SEMESTER PROJECT ISE 250: Organizational Improvement Capabilities and Skills Instructor: Dr. Baruch I. Saeed Team Members: Ramachandran Janakiraman Emma

SEMESTER PROJECTISE 250: Organizational Improvement Capabilities and Skills

Instructor:Dr. Baruch I. Saeed

Team Members:Ramachandran JanakiramanEmma LaraRichard OlasoRonnaporn PasakdeeYoung Shea

Agenda

Six Sigma Storyboard– Define– Measure– Analyze– Improve– Control

Conclusion

Six Sigma Storyboard

Define Goals:

– To define the project’s purpose and scope– To obtain background information:

Process Customers

– Understand the voice of the customer (VOC)

D for Define

Goods

Receiving7.44 sec./pc.

Storing3.50 sec./pc.

Picking18.00 sec./pc.

Shipping11.40 sec./pc.

GoodsStored

Goods OrderedShipped

A

B

D

Initiating Order orRequest for Shipping

WMS

End of Receivingand Storing

End of Picking andShipping

WMS

Initiating Arrival ofGoods to be Stored

Process Flow DiagramOverall Process (High-Level)

C

Tools Applied

Problem Statement

Customer(s)?

Business Case....

Problem Statement

Customer(s)?

Business Case....

CharterProcess Flow

Diagram Critical-to-Quality

Charter

Problem Statement– SuperMicro warehouse not meeting customer needs– No visibility of flow through warehouse, and packages arriving late to customer– Customers opting to go with competitors if not solved

Business Case– SuperMicro exports microprocessors throughout the country. Menlo Worldwide has been

contacted to analyze the company’s dilemma, and to determine if RFID implementation will solve existing problems.

Deliverables– Obtain an efficient and effective proposal, while meeting customer’s needs

Success?– Better visibility– On-time delivery

Scope– Evaluate current warehousing process– Provide proposal/recommendations within 4 months (February-May)

D for Define

Goods





GoodsStored


A

B

D


WMS



WMS



C

Tools Applied

Process Flow Diagram Critical-to-Quality

Goods

Goods areProcessed by

Receiver1.40 sec./pc.

GoodsStored

WMS



Process Flow DiagramReceiving and Storage (A & B)

Notify Supplier andMake Necessary

Arrangements

Enter OrderReceived into theSystem and PrintOrder Location1.44 sec./pc.

Return Order toSupplier

Modify ReceivedOrder

Move Order to theStorage Area2.76 sec./pc.

B

Complete theReceived Orderinto the System

0.84 sec./pc.

Perform Inspection(Count and Damages)

4.50 sec./pc.

A

Updated PFD (with Time Study)

Process Flow DiagramPicking and Shipping (C & D)

Check if Order isAvailable

Ship Order1.80 sec./pc.



WMSC

Notify Customerthat Order is Not

Available

Customer ModifyOrder

Cancel Order

Resend Order

Generate Pick-List1.20 sec./pc.

Pick Order3.60 sec./pc.

Move Order toQuality Control

Area1.20 sec./pc.

Puller MakesAdjustments of

Wrong Picked orDamaged Items

2.00 sec./pc.

Perform Inspections(Count and Damages)10% ~ 10.00 sec./pc.

Move Order toPacking Area1.25 sec./pc.

Process Shipping Labeland Notify Customer of

Processed Order7.20 sec./pc.


D

Order Verification1.20 sec./pc.



Goods





GoodsStored


A

B

D


WMS



WMS



C

D for Define

Tools Applied

Critical-to-Quality

On-Time Delivery

Reduce warehouse cycle time

Optimal responsiveness

Optimal Inventory level

Consistently meeting customer demand

Need Drives CTQs

Time on hold is minimal

Reduce order process time

Low Stock-out %

Streamline process

Efficient transportation

Efficient material handling

Optimal picking sequence

Fast inventory turnover; FIFO

Fast dock-to-stock time

Easy to identify location for customer orders

Good inventory tracking system

Sufficient staffing High Productive output

High accuracy in picking orders (fill-rates)

Fast delivery, short transit time

Quick respond to urgent orders

High service level

Low % transportation delay

Low loss or damage claims

Shorter promised lead times

Critical-to-Quality

….indicate deficiency


Measure Goals:

