WTA Outsourcing and Lean Six Sigma Consulting

June 22, 2016 | Author: WillowTree Advisors, LLC | Category: Types, Business/Law
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Whether an organization is just getting started with a significant outsourcing transaction; or negotiations are complete...































I don’t view “multi-sourcing” as a new era or new trend in sourcing. The concept has been around for many years, albeit under other names --- such as “best of breed” and “selective” sourcing. I see this model as a natural evolution for certain organizations, whose high process discipline, governance and sourcing / organizational sophistication allow it to work with multiple providers and act as the “prime” in the overall delivery model. There are organizations that have used this strategy to great success for many years, but there are also those that have tried it and failed. Why does it work for some and not others? There are two important considerations surrounding multi-sourcing: clear vision/ strategy and management discipline. Multi-sourcing is the tactical realization of a sourcing strategy for service delivery. It is a path that should be undertaken purposefully, with careful planning and coordination. Sometimes, organizations find themselves in a “multi-sourcing” environment after making serial, and sometimes independent, decisions around sourcing – I call this “accidental multi-sourcing”. This multi-sourcing-by default model is riddled with pitfalls, including the possibility of disjointed processes, inconsistent

Secondly, most organizations who undertake a services sourcing agreement for the first time seriously underestimate how challenging it can be to manage the agreement. A multi-sourcing delivery model requires far more attention, interface and coordination than a single source service delivery model. Enormous challenging exist in managing three or four different services providers, and the touch points, processes and communications between each of them and the client organization. I would not recommend this approach for a company that is resource or process challenged, or one whose time horizon is short term. Getting multiple service agreements in place will be only the first challenge. Getting the operating agreements and common processes set up among the various service providers

could take many more months. If the legal arrangements are pursued in isolation, without any consistency in requirements, a clear, overarching strategy and complementary responsibilities -- the resulting disconnects, white spaces and duplications will consume resources and create headaches for a very long time.

WTA is Headquartered in Denver There has been a trend lately to recommend multi-sourcing as the “right” way to source -- without consideration of the client circumstances. I believe strongly that multi-sourcing is not for everyone. Clients should be aware of the considerations inherent in this model and carefully investigate whether or not it will work for their organization. If the organization is up to the management and process challenges, and the strategy enhances and optimizes its delivery of services – multi-sourcing can be very effective.

SERVICE DELIVERY MODELS Thanks to Lou Dobbs and many of our politicians, most Americans think that outsourcing is synonymous with offshoring – in other words, moving US jobs to a foreign company. The impression is that any company who outsources is forcing US jobs overseas. Not always.

Our symbol is the WillowTree, known for its resilience, strength and flexibility.

methodologies and technologies, duplication of effort and costs, lack of accountability and customer dissatisfaction. Done correctly, it can be a very flexible way to get the best solutions for a complex environment. In either case, the hard work is up front. Defining the portfolio of services, and determining their suitability for internal, external or joint sourcing, and determining how to group services and deal with the “grey” areas and touch points is critical preparation to engaging with service providers.

Many people would be surprised to learn that many of the Outsourced services are being provided by US companies, with US Citizen employees. Even some foreign companies provide outsourcing with US Citizen employees. Often, even though

company employees may have lost their jobs, there may be no net US job loss. Often, employees who are affected by outsourcing keep their old jobs but are simply “rebadged” – they go to work for a third-party company but deliver the same type services they formerly performed as employees. If this all sounds confusing, let’s take a look at the terminology to see what it all really means. “Sourcing” is simply the act of obtaining designated services from a particular source. Services can be

sourced internally, often called “insourcing”, or they can be sourced externally, typically known as “outsourcing”. Most companies have service delivery models, which may include a combination of these sourcing approaches. Some complex delivery models involve multiple processes or sub-processes/services, which may be sourced to multiple third parties , what we call “multi-sourcing” or in some cases, “best of breed sourcing”. See Page 3, Outsourcing or Staff Aug for more details!


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WTA EARNS MOBIS CONTRACT SCHEDULE Provider of Lean Consulting Services to the Federal Government In November, WillowTree Advisors (WTA), began offering business transformation and Lean consulting services to the Federal Government with recent approval from the General Services Administration (GSA) under the MOBIS Schedule, SIN 874.1, contract number GS-10F-0002Y. Today’s economic and political pressures have pushed governments to do more with less. Lean Government methodology enables agencies and public entities to do more with the resources they have and provide better services to their stakeholders and constituents. “The application of Lean techniques to business processes can save time, reduce waste and eliminate costs –

while improving customer and employee satisfaction,” said Kathryn Douglass, WillowTree Advisor managing partner. “This opportunity is an excellent way for the Federal Government to optimize its operations and focus on the customers and stakeholders it is serving.” Lean Government initiatives center on the agencies’ work and operations, helping them think differently about the way they work, while increasing capacity and adding value for those they serve. Lean initiatives focus on eliminating administrative and transactional waste and lead the organization to design and implement its processes by directly focusing on achieving desired outcomes.

