1 Assessment and Improvement of the Part Order Fulfillment Process

1

Assessment and Improvementof the

Part Order Fulfillment Process

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2

Introduction

• Project Charter• Methodology• Results

• Backorder Analysis• Customer Complaints

Analysis• Root Cause Analysis

• Recommendations• Economic Impact• Tools and Techniques• Conclusion

Team

Nackia SalmonProject Manager

Veronica MarcelliTechnical Writer

Financial Analyst

Carol HernandezWebmaster

Business Analyst

Agenda

Mr. Mario SanchezFaculty Advisor

FIU

Jorge Lozan

John Kelley

3

Goal StatementTo assess and improve the current parts order fulfillment process and ultimately customer satisfaction.

Problem StatementGrowth and servicing of old machines has resulted in a challenge to provide customers with

Deliverables• As-Is Process Map• Documentation of Root Cause

Analysis• Recommendations and their Impact• Implementation Strategy • Process Control Plan

Project Charter

• Correct desired part• Quality desired part • Within desired time

ObjectivesComplete a thorough assessment of current process and construct a feasible list of recommendations to

• Decrease return authorizations• Decrease credit memos• Decrease customer complaints• Decrease lead time of order

fulfillment

4

Methodology

Gather information

concerning

• Company○ Background

○ Mission

○ Vision

○ Policies

○ Procedures

○ Contacts

• Problem background

•Needed/Missing Information

Determine

sequence of events

By

• Interviews

•Current State

Process Map

• Needed/Missing Information

Define causal

factors of the

problem by

• Data Collection and Pareto Analysis

○ Customer Complaints

○ Parts on Back Order

• Brainstorming Session

•Cause and Effect Diagram

Analyze causal

factor’s root

cause by

• Focus Group of

Key employees

• 5 Whys Method

• Root Cause Diagram

Develop and

evaluate corrective

action by

• Economic Impact Analysis of Problem

• Recommendations and their impact

• Implementation and Control Strategy

The TapRoot® Methodology Developed by Mark Paradies and Linda Unger

Get StartedSequence of Events

Causal Factors Root Cause Corrective Action

5

Cross functional chart validated by Customer Service Manager and Backorder Clerk

Part Order fulfillment Process - No BackorderF

ron

t D

esk

Part

R

ep

rese

nta

tive

Ship

pin

g

De

part

me

nt

Cu

sto

me

r

Call made to place an order

Determine nature of call (Mechanical

or Electrical)

Part is identified

Order is put together and

shipped

Order received

Electrical/Mechanical Rep. Receives phone call and pre-filled

information

Customer info and/or part info is pre-filled on computer

form

Weigh Bill with Order Number is

created

6

6


Part Order Fulfillment Process - With Backorder (B/O)C

usto

mer

Par

t R

epre

sent

ativ

eB

acko

rder

Fro

nt D

esk

Shi

ppin

g D

epar

tmen

t

Pur

chas

ing

or

Man

ufac

turin

g D

epar

tmen

t

Electrical/Mechanical Rep. Receives phone call and pre-filled

information

Put together Order and Ship

Check Inventory Data and/or

Receiving and/or Bin Transfer Data

Determine nature of call (Mechanical

or Electrical)

B/O is written on the weigh bill

B/O received (Manually)

Determine if part is Manufactured or

Purchased

B/O received (Electronically)

B/O send to Manufacturing (Electronically)

(A)

Order receivedCall is made to make an order

Weigh Bill with Order Number is

created

All parts available?

Y

N

YPart to manufacture?

N

B/O send to Purchasing

(Electronically)(B)

All parts available?

YN

Customer info and/or part info is pre-filled on computer

form

Order status update

Part is identified

7

7


Part Order Fulfillment Process - Manufacturing Backorder A S

hip

pin

g/

Re

ceiv

ing

D

ep

art

me

nt

Ma

nu

fact

uri

ng

D

ep

art

me

nt

Ba

cko

rde

rP

art

R

ep

rese

nta

tive

Cu

sto

me

r

Y

System update

B/O Release

Weigh Bill Created with Order Number

Order received

Determine if part is been

manufactured or needs to be

B/O send to Manufacturing (Electronically)

(A)

N

Part manufactured

Part received?Daily B/O check

Determine estimated arrival

date

Update status on new shipping date

New date of arrival update


shipped

Y

8

8

Cross functional chart validated by Customer Service Manager and Backorder Clerk 9

Part Order Fulfillment Process - Purchasing Backorder B Q

ualit

y C

ontro

l D

epar

tmen

tP

art

Rep

rese

ntat

ive

B/O

Pur

chas

ing

Dep

artm

ent

Shi

ppin

g D

epar

tmen

tC

usto

mer

Determine if part is already ordered or

needs to be ordered

Determine estimated arrival

date

New date of arrival update

Update status on new shipping date

Daily B/O check Part received?Y

Weigh Bill Created with Order Number

Order received

B/O send to Purchasing

(Electronically)(B)

Part received from vendor

System update

N

B/O Release


shipped

Inspection needed?

