Beyond Lean Six Sigma: "The First Choice Way - The Common Management Approach For The Largest Logistics Company"

BEYOND
LEAN SIX SIGMA

“The First Choice Way – The Common Management Approach for The Largest Logistics Company”
LEAN Six Sigma & Performance Management Summit ASIA 2014

September 17-18th, 2014
Alex Tan | Regional First Choice Senior Advisor, Asia Pacific

1 Background
2 Concept
3 Implementation
4 Exemplar
Beyond Lean Six Sigma | LSS Summit Asia 2014 Deutsche Post DHL | Page 2
The Company
Deutsche Post DHL is a true Global Player with EUR 55 bn of revenues

and around 470,000 employees worldwide (FY 2013)
Corporate Center
“Die Post für Deutschland” “The logistics provider for the world”
Forwarding, Supply Chain

PeP* Express Freight
Revenue EUR 14bn Revenue EUR 13bn Revenue EUR 15bn Revenue EUR 13bn Global
Employees 145,000 Employees 85,000 Employees 43,000 Employees 133,000 Business
Services
Customer Solutions and Innovation IT Services
* Postal, eCommerce, Parcel
The Bottom Lines
Customers, Employees and Investors expect a culture of continuous

improvement from Deutsche Post DHL as a key strategic objective.
Provider Our
of Choice message
We are
… centered on our customers.
… convinced about openness and teamwork.
… focused on our financial success.
… committed to a better world.
Investment Employer
of Choice of Choice
The Begin of “First Choice”
Since 2006, DPDHL rolled-out “First Choice” Program globally to improve

customer satisfaction by leveraging industrial proven methodologies
LEAN Six Sigma
LEAN & Six Sigma as the main method of “classical” First Choice provides structure and specific tools in every phase of
process improvement
The Recognition
First Choice Wins The Best Process Improvement

Program Award 2010
Holger Winklbauer, the Executive Vice President - First Choice

The Results
As of Dec. 2013
High levels of engagement & penetration in all divisions and regions
First Choice certified employees in

Global almost every single country unit1):
presence •~24,000 certified Master Bronze3)
•~1,000 certified Advisors2) 3)
•~400 certified Senior Advisors 3)
• ~20,000 Process Excellence Activities

Global executed since 2008
Progress • Numerous additional non-process focused
activity, e.g. Performance Dialogs executed
in 46+ countries
• ~600 Assessments with Management
Teams
• Customer satisfaction scores steadily

Global improving
Impact • Employee Opinion Survey results on First

Choice improving, from 51% (2009) to 67%
(2013)4)
• Revenue and cost impact significant and
growing - in total >915 M€ cost savings
reported5) since 2009
Source: Corporate First Choice; 1) Data as of January 2014; 2) Process Improvement Advisor and Advisor; 3) Master Bronze, Advisor and Senior Advisor figures are mutually exclusive ,
also they are certified figures while number of trained senior advisors and advisors are higher; 4) % favorable EOS score for DPDHL for Living First Choice; 5) As of Dec 2013 (for DGF,
MAIl & GBS), as of June 2013 (for CSI, DSC & FRT), EXP & GM figures not reported)
The Left Open Questions…
First Choice succeeded in generating impact on all three bottom

lines but it left open questions to the organization
How do we make improvements more

sustainable?
How can we engage everyone to continuously

strive for improvements?
• Employee’s knowledge and
awareness for process
improvement
How can we ensure a more comprehensive
approach to improvements as levers are not
• Increased Customer only related to processes?
satisfaction
• Financial impact
How can we engage management and trigger
improvements more proactively?
Source: Corporate First Choice
The Answer
A common management approach and philosophy that institutionalizes

the culture of continuous improvement into every part of the organization
Photo: Dr. Frank Appel, the CEO of Deutsche Post DHL

