When manual processes resulted in lengthy turnaround times and dissatisfaction among internal customers at Bank of America, the bank took its technology leasing program online with a Web-based sourcing solution.
The consumer and commercial banking operations at Bank of America transact with more than 150 customers per second, but when the bank's staff needed to lease information technology equipment, the turnaround time to get the information they needed to choose a lessor stretched to nearly two weeks. Until, that is, the bank applied Six Sigma principles and e-sourcing tools to its IT equipment leasing processes.
Charlotte, N.C.-based Bank of America, holding nearly a half-trillion dollars in investor assets, has more than 177,000 employees working in 5,790 banking centers in 29 states and the District of Columbia. As recently as a couple of years ago, the bank had a single employee handling its leases for various IT equipment, ranging from copiers and mail equipment to midrange computers and mainframes — in short, any IT-related piece of equipment went through one person.
The lone leasing lead processed dozens of requests for proposals (RFPs) every year — for example, 54 in 2001, 68 in 2002 — using e-mail and "snail mail" to correspond with the equipment lessors. When a leasing request came in from one of Bank of America's internal customers (or "business partners," in the bank's lexicon), the lead would prepare and send out RFPs to the bank's dozen or so regular lessors and wait as the responses trickled back into the bank.
Eventually the lead would collate the responses and pass the lessors' proposed lease rate factors back to the internal customer for a decision. (The lease rate factor is a percentage figure that, when multiplied by the total cost of the piece of equipment in question, produces the periodic lease payment.) All in all, the turnaround time from the moment the internal business partner requested a lease rate factor to the moment the leasing lead could provide that information was averaging 11 days.
Bringing in the Six Sigma Team
"It was extremely slow," says Michelle Selk, a sourcing lead at Bank of America, of the lengthy cycle time to secure a lease rate factor. The result was low satisfaction among the internal business partners. "They just couldn't do their job efficiently because of the delay in the timing," Selk says, adding that the manual processes also made it difficult to track information on the different equipment leases out for bid and those that had been completed.
Selk was a member of Bank of America's Six Sigma group, which has been systematically working its way through the bank's processes in search of new efficiencies. The bank's Six Sigma group began looking at the leasing process a couple years ago after one of its black belts moved from technology and operations to the supply chain management group and wound up heading, among other offices, the leasing department. Aware of the end user discontent with the IT equipment leasing process, the bank moved Selk over to leasing as well to work on a Six Sigma project in the department.
The Six Sigma team began by evaluating the current leasing process and identifying the primary bottlenecks, which, naturally enough, turned out to be the manual RFP processes. As the team began evaluating ways to streamline this process, Selk learned that, in fact, the supply chain management group had been using an e-sourcing solution elsewhere in the bank for about three years to streamline the purchasing of various other goods. After consulting with the Six Sigma black belt, Selk and her team decided to try applying the same solution, from Atlanta-based provider Procuri, to the IT equipment leasing process as well, an initiative that Selk says was possible because all the bank's lessors are included on one master lease.
Getting the Lessors Onboard