NAllocate parts

Y

Passed Inspection?

N YReturn to Vendor

9

Back Order Analysis

Background: • X has received customer complaints about its delivery delays. • This analysis aimed to uncover the parts manufactured in house that are creating delays and

compromising customer satisfaction and stopping them from exceeding their - 30 days maximum – goal*. The findings will be use as base-line to decide which parts are worth targeting.

Limitations: • X had available back order data starting January 2007.• The Economic impact caused by long lead time is difficult to quantify, since it is not possible to assess

how many customers or sales were lost as consequence or this problem. • Information in regards to number of sales and their value were not disclosed to the team.

Methods:• Management provided the team with the back order data available. • X had available back order data starting January 2007. • The data had been collected weekly. There were about 52 reports available for a total of 939 orders.• The reports were compiled into a single report for all 2007 data.

*Goal given by X Management Team

10

Back Order Analysis (Cont.)

J5 8P 69 J4 J6

0

2000

4000

6000

8000

10000

0

100

200

300

400

500

600

700

80010,240

726

794

56

2007 BO Data

Cummulative Number of Days a Family Product is in BO

Number of Times a Family Product has been in BO

Average Number of Days a Family Product has been in BO

Product Family

Tim

e (

da

ys

) Tim

e (d

ay

s)

J5 Spare Quilter Parts

8P Printer Parts

J6 Miscellaneous Machines Re-sales

*Data obtain from X Information System

69 Old Printer Parts

J4 Kits

11


J5 Family Part Numbers, Count and Sum of days in BO in 2007

Part Number PM Cumulative Frequency BO Average

J515001321 P 334 5.00 66.80

J5206042 P 157 12.00 13.08

J5P30229D P 145 8.00 18.13

J515001130 P 143 1.00 143.00

J513195265 M 107 2.00 53.50

J5539015000 M 106 1.00 106.00

J5P3031910 P 105 1.00 105.00

J540000739 M 98 4.00 24.50

J5Q13072AY M 95 1.00 95.00

J5Q180395 M 76 2.00 38.00

J513193261 M 75 3.00 25.00

J598271144 M 74 2.00 37.00

J5P30319 P 70 4.00 17.50

J5P331910T P 68 4.00 17.00

J513770065 P 67 1.00 67.00

12



J513

1952

65

J553

9015

000

J540

0007

39

J5Q

1307

2AY

J5Q

1803

95

J513

1932

61

J598

2711

44

J5P30

0835

4

J5P30

4627

J556

0590

02

J5Q

1730

NTA

J513

2151

14

J5P30

3191

5

J5P30

0835

5

J554

8054

502

J554

8054

401

J513

1913

23

J598

2711

28

J5P30

166

J577

7702

22

J555

8208

200

J513

1709

24

J5P30

2125

A

J5W

RA9875

J513

2150

05

J5Q

1037

14

J598

2711

87

J560

0800

13

J521

0100

67

J5Q

1305

5AY

J5P38

0120

J5Q

1037

10

J598

2711

35

0

20

40

60

80

100

120

140

160

J5 Part Numbers 2007 BO Data -

Cumulative Number of days a product has been in BO

Number of times a product has been in BO

Average number of days a product has been in BO

Goal - 30 days maximum in BO

Part Number

Tim

e (

da

ys

)

