Inconsistent Administration of Sales Commissions Status Report August 28, 2003 Norcross, GA

Inconsistent Administration of Sales Commissions

Status ReportAugust 28, 2003Norcross, GA

2

Project Definition

Problem Statement:

Inconsistent administration of sales commissions is affecting sales rep morale and wasting IKON dollars in the administration of the sales commission "errors". Sales commission administration is currently handled at the four customer care centers (Phoenix, Atlanta, Houston & Glastonbury), but is being centralized to the MSSC. The Phoenix CCC will be the first to be centralized November 1. The Phoenix CCC has reported that over 40% of the Phoenix sales commissions were incorrect in the month of May. This equated to approximately $90,000 in net savings to IKON in the form of commission payments that were not calculated correctly.

Project Definition:

This project is to reduce the need to audit 100% of the sales commission payments, which will result in the reduction of headcount in audits from 9 to 3. The assumption is that, in the “End State”, errors will be reduced to a level requiring only 33% of payments to be audited. This project will be completed by November 1, 2003.

3

Project Definition

Project Benefits:

Of the 29 Phoenix commission employees, 9 employees perform a 100% audit on approximately 3500 commission payments per month. A soft benefit is improving sales rep satisfaction.

Financial Benefits: A reduction of headcount from 9 to 3 will result in a headcount savings of

$256,320. ($42,720/head -- Labor cost provided by Frank Eaton).

Project Metric “Y”: Y1 = Incorrect commission payment requests as defined by a percentage

of Incorrect Commission Payment Worksheets divided by the total number of Worksheets received.

4

Project Definition, Cont’d

Defect Definition: Commission payment request that must be audited and adjusted

due to errors in the submission before payment can be made. Leveragability:

This should be leveraged at the Houston and Atlanta CCC's; Preliminary indication does not indicate a large volume of commission errors at the Glastonbury CCC. Houston headcount reduction of 6 x $51,036 = $306,216. Atlanta reduction of 3 x $44,736 = $134,208.

5

Financial Impact

Forecast Actual Forecast ActualFinancial Benefits:

- Revenue Improvement (OI) - - - - - Productivity & Cost Savings Benefits 256 - - - - Cash Flow Benefits (OI) - - - -

Total Financial Benefits: 256 - - -

Project Cost:- Restructuring & Severance - - - - - IT investment - - - - - Outside Professional Expenses - - - - - T & E - - - - - Other (List): - - - -

- - - - - - - -

Total Project Cost - - - -

Return On Investment (ROI) 100% 0% 0% 0%

Year 1 Year 2

$(000's)

- __________________________ - __________________________

6

Project Team

Champions – Bill Carpou, INA LA and Donna Wood, HSSC Financial Analyst – Tina Johns Black Belt – Tony Belfiglio Process Owner – Susan Hicks, Sr. Manager Transaction, Accounting & Rita

Anderson, Sr. Manager US Payroll Team Members:

Sales – Shannon Lawson (AE- PHX), Terrie Day (SAE- PHX), Catherine Fallis (AE -PHX) Sales – Jon Elwell (GSM), PHX Marketplace OC – Tina Elick, PHX Order Coordination Manager Commissions – Jeff Brown (Consultant SCS), Marie Eggleston (Supervisor PHX CCC) Auditors – Tina Sparrazza (Acting Supervisor PHX CCC)

Master Black Belt – Bob Conrad

7

Communications Plan

Communication Target Purpose/MessagePrimary

ResponsibilityMode Frequency Target Date Status

Functional ChampionsNames (Title, Location, and Phone #)

Jon Elwell, General Sales Manager PHX 480-379-7470

Process Implementer Belfiglio Written (e-mail) Weekly ASAP Scheduled

Project ChampionsNames (Title, Location, and Phone #)

Donna Wood Dir. (Macon) 478-475-7581Project Champion Weekly Status Update

Belfiglio Telephone Meeting Weekly Wed @ 10AM Scheduled

Bill Carpou, VPGM (LA) 949-500-4821(c) or 949-862-2777 (o)