– Collect the baseline data – Create a Pareto chart to analyze the current

process– Create a Balance Scorecard for what to

improve and how to measure– Do benchmarking against competitors and

industry standards

M for Measure

Tools Applied

Balance ScorecardPareto Chart Benchmarking

Benchmarking with Industry Average

18.5%

9.0%

44.5%

28.0%

20%

10%

45%

25%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Receiving Storing Picking Shipping

Tasks

% o

f T

imes

Client Current Process Industry Standard

Pic

king

Rec

eivi

ng

Shi

ppin

g

Sto

ring

0

2

4

6

8

10

12

14

16

18

20

sec

/ pie

ce

Breakdown of Picking Process

15%15%

25%

45%

Pick the order

Adjustment forwrong picking

Generate Pick-List

Move to the Q/C

- Time Study- Pareto Chart ( High Level and Detailed Process )

M for Measure

Tools Applied

Balance Scorecard Benchmarking

Benchmarking with Industry Average

18.5%

9.0%

44.5%

28.0%

20%

10%

45%

25%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%


Tasks

% o

f T

imes


VS Industry Standards VS Competitor

Benchmarking: Processing Time VS

Industry Standards

18.5%

9.0%

44.5%

28.0%

20%

10%

45%

25%

0%5%

10%15%20%25%30%35%40%45%50%


Tasks

% o

f T

ime

s


Benchmarking VS Competitor (RFID)

6230

150

10 10 10

60

5

337

28 22 267 18 4

348

147

0

50

100

150

200

250

300

350

400

Receiveorder

Move tostoring

Pick parts Move toinspection

Q/C Check Move topacking

Pack parts Move toshipping

Total Time

Tasks

Tim

e(m

ins)

Current Process (mins) Competitor with RFID (mins)

Benchmarking

Balance Score CardFinancial 33

Warehouse Productivity

Net Received Orders Per Hour

6

Net Stocked Orders per Hour

3

Net Pulled Orders Per Hour

3

Net Shipped Orders Per Hour

6

Expense per Received and Shipped Orders

6

National Revenue Growth

6

International Revenue Growth

3

IBP 20

Service Quality Index

Rejected Orders 4

Shortage Orders 2

Shipped Damaged Orders 2

Received Damaged Orders 2

Committed Services 2

Visibility (2)

Received Orders Confirmed 1.5

Shipped Orders Confirmed 0.5

Claims (4)

Origin Damage Issued 2

Destination Damaged Issued 2

Concern 2

Customer

27

Customer Retention

20

Volume Growth

7

People 20

Employees Paid Over 9 hours 5

Turnover 1

Safety Index(14)

Injury Frequency/ Expense 7

Accident Frequency/ Expense 7


Analyze Goals:

– Explore potential causes– Identify and focus on root problems– Interpret root problems– Help formulate feasible solutions