PRESSER FOOT, BUSHING, ASL CTR

KIT, JOG/RUN PB ASSY CTR

PLATE, CROSS SEAL BAR, 11 CTR

CARRIAGE, SUPPORT BRG, AS

13


8P Family Part Numbers, Count and Sum of days in BO in 2007

Part Number PM Total Days in BO Frequency BO Average Days in BO

8P3468 M 81 3.00 27.00

8P2399 M 50 5.00 10.00

8P67356003 P 35 2.00 17.50

8P61369002 P 32 1.00 32.00

8P65158008 P 31 1.00 31.00

8P65158009 P 31 1.00 31.00

8P65158010 P 31 1.00 31.00

8P65158011 P 31 1.00 31.00

8P65158012 P 31 1.00 31.00

8P65158013 P 31 1.00 31.00

8P43625101 P 30 1.00 30.00

8P67356002 P 28 2.00 14.00

8P0682 P 24 2.00 12.00

8P2817 M 24 2.00 12.00

8P2961 M 23 2.00 11.50

14


8P34

68

8P23

99

8P28

17

8P29

61

8P73

6100

09

8P43

6300

04

8P35

12

8P28

18

8P22

87D

8P73

6300

01

8P19

11M

8P24

01

8P34

67

8P80

7600

01

8P47

2301

04

8P66

7520

02

0

10

20

30

40

50

60

70

80

90

8P Part Numbers 2007 BO Data

Cumulative Number of days a product has been in BO

Number of times a product has been in BO

Average number of days a product has been in BO

Goal - 30 days maximun in BO

Part Number

Tim

e (

da

ys

)

HEAD ASSY, 30PL EPDM, SVC

SHUTTER ASSY, RIGHT SIDE

BELT ENCODER ASSY

KIT, SPARE PARTS

PLATE, MOUNTING, INK VALV

HEAD ASSY, 30PL DYNEON SV


15


After going through the raw Back Order data. The following issues arise:

• Some product families were included in the raw data but were excluded from the data analysis due to being outside the scope of this project. i.e. machine, samples, etc.

• X has agreements with its sister company located in Shanghai which established that a 90 day period is required for X to obtain certain parts before they can be sent to customers in the US. However these orders were recorded as regular orders, reflecting the periods of time as if it was a responsibility of X manufacturing floor. As a result, the back order report and graphs showed that the company was performing below the target during the entire year.

16

Back Order Analysis Recommendations

Recommendations for data collection

• Exclude product families from the back order data due to being outside the scope of this project. i.e. machine, samples, etc.

• Exclude Shanghai orders from the back order data in order to avoid a misleading negative effect on the performance indicator.

• A new addition to the current report will be given to X to better keep track and visualize back orders exceeding 30 days which are going to be exported to a separate tab within the same excel file with the help of a macro.

• The parts that are purchased but modified in the manufacturing floor should be classified as P (purchased) prior to arriving to the warehouse and then changed to M (manufactured) to accurately capture the information. The time to receive the purchased part should be differentiated from the time it takes to modify or assemble the part in manufacturing.

17

Back Order Analysis Recommendations

Back Order Analysis Recommendation

An analysis of the manufacturing process for the part numbers found to be negatively exceeding the 30 days target.

• An FIU team can be assigned to this project have a direct impact on lead time by:• Streamlining manufacturing operations to meet or remain under

30 days target.• Looking into benefits of applying Lean Manufacturing and Six

Sigma in the shop and implement them if suitable.• Checking monthly usage of parts.• Reviewing safety stock policy and provide X with a Safety Stock

strategy based on demand forecast is found to be appropriate.

18

Analysis of Customer Complaints

Background: • X has received customer complaints regarding errors on orders shipped. • An analysis of complaint data was performed to determine improvement

opportunities in customer satisfaction and possible savings.

Methods: • Management provided 2007 customer complaint data • Data was analyzed by the type of complaint or credit reason to determine most

common• Data was analyzed by customer to determine root of most complaints• Data was analyzed by Credit Memos, Return Authorizations and Manual

Entries to determine economic impact*• Credit reasons were analyzed by cost to determine economic impactManagement provided information of Credit Memo, Return Authorization and Manual Entries cost

19

Customer Complaints by Credit Reason

19

32

AF

36

21

20

37 8

81

38

87

15

R4 7

0

50

100

150

200

250

.00%

20.00%

40.00%

60.00%

80.00%

100.00%

120.00%

2007 Customer Complaints by Credit Reason

Credit Reason Cum %

Credit Reason Code

Fre

quency

Cum

%

A total number of 485 complaints was analyzed from X Complaint Log system for the year of 2007

20

Customer Complaints by Credit Reason (Cont.)

Credit Reason Explanation Credit Reason Frequency Cumulative %Incorrect parts identification 19 192 39.59%Wrong quantity pulled by shipping 32 69 53.81%Quality of Goods AF 65 67.22%Wrong product pulled by shipping 36 56 78.76%Wrong Freight on Workorder 21 22 83.30%Wrong Customer on Workorder 20 21 87.63%Wrong customer entered by shipping 37 13 90.31%Damaged by Improper Packaging 8 11 92.58%Late shipping 81 10 94.64%Wrong Freight by Shipping 38 7 96.08%Export/Improper Documents 87 7 97.53%Wrong Quantity on Workorder 15 6 98.76%Carrier unable to deliver R4 4 99.59%Damaged by Carrier 7 2 100.00%

