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Case study: Anna Pessah: Lean thinking at Summit Funding

The three main reasons for the immediate need for fundamental improvements at Summit Funding were its recent rapid growth, regulatory compliances and its cultural commitment towards its branches to make their own decisions to a certain level. The company’s success could largely be attributed to its strategic decision that allows its branches and sales personnel to have control over their operations. This encouraged employee engagement but the downside was consistent data was not made available by the branches to the head office to improve productivity(Goldberg& Weiss, 2017).

Anna Pessah was hired to improve the overall process of the organization where she introduced the lean techniques. Her major projects towards this regard were the workshops she conducted for the closing and underwriting departments, verification of employment and selection of pods. She also witnessed the introduction of project ninja(Goldberg& Weiss, 2017).

Lean thinking

Lean can be defined as the flow of resources through a value chain that delivers value to the end customer. It requires the elimination of any activity that does not add value to the process or the end product. It is based on the principle of the products reaching the right place, at the right time and in the right quantity(Shaked& Stampf, 2015).

Lean is a process of continuous improvement as the current process may deviate from its set path due to inefficiencies and waste. Different tools and techniques are used in the implementation of lean. The main focus of lean thinking is following the approach of problem-solving, awareness regarding the current efficiency, finding the gaps and its main causes in the process and working towards filling those gaps(Shaked & Stampf, 2015).

Workshops

Pessah conducted three-day workshops for the closing and the underwriting department that educated the employees of these departments on the basics of lean tools and techniques. They were asked to focus on their products, customers and the value and prioritize the internal activities i.e., the activities that fall directly under their control(Goldberg& Weiss, 2017).

The workshops were a good way of introducing lean to these departments as they ought to have the knowledge that is needed in this regard. In my opinion, these workshops could be more effective if there could be a regular follow up on new procedures and process introduced into the system.

A feedback session or a follow up from these departments could help Pessah better understand the system and how well it is working in these departments. It will also help Pessah to analyze whether these departments have actually understood as to what she wanted them to understand and put in practice.

Creation of ‘Pods’

One of the outcomes of these workshops was the introduction of pods. Pessah grouped 3 functions or related roles into one pod based on geographic area. The roles were funding coordinator, CD drawer and funder and eight pods were created who worked together from the mothership. But, branch managers believed that having one funder for each of their branches at their branch rather than at the mothership would be more convenient and under control. The main goal of creating these pods was that it would help the team members to work together at improved speed and quality(Goldberg & Weiss, 2017).

In my opinion, having one funder at every branch would be more convenient as the exchange and maintenance of data would be less complicated – adding value to the process by eliminating the large process of exchanging unnecessary data between the branch and the mothership. Moreover, since the loan originates in the branch, a local funder would also be more satisfied and feel in control if the funding happened within his geographical area.

Verification of employment (VOE)

VOEwas performed by funding coordinator for each borrowed loan and it had to be done within seven days. But, it was difficult to schedule them because of the uncertainty of the closing dates of the loan and the number of VOE’s that could be completed within a day was less than what was expected. Moreover, it would be far more expensive if the VOE completion was accelerated than repeating it multiple times(Goldberg& Weiss, 2017).

In my opinion, Pessah should use the available statistical tools in finding the optimum loan closing dates so that they are certain to perform VOE process on time.

Project ninja

Senior management at summit introduced the ‘project ninja’ contest with the aim of encouraging creative ideas that would help in reducing 25% of the work performed on the mortgage loans leading to closing six loans per day by each employee. Teams were formed that worked on fake loan flies from its point of origination to closing so as to understand what the current loan managers and underwriters experience. After working on the procedure, they were asked to provide their results and recommendations that would save the company money by reducing costs and improved quality.  Although it was a great initiative, the people in the contest were directors and executives who did not have any idea about the working of the loan process as it was not their daily job(Goldberg& Weiss, 2017).

In my opinion, this project wouldn’t contribute much to the summit as running such simulations wouldn’t involve the actual hurdles and inefficiencies employees go through. Moreover, the intended results when not achieved cost the company time and money which it is trying to reduce in the first place.

Employee empowerment

Employee empowerment is the involvement of the employees and delegating more responsibilities to the floor employees who actually do the job into the production process. Studies show that organizations that implement the employee empowerment programs are more likely to succeed than the organizations that follow the top-down approaches to decision making. This system is used mainly because the people who actually work in the system better understand it than anyone else and are more likely to be able to provide better and effective solutions to its inefficiencies (Heizer, Render & Griffin, 2017).

Delegating more responsibilities to the employees indicates that the delegating authority trusts its employees which improves the relationship between the two. Although Pessah tried to improve her relationship with the employees she can be more successful in this regard if she employs the employee empowerment program. This relationship of trust and personal connections can further help in overcoming resistance to any change from the employees or while implementing new procedures.

Six Sigma

It is a continuous improvement model focused on customer satisfaction with the help of a set of tools. It uses statistical analysis to describe a product or a service to it an optimum capability. It is directed towards saving time, reducing costs and improving the quality of the process it is analyzing(Heizer, et al., 2017).

According toCherrafi et al., (2017), Six Sigma can address the gaps found in the implementation of lean through the precise structure of continuous improvement and problem-solving procedures. Pessah in here further attempt to implement lean in the branches of Summit funding should also work with Sig sigma. Statistical figures can be drawn for origination, closing of loans, VOE’s and creation and management of pods that will contribute to the reduction of costs and improve the quality of the process leading to Pessah achieving the results that are expected.

References

Cherrafi, A., Elfezazi, S., Govindan, K., Garza-Reyes, J. A., Benhida, K., & Mokhlis, A. (2017). A framework for the integration of Green and Lean Six Sigma for superior sustainability performance. International Journal of Production Research, 55(15), 4481-4515.

doi: 10.1080/00207543.2016.1266406.

Goldberg, R., Weiss, E. N., (2017).Anna Pessah: Lean Thinking at Summit Funding.Darden Business Publishing.

Heizer, J., Render, B., Griffin P. (2017). Operations Management: Sustainability and supply chain management.Toronto, Ontario: Pearson.

Shaked, D., & Stampf, N. (2015). Appreciative & Strengths-based Lean Thinking Positive Engagement with Business Improvement and Efficiency. AIPractitioner, 17(4), 45-51.

doi: 10.12781/978-1-907549-25-0-1.