Platinum Sponsors
Improving Marketing Operations with Six Sigma and Affinium Plan
John Derrico, Senior Director Marketing Operations
Medco Health Solutions, Inc
Medco is a registered trademark of Medco Health Solutions, Inc.© 2007 Medco Health Solutions, Inc. All rights reserved. Distribution prohibited without prior consent.
Overview
• About Medco Health Solutions
• Marketing challenges across the spectrum of Marketing Operations
• Six Sigma overview and application with Affinium Plan (DMAIC)
• Fundamentals for continuous process improvement
• Appendix
Medco is a registered trademark of Medco Health Solutions, Inc.© 2007 Medco Health Solutions, Inc. All rights reserved. Distribution prohibited without prior consent.
Medco Health Solutions, Inc. (NYSE: MHS)
• Medco is a leading pharmacy benefit manager (PBM), with one of the nation's largest mail order pharmacy operations. Through advanced pharmacy, Medco helps to improve the health and lower the total cost of care for clients and their members.
• Medco helps to ensure that millions of Americans have access to affordable, high-quality prescription healthcare. It is more than our business-it's our calling.
• Scope- About 1/3 of the companies on the Fortune 500 list are Medco clients.- Medco provides pharmacy benefit management services for
approximately 1 in 5 Americans.- Medco employs more than 20,000 people nationwide, including more
than 2,400 pharmacists and more than 500 nurses.- Medco’s 2007 net revenues were $44.5 billion. - In 2007 Medco managed nearly 560 million prescriptions of which 94.8
m, were fulfilled by our Mail order pharmacies
Information from the Medco Health Solutions investor web site (4.11.2008). URL, http://phx.corporate-ir.net/phoenix.zhtml?c=131268&p=irol-homeProfile
Medco is a registered trademark of Medco Health Solutions, Inc.© 2007 Medco Health Solutions, Inc. All rights reserved. Distribution prohibited without prior consent.
The Medco Goals
How we do it: We know our customers so intimately and serve them so well that we are their most trusted advisor and the preferred provider of safe, effective pharmacy benefit management services.
Customer Intimacy
• Develop Scalable Solutions: Serve the needs of many with the flexibility to meet specific customer requirements
• Execute Solutions: quickly, easily, and flawlessly
Core Values
• Speed without compromise: Delivering quality on time
• Strength through teamwork: Collaborating at all times
What we do: We’re in the business of keeping prescription drug benefits affordable for America.
Medco is a registered trademark of Medco Health Solutions, Inc.© 2007 Medco Health Solutions, Inc. All rights reserved. Distribution prohibited without prior consent.
Medco’s Process and Quality History
• History:- Ernest A. Codman award for re-engineering pharmacy
processes to dramatically reduce medication dispensing errors and improve patient safety. (2004)
- URAC (an independent evaluator of health care quality) awarded Medco its inaugural PBM Accreditation for being clinically focused and meeting quality standards for consumer protection and empowerment. (2007)
- URAC’s Drug Therapy Management (DTM) Accreditation for its clinical management and member engagement programs that improve pharmacy care and prescription drug safety. (2007)
• Utilize Six Sigma to quantify performance, improve efficiency, and continually enhance quality.
• Supporting culture and deep core competencies in the areas of process efficiency and cost reduction.
Medco is a registered trademark of Medco Health Solutions, Inc.© 2007 Medco Health Solutions, Inc. All rights reserved. Distribution prohibited without prior consent.
Medco’s Marketing Operations – Challenges & Solutions
• Original Challenge- Increase Productivity- Mange Operational Costs- Manage defects (and implement
process improvements)
• New Challenge- Visibility to all Marketing Operations- Processes must meet audit standards- Expand the platform for productivity- Intuitive and easy to use
- A.Campaign
- E.Message
- Launch Affinium Plan for List Pull Operations Only
Solution
Extend Affinium Plan across the “Spectrum of Marketing Operations”
Medco is a registered trademark of Medco Health Solutions, Inc.© 2007 Medco Health Solutions, Inc. All rights reserved. Distribution prohibited without prior consent.