21

Customer Complaints by Customer

7 8 15 19 20 21 32 36 37 38 81 87 AF R430010 6 1 1 1 990R17 7 1 860205 4 3 1 82108 5 3 8

90N13 6 1 765042 4 1 2 720355 5 1 1 790L21 1 3 1 1 660240 2 4 660145 3 1 1 1 650108 4 1 1 614741 2 2 1 1 69716 3 1 1 1 6

8936429 3 1 1 550060 1 1 1 2 541759 3 2 539276 4 1 530102 2 1 1 1 51299 1 3 4

90G24 4 490D76 3 1 4

… …Grand Total 192 69 65 56 22 21 13 11 10 7 7 6 4 2 485

Grand Total

CREDIT REASON

CUSTOMER

22

*Customer 90R17 is a sister company and X will not take this information into account to make decisions

Customer Complaints by Customer (Cont.)

The customers that placed more than 7 complaints to X in 2007 are:• Customer 30010 (Simmons CO, Hazelton, PA) • Customer 90R17 (Jiading L&P Machinery Technology, Shanghai, China)*• Customer 60205 (Serta , Lancaster, PA)• Customer 2108 (Continental Silverline Pro, Houston TX)• Customer 90N13 (L&P Components Australia Pty. Ltd., Wacol Qld, Australia)• Customer 65042 (Simmons CO Inc, Janesville, WI)• Customer 20355 (Consolidated Bedding Inc, Carrollton, TX)

23

Customer Complaints by Action

Return Authorization (RA): Complaint incurring in administrative cost and a return of part (s) from the customer

Credit Memo (CM): Complaint incurring in administrative cost and the accreditation of the cost of the part (s) to the customer

Manual Entries: Complaints that do not result in a Credit Memo or Return Authorization

RA Issued CM IssuedManual Entry

Issued

19 132 60 0 19232 4 29 36 69AF 45 19 1 6536 43 8 5 5621 2 20 0 2220 5 16 0 2137 4 3 6 138 8 1 2 11

81 0 10 0 1087 2 0 5 738 4 0 3 715 2 4 0 6R4 4 0 0 47 0 1 1 2

Grand Total 255 171 59 485

ACTION

CREDIT REASON Grand Total

24

Credit Memo Cost Assumptions

* Developed in collaboration with X Customer Service Manager

CREDIT REASON CODE EXPLANATION EQUATION

7 Damaged by Carrier AC + 1F8 Damaged by Improper Packaging AC + CP + 2F

15 Wrong Quantity on Workorder AC 19 Incorrect parts identification AC + 1F20 Wrong Customer on Workorder AC + RR21 Wrong Freight on Workorder AC32 Wrong quantity pulled by shipping AC + 1F36 Wrong product pulled by shipping AC + CP + 1F37 Wrong customer entered by shipping AC + RR38 Wrong Freight by Shipping AC + 1F81 Late shipping AC + 1FAF Quality of Goods AC + CP + 1FR4 Carrier unable to deliver AC + 2F

CREDIT MEMO COST BREAKDOWN

CODE COMMENT COST

AC Administrative cost of processing a CM $50.00 CP Cost of part Actual Cost1F Average freight charge for one transit $25.00

2F Average cost of freight charge for two transit $50.00 RR Carrier reroute fee $10.00

CREDIT MEMO COST BREAKDOWN

25

Return Authorization and Manual Entries Assumptions

*Developed in collaboration with X Customer Service Manager

**An average of one man hour per return and a cost of $50.00 for two way freight were used for Return Authorization economic calculations

Variables CostAdministrative Cost $100.00

Freight charges $50.00 Average Cost $150.00

Return Authorization Breakdown

Variables CostCost Actual Cost

Manual Entry

26

Economic Impact by Action

CM Issued RA Issued Manual EntryAF $32,760.04 $6,750.00 $0.00 $39,510.0419 $4,500.00 $19,800.00 $0.00 $24,300.0036 $1,273.86 $6,450.00 $100.00 $7,823.8632 $2,175.00 $600.00 $900.00 $3,675.008 $333.64 $1,200.00 $1,061.16 $2,594.80

20 $960.00 $750.00 $0.00 $1,710.0021 $1,000.00 $300.00 $0.00 $1,300.0037 $180.00 $600.00 $105.00 $885.0081 $750.00 $0.00 $0.00 $750.0038 $0.00 $600.00 $50.00 $650.00R4 $0.00 $600.00 $0.00 $600.0015 $200.00 $300.00 $0.00 $500.007 $75.00 $0.00 $320.00 $395.00

87 $0.00 $300.00 $50.00 $350.00Grand Total $44,207.54 $38,250.00 $2,586.16 $85,043.70

RECATEGORIZED ACTIONCredit Reason Grand Total

27

Credit Reason by Cost

AF

19

36

32 8

20

21

37

81

38

R4

15 7

87

0.005,000.00

10,000.0015,000.0020,000.0025,000.0030,000.0035,000.0040,000.0045,000.00

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

120.00%

Credit Reason by Cost

Cost Cum %

Credit Reason

Co

st

28

Credit Reason by Cost (Cont.)