A for Analyze

Tools Applied

Cause-and-Effect Diagram

Communication

Unclear instructions

Lack of standard procedure

Inconsistent data format

Inaccurate reporting

Human errors on manual inputInadequate inter-department

communication

Lack of technology

Excessive paper trails

Lack of documentation

Ineffective IT usage

Material Handling

Inefficient organization of storing

Hard to pick on high shelves

similar items store too close

Lack of visible labels and signs

Error on picking

Inefficient procedure

Inadequate supervision

Mishandle in storing

improper stacking

variation on sizesExcessive idle time

Methods not followed

Inefficient methods

Long Warehouse Processing Time

& No Visibility of Goods

Methods

Poor Handling of orders

Poor inventory management

Lack of technologyLack of process management training

Lack of experience

Poor manual process

Poor Shiping

Poor picking process

Manual Picking

Too much QC Time

Manual QC

Excess time to checkreceived boxes

Not scanningTechnologies Available

Lack employee motivation

Poor Receiving

Poor reports on itemslocation

Employee resistanceHigh Cost

Need training to use

Too expensive

Not methodsfollowed

Employees Not supervised

Not enough staff

Too expensive

Not Followed

Machine/Equipment

Machine malfunction

Misuse transport equipment

Insufficient equipments

Not enough packaging linesOver utilized

Inefficient schedulingInefficient carry aids

Lack of flexibility

Overload unitsUnbalance load of lines

Overheat on packing

Old devices

Lack of maintenance

insufficient budgets

Under utilized

Different Proprietary software

Time consuming

Unorganized written procedures

lack of standard protocol

Uneasy to use

lack of interdepartmentalmeeting

lack of systematic training

lack of preventative plans


Long Warehouse Processing Time

& No Visibility of Goods

People Worker injurySafety procedures not reinforced

Low worker attendance

Warehouse ethics not reinforced

Poorly trained workers

Training classes not effective

Low motivation for job

Low pay

Lack of retention programs

Lack of teamwork

Instructions are not effective

Teaching methods are poor

Low teaching experience

Class content not updated

De-motivates workersContent is dull

Students do not pay attention

No homework and exams

Too many warehouse errors

Resistance to change

Low pay

Low WMS skills

Procedures are seldom updated

Classes not effectiveClasses not effectiveLack of 401K program

Health benefits are poor

Competitive work environmentWorker favoritism

Hiring of low skilled workers

Ethical responsibilities not made important

Safety procedures not made important

Errors are seldom reported

De-motivated by work

Safety procedures not followed

Ethical responsibilities not followed

Lack of reward system

Poor management

Low motivation for jobLow Pay

Poor management

Low motivation for jobLow Pay

De-motivated by work

Measure

Inefficient organization management

Insufficient time and supervision

Not follow-up on problems

Insufficient datasampling

Inefficient procedure

Not enough Time study

Insufficient Information Tracking

Not enough supervisionNot enough employees

No clear data analysis

Lack of knowledgeData misinterpretation

Not enoughTime and people

Not enoughresources

Wrong analysis tools used

Insufficient resources

Poor lay Out

Low visibility

Not expertise people available

Limited Space

Not enough air circulation

Extreme Temperature

Not enough lights

Limited Space of warehouse

Too Hot

Too ColdToo many doors open

A/C not available

Short budget

Inefficient use of space

Wrong use of voltage

Unable to expand

Inefficient use of space

Work Environment

Improper storage arrangement

lack of grouping products

lack of floor configuration

lack of expert evaluation

outdated plan


CommunicationCommunication

Work EnvironmentWork Environment

PeoplePeople

Material HandlingMaterial Handling

MethodsMethods

Machine EquipmentMachine Equipment

MeasureMeasure

• Lack of interdepartmental communication

• Inefficient handling procedure

• Improper transport aid

• Poor picking method

• Improper storage configuration

• Inconsistent time study

• Lack of training

Long warehouse processing time

Cause-and-Effect Diagram: Analysis and Findings


Improve Goals:

– Plan, develop, and implement solutions– Prioritize the projects– Develop project plans– Actual implementation plan

I for Improve

5SmallEmployee MotivationMonthly$500 per month1 yr$6,000

Reward and Motivation Program

5SmallEfficient Communication

Efficient operational procedures

Efficient Data Analysis

1 hour4 hours8 hours

(15 Employees)$60 per person$250 per person$580 per person1 yr$6,400

TrainingCommunicationMethodsTools Analysis

5SmallEfficient Operation Procedure

4 Weeks$2,000 per method modified

3 yrs$8,250

Revise and Modify Process Methods (use expertise)

ReceivingStoringPickingShipping

5MediumTime is allocated per order

4 Weeks$500 per day observed3 yrs$10,240

Categorize orders and Establish Standard Time

ScoreComplexChangeDurationCostEnd of lifeNPVProject











3 yrs$8,250







Tools Applied

PDCAPrioritization

Service Level

Productivity Level

Prioritization











3 yrs$8,250

















3 yrs$8,250







Prioritization

1LargeProvide Visibility at all times

3 months$3,500 per reader $.40 per tag (varies)$20,000 (hardware &

software)

10 years$133,000RFIDReadersTagsAntennaHardware and

Software

2MediumBetter Environment

2 Weeks$15,00030 yrs$17,000Install appropriate lighting system

2LargeBetter Environment

2 Weeks$40,000 30 yrs$48,000Install an efficient A/C

3LargeEfficient Use of space

3 Weeks$80,0005 years$80,00Re-Arrange Layout

3SmallReduce Idle TimeYears life

2 Forklift ($14,000)3 Dollies ($600)3 Hand Forklift ($3,400)

10 yrs$17,500Buy new EquipmentForklifts


1LargeProvide Visibility at all times

3 months$3,500 per reader $.40 per tag (varies)$20,000 (hardware &

software)