Project Champion Weekly Status Update

Belfiglio Telephone Meeting Weekly Wed @ 10AM Scheduled

Local ManagementNames (Title, Location, and Phone #)

Mike Crydermann Mgr. Commissions (PHX) 480-379-7054

Data Collection til 11/1/03 Belfiglio Written (e-mail) Weekly ASAP Scheduled

Local EmployeesNames (Title, Location, and Phone #)

Shannon Lawson, Sales Rep AE (PHX) 480-379-7535

Interview Belfiglio Written (e-mail) Weekly ASAP Scheduled

Tina Elick, Order Coordinator (PHX) 480-379-7633


Marie Eggleston Commissions (PHX) 480-379-7000


LA representation (TBD)

Mary Czekaj, Process Owner/Mgr PHX CCC 480-379-7018

Commission Worksheet Owner Belfiglio Written (e-mail) Weekly ASAP Scheduled

Project Team membersNames (Title, Location, and Phone #)

Susan Hicks Sr. Mgr. Trans. Acctg (Macon) 478-475-7606

Process Owner after 11/1/03 BelfiglioTelephone or in

personWeekly ASAP Scheduled

Rita Anderson Sr. Mgr Payroll Ops (Macon) 478-475-7574

Process Owner after 11/1/03 BelfiglioTelephone or in

personWeekly ASAP Scheduled

Deployment ChampionNames (Title, Location, and Phone #)

Six Sigma Steering CommitteeNames (Title, Location, and Phone #)

As defined by company

Master Black BeltNames (Title, Location, and Phone #)

Scott Fowler, MBB 480-229-5858 MBB Weekly Status Update/Coaching

BelfiglioTelephone or in

personWeekly Tue @ 9AM Scheduled

Other Black BeltsNames (Title, Location, and Phone #)

Laura Wells MBB 480-229-1593 Questions/Project overlays BelfiglioTelephone or in

personAs needed

Based on availability

As needed

COMMUNICATION PLAN

8

CT TREE

Critical to Quality(CTQ)

Critical to Satisfaction (CTS)Correct Commissions Paid

Critical to Delivery(CTD)

Critical to Cost(CTC)

CompensationWorksheetcompleted

StandardForms

Packageupdated

Propersignature

signoff

Rep expects ontime payment -

next paydate afterinvoicing to

external customer

Paperworkdeadlines met to

OrderCoordination (OC)and CommissionsAnalysts/Auditors

(CA)

Number ofemployees in

OrderManagement

Number ofemployees inCommissionsProcessing

Number ofemployees inCommissions

Audit

Equipmentdelivered and

invoiced toexternal

customer

CT TREE - Customer is the IKON Sales Professional

Rep trained andunderstands

signatureapprovalprocess

Excel tablesmaintained for

pricing andavailable products

to populateworksheet

Rep trained onhow to

complete theworksheet

Skill andexperience of

OrderCoordinator and

CommissionsAnalysts/Auditors

Core 2Training

ProductMarketing

maintainingtables of productcodes and rep

floor pricing

Localmanagement

and Region setapprovalprocess

9

Defining Y=f(x) Relationships

Big Y= Incorrect Commission Payment Request

Y= f( x1, x2, x3, xn)

x1=Sales

x2=Order Coordination

x3=Commissions

y= f( x1, x2, x3, xn)

x1=Standard Forms Package – i.e. Price Book

x2=FY’03 Comp Plan

x3=Experience/Training

10

Defining Y=f(x) Relationships

Big Y= Incorrect Commission Payment Request

Y= f( x1, x2, x3, xn)

x1=Sales

x2=Order Coordination

x3=Commissions

y= f( x1, x2, x3, xn)

x1=Sales Commission System (SCS)

x2=Commission Analysts/Auditors

x3=Experience/Training

11

SIPOC

Suppliers Inputs Outputs(Providers of the required

resources)(Resources required by the

process)(Deliverables from the

process)