7$350.00 Export/Improper Documents 87

2$395.00 Damaged by Carrier7

6$500.00 Wrong Quantity on Workorder15

4$600.00 Carrier unable to deliverR4

11$650.00 Wrong Freight by Shipping38

10$750.00 Late shipping 81

13$885.00 Wrong customer entered by shipping37

192$1,300.00 Wrong Freight on Workorder21

192$1,710.00 Wrong Customer on Workorder20

11$2,594.80 Damaged by Improper Packaging8

69$3,675.00 Wrong quantity pulled by shipping32

56$7,823.86 Wrong product pulled by shipping36

192$24,300.00 Incorrect parts identification19

65$39,510.04 Quality of Goods AF

FrequencyCostCredit Reason Code DescriptionCredit Reason Code

7$350.00 Export/Improper Documents 87

2$395.00 Damaged by Carrier7

6$500.00 Wrong Quantity on Workorder15

4$600.00 Carrier unable to deliverR4

11$650.00 Wrong Freight by Shipping38

10$750.00 Late shipping 81

13$885.00 Wrong customer entered by shipping37

192$1,300.00 Wrong Freight on Workorder21

192$1,710.00 Wrong Customer on Workorder20

11$2,594.80 Damaged by Improper Packaging8

69$3,675.00 Wrong quantity pulled by shipping32

56$7,823.86 Wrong product pulled by shipping36

192$24,300.00 Incorrect parts identification19

65$39,510.04 Quality of Goods AF

FrequencyCostCredit Reason Code DescriptionCredit Reason Code

29

Observations

The customer complaints with the highest frequency and financial impact are:• Incorrect Parts ID (19)• Quality of Goods (AF)• Wrong Quantity pulled by Shipping (32)• Product pulled by Shipping (36)

AF 19 36 32 8 20 21 37 81 38 R4 15 7 870.00

5,000.00

10,000.00

15,000.00

20,000.00

25,000.00

30,000.00

35,000.00

40,000.00

45,000.00

0

50

100

150

200

250

Cost and Frequency of Credit Reasons

Cost Frequency

Credit Reason by Code

Co

st

($)

Fre

qu

en

cy (

#)

30

Brainstorming Session

Objective: Stimulate creative thinking and share a wide range of

ideas of the causes to the problem identified.

Steps followed: 1. Introduction 2. Objectives and guidelines3. The problem or effect of interest was identified and placed at the head of a fishbone diagram 4. Major categories of the fish bone were the main process steps and they were placed on the diagram 5. Entire group brainstormed for more detailed causes and wrote them on sticky paper 6. Each person shared their ideas after which they were placed on the fishbone diagram under respective category 7. Diagram was reviewed and critical causes were identified 8. The participants were thanked for their attendance and participation. 9. Adjournment

31

Cause and Effect Diagram

Gribetz received a highnumber of customer complaints

Part Identification Order Receival

Part Storage Back Order- Manufacturing/Purchasing

Shipping/Receiving

Part Picking

Incorrect Data Entry by parts rep

Replacement # not used for replacement part

Incorrect Parts manual

No picture/manual of part

None/Incomplete serial number

Insufficient experience/training of rep. & customer

No order verification before sent to shipping

Lack of kit member specification

No Manuals

Lack of communication of part updates

Obsolete parts are not identified in system

Computer allows obsolete part entryIneffective order picking sequence, FIFOWrong quantity picked

Picked by pack instead of by unit

Low skill

Wrong department

Hand written labels

Similar looking parts with wrong part number

No standard method

Wrong bin location

Lack of communication of bin relocation

Low skill

Receiving parts under wrong part #

Incorrect part# labeling

Incorrect On-hand quantitiy

Customer address not updated

Data entry error

Last minute shipping address change

Shipping multiple orders at once

Shipping label swap

Slammed during rush hour

System glitch

Weekly MRP run

Ineffective manufacturing scheduling

Fails to report below safety stock

parts

High usage parts not flagged

Immediate need parts not flagged

One person manual update invenotry

Long lead time between physical inventory count and system updates

Batch processing of inventory updates

No cut off time to accept customer orders

Servicing machines over 50yrs old

Wrong identification


Picking for multiple orders at once

Failure to verify parts picked

TrainingExperience

Incorrect customer description

Rep SkillCustomer Skill/

Training

No replacement of obsolete parts available

Provide info. Too

late

32

Identification of Major Causes

Based on the data analysis and results of the brainstorming session,

the following main causes of customer complaints were identified.

