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Enterprise Excellence Reduce Temp Management Equipment Repair and Scrap Expense Measure/Analyze Tollgate Karla Mack Project Manager February 19, 2015

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Enterprise Excellence Reduce Temp Management Equipment Repair and Scrap Expense Measure/Analyze TollgateKarla MackProject ManagerFebruary 19, 2015

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DMAIC Road Map

=Tollgate Approval

2Kaizen

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Agenda

Project Charter Kaizen Team Measure Analyze Improve Lessons Learned Next Steps Sign-Off Decision

3

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Project Charter

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Problem/Goal Statement

Core Team Tollgate Review Schedule

Business Impact

Belinda Cordina Project Sponsor Catherine Stemper Deployment Leader Karla Mack Green Belt Bob Pahl Black Belt TBD Process Owner Team members, role, % contribution, LSS training Jim Fisher, MFG One, 10 %, CIIP Trained Ashley Lucci-Vaughn, MFG One, 10%, CIIP Trained Dave Rawlings, Marketing, 10%, CIIP Trained Jason Price, Finance, 5%, CIIP Trained Laticia Wilson, Finance, 5%, CIIP Trained Debbie Nicolas, GSC HC Finance, 5%, CIIP Trained Becky Hudgins, GSC HC Finance, 5%, CIIP Trained Erion Lanier, Quality, 10%, CIIP Trained

Problem: The total spend of repairing and scraping Temp Management equipment has increased 19% over the past 12 mos. with no clear reason as to why and no increase in number of units serviced.

In Scope: North America Scrap & Repair Expense for Loaned Equipment & Purchased Equipment; All cost related to repair and scrap process; Approval process and criteria for scrapping and repairing equipmentOut of Scope: All other Ecolab Temp Management equipment processes upstream or downstream from the repair & scrap process as defined in this project; Chillbuster Equipment; Changes to our existing contract with MFG One beyond scrap and repair criteria

Goals: Reduce total spend of repair and scrap expense Review/Revise criteria for scrap and repair All invoices paid upon completion of approval process/criteria

Tollgate Scheduled Completed Define 12/02/14 12/02/14 Measure 02/13/15 02/19/15 Analyze 02/13/15 02/19/15 Improve 03/23/15 Control 04/20/15

Review high-level schedule milestones Define Gate Complete Measure Analyze Kaizen Complete

Potential Savings

Estimated Type 1 OI Benefits: 10%-20% ($50-$100K ) reduction in total

spend on repairs and scrap from 2014 to 2015 (Oct 2013 – Sept 2014 total spend: $500K)

Estimated Type 2 OI Benefits: % reduction in FTE time due to increase in

consistency and quality of information received (Providing opportunities to work on value-add activities)

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HUGE Thanks to the TEAM!!!

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Kaizen Team Members (Left to Right) Ashley Lucci-Vaughn, Jim Fisