Commercial Loan Operations – Cost of Quality

Project Description:

Problem Statement: From January through December, the Commercial Loan Servicing function will process almost 230,000 transactions. At current error rates, the cost of quality will be approximately $230,000 per year due to rework and the need for additional FTE in quality assurance functions.

Goal Statement: Reduce the error rate from 11% run rate to the 2% target rate.

Start Date: May   End Date: November

Project Metrics

Project Benefits

Estimated Net Savings: $230k

Direct Savings: Fee Income $ 230k

Project Accomplishments

• The loan processors with the highest error rate were phased out of their positions from mid August to October 1st. This has driven down the error rate.
• Increased awareness of the impact of bad hires.
• Error rate down to 5% and falling.