• Incorrect Part Identification• Inefficiencies in Shipping/Receiving• Back-ordered parts contributing to long lead times

33

Root Cause Analysis

5Whys Method

A basic technique used to push your thinking about a potential cause down to the root level. Very quick and focused.Root Cause: Back-Order Purchasing/Manufacturing

1. Why 2. Why 3.Why

4. Why 5. Why

Tips: Nothing sacred about the number 5.

34

Root Cause: Wrong Product on Work Order

Causal Factor: Wrong Product on Work OrderResult: ~40% of Customer Complaints

Wrong Customer Order Placed

Wrong Part Identified Order Entry Error

Low Customer

Skill

Customer provide wrong information

Parts Rep Information SystemProcedures Parts Rep

Customer has no manual

Customer uses incorrect manual

No standard

procedure

No verification

Old machines >20yrs old

Incomplete manuals

None or incomplete serial and parts number on part

No template of a series of

questions to identify part

No picture/diagram of part

Obsolete parts not identified

Allows the ordering of

absolete parts

Lack of kit member

specificationLow skill/

experience

Lack of sufficient attention

Type incorrect

data

High turnover rate

Low skill requirement

Pay and beneifts

Input/Materials

35

Root Cause: Inefficient Shipping/Receiving (Cont.)

Causal Factor: All Associated with Shipping/Receiving Area

Result: ~80% of Cost associated with Complaints

Incorrect Part Storage Wrong Part/Quantity Picked Shipping/Receiving

Part Stored in the wrong location

Parts look similar with

different part #

Incorrect part

labeling

Hand written part # labels

No standard method

Part identified incorrectly

Employee low skill level

Not enough available

time


No cut off time for order

receival

Wrong part gets picked

Wrong quantity gets

picked

Kit /assembly members

not specified

Parts shipped by package instead of

each

Pick for multiple orders at same time

Ineffective order picking

sequence

No standard method

Failure to verify parts

picked

Employee low skill

Difficult to read labels

Shipping label mix up

Wrong shipping address

Ship multiple orders at once

Last minute shipping address

change requst

Customer information not

updated

Customer address retyped

incorrectly

Manual data entry in shipping

department

Address change not

communicated

Separate IT systems not integrated

Lack of communication

of bin relocation

Vendor did not follow directions on order

QC only required to

inspect one part in order

Defective part was sent

QC did not catch defective

part

36

Root Cause: Back-Order Purchasing/Manufacturing

Causal Factor: Parts on Back OrderResult: Long lead time between part order recieval and fulfillment

People ProceduresInformation System

Long lead time between physical inventory count

and system update

System is updated in Batches

Sometime no one is available to update system

Only one person is assigned to update system

System is updated manually

System MRP is

run weekly

Below safety stock not reported

Below safety stock reported

too late

Bugs in the IT program

Separate IT systems

On-hand count in system incorrect

Lack of integration of systems

No cut-off time for order receival by

managment

Shipping might look in the wrong

bin location

Insufficient time to properly check

inventory during peak hours

Data errors due to retyping in shipping

Incorrect on-hand quantitiy reported

by shipping

37

Main Root Causes and Impact

*Numerical values illustrated are per year and based on only 2007 data.

AF 19 36 32 8$39,510.04 $24,300.00 $7,823.86 $3,675.00 $2,594.80 $77,903.70 393

Old Machines with Incomplete Manuals X $24,300.00 192

Failure of QC to find defective part X $39,510.04 65

Root Causes

Top Codes That Are Linked to Root CauseTotal Cost

Total No. of Complaints

Employee Skill Level X X X X $35,798.86 328

Customer Skill Level X $24,300.00 192

Lack of Standard Procedure for Part Identification X $24,300.00 192Part Storage and Picking Policies and X X X $51,008.90 201

38

Recommendations

• Detailed Documentation of Part Revisions • Web-hosting of Manuals for Customers• 6S Implementation in Parts Storage Area

• Focused on sort, set in order and sustain• Formal Training for Parts Representatives• Continuous Improvement Program Teams (CIP) for each top 5 codes• Value Stream Map of Manufactured Parts on Back-order for over 30days

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Recommendations (Cont.)