Spectrum of Marketing Operations
RequestCreative
CompositionDigital Asset Management
List Selection Criteria
Production Presentment Response / Analytics
- Storage- Version Control
Unica Affinium Toolset [Plan, Campaign & E-Message]
Document Composition and Document Storage Applications
Lettershop, OB-IB Phone Vendors/Systems
Customer Service Platform
- Lettershop Instructions and Approvals
- Requirements- Development- File Transfer
- Copy- Design- Review- Approvals
-Communication Request Information
-Mail Drop-IB Phone -OB Phone-Email-IVRU
Integration and consolidation of operations for effective execution
Sys
tem
s &
DB
’s
Supporting Db’s and Reporting/Analytical
Toolsets
-Capture Response-Campaign Results Reporting-Response Modelling
Medco is a registered trademark of Medco Health Solutions, Inc.© 2007 Medco Health Solutions, Inc. All rights reserved. Distribution prohibited without prior consent.
Prior Communication Request Process
Communication Requestor
Editorial / Design
· PCM or Traffic· CRP Manager & Panel· Requestor· Editorial Design
· Request· Creative Review· Editorial / Design
List Pull
· Business Partner Mgr,· Developer· QA· Requestor
· List Pull Requirements· Project management
via Affinium Plan for work & approvals
Production & Lettershop
· Production Manager· PCM or Traffic· Requestor· Lettershop
· Lettershop Requirements
· Lettershop Approvals
Pro
cess
Rol
e
· CRP Approval· Final Creative
Res
ult
· Release File to Supplier· Art Release · Laser Approval· Mail Drop
Communication Mail Box Affinium Plan Email
Medco is a registered trademark of Medco Health Solutions, Inc.© 2007 Medco Health Solutions, Inc. All rights reserved. Distribution prohibited without prior consent.
Triage
Master Project
Communication Request Process Managed by Affinium Plan
Features· Single Communication
request · Links to final creative· Attachments (e.g. Checklists)
Communication Request
AcceptedProject
Editorial / Design
· Owner - PCM or Traffic Role
· Schedule - MUST contain the milestone of Final Creative
List Pull
· Owner - CSG BPM · Schedule - MUST contain
the milestone of Release File to Supplier
Production & Lettershop
· Owner - Production Manager · Schedule - MUST contain the
milestones of Art Release, Laser Approval & Mail DropP
roce
ss
Project Schedule · Milestone level only(based on the dependent sub projects)
Coordination across marketing areas
· Owner - CRP Manager· Schedule - MUST
contain the milestone of CRP Approval
Creative Review
Medco is a registered trademark of Medco Health Solutions, Inc.© 2007 Medco Health Solutions, Inc. All rights reserved. Distribution prohibited without prior consent.
What is Six Sigma?
• Six Sigma as the system- Six Sigma (σ) is a comprehensive and
flexible system for achieving, sustaining and maximizing business success. Six σ is uniquely driven by a close understanding of customer needs, disciplined use of facts, data and statistical analysis and diligent attention to managing, improving and reinventing business processes
from the Six Sigma way by Peter S. Pande, Robert P. Newman & Roland R. Cavanaugh
Medco is a registered trademark of Medco Health Solutions, Inc.© 2007 Medco Health Solutions, Inc. All rights reserved. Distribution prohibited without prior consent.
How Six Sigma ‘Drives’
• Six Sigma is the engine- Business performance improvement … using
fact based management … via a comprehensive collection of tools…focusing on Top Level Indicators or business objectives (TLI’s) …. to provide increased customer value (internal & external)
Medco is a registered trademark of Medco Health Solutions, Inc.© 2007 Medco Health Solutions, Inc. All rights reserved. Distribution prohibited without prior consent.
Prerequisite for Six Sigma Use
1. The savings are greater than the process2. Data will be used to drive decisions (COPQ,
TAT)3. Collaboration around the P’s & Q’s4. Standard Repeatable Process (↓Defects &
remove NVA Processes)
Gain consensus that fact driven management will yield measurable results
Medco is a registered trademark of Medco Health Solutions, Inc.© 2007 Medco Health Solutions, Inc. All rights reserved. Distribution prohibited without prior consent.
