Lean Consulting was commissioned by Northern Rock to help them create the ‘cost architecture’ to support the 5 year business plan. Having come through a turbulent 3 years, 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 completed a process & performance diagnostic 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 (OE) 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.
Having performed the original diagnostic, Lean Consulting was asked to design, implement and manage the OE 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 was extremely important to this client 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.
Lean Consulting successfully delivered a total reduction in resourcing of 393.5 FTE against a target reduction of 305 FTE. This delivered an annualised cost saving of £9.51M to the business.