Requirements

Sales ProfessionalStandard Forms Package -

Commission Worksheet

To accurately calculate the commission

A calculated and authorized Commission Payment

Worksheet


that is calculating correctly

Sales Professionals

Sales ManagementCompleted Sales Commission

Worksheet

To authorize the

commission

A calculated and authorized Commission Payment

Worksheet


that accurately reflects the

deal attached to the order

package

Sales Management

Order Coordination COPV

To determine whether a

complete order package has

been submitted

Reports: 1.Accuracy 2.Accuracy Drop Out 3.Time Performance 4.Turn Around Timeliness 5.Multiple Return

Paperwork received

correct and on time

Order Coordination OMD Stage order in

OMDShipping Logs

Paperwork received

correct and on time

Commission AnalystsSales Commission System

(SCS)Load Deal in

SCS ToolOrder set for payment

Paperwork received

correct and on time

Commission AuditorsSales Commission System

(SCS)Verification Order verified for payment

No Adjustment Form required

End:IKON sales professional gets

paid correctly and on time

Commission worksheet

flows through the Order

Management and

Commissions processes to

be paid

Operations Team

Inconsistent Administration of Sales Commissions

IKON sales professional completes Commission

Worksheet

Start:

Process Requirements

Process Customers(Top level description of the

activity)(Anyone who receives a

deliverable from the process)

12

FLOW CHART Sales Commission Overview

SDCDELIVERY

SALES COMMISSION PROCESS - Project 0307-007-001

ORDER COORDINATION / COMMISSIONSSALES

No

No

Yes

OK?

Return order to thesales professional

Paperwork reworked

Copy of complete orderpackage sent to

Commission Team

Commissions arefinalized

Order Installation- D&A pulled from scan- Lease transmittal finalized- Equipment invoice(s) generated- Supply order generated

Cycle record set up

Send Original Docs to IOSC for funding

Lease Transmittal Initiated

Valid?Order Stager notified to stop

delivery (copy sent to the salesprofessional and manager)

Order Documentssigned by the customer

Order Documents signed bylocal Sales Management

Complete Order Packagesubmitted

Complete OrderPackage verified

Order Initiation in OMD- Order entered into proper initial order category- Pickup requests are keyed under a separate order- Supply order keyed

Sales ProfessionalPre-Order processes

(ie.Credit Approval / 3rdParty Buyout )

WIP processbegins

D&A scanned

After upload to VCTS,update record

Copy of vendor credit docsto Vendor CreditAdministration

If centralized, original complete orderpackage is sent to Order Installation

Validation of CompensationWorksheet information

Equipment ReturnProcess

END

Update Serial Control Record

Invoice Review and Release

Documents Filed

13

FLOW CHARTSales Commission

DATA POINT 1

No

YesOK?

Return order to thesales professional

Paperwork reworked

Complete Order Packagesubmitted

Complete OrderPackage verified

Order Initiation in OMD- Order entered into proper initial order category- Pickup requests are keyed under a separate order- Supply order keyed

14

Flow ChartSales Commission Detailed

Complete orderpacket sent from

OC

Commissions toreceive packets

and enter into log

Marketplace CA toinitial logs andaccept packets

from Receiving CA

Mktpl CA to OMDNew Packets and

Orders stillPending

Are the ordersInvoiced?

Load Deal in SCSTool

File In Pending BinIs the commission

worksheet signedby the correct

individual?

Send to Auditor tobe pre-audited

Audit orderSend order to

audit

Has this orderbeen pre-audited?

Log order in OrderLog & File

Is adjustmentrequired?


Is there anadjustmentrequired?

Audit Order

E-mail notification toSales Rep (3 days w/oresponse, adjustmet

done)

Complete &Send

AdjustmentForm

Complete &Send

AdjustmentForm

Is theadjustment

approved by thesales rep?

Is theadjustment

approved by thesales rep?

Auditor makesadjustment in tool

Escalate forResolution untilagreement in

completed

Repeat Process

Auditor makesadjustment in tool

Escalate forResolution untilagreement is

completed

Yes No

No Yes

NoYes

YesNo

NoYes

No

Yes

Yes

Send deal back toPmt Team to Load

No



15

Flow ChartSales Commission Detailed

Load Deal in SCSTool

Is the commission

worksheet signed bythe correctindividual?

