Improving marketing operations with six sigma

Platinum Sponsors

Improving Marketing Operations with Six Sigma and Affinium Plan

John Derrico, Senior Director Marketing Operations

Medco Health Solutions, Inc

Medco is a registered trademark of Medco Health Solutions, Inc.© 2007 Medco Health Solutions, Inc. All rights reserved. Distribution prohibited without prior consent.

Overview

• About Medco Health Solutions

• Marketing challenges across the spectrum of Marketing Operations

• Six Sigma overview and application with Affinium Plan (DMAIC)

• Fundamentals for continuous process improvement

• Appendix


Medco Health Solutions, Inc. (NYSE: MHS)

• Medco is a leading pharmacy benefit manager (PBM), with one of the nation's largest mail order pharmacy operations. Through advanced pharmacy, Medco helps to improve the health and lower the total cost of care for clients and their members.

• Medco helps to ensure that millions of Americans have access to affordable, high-quality prescription healthcare. It is more than our business-it's our calling.

• Scope- About 1/3 of the companies on the Fortune 500 list are Medco clients.- Medco provides pharmacy benefit management services for

approximately 1 in 5 Americans.- Medco employs more than 20,000 people nationwide, including more

than 2,400 pharmacists and more than 500 nurses.- Medco’s 2007 net revenues were $44.5 billion. - In 2007 Medco managed nearly 560 million prescriptions of which 94.8

m, were fulfilled by our Mail order pharmacies

Information from the Medco Health Solutions investor web site (4.11.2008). URL, http://phx.corporate-ir.net/phoenix.zhtml?c=131268&p=irol-homeProfile


The Medco Goals

How we do it: We know our customers so intimately and serve them so well that we are their most trusted advisor and the preferred provider of safe, effective pharmacy benefit management services.

Customer Intimacy

• Develop Scalable Solutions: Serve the needs of many with the flexibility to meet specific customer requirements

• Execute Solutions: quickly, easily, and flawlessly

Core Values

• Speed without compromise: Delivering quality on time

• Strength through teamwork: Collaborating at all times

What we do: We’re in the business of keeping prescription drug benefits affordable for America.


Medco’s Process and Quality History

• History:- Ernest A. Codman award for re-engineering pharmacy

processes to dramatically reduce medication dispensing errors and improve patient safety. (2004)

- URAC (an independent evaluator of health care quality) awarded Medco its inaugural PBM Accreditation for being clinically focused and meeting quality standards for consumer protection and empowerment. (2007)

- URAC’s Drug Therapy Management (DTM) Accreditation for its clinical management and member engagement programs that improve pharmacy care and prescription drug safety. (2007)

• Utilize Six Sigma to quantify performance, improve efficiency, and continually enhance quality.

• Supporting culture and deep core competencies in the areas of process efficiency and cost reduction.


Medco’s Marketing Operations – Challenges & Solutions

• Original Challenge- Increase Productivity- Mange Operational Costs- Manage defects (and implement

process improvements)

• New Challenge- Visibility to all Marketing Operations- Processes must meet audit standards- Expand the platform for productivity- Intuitive and easy to use

- A.Campaign

- E.Message

- Launch Affinium Plan for List Pull Operations Only

Solution

Extend Affinium Plan across the “Spectrum of Marketing Operations”


Spectrum of Marketing Operations

RequestCreative

CompositionDigital Asset Management

List Selection Criteria

Production Presentment Response / Analytics

- Storage- Version Control

Unica Affinium Toolset [Plan, Campaign & E-Message]

