Operational Excellence in Virgin Media

June 2010Peter R Evans

Virgin Media

We Are Virgin Media…

• Formed by merger of ntl, Telewest, Virgin.net, Virgin Mobile – Feb 2007

• Over 14,000 staff

• Over 100 offices

• Over 5,000 vehicles

• Almost 10 million customers

• UK’s first quad-play provider of broadband, TV, phone and mobile

• Largest company in the Virgin Group

“The Simple Choice in a Complex Digital World”

In 20 yrs….

I’ve learned that:

– You can’t manage change with a toolkit - you facilitate change through hearts and minds and shared journey’s and experiences

– The tools required are governed by the situational circumstances not the training manual and the chosen methodology

– It’s not about having your leadership team at the front of everything – it’s about having them at the front of the right things

• This Lean stuff Works!

Interesting times…

“The greatest danger in times of turbulence is not the turbulence: it

is to act with yesterday’s logic”Peter F. Drucker

The Objective…

“Lets make Quality part of our DNA in Virgin

Media”Neil Berkett, CEO

My Role as Leader…

• Create the ‘North Star’– “Getting Quality Into the DNA of Virgin Media”

• Create the environment for change– People, People, People,

– “Hard” link to annual objectives

• Establish the governance– Personal accountability for delivery

• Talk the talk….– “Genchi Genbutsu” = “Go and Look For Yourself!”

“Better Quality Might Just Be A Short Walk Away”“Norman Bodek - Kaikaku – The Power & Magic Of Lean”

Shared Services Operating Model

Insert graph or spreadsheet here

Cap

acity

Pla

nnin

g &

Bud

get

Serv

ice

Mea

sure

men

t & R

epor

ting

ServiceAccount

Management

External ProjectChange Activity

Service Delivery

Finance Services

Billing & Payment Services

Accounting Services

ServicePerformance

ServiceDevelopment

Continuous Improvement

Bus

ines

s Pr

oces

sR

e-en

gine

erin

g

New

tech

nolo

gy

New ServicesLocational Consolidation

Com

plia

nce

Empl

oyee

Eng

agem

ent

Employee Services

Assurance Services

Management Information Services

Transactional Services

EPM – MI, CPR, GMIP, MDM, OBIEE+, BO, Essbase, SAS, Oracle

Systems Integration & DevelopmentRevenue & Direct costs

assurance systems & tools New systems

Lean

6 S

igm

a

Clarity Accountability Delivery

Finance Shared Services (Bradford) Introduction

Bradford Shared Services consists of 7 operational Teams across 3 core functions.

• The Contractor Payments Function has the responsibility of validating 1.5 million work orders per annum.

• Its turnover for residential payments alone per year is over £120m

• Business contractor payments has processed over £54m work applications and £43m GRN’d

• In 2009 the value of invoices into AP amounted to £3.263bn

• They process 12,500 invoices on average per month

• Billing Services processed c50,000 invoices per year worth c£1bn

• Credit and collections collects £70 million per MONTH

• Bank Recs. Reconcile £3bn annually

Purchase to Pay

Invoice Data Entry

Invoice Query Handling

Payment Services

Order to Cash

Billing Services

Credit & Collections

Bank Reconciliation

Contractor Payments

Contractor Payments

Operational Obesity….

SYMPTOMS:SYMPTOMS:

•• Slow to move and to reactSlow to move and to react

•• Processes are complexProcesses are complex

•• Making Change is difficultMaking Change is difficult

•• ““Hard To Do Business WithHard To Do Business With””

•• Clogged ArteriesClogged Arteries

•• Internal Comms Channels are slow Internal Comms Channels are slow

•• Controls and Checks everywhereControls and Checks everywhere

•• Getting Stuff Done is Too Hard Getting Stuff Done is Too Hard -- ““Hard To Do Business In!Hard To Do Business In!””

•• Spirit is Willing Spirit is Willing …………

•• Lots of Change Lots of Change -------- Very Little Improvement!!Very Little Improvement!!

The Virgin Media Approach

• Define & Create a Route to “Operational Excellence”

• Understand the End To End Processes – “The Customer Journey”

• Apply Lean Operations Techniques – “Learning To See”

• Graduate to more Complex Interventions and Tools as we progress (Six Sigma & Design for Six Sigma)

The Various Production SystemsToyota Carnegie Melon Model ISO

Customer FocusLeadershipTechnology

Management Behaviour

JIT

Process Management

Voice of Customer

People & Teamwork

Supplier Dvt

Jidoka

Strategy

Performance Measures & Process

Customer

People Structure, Skills & Decision Making

Supplier

Projects, Change Mgt & Improvement

Techniques & Automation

Understanding & Awareness

Process & Practice

Compliance

Roles & Responsibility

Training & Communication

Expertise

Our Operational Excellence Journey…

Swamp

Base CampBase Camp

SummitSummit

(This is where Most Of Us Start)

Basic Lean Principles In Place “Learning To See”

(We Are Here!)