Applying Six Sigma – the ‘DMAIC’ & Affinium Plan
• What is a ‘DMAIC’?- Product/process improvement methodology- Can be an iterative approach - Phase Steps & Tools:
• Define - Charter, SIPOC, VOC• Measure - Process Maps, DPMO• Analyze - Pareto’s, Fishbone, 5 why’s• Improve - Solution Selection Matrix• Control - Control Charts, Control Plans
Medco is a registered trademark of Medco Health Solutions, Inc.© 2007 Medco Health Solutions, Inc. All rights reserved. Distribution prohibited without prior consent.
Applying Six Sigma – the ‘DMAIC’ & Affinium Plan (D)
• Define the Customer, their Critical to Quality (CTQ) issues, Voice of the Customer (VOC) and the Core Business Process involved.
- (D) who customers are -> People tab
- (D) what's in scope and the requirements for products and services -> Templates, Custom tabs, MO’s
- (D) what their expectations are (both stated and unstated) and how the information managed by Affinium Plan will be used
An example of a Six Sigma tool (DMAIC) and how it can be used in conjunction with Affinium Plan
Medco is a registered trademark of Medco Health Solutions, Inc.© 2007 Medco Health Solutions, Inc. All rights reserved. Distribution prohibited without prior consent.
Define Example – VOC ‘Consumability Audit’
RequestCreative
CompositionDigital Asset Management
List Selection Criteria
Production
- Approvals- Storage- Version control
- Lettershop Instructions and Approvals
- Requirements- Development- File Transfer
- Copy- Design- Review -Approvals
- Communication Request Information
By aligning users to processes, modifications were made to ease the learning curve and speed user adoption of Affinium Plan.
-Acct Mgrs-Product Owners-Assessment/Assignment Team
-Program Communication Manager-Traffic Manager
-Editorial/ Design Team-Creative Review Managers
-Creative Review Team
-List Pull Team
-Production Mgrs-Lettershops
= High Consumability
= Medium Consumability
= Low Consumability
Us
ers
Pro
ce
ss
Medco is a registered trademark of Medco Health Solutions, Inc.© 2007 Medco Health Solutions, Inc. All rights reserved. Distribution prohibited without prior consent.
Applying Six Sigma – the ‘DMAIC’ & Affinium Plan (M)
• Measure the performance of the Core Business Process involved.- Develop a data collection plan for the process
-> Questions on the Plan templates (yes/no, drop down, grids), Metrics, Saved Searches and Cognos Reports
- Collect data to determine the types of defects and metrics
• Validate how the information (data) will be used to drive business decisions
Medco is a registered trademark of Medco Health Solutions, Inc.© 2007 Medco Health Solutions, Inc. All rights reserved. Distribution prohibited without prior consent.
Applying Six Sigma – the ‘DMAIC’ & Affinium Plan (A)
• Analyze the data collected and process maps to determine root causes of defects and opportunities for improvement.
- Identify gaps between current performance and goal performance
- Prioritize opportunities to improve- Identify sources of variation
• - > Workflow target vs actual, saved searches and Cognos reports
Medco is a registered trademark of Medco Health Solutions, Inc.© 2007 Medco Health Solutions, Inc. All rights reserved. Distribution prohibited without prior consent.
Applying Six Sigma – the ‘DMAIC’ & Affinium Plan (I)
• Improve the target process by designing creative solutions to fix and prevent problems. - Create solutions using technology and
discipline (automate where possible)- Develop and deploy an implementation
plan • Modify templates & MO’s• Execute training as needed
Medco is a registered trademark of Medco Health Solutions, Inc.© 2007 Medco Health Solutions, Inc. All rights reserved. Distribution prohibited without prior consent.
Applying Six Sigma – the ‘DMAIC’ & Affinium Plan (C)
• Control the improvements to keep the process on the new course.- Institutionalize the improvements through
the modification of systems and structures- Prevent reverting back to the “old way“ via
an ongoing monitoring plan • -> Custom Searches, Cognos ‘Outlier’ reports
& training
Medco is a registered trademark of Medco Health Solutions, Inc.© 2007 Medco Health Solutions, Inc. All rights reserved. Distribution prohibited without prior consent.