Agenda
1 Background
2 Concept
3 Implementation
4 Exemplar
The Evolvement
Organization’s demand led to a more holistic approach; extending the

framework to principle-based THE FIRST CHOICE WAY was logical
2006 - 2008 2009 - 2011 2012 & beyond
LEAN & Six Sigma Expanding Scope THE FIRST CHOICE WAY
Define
Processes Performance
Management
Control Measure
LEAN
Performance
THE FIRST
DMAIC Manage-
ment
House CHOICE WAY
Improve Organization
Organization
& Skills
Mindset &
Analyze & Skills Behaviors
DMAIC + DMADV Initiatives (PEA1)
ACT Change Management, Lean House, Performance Dialogs, Gemba, 5S, NPA
A Common Management Philosophy
The First Choice Way
THE FIRST CHOICE WAY is the approach to implement Continuous

Improvement culture within our company
THE FIRST CHOICE WAY provides a framework for Continuous Improvement
• DPDHL‘s joint management approach to improve holistically along all dimensions

• The Self-Assessment starts the engagement on all levels
• The principles give guidance on how to continuously strive towards excellence
• The comprehensive toolbox helps to foster the engagement and the necessary behaviors on a daily basis
Mindset & Behavior Performance Management

The way we think, feel and The way we define our
act both individually and metrics and targets and
collectively use them to manage the
business
The First
Choice Way
The way we hire, train, The way we define the
develop and retain our processes and standards
people to continuously improve
our businesses
Organization & Skills Processes
The First Choice Way – Consistent Routines
THE FIRST CHOICE WAY empowers all levels to live THE FIRST
CHOICE WAY principles by using the comprehensive toolbox
Various tools create consistent routines to

Our joint THE FIRST
embed the principles of THE FIRST CHOICE
management CHOICE WAY
WAY
approach
• The Self-Assessment identifies specific
improvement potential regarding principles
Comprehensive • The tools help create consistent routines
toolbox Control
Define
Measure
regarding the principles of THE FIRST
Improve Analyze
CHOICE WAY
DGF Country
Alignment Program • Living up to the principles leads to a
culture of Continuous Improvement
To sustainably implement these tools,

the right culture for Continuous
Improvement is necessary
Agenda
1 Background
2 Concept
3 Implementation
4 Exemplar
The Doors
Many doors open up to continuous improvement
Unlock The Door: Self-Assessment
To foster a real change towards an attitude of continuous improvement

a continuous Self-Assessment and Follow-Up is necessary
Engage Management by
• Creating a common understanding of gaps between As-Is vs. To-Be state
• Identifying how to further improve the business
Unlock The Door: GEMBA Walk
Managers on all levels strive to get first hand impressions, not only
relying on reports or other people’s opinions
• The real place, the real thing, the real people

 the area around the frontline where all the value is generated
• Structured ‘visit’ from managers to analyze the as-is situation as a routine
• Observing and asking people involved in the process leads to identification of

improvement opportunities and actions
Unlock The Door: Performance Dialog Cascade
Regularly discuss performance across organizational hierarchies and

create a visual control platform for continuous improvement
Underlying • Gain a clear understanding of performance & potentials

mindset • Live continuous improvement and focus on problem solving
• Be able to increase employee engagement & motivation
The Fundamental to Sustainability
Mindsets, knowledge and capabilities drive behaviors and

therefore drive individual actions and performance
Fostering understanding and Reinforcing with formal

conviction mechanisms
“… I know why I need to change – I “… the structures, processes, and
agree with it, and it is meaningful to me” systems support the desired change”
“I will change my behavior if …”
Developing talent and skills Role-modeling

“… I have the skills and capabilities to “… I see my leaders, peers, and
behave in the new way” reports behaving in the new way”
Agenda
1 Background
2 Concept
3 Implementation
4 Exemplar
The DPDHL’s “IT Services”
IT Services offers the Business Units in DP DHL with industrialized IT RUN

and specialized IT BUILD services
Bonn Darmstadt Country IT Europe Prague
359 employees 359 employees 199 employees ~ 1200 employees
27 Countries
80 Nationalities
3,400 Employees
USA, 126 employees

• Mechanicsburg, Pennsylvania
• Scottsdale/Tempe, Arizona
• Westerville, Ohio
• Atlanta, Georgia
• Houston, Texas
• Livonia, Michigan
• Ashburn, Virginia (co-location)
San Jose, Costa Rica Mexico City Louveira, Brazil Cyberjaya