• Strategy Linked Top To Bottom

• Improvement A Way of Life

• Customers See and feel It in

Every Interaction

The Model…..

Scoping Tool

Shared Services – The Initial Scores

Operational Excellence Management Foundations

0.0

1.0

2.0

3.0

4.0

5.0

6.0Customer

Supplier

Strategy & Leadership

People Skills & Resources

Process & Performance Measures

Change Management and CI

Operational ExcellenceBuilding Blocks

0.0

1.0

2.0

3.0

4.0

5.0

6.0

CustomerAwareness

SupplierAwareness

CapacityPlanning

SkillsManagement

ProcessManagement

OperationalCommunication

ProductivityManagement

Quality & RiskManagementDelivery

ManagementWorkplace

Environment

ImprovementBasics

Work Organisation

People PerformanceManagement

ManagingCosts

Leadership

TM Training& Development

ManagingTechnology

Bradford Building Blocks June 2009 Bradford Foundations June 2009

Shared Services – The Plan to improve

14 Weeks14 WeeksSCOPESCOPE

ENGAGEENGAGE

5S5S

Data CaptureData Capture

ProcessProcess

TRAININGTRAINING

Visual ManagementVisual Management

Cap Planning

Base Camp

Scoping Shared Services SS Team Manager Activity v. Ideal Model

Graph 1 Graph 2

SCOPE

Engaging Management and Staff

"Without involvement, there is no commitment.”

Stephen R. Covey

ENGAGE

‘Hearts and Minds’ with all Staff

• Project Background

• The purpose of the project

• Overview of the Tools and Techniques of Lean Sigma and how they will apply in Shared Services

• How each staff member will be involved

• “What’s in it for them!”

ENGAGE

Believe In Quality Day: All staff

Effective Team Work

Voice of the Customer

Rapid Improvement The Impact

of Variation in Process

ENGAGE

Training for all staff

• ‘Rough Guide to Lean Sigma’. Web Based

• 5S Training

• Virgin Accredited ‘Lean Sigma Green Belt’:

• C. I. Green Belt Projects with onsite mentoring

• Cardiff University Lean Basics 1a (1 day course).

– Lean Tools

– Role that each staff member plays in increasing performance and in Continuous Improvement in their day to day duties

ENGAGE

Site visits

• 12 Staff took the tour of Operation at Burnaston, Derby.

• All Bradford Team Managers visited current Virgin Media Lean Model Office area at Telephony Operations, Manchester

ENGAGE

ENGAGE

5S

The 5s Principles

•SORT

•SET IN ORDER

•SHINE

•STANDARDISE

•SUSTAIN

The Necessary from the Unnecessary

Locating according to frequency of use

A pleasant working environment

Agreeing the Team Standard

The 5s Audit & Competition

5S

5S ‘Sort’ Journey

AROUND THE WORLD IN 5S’s!

THE LEADERBOARDUPDATED 11/12/09

Week 13 fixtures:Week 12 Results:

Australasia continue to hold on to the lead but Asia and Antartica are catching up and closing the gap, Americas and Africa are catching up after winning the competition this week and Europe are still going strong after winning the fortnightly competition.

Results Commentary:

Americas WinAustratasiavsAmericas

Africa WinAsiavsAfrica

Antartica WinAntarticavsEurope

Americas WinAustratasiavsAmericas

Africa WinAsiavsAfrica

Antartica WinAntarticavsEurope

AustralasiavsAsia

AmericasvsEurope

AntarticavsAfrica

AustralasiavsAsia

AmericasvsEurope

AntarticavsAfrica

504Europe525Africa540Americas579Antartica587Asia614Australasia

504Europe525Africa540Americas579Antartica587Asia614Australasia

ENGAGE

5S Leader board

Bringing the Team Together…

Keeps staff updated, provides forum for questions and to give out prizes for all incentives

ENGAGE

If all else fails….. Dress-up!

The ‘Lean Model Office’ Main Steps

16 WeeksSCOPE

ENGAGE

5S

Data Capture

Process

TRAINING

Visual Management

Cap Planning

Base Camp

Process Mapping and Eliminating Waste

• We have mapped 147 processes

• Eliminated >190 ‘Non Value Add’ steps

• Each process step in all 147 maps has been risk assessed, the outcome being the formation of ‘Critical Control Points’ that will be audited and monitored weekly to reduce Risk Events.