The following are real results from organizations that resulted in costs savings and improved services to customers: Lean is the reason that an Iowa business can now obtain a clean water permit in four and a half months instead of 28.

“Lean Government is about increasing our capacity to do good.”

Lean is the reason that, in S. Carolina, the lead time for processing storm water applications dropped from 47 days to 10. Lean is the reason that, at BAE Systems, the time to upgrade the enterprise resource planning (ERP) system was reduced from 24 months to six. We’re betting that Lean initiatives will be a key focus this year in federal, state and local governments.

OUTSOURCING SERVICES APPROACH Whether an organization is just getting started with a significant outsourcing transaction; or negotiations are completed and the team is getting ready for transition; or the team is experiencing dissatisfaction with an existing relationship --- it pays to take an holistic approach and consider the way in which the organization will use the services, and address these issues directly. During the initial stages of an outsourcing initiative, significant focus is placed on pricing and contractual negotiations. Less focus is usually placed on the communications, operational change management and process adjustments that need to be made in order to successfully accommodate the new service delivery model. As a result, customers often find themselves one or two years into a major services agreement, with customer satisfaction issues, performance and cost problems, and significant concerns over whether the arrangement is successful.

helps companies establish successful outsourced service provider relationships by using process improvement and organizational transformation methodologies to streamline the

tomer focus on the root cause of issues that can up-end even the most well-negotiated services agreement. We help our clients establish a healthy working relationship, with sound communications and operational processes that help avoid cost overruns, value leakage, performance problems and the expense of contract breakage or renegotiations. The 360 Approach can be applied with new services contracts in transition, existing services contracts needing revitalization or remediation, renewals with current service provider, or services transfer between providers.

Tate and Lyle, Americas Headquarters in Decatur, Illinois, where a team of WTA advisors has been working with the Global SAP Imple-

360 Sourcing Services™ a service offering for contract remediation and services transition,

processes and organizations that feed, manage and interact with the outsourced services. By utilizing this new approach, we help the cus-

The 360 Approach for all outsourcing scenarios focuses on an end-toend analysis in five key dimensions:

· Process Maturity · Organizational Maturity · Contract Relevance · Service Cost · Service Quality This holistic approach ensures that all key areas of sourcing are addressed.


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OUTSOURCING OR STAFF AUG? Outsourcing vs. Staff Augmentation While outsourcing involves contracting with a third party for entire processes or services, there is another, somewhat-related approach, often confused with outsourcing. This model is called “staff augmentation”. There is a subtle difference between outsourcing and staff augmentation. There are some tests to help determine whether the relationship is true “outsourcing”: Outsourcing: If a firm gives a third party the full scope of the responsibility for service delivery, it is probably outsourcing. Outsourcing typically implies that there are fixed deliverables or services, managed by the third party, with some contractual performance standards. Because there is an agreed-to charge for those deliverables or services, fixed-price arrangements are typically indicative of outsourcing. Let’s look at some scenarios:



Outsourcing Scenario 1: Company A, a New York based company, chooses to contract with Service Provider X to deliver support for its Customer Call Center, which is in New York. Service Provider X has a call center already established in Arizona, and it shifts the work from the company’s location in New York to Arizona. Most of the employees are terminated. Outsourcing Scenario 2: Company A chooses to outsource with Service Provider X. Service Provider X chooses to purchase Company A’s facility and hire all of its employees to deliver on the contract. Outsourcing Scenario 3: Company A chooses to outsource its call center services to a Service Provider, who is responsible for all calls placed to the call center. The Service Provider offers end-to-end services, including the systems and software to track and resolve issues and problems. Pricing is typically on a by-the-user basis.

Let’s see how staff augmentation is different. Staff augmentation: With staff augmentation, a third-party provides temporary employees to a firm for a particular project or service, and those employees join with the firm’s team to help deliver services for a period of time. The test for staff augmentation is the inverse of the outsourcing test. The project or service is managed by firm, and the price varies based on what services that are requested. Billing by the hour is typically indicative of staff augmentation arrangements. If there are no set deliverables and there are no service levels, this is probably a staff augmentation relationship.