10 years$133,000RFIDReadersTagsAntennaHardware and

Software

2MediumBetter Environment

2 Weeks$15,00030 yrs$17,000Install appropriate lighting system

2LargeBetter Environment

2 Weeks$40,000 30 yrs$48,000Install an efficient A/C

3LargeEfficient Use of space

3 Weeks$80,0005 years$80,00Re-Arrange Layout

3SmallReduce Idle TimeYears life

2 Forklift ($14,000)3 Dollies ($600)3 Hand Forklift ($3,400)

10 yrs$17,500Buy new EquipmentForklifts


I for Improve

Tools Applied

PDCA

Service Level

Productivity Level

PDCA: Service Level

PDCA: Service Level (Gantt Chart)

PDCA: Productivity Level

PDCA: Productivity Level (Gantt Chart)


Control Goals:

– Document new process methods and standard data per department

– Present results to management for an approval

– Training program– Monitor performance– Evaluate current methods and standard times

every five years

C for Control

Tools Applied

Control Plan

4 8 12 15A B C D

<1200 1 A1 B1 C1 D1<1400 2 A2 B2 C2 D2<1600 3 A3 B3 C3 D3<1800 4 A4 B4 C4 D4

QtyItems

Receiving

Classification Type

4 8 12 15A B C D

<1200 1 40 50 60 70<1400 2 45 55 65 75<1600 3 55 65 70 80<1800 4 60 75 75 85

Receiving

ItemsQty Minutes per order type

1 2 3 4 5LL L M H HH

<100 1 1LL 1L 1M 1H 1HH<200 2 2LL 2L 2M 2H 2HH<300 3 3LL 3L 3M 3H 3HH<400 4 4LL 4L 4M 4H 4HH

Storing

LevelQty Classification Type

1 2 3 4 5LL L M H HH

<100 1 5 8 10 15 20<200 2 7 10 12 17 22<300 3 9 12 14 19 24<400 4 10 14 16 21 26

Storing

LevelQty Minutes per order type

1 2 3 4 5LL L M H HH

<2 1 1LL 1L 1M 1H 1HH<5 2 2LL 2L 2M 2H 2HH<10 3 3LL 3L 3M 3H 3HH<20 4 4LL 4L 4M 4H 4HH

ItemsLevel

Picking

Classification Type

1 2 3 4 5LL L M H HH

<2 1 5 7 10 13 15<5 2 6 8 11 14 16<10 3 8 9 13 16 18<20 4 10 11 15 18 20

LevelItems

Picking

Minutes per order type

5 10 20S M L

<5 1 1S 1M 1L<10 2 2S 2M 2L<20 3 3S 3M 3L

QtyItems

Shipping

Classification Type

5 10 20S M L

<5 2 5 7 10<10 3 7 9 12<20 4 9 11 14

Items

Shipping

Minutes per order typeQty

Order Matrix Classification

Storing Control Chart

02468

1012

Date

Ord

ers

Per H

our

Storing Daily ResultsUpper Control LimitMeanLower Control Limit

Picking Control Chart

20

25

30

35

40

45

Date

Ord

ers

Per

Hou

r

Picking Daily ResultsUpper Control LimitMeanLower Control Limit

Shipping Control Chart

30

35

40

45

50

Date

Ord

ers

Per

Hou

r

Shipping Daily ResultsUpper Control LimitMeanLower Control Limit

Receiving Control Chart

0

1

2

3

4

Date

Ord

ers

Per

Hou

r

Receiving Daily ResultsUpper Control LimitMeanLower Control Limit

Control Charts

Project Gantt Chart

Conclusion

Entire warehouse process was analyzed Take care of small problems first:

– Standardization of process times– Classification of orders

Install and monitor proposed changes Start thinking of RFID implementation

The End

Questions………

Element Sub-elementWeight

How Measure

d

Target

Financial 33

Warehouse Productivity

Net Received Orders Per Hour

6% Eff 100%

Net Stocked Orders per Hour

3% Eff 100%

Net Pulled Orders Per Hour

3% Eff 100%

Net Shipped Orders Per Hour

6% Eff 100%

Expense per Received and Shipped Orders

698% Matrix 100%

National Revenue Growth

6% Eff 100%

International Revenue Growth

3% Eff 100%

Balance Scorecard (2006)

Documents

SEMESTER PROJECT ISE 250: Organizational Improvement Capabilities and Skills Instructor: Dr. Baruch I. Saeed Team Members: Ramachandran Janakiraman Emma