• The Mapping and Critical Control Points form the basis of each teams Skills Matrix and Quality measure

Process

Accounts Payable: Data Entry Time to Input

20151050

Median

Mean

86420

1st Q uartile 0.0000Median 8.00003rd Q uartile 8.0000Maximum 22.0000

3.5841 6.7236

1.0000 8.0000

3.9575 6.2409

A -Squared 2.59P-V alue < 0.005

Mean 5.1538StDev 4.8425V ariance 23.4494Skewness 0.95917Kurtosis 1.99294N 39

Minimum 0.0000

A nderson-Darling Normality Test

95% C onfidence Interv al for Mean

95% C onfidence Interv al for Median

95% C onfidence Interv al for StDev95% Confidence Intervals

Summary for Time to sort and Input• of all Invoices fail to meet the 48 hr SLA

•Average speed of invoice processing in Data Entry was days

•Oldest Invoice was in backlog for days

Data Capture

COPQ (cost to our business) of not paying on time

Count 393 293 91 64 53 100Percent 39.5 29.5 9.2 6.4 5.3 10.1Cum % 39.5 69.0 78.2 84.6 89.9 100.0

Type of Query OthersList of InvsReceiptingDoc CopiesOtherProgress Update

1000

800

600

400

200

0

100

80

60

40

20

0

Coun

t

Perc

ent

Pareto Chart of Type of Query•Graph shows because of the time it takes to be paid; 39.5% of the query demands are ‘Progress Updates’, basically our suppliers chasing payment. •We have 11.5 FTE currently working in the team ‘Query Resolution’.

Accounts Payable: Data Entry

Data Capture

•2 weeks, cleared their backlog of 11 days of invoices.

•Ever since, ALL invoices processed within 48hours

Accounts Payable: Data EntryVisual Management Introduced

Short Interval Control

Results• 25% less

resourceOvertime (hours)

0

20

40

60

80

100

120

Jun Jul Aug Sep Oct Nov

Ove

rtim

e (h

ours

)

Overtime (hours)

Accounts Payable: Data Entry

November = 12 hours

(average overtime 71.5 hours per month)

ProcessData Capture

Visual Management - Example

Quality Measure

Risk Cross

5s Audit

Daily Huddle

Cost Measure

Delivery Measure

People Development Measure

Problems & Countermeasures

Process Flow – UKTV InvoicesAccounts Payable: Data Entry

Data CaptureProcess

Query Resolution Post Desk

ScanStation

1 START (AFTER POST ROOM SORT IN OTHER BUILDING)

2. SORT

3. QR PROCESS

4. STICKER

5.SCAN

6. QR PROCESS

7. DATA ENTRY

8. QR PROCESS

9/ QR TRANSPORT TO FILE ROOM

NB: INVOICE JOURNEYS DIFFERED BASED ON THE SUPPLIER

Process Flow – All InvoicesAccounts Payable: Data Entry

Data CaptureProcess

Post DeskScanStation

1 START (AFTER POST ROOM SORT IN OTHER BUILDING)

2. STICKER &SORT

3.SCAN

4. DE DATA ENTRY5. QR PROCESS ANY QUERIES

6. QR TRANSPORT TO FILE ROOM

NB: ALL INVOICES FOLLOW THE SAME JOURNEY

Future State - The Value Stream Layout

CONTRACTOR PAYMENTS

ACCOUNTS RECEIVABLE

ACCOUNTS PAYABLE

BANK RECONCILIATIONValue Stream

Value Stream

Making Value Flow Whilst Creating Increased Process Visibility

BRADFORD SHARED SERVICES

Sustainability Audits…..

Operational Excellence Management Foundations

0.0

1.0

2.0

3.0

4.0

5.0

6.0Customer

Supplier

Strategy & Leadership

People Skills & Resources

Process & Performance Measures

Change Management and CI

Re-visit the Scoping Tool and create the plan for Continuous Improvement – 6 Monthly

Lean Coaches role and responsibilities….

Finance Shared Services Closure & Benefits Realised

These results happened in 16 weeks and with the Sustaining and C. I. plan going forward Shared Services is set to make exponential improvement and become the flag ship Lean Operation in Virgin Media. Due to the success of Bradford, Birmingham Billing and Payment Services and Preston Business Billing & Payments are now replicating the Lean Model Office

FINANCE MGR 6TEAM MGR 8

CO-ORDINATOR 4PROCESSING 62

OVERALL 80

ORIGINAL IN-SCOPE FTE

FINANCE MGR 6TEAM MGR 6

CO-ORDINATOR 4PROCESSING 53OVERALL 69

PROC FTE RED 15%TOTAL FTE RED 14%

FTE REDUCTION

The summit is only attainable as a whole organisation…..

• The Business Leadership Team defining strategy and

enabling cascade mechanisms that ensure E2E Alignment

• The Business Leadership Team leading by example, visiting

‘The Gemba’, using the same ‘Visual Management’

techniques, driving ‘Continuous Improvement’ at all levels,

aligning ‘Reward & Recognition’ to delivery of the strategy

…. Hoshin Kanri starts here!!!

In conclusion….

• It depends where you start….– Obvious but rarely acknowledged– Can only work if Organisation Mobilised and Up-Skilled to

support the effort– Sophistication of approach determined by internal

capability (Not by your Consultants)

A Fool With a Tool….. Is Still A Fool!

Thank You! Peter.evans3@virginmedia.co.uk