Document Composition and Document Storage Applications

Lettershop, OB-IB Phone Vendors/Systems

Customer Service Platform

- Lettershop Instructions and Approvals

- Requirements- Development- File Transfer

- Copy- Design- Review- Approvals

-Communication Request Information

-Mail Drop-IB Phone -OB Phone-Email-IVRU

Integration and consolidation of operations for effective execution

Sys

tem

s &

DB

’s

Supporting Db’s and Reporting/Analytical

Toolsets

-Capture Response-Campaign Results Reporting-Response Modelling


Prior Communication Request Process

Communication Requestor

Editorial / Design

· PCM or Traffic· CRP Manager & Panel· Requestor· Editorial Design

· Request· Creative Review· Editorial / Design

List Pull

· Business Partner Mgr,· Developer· QA· Requestor

· List Pull Requirements· Project management

via Affinium Plan for work & approvals

Production & Lettershop

· Production Manager· PCM or Traffic· Requestor· Lettershop

· Lettershop Requirements

· Lettershop Approvals

Pro

cess

Rol

e

· CRP Approval· Final Creative

Res

ult

· Release File to Supplier· Art Release · Laser Approval· Mail Drop

Communication Mail Box Affinium Plan Email


Triage

Master Project

Communication Request Process Managed by Affinium Plan

Features· Single Communication

request · Links to final creative· Attachments (e.g. Checklists)

Communication Request

AcceptedProject

Editorial / Design

· Owner - PCM or Traffic Role

· Schedule - MUST contain the milestone of Final Creative

List Pull

· Owner - CSG BPM · Schedule - MUST contain

the milestone of Release File to Supplier

Production & Lettershop

· Owner - Production Manager · Schedule - MUST contain the

milestones of Art Release, Laser Approval & Mail DropP

roce

ss

Project Schedule · Milestone level only(based on the dependent sub projects)

Coordination across marketing areas

· Owner - CRP Manager· Schedule - MUST

contain the milestone of CRP Approval

Creative Review


What is Six Sigma?

• Six Sigma as the system- Six Sigma (σ) is a comprehensive and

flexible system for achieving, sustaining and maximizing business success. Six σ is uniquely driven by a close understanding of customer needs, disciplined use of facts, data and statistical analysis and diligent attention to managing, improving and reinventing business processes

from the Six Sigma way by Peter S. Pande, Robert P. Newman & Roland R. Cavanaugh


How Six Sigma ‘Drives’

• Six Sigma is the engine- Business performance improvement … using

fact based management … via a comprehensive collection of tools…focusing on Top Level Indicators or business objectives (TLI’s) …. to provide increased customer value (internal & external)


Prerequisite for Six Sigma Use

1. The savings are greater than the process2. Data will be used to drive decisions (COPQ,

TAT)3. Collaboration around the P’s & Q’s4. Standard Repeatable Process (↓Defects &

remove NVA Processes)

Gain consensus that fact driven management will yield measurable results


Applying Six Sigma – the ‘DMAIC’ & Affinium Plan

• What is a ‘DMAIC’?- Product/process improvement methodology- Can be an iterative approach - Phase Steps & Tools:

• Define - Charter, SIPOC, VOC• Measure - Process Maps, DPMO• Analyze - Pareto’s, Fishbone, 5 why’s• Improve - Solution Selection Matrix• Control - Control Charts, Control Plans


Applying Six Sigma – the ‘DMAIC’ & Affinium Plan (D)

• Define the Customer, their Critical to Quality (CTQ) issues, Voice of the Customer (VOC) and the Core Business Process involved.

- (D) who customers are -> People tab

- (D) what's in scope and the requirements for products and services -> Templates, Custom tabs, MO’s

- (D) what their expectations are (both stated and unstated) and how the information managed by Affinium Plan will be used

An example of a Six Sigma tool (DMAIC) and how it can be used in conjunction with Affinium Plan


Define Example – VOC ‘Consumability Audit’

RequestCreative

CompositionDigital Asset Management

List Selection Criteria

Production

- Approvals- Storage- Version control

- Lettershop Instructions and Approvals

- Requirements- Development- File Transfer

- Copy- Design- Review -Approvals

- Communication Request Information

By aligning users to processes, modifications were made to ease the learning curve and speed user adoption of Affinium Plan.

-Acct Mgrs-Product Owners-Assessment/Assignment Team

-Program Communication Manager-Traffic Manager

-Editorial/ Design Team-Creative Review Managers

-Creative Review Team

-List Pull Team

-Production Mgrs-Lettershops

= High Consumability

= Medium Consumability

= Low Consumability

Us

ers

Pro

ce

ss


Applying Six Sigma – the ‘DMAIC’ & Affinium Plan (M)

• Measure the performance of the Core Business Process involved.- Develop a data collection plan for the process

-> Questions on the Plan templates (yes/no, drop down, grids), Metrics, Saved Searches and Cognos Reports

- Collect data to determine the types of defects and metrics

• Validate how the information (data) will be used to drive business decisions


Applying Six Sigma – the ‘DMAIC’ & Affinium Plan (A)

• Analyze the data collected and process maps to determine root causes of defects and opportunities for improvement.

