dmaic analysis pareto root cause7
    Appendix DMAIC - Analysis (Pareto Root Cause)


    Appendix dmaic analysis fishbone root cause1
    Appendix DMAIC - Analysis (Fishbone Root Cause)


    Appendix dmaic analysis pareto root cause8
    Appendix DMAIC - Analysis (Pareto Root Cause)


    Appendix dmaic analysis fishbone root cause2
    Appendix DMAIC - Analysis (Fishbone Root Cause)


    Dma i c improve leveraging best practices
    DMAIC – Improve Leveraging Best Practices

    Process Improvement

    Best Practices


    Appendix dmaic improve scoring solutions effectiveness risk cost
    Appendix DMAIC - Improve Scoring Solutions – Effectiveness/Risk/Cost


    Appendix dmaic improve scoring solutions effectiveness risk cost1
    Appendix DMAIC - Improve Scoring Solutions – Effectiveness/Risk/Cost


    Appendix dmaic improve
    Appendix DMAIC - Improve


    Appendix dmaic control
    Appendix DMAIC - Control


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