“The application of Lean techniques .. can save time, reduce waste and eliminate costs…”

Why does this matter? It matters significantly in several key areas: contract negotiations, pricing, service levels and contract governance.


"Lean" seems to be everywhere. What started as Western manufacturers emulating Toyota's unique production methods has now been implemented in every industry from healthcare to the public sector. There is Lean Accounting, Lean Sigma, Lean Service – I’ve even seen ‘Value-Based Lean Six Sigma (VBLSS) teams – now there’s a mouthful! The tools springing from this "methodology" are point-effective. By that I mean that the tools are effective at solving a single problem, but unless the underlying philosophy is embraced, the result will be limited to that issue, that point. What's missing is a Lean Mindset. We run around the operation as hammers, seeing nails everywhere. Instead, we need to give voice to our inner engineer, and our inner leadership guru. Engineers stake their careers on analyzing problems and designing solutions, and the leadership gurus facilitate change in an organization. If we, as operators, supervisors, managers, and executives have a common approach to our work and

our work environment, we think not of 'change', but 'improvement'. We also think of improvement as global - if my job gets easier, but my internal customer's or supplier's job gets harder, it may or may not be the right move, depending on the overall cycle time, transparency, quality, etc. The Lean Enterprise Institute discusses Lean Management in this way, also. Using Deming's terminology, the lean mindset understands change in the context of Plan, Do, Check, Act. I describe it in as the Closed-Loop Methodology. Closing the loop is the foundation for every important managerial system. It's the way systems engineers view the world, and how junior officers are trained to think in the military.

The best leaders in the military are not what Jim Collins would call "Level 4 Leaders". Contrary to popular lore, they are not heroes. In fact, one of the tenets of Lean is to create a team, not heroes. Having literally led a team of courageous firefighters, I know that it

is difficult to create the mindset of peacetime operations. Everyday activities, the management of the mundane, takes discipline and will, but not individual "above and beyond the call of duty" courage. Fire prevention is the answer, not putting out fires. How many times have we been told that an ounce of precaution is worth a pound of cure, but we reward the firefighter, not the fire preventer. Daily operations call for making the job easier, not overcoming adversity to get the job done. The Lean Mindset, then, is thinking constantly in terms of global improvement, creating self-managing, closedloop systems, and developing an organization that values predictable operations that obviate the need for heroic comebacks.

Scott Zimmerman is actively blogging on Lean topics on the WTA Website.


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TOP 10 COMMUNICATION FAUX PAS IN CHANGE MGMT When Communicating on any type of critical project, including business transformation, and outsourcing, how can you go wrong? Let me count the ways... 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Not developing a communications strategy and plan Communicating only with “select” individuals Letting “bad news” sit Not anticipating and thinking through answers to critical questions Approaching communications as an afterthought Sending “mixed” messages Conducting only “one-way” communications Being afraid to communicate Communicating inconsistently Not tying the communications to real business outcomes

“When you are leveling with employees about what is coming down the pike, skip the platitudes.”

No matter what kind of change an organization is undertaking, communication can make it a success or doom it to failure. Don’t let these problems happen in your project!

WTA WELCOMES NEW TEAM MEMBERS AND PARTNERS Our extended team has grown over the last year and we are pleased to welcome several new associates, consultants, teaming partners and support staff members. Laura Powers—Technical Writer

Toni Martin—Administrative Assistant Colleen Kindler—Lean Expert Catherine LeRoi—Lean Expert Matt Bross—Financial Expert Scott Zimmerman—Lean Expert

Ed Powers—Strategic Planning Expert Triche Guenin– Lean Six Sigma Expert Spitfire Group, Inc. Interfacing Technologies, Inc. The Great Online, Inc.

Colleen Kindler, Ed Powers and Triche Guenin take a break from working on the Denver Water Lean Enterprise Project.



Western Disposal is a family-owned business, headquartered in Boulder Colorado, that started over 35 years ago with one truck and a vision of what customers would value in a trash collection company: dependable, on-time service from friendly, well-trained employees.

WTA performed a one week assessment, which identified business issues and laid out the key

Western Disposal has 120 employees, over 70 vehicles on the road each day and 35,000 residential and commercial customers. Western Disposal attribute its success to the commitment to provide the best service to all our customers every day. Business Problem:

WTA then proceeded to document and map all processes within this critical area of service for Western Disposal. As part of this process, WTA consultants identified key improvements to the system, to the business processes and to the training for customer service representatives. Results: WTA identified and installed a web based collaboration tool, which now houses the documentation for all business processes, all training tools and job aids. The tool selected was Interfacing Technologies, Enterprise Process Center ( EPC) BPM solution.