Proposed Solutions

Root Causes Addressed Steps Involved

Resource Needed Executed By

Est. Duration Expected Benefits Justification Cons

Web hosting of Manuals

Old Machines with no manuals

1. Locate physical manuals

Scanner, Server, Web Administrator IT Manager < 6 months

1. Decrease time to identify parts

Less time spent questioning customers, contacting technicians, searching for part

Concern about security of proprietary information

Employee Skill Level

2. Scan Manuals to get it in an electronic format

2. Decrease error rate in part identification

Technicians and engineers can identify parts without serial numbers

Customer Skill Level

3. Label /name documents

3. Decrease RA's, CM's and customer complaints More accurate shipments

Lack of Standard Procedure for Part Identification

4. Upload to web server

4. Increase customer satisfaction

Less hassle, quicker order placement, more likely for desired part to be received

5. Make it available to customers

5. Repeat Customers

Creation of history good of good customer service

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Recommendations (Cont.)Proposed Solutions




Integration of 5S for Parts Storage Area

Part Storage and Picking Policies and Procedures

1. Sort what is needed in that area, leave the bear minimum. Red tag Strategy can be used.

Stationary and other materials for Visuals

Industrial Engineer >1year Higher productivity

Less time searching during parts picking

It is a challenge to sustain the gains of 5S. Employees tend to go back to old habits.

2. Set in order and use effective visual controls so parts can be quickly and easily stored and located i.e. by machine type FIU Team

Less defects or errors in part picking

Parts are easier identified and less likely to be stored in the incorrect place.

3. Shine: create a clean an immaculate work place Safer place to work

Less safety hazards due to dirt or disorganized work areas

4. Standardize: keep and maintain what was attained in previous 3S

Optimize company image to employees and visitors

5. Sustain: assign responsibly and establish new habits of employees so that gains are never lost

Disciplined and motivated workforce

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Proposed Solutions


Resources Needed Executed By

Est. Duration

Expected Benefits Justification Cons

Formal Training for Parts Representatives

Old Machines with incomplete manuals

1. Identify business goals that define the end result of training.

Technical Writer

Customer Service Manager <1year

Decrease error rates

Representatives will be more knowledgeable and prepared to satisfy the needs of the customer

Gains are highly dependent on turnover rate

Employee Skill Level

2. Develop the objectives of the training procedure

Research and Planning Team

Decrease in part fulfillment cycle time

The correct needed parts will be identified in a quicker time and sent to the customer right the first time

Challenge to find a training program that is suitable for all individuals with different learning styles

Lack of Standard Procedure for Part Identification

3. Understand the workforce to get to know your audience.

4. Identify information and concepts that they need to know to be successful.

5. Based on previous findings determine How they can best learn the concepts.

6. Combine formal and informal training

7. Modulate learning and blend with practical experience

8. Assign an experienced parts rep. as a mentor.

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Recommendations (Cont.)Proposed Solutions




4. Detailed Documentation of Part Revisions

Old Machines with incomplete manuals

1. Identify old machines whose parts are frequently ordered Technical Writer

Technical Writer >1year

1. Decrease time to identify parts

Less time spent questioning customers, contacting technicians, searching for part

Might be a challenge to locate all the notes that parts representative have compiled over the years

2. Determine if machine have parts that have been revised. FIU Team

2. Decrease error rate in part identification

Reps., Technicians and engineers will now have detailed supporting document to assist them

Some parts reps have relied on their memories and did not document needed notes.

3. Develop and plan a system of collecting, organizing and documenting part revisions for machines found

3. Decrease RA's, CM's and customer complaints More accurate shipments

4. Identify part reps., engineers and technicians who will assist.

4. Increase customer satisfaction

Less hassle, quicker order placement, more likely for desired part to be received

5. Decide on time intervals for regular progress meetings to take place

5. Repeat Customers

Create history of good customer service

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Proposed Solutions Top 5 Codes Steps Involved



Continuous Improvement Teams for Top 5 Codes

Quality of Goods(AF)

1.Identify and prioritize top complaints

Customer Service Manager Continuous

Decrease the frequency of CM's, RA's and Manual entries.

Teams will be focused on decreasing codes with highest impact

Might be a challenge to get diversified teams that are focused on only one code.