Send to Auditor tobe pre-audited

Audit order Send order to audit

Has this orderbeen pre-audited?


Is there anadjustmentrequired?

Audit Order

Complete &Send

AdjustmentForm

No Yes

NoYesYes

Send deal back toPmt Team to Load

No

DATA POINT 2

16

Where to go next?

DATA

17

Data Point 1

Washing

tonLA

Oregon

Des ert So

uthwes t

San D ieg

o /Neva

da

Greater B

ay

C entra

l Va lle

y

WestBay

Mountai

n West

No r th C SC

/DSC

Alask a

O thers

569 389 386 367 329 256 202 184 180 126 36 1

18.8 12.9 12.8 12.1 10.9 8.5 6.7 6.1 6.0 4.2 1.2 0.0

18.8 31.7 44.4 56.6 67.4 75.9 82.6 88.7 94.6 98.8 100.0 100.0

0

1000

2000

3000

0

20

40

60

80

100

Defect

CountPercentCum %

Pe

rce

nt

Co

un

tTotal Packages by Marketplace for June 03 PHX CCC

3,025 deals in the month

18

Where are the errors?

LAW es

tBay

Greater

Bay

Des ert So

uthwes t

Oregon

Moun tai

n Wes

t

San Diego

/Neva

da

Was hingto

n

C entra

l Valle

y

Alaska

N orth C

SC/DSC

Others

187 111 108 106 99 81 74 72 66 10 6 0

20.3 12.1 11.7 11.5 10.8 8.8 8.0 7.8 7.2 1.1 0.7 0.0

20.3 32.4 44.1 55.7 66.4 75.2 83.3 91.1 98.3 99.3 100.0 100.0

0

100

200

300

400

500

600

700

800

900

0

20

40

60

80

100

Defect

CountPercentCum %

Pe

rce

nt

Co

un

tBad Packages by Marketplace for June 03 PHX CCC

920 deals in the month

19

Where is the best practice?

Wes tBay

LA

Mounta

in W es

t

Greater

Bay

C entra

l Va lle

y

Des ert So

u thwes t

Alas ka

Oregon

San Diego

/Neva

da

W ashin

gton

N orth C

SC/DSC

Others

0.603 0.481 0.450 0.422 0.327 0.289 0.278 0.256 0.225 0.127 0.048 0.000

17.2 13.7 12.8 12.0 9.3 8.2 7.9 7.3 6.4 3.6 1.4 0.0

17.2 30.9 43.8 55.8 65.1 73.4 81.3 88.6 95.0 98.6 100.0 100.0

0

1

2

3

0

20

40

60

80

100

Defect

CountPercentCum %

Pe

rce

nt

Co

un

tPerformance of Bad Packages by Marketplace for June 03 PHX CCC

20

Descriptive Stats on % Good

0.05 0.20 0.35 0.50 0.65 0.80 0.95

95% Confidence Interval for Mu

0.62 0.67 0.72

95% Confidence Interval for Median

Variable: O-% Good

A-Squared:P-Value:

MeanStDevVarianceSkewnessKurtosisN

Minimum1st QuartileMedian3rd QuartileMaximum

0.62805

0.20045

0.64332

1.2530.003

0.6574700.2193734.81E-02-4.2E-01-3.9E-01

216

0.000000.500000.666670.818181.00000

0.68689

0.24227

0.71429

Anderson-Darling Normality Test

95% Confidence Interval for Mu

95% Confidence Interval for Sigma

95% Confidence Interval for Median

Descriptive Statistics

21

Defects

Wes

tBay

Was

hing

ton

Sou

th B

ay

San

Die

go/N

evad

a

Ore

gon

Nor

th C

SC

/DS

C

Mou

ntai

n W

estLA

Gre

ater

Bay

Des

ert

Sou

thw

est

Cent

ral V

alle

y

Ala

ska

1.0

0.5

0.0

O-Marketplaces

O-%

Goo

d

Boxplots of O-% Good by O-Market

Upper Limit

Lower Limit

22

Capability Analysis on % Good Packages

1.41.21.00.80.60.40.20.0

UBLSL

Process Capability Analy sis f or O-% Good

% Total

% > UB

% < LSL

% Total

% > UB

% < LSL

% Total

% > UB

% < LSL

Ppk

Z.LSL

Z.USL

Z.Bench

Cpm

Cpk

Z.LSL

Z.USL

Z.Bench

StDev (Overall)