Western Disposal was working with Western Disposal, Headquartered in Boulder Colorado, was the site “We chose the EPC because, not an aging, in-house developed CRM only does it meet the client requireof an extensive assessment and process mapping for customer service and sales departments. system that was the heart of its busiments, but we felt that it represents ness. They wanted to know if the high us well and will serve as a reminder business processes within the customer serturnover and difficult training for its cusof the engagement”. Kathryn Douglass vice and sales organization. tomer service reps was a result of the system and if that system needed to be replaced.


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WTA ENGAGES THE GREAT ONLINE WTA has been very busy with marketing over the last year or so,, and earlier this year, our Marketing Assistant, Brett Piche, left to complete his MBA and start his own business. So we’ve taken our own advice and outsourced! We have engaged a local Denver marketing firm, The Great Online, to assist with inter-

net marketing, blog development and electronic customer outreach. The team of Joe Caston, Julianne Salisbury, Suzanne Trantow are providing great support for our website, Linked In and Facebook presences. If you haven’t already done so, please check out our new website

at www.willowtreeadvisors.com (Designed by Colorado Web Solutions) , our Facebook Page www.facebook.com/ willowtreeadvisors and our Linked In page at www.linkedin.com/ company/2279508?trk=tyah . You can also follow us on Twitter: WTA80209.

COMMUNICATION THOUGHTS FOR CONSULTANTS It doesn't matter how brilliant, competent or even right you are. If you can't master people skills, you'll get left in the dust. Communication lapses will affect your people skills. How we communicate with others has a tremendous impact on our business success or failure. Here are some of the more common communication mistakes people make: 1. Me, me, me -- focusing on our own agenda. It doesn't matter what you want. What matters is what the other person wants. Zig Ziglar said that you can get anything in life you want if you help other people get what they want. When you frame your communication from their point of view, you will be more successful. A business advisor I know once asked an insurance agent what she thought about every time she talked to a client or prospect. She replied: "Making the sale, making more money. I've got to do this for my children, their well-being, their future." My friend suggested that instead of thinking about her children, she think about the client's children -- their well-being, their future. With that new approach, her business turned around almost overnight. 2. Ho-hum -- no enthusiasm for your idea, product, service, self. If

you can't get excited about what you're talking about, don't expect anybody else to. You must show people that you believe what you're saying. Enthusiasm should not be faked. Think about it in terms IASM: I Am Sold Myself. Low energy, monotone voice and a corpse-like appearance will not convey that message. Project energy through an animated voice and purposeful gestures. If you don't believe in yourself and show it, no one else will. 3. Arrogance -- an "I'm right" attitude. It doesn't matter if you're right and you know it. Being closed-minded to others' ideas or confronting or challenging different opinions creates an opponent out of your colleague, not an ally. You can challenge or accuse or insist all you want, but "a man convinced against his will is of his own opinion still." You win people over more effectively with an open -minded attitude, a willingness to say: "Well, you might be right. I hadn't thought about that. Let's discuss that possibility." You'll be amazed how often people will talk themselves out of their point of view and see their way clear to yours if you don't treat them as if they're wrong. 4. Weasel words -- lack of conviction or responsibility. Let's say you express a complaint to a vendor, and the response you get is: "I'll

see what I can do." Are you convinced that the person will resolve your problem? Roger Dawson says: "There is a place in heaven for every person who says, `I'll take care of it.' " A customer doesn't care whether or not the problem was your fault; she cares only that you'll resolve it. Speak confidently, take responsibility and follow through. 5. "Yes, but ..." -- not listening. The most important communication skill -- listening -- is also the hardest to master. But there is nothing that makes people feel more validated than being listened to. Effective listening requires showing people that you're listening, through eye communication and vocal responders ("mm-hmm") and letting them know you heard them through appropriate responses. Whenever you respond to someone with "Yes, but...," it's a sure sign you haven't listened. Before you state your response, make an effort to paraphrase what the other has said ("So what I hear you saying is ...") or to identify the feelings behind what the other said ("You must be so proud"). When people feel listened to, they're more likely to listen to you in return. That creates a connection that creates understanding, improves relationships and capi-

“Whenever you respond … with “yes, but…” it’s a sure sign you haven’t listened.”

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