- Identify gaps between current performance and goal performance

- Prioritize opportunities to improve- Identify sources of variation

• - > Workflow target vs actual, saved searches and Cognos reports


Applying Six Sigma – the ‘DMAIC’ & Affinium Plan (I)

• Improve the target process by designing creative solutions to fix and prevent problems. - Create solutions using technology and

discipline (automate where possible)- Develop and deploy an implementation

plan • Modify templates & MO’s• Execute training as needed


Applying Six Sigma – the ‘DMAIC’ & Affinium Plan (C)

• Control the improvements to keep the process on the new course.- Institutionalize the improvements through

the modification of systems and structures- Prevent reverting back to the “old way“ via

an ongoing monitoring plan • -> Custom Searches, Cognos ‘Outlier’ reports

& training


Success Indicators

1. Application Ease of Use (in relation to user consumability)

2. Visibility to Operations • Process & Project Management• Operational and Financial Measurement

3. Adherence to Internal Compliance Standards (auditable)

4. Establish a Platform for Increased Productivity

End Result via Affinium Plan & Six SigmaScalable, automated processes to support future growth and to manage operational efficiencies via a fact based approach (data)

Challenges became our measurement goals


Fundamentals for Continuous Process Improvement

• Confirm who are the customers • Define what it means to ‘succeed’ • Gain visibility to operations & processes

- Create a Process Control Plan • (M3 - Map, Measure & Manage)

- Confirm the Q’s, then understand the P’s• Assign ownership• Data, Data, Data • Manage and control


Appendix

• Cognos Reporting • Control charts (mock data)


Cognos Reports via Affinium Plan

Plan Administration

Project Leads

Business Owners

Exe.

Summary

- Monthly metric summary reports by Business Area

- Selectable Business Area for summary metrics, defects and project financials

- Defects, resource and task level information

- Transactional Level Operational Reports

-Data Integrity

-User access level and licensing


Location: Franklin Lakes/BBPA Display/Print Date: 2/2/2007

Owner John Derrico Favorable Results:

Metric: 1st Pass Yield

Operational Definition Total defect free campaigns / total campaigns (production and new campaigns)

Process/Customer impact rework

Date Desc. Of OOC Assignable Cause Action Needed

2/06 Below Historical Avg.

5/06 Below Historical Avg.

11/06 Below Mean

12/06 Below Mean

1st Pass Yield

72%

61%

78%

85%

60%

73%76%

79%

87%

78%

68%73%

85%88%

LCL=0.47782

CEN=0.74285

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07




Metric: Productivity

Operational Definition Hours/List Pull (does not include 1st run of new campaigns)

Process/Customer impact Internal Productivity

Date Desc. Of OOC

Assignable Cause Action Needed

6/06 – 7/06

Above Historical Avg.

8/06 Above Historical Avg.

Hours Per Production List Pull

12.93

14.34

19.56

18.12 18.2717.27

20.05

14.34

20.38

18.98

16.62

UCL=20.483

LCL=7.971

CEN=14.227

4

6

8

10

12

14

16

18

20

22

Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07




Metric: Defect Types

Operational Definition Communication defects from enrollment transfer CSG to vendor file release / total CSG supported communications

Date Desc. Of OOC

Assignable Cause Action Needed

Campaign In-Process Defects for May 2006

27

18

108

2 1

0.68

0.83

1.000.980.95

0.41

0

5

10

15

20

25

30

35

Contingency (InputsNot Received)

Other ProcessDefects

Security PatchDefects

IW Defects Vendor Defects List Pull Defects

Defect Type

# O

bse

rvat

ion

s

00.10.20.30.40.50.60.70.80.91

Technology

Improving marketing operations with six sigma