StDev (Within)

Sample N

Mean

LSL

Target

Upper Bound

86.53

*

86.53

88.18

*

88.18

85.19

0.00

85.19

-0.37

-1.10

*

-1.10

*

-0.39

-1.18

*

-1.18

0.219629

0.204828

216

0.65747

0.90000

*

1.00000

Exp. "Overall" PerformanceExp. "Within" PerformanceObserved PerformanceOverall Capability

Potential (Within) Capability

Process Data

Within

Overall

DPMO = 851,900Z = -1.045

23

Next Steps…..

• What we learned in Week 2• Need to do Detailed Process Map • Need to do Matrix C & E• Need to do FEMA• Need Data Point 2

24

Project DMAIC Checklist/Status

Black Belt: __Tony Belfiglio CTS’s: _______________________________________________________

Project Champion: Bill Carpou & Donna Wood Defects to be Reduced: _________________________________________

Deployment Champion: _Susan Hicks and Rita Anderson Beginning DPMO/Sigma Level: ___________________________________

Master Black Belt: _Bob Conrad Final DPMO/Sigma Level: ________________________________________

Six Sigma Project DMAIC Checklist

Project :_Inconsistent Administration of Sales Commissions

Define Measure Analyze Improve Control

Completion Date: Completion Date: Completion Date: Completion Date:

Discover Variable Relationships

Establish Current Performance

Establish Performance Objective

ID Alternative Solutions

Determine “Best Fit” Solution

Establish Process Tolerances

Update FMEA

Develop Pilot Plan

Pilot “Best Fit” Solution

Validate Improved Performance

Conduct Cost/Benefit Analysis

Complete Improve Phase Project Review

Redefine Process Capability

Develop Control Plan

Develop Mitigation Plan

Implement Process Controls

Develop Monitoring Plan

Implement Process Control Plan

Obtain Financial Validation

Completion Date:

Define Project Scope

Initiate Team (Kick-off)

ID Process Customers

ID Process CTS’s

ID Process Metrics (Y’s)

Complete SIPOC Map

Complete Define PhaseProject Review

Receive Approval to Move to theMeasure Phase

Receive Approval to Move to theControl Phase

Confirm Baseline Capability

Identify Sources of Variation

Complete Detailed Process Map

Complete C&E Diagram & Matrix

Complete FMEA

Perform Data Collection for Analysis

Screen Potential Causes

Conduct Graphical Analysis-

Conduct Hypothesis Testing

Complete Root Cause Analysis

Receive Approval to Move to theAnalyze Phase

Develop Data Collection & Sampling Plan

Identify Potential X’s

Validate Measurement System

Collect Data on Y’s

Perform Capability Analysis

Voice of Process/Benchmark

Define Performance Objectives

Complete Measure Phase Project Review

Receive Approval to Move to theAnalyze Phase

Receive Approval to Close the Project

Complete Control Phase Project Review

Obtain Financial Analyst Sign Off

Obtain MBB Sign Off

Obtain Project Champion Sign Off

Obtain Steering Committee Sign OffComplete Analyze Phase Project Review

Leverage Project within Organization

Problem Statement: Inconsistent administration of sales commissions is affecting sales rep morale and wasting IKON dollars in the administration of the sales commission "errors". Sales commission administration is currently handled at the four customer care centers (Phoenix, Atlanta, Houston & Glastonbury), but is being centralized to the MSSC. The Phoenix CCC will be the first to be centralized November 1.