35 employees 23 employees 31 employees ~ 1100 employees
The Exemplar
How IT Services implemented The First Choice Way – Fusing Operational

Excellence and Organizational Culture
Reaping The Benefits
After 31 months1), The First Choice Way journey benefits seen in our
People, Quality and Flexibility performance
Engaged People Great Quality Maximized Flexibility
 Emp. Engagement:  BU Partner Satisfaction:  Overhead:

+11 pts (63% to 74%) +8 pts (56% to 64%) -6.8 pts (23% to 16.2%)
 Leadership:  Service Quality (Run):  RUN Service Pricing:
+11 pts (70 to 81%) 50% less incidents +33 pts (36% to 69%)
 Turnover: No employee  Service Quality (Build):
job losses Performance transparency
66% adoption Rate2) of The First Choice Way
Continuous Improvement
1) Jul YTD 2014

2) Touched by TFCW Cultural Transformation Initiatives or White Board Sessions
To Know More…
Keep Calm, See You Tomorrow!
Closing Summary… Beyond Lean Six Sigma
Why? Clear Purpose &

Value Proposition
How? A Common
Management Approach
What? Sustainable Bottom-

Up Cultural Change

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BEYOND

LEAN SIX SIGMA

LEAN Six Sigma & Performance Management Summit ASIA 2014

Alex Tan | Regional First Choice Senior Advisor, Asia Pacific

Deutsche Post DHL is a true Global Player with EUR 55 bn of revenues

Forwarding, Supply Chain

Customer Solutions and Innovation IT Services

* Postal, eCommerce, Parcel

Customers, Employees and Investors expect a culture of continuous

Since 2006, DPDHL rolled-out “First Choice” Program globally to improve

LEAN Six Sigma

First Choice Wins The Best Process Improvement

Holger Winklbauer, the Executive Vice President - First Choice

High levels of engagement & penetration in all divisions and regions

First Choice certified employees in

• ~20,000 Process Excellence Activities

• Customer satisfaction scores steadily

Impact • Employee Opinion Survey results on First

First Choice succeeded in generating impact on all three bottom

How do we make improvements more

How can we engage everyone to continuously

Source: Corporate First Choice

A common management approach and philosophy that institutionalizes

Photo: Dr. Frank Appel, the CEO of Deutsche Post DHL

Source: Corporate First Choice

Organization’s demand led to a more holistic approach; extending the

2006 - 2008 2009 - 2011 2012 & beyond

DMAIC + DMADV Initiatives (PEA1)

A Common Management Philosophy

Source: Corporate First Choice

THE FIRST CHOICE WAY is the approach to implement Continuous

THE FIRST CHOICE WAY provides a framework for Continuous Improvement

• DPDHL‘s joint management approach to improve holistically along all dimensions

Mindset & Behavior Performance Management

Source: Corporate First Choice

Various tools create consistent routines to

To sustainably implement these tools,

Source: Corporate First Choice

Many doors open up to continuous improvement

To foster a real change towards an attitude of continuous improvement

• The real place, the real thing, the real people

• Structured ‘visit’ from managers to analyze the as-is situation as a routine

• Observing and asking people involved in the process leads to identification of

Regularly discuss performance across organizational hierarchies and

Underlying • Gain a clear understanding of performance & potentials

Mindsets, knowledge and capabilities drive behaviors and

Fostering understanding and Reinforcing with formal

“I will change my behavior if …”

Developing talent and skills Role-modeling

IT Services offers the Business Units in DP DHL with industrialized IT RUN

USA, 126 employees

San Jose, Costa Rica Mexico City Louveira, Brazil Cyberjaya

How IT Services implemented The First Choice Way – Fusing Operational

Engaged People Great Quality Maximized Flexibility

 Emp. Engagement:  BU Partner Satisfaction:  Overhead:

66% adoption Rate2) of The First Choice Way

1) Jul YTD 2014

Keep Calm, See You Tomorrow!

Why? Clear Purpose &

What? Sustainable Bottom-

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