Incorrect Part Identification (19)

2. Identify team members

Decrease costs incurred by complaints

Wrong quantity pulled by shipping (32)

3. Get the buy-in of team members

Improve customer service

Wrong product pulled by shipping (36)

4. Decide on meeting intervals

Get employees involved in the company's quality improvement initiatives

Damaged by improper packaging (8)

5. Identify methods to decrease complaints and strategically plan how they should be implemented

6. Determine how the gains can be sustained.

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Proposed Solutions Problem Steps Involved



Value Stream Map

Manufactured parts that are on backorder for over 30days

1. Determine what individual part or family to be mapped FIU Team

Industrial and Systems Engineer 6 months

1. Helps to show more than waste but the sources of waste

Identifies both value added and non-value added activities

More complicated to construct than other flow charts

2. Draw the process flow

2. Makes decisions about the flow apparent

Identifies the flow of both materials and information

3. Add the material flow

3. Forms the basis of a lean implementation plan

Reveals current process performance and hidden opportunities with data such as reliability, inventory and cycle time

4. Add the information flow

5. Collect process data and connect it to the boxes on the chart

6. Add process and lead time data to the chart

7. Verify the map

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Cost of Project

Items FIU Gribetz Team Total CostLabor N/A N/A $24,000.00 $24,000.00 Materials and Supplies N/A N/A $100.00 $100.00 Equipment $3,030.00 N/A N/A $3,030.00 Software $1,180.00 N/A N/A $1,180.00 Mileage N/A N/A $4,757.76 $4,757.76 Miscellaneous $120.00 N/A N/A $120.00 Total $4,330.00 N/A $28,857.76 $33,187.76

46

Cost of Project (Cont.)

Cost of Project will not be taken into consideration for cost/benefit analysis

Position Labor Rate Hours TotalPM $25.00 240 $6,000.00 Assistant PM $25.00 240 $6,000.00 Technical Writer $25.00 100 $2,500.00 Webmaster $25.00 80 $2,000.00 Financial Analyst $25.00 20 $500.00 Data Analyst $25.00 20 $500.00 Business Analyst $25.00 20 $500.00 IE $25.00 240 $6,000.00 Total $24,000.00

Materials and Supplies Unit Cost Number TotalTotal $100.00

Equipment Unit Cost Number TotalComputer $1,000.00 3 $3,000.00 Calculator $10.00 3 $30.00 Total $3,030.00

Software CostMicrosoft Office Suite $300.00 Microsoft Office Visio $130.00 Microsoft Office Front Page $300.00 Microsoft Project $450.00 Minitab $1,000.00 Total $2,180.00

Miscellaneous CostInternet Connection $120.00 Total $120.00

Mileage Unit Miles CostTotal $0.59 8064 $4,757.76

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Cost/Benefit Analysis

ROI = (Gain of Investment – Cost of Investment) / Cost of Investment

Benefits were calculated assuming a minimum of 5% savings in cost of complaints

RecommendationTotal

InvestmentBenefit (5%)

ROI

Website upgrade $700.00Website maintenance (yearly) $200.00Website Training to Part Reps. $0.00

2. Integration of 5S for Parts Storage Area

Cost of having an FIU team implementing this recommendation $500.00 $500.00 $704.68 40.94%

3. Formal Training for Parts Representatives Making of Modules $200.00 $200.00 $2,171.93 985.97%

4. Detailed Documentation of Part Revisions

Cost of having an FIU team implementing this recommendation $500.00 $500.00 $1,215.00 143.00%

5.Continious Improvement Teams for Top 5 Codes

CIP teams do not incurred in any cost for Gribetz International $0.00 $3,895.19 N/A

6. Value Stream Map for Manufactured Parts that are consistently over 30days on Backorder

Cost of having an FIU team implementing this recommendation N/A N/A N/A N/A

98.88%1. Webhosting Manuals

Cost Description and Price

$900.00 $1,789.94

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Tools, Techniques and Skills

Software Tools/Techniques Skills

Microsoft Word Pareto Analysis Critical Thinking

Microsoft Excel Cause-Effect Diagram Negotiation

Microsoft Visio Histograms Interviewing

Microsoft Front Page SIPOC Diagram Communication-Written and Verbal

Microsoft Project Cross Functional Chart Problem Identification, Analysis and Solving

Paint Focus Group Data Collecting and Analysis

5S Develop Evaluating Criteria

Mistake Proofing Teambuilding

Visual Controls Time Management

Technical Writing

Fish Bone Diagram

49

Conclusion

• To allow FIU team to implement recommendations as:• Integration of 5S for parts storage area• Detailed documentation of parts revision

will benefit X financially and time wise since one semester is offered as time frame for completion• Recommendations given do not only focus on cost saving but on

process standardization for control of the system• Customer satisfaction will be positively impacted by our

recommendations• Probability of sales increase should not be discarded after

recommendations have been implemented

50

Questions?