Having come through a turbulent 3 years of Global Financial Crisis, the Executive Committee was asked to create a 5-year plan that showed how the business would reduce costs whilst increasing revenue and profit over the next 5 years. Lean Consulting was engaged by Northern Rock to help them create the ‘cost architecture’ to support the 5-year business plan.
An organisation-wide diagnostic
Lean Consulting completed a process & performance diagnostics of the entire company (all functions) and determined a potential cost reduction of £32M (comprising a reduction in 791 FTE) available to the business. A key recommendation in the 2011-15 Cost Architecture Review was to implement an “Operational Excellence” programme to deliver benefits identified through the diagnostic.
We executed an Operational Excellence pilot in a Mortgage Operations department. The pilot reduced required resourcing from 74 FTE to 37 FTE (50% reduction) and delivered an annualised cost reduction of £1.1M. The success of this pilot led the Board to approve an OE programme across Operations and Customer Sales & Service, the 2 largest functions of the bank.
Delivering lean transformation across the organisation
Having performed the original diagnostic, Lean Consulting was asked to design, implement and manage the Operational Excellence programme with a team of 14 Specialists (6 external and 8 internal colleagues). Lean Consulting was targeted to achieve a net reduction of 268 FTE colleagues, whilst ensuring that the business was able to absorb the effort required to deliver a plan to grow Savings by 13%, Lending by 26% and Commission Sales by 11%.
The Operational Excellence programme delivered:
Development of Target Operating Models (TOMs) and implementation of the new operating models
Development of effective Capacity Models and creation of a centralised Resource Planning department
Implementation of 145 separate process improvement initiatives
Quality Management and Risk Analysis
Analysis and Management of Shrinkage from over 45% to 30%
Process timing and Productivity Management
Creating a sustainable change culture
It was extremely important to Northern Rock that the organisation would continue to have the capability to improve beyond the Operational Excellence programme and Lean Consulting worked to develop and embed a culture of continuous improvement. We facilitated this through the delivery of Six Sigma Training to 40 colleagues, Management training & mentoring, ‘Walk the Walk’ sessions, Leadership roadshows, internal communications and internal marketing of continuous improvement practices around the business.
Over achieving against targets
Lean Consulting successfully delivered a total reduction in the resourcing of 393.5 FTE against a target reduction of 305 FTE. This delivered an annualised cost saving of £9.51M to the business.