Success Indicators
1. Application Ease of Use (in relation to user consumability)
2. Visibility to Operations • Process & Project Management• Operational and Financial Measurement
3. Adherence to Internal Compliance Standards (auditable)
4. Establish a Platform for Increased Productivity
End Result via Affinium Plan & Six SigmaScalable, automated processes to support future growth and to manage operational efficiencies via a fact based approach (data)
Challenges became our measurement goals
Medco is a registered trademark of Medco Health Solutions, Inc.© 2007 Medco Health Solutions, Inc. All rights reserved. Distribution prohibited without prior consent.
Fundamentals for Continuous Process Improvement
• Confirm who are the customers • Define what it means to ‘succeed’ • Gain visibility to operations & processes
- Create a Process Control Plan • (M3 - Map, Measure & Manage)
- Confirm the Q’s, then understand the P’s• Assign ownership• Data, Data, Data • Manage and control
Medco is a registered trademark of Medco Health Solutions, Inc.© 2007 Medco Health Solutions, Inc. All rights reserved. Distribution prohibited without prior consent.
Appendix
• Cognos Reporting • Control charts (mock data)
Medco is a registered trademark of Medco Health Solutions, Inc.© 2007 Medco Health Solutions, Inc. All rights reserved. Distribution prohibited without prior consent.
Cognos Reports via Affinium Plan
Plan Administration
Project Leads
Business Owners
Exe.
Summary
- Monthly metric summary reports by Business Area
- Selectable Business Area for summary metrics, defects and project financials
- Defects, resource and task level information
- Transactional Level Operational Reports
-Data Integrity
-User access level and licensing
Medco is a registered trademark of Medco Health Solutions, Inc.© 2007 Medco Health Solutions, Inc. All rights reserved. Distribution prohibited without prior consent.
Location: Franklin Lakes/BBPA Display/Print Date: 2/2/2007
Owner John Derrico Favorable Results:
Metric: 1st Pass Yield
Operational Definition Total defect free campaigns / total campaigns (production and new campaigns)
Process/Customer impact rework
Date Desc. Of OOC Assignable Cause Action Needed
2/06 Below Historical Avg.
5/06 Below Historical Avg.
11/06 Below Mean
12/06 Below Mean
1st Pass Yield
72%
61%
78%
85%
60%
73%76%
79%
87%
78%
68%73%
85%88%
LCL=0.47782
CEN=0.74285
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07
Medco is a registered trademark of Medco Health Solutions, Inc.© 2007 Medco Health Solutions, Inc. All rights reserved. Distribution prohibited without prior consent.
Location: Franklin Lakes/BBPA Display/Print Date: 2/2/2007
Owner John Derrico Favorable Results:
Metric: Productivity
Operational Definition Hours/List Pull (does not include 1st run of new campaigns)
Process/Customer impact Internal Productivity
Date Desc. Of OOC
Assignable Cause Action Needed
6/06 – 7/06
Above Historical Avg.
8/06 Above Historical Avg.
Hours Per Production List Pull
12.93
14.34
19.56
18.12 18.2717.27
20.05
14.34
20.38
18.98
16.62
UCL=20.483
LCL=7.971
CEN=14.227
4
6
8
10
12
14
16
18
20
22
Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07
Medco is a registered trademark of Medco Health Solutions, Inc.© 2007 Medco Health Solutions, Inc. All rights reserved. Distribution prohibited without prior consent.
Location: Franklin Lakes/BBPA Display/Print Date: 2/2/2007
Owner John Derrico Favorable Results:
Metric: Defect Types
Operational Definition Communication defects from enrollment transfer CSG to vendor file release / total CSG supported communications
Date Desc. Of OOC
Assignable Cause Action Needed
Campaign In-Process Defects for May 2006
27
18
108
2 1
0.68
0.83
1.000.980.95
0.41
0
5
10
15
20
25
30
35
Contingency (InputsNot Received)
Other ProcessDefects
Security PatchDefects
IW Defects Vendor Defects List Pull Defects
Defect Type
# O
bse
rvat
ion
s
00.10.20.30.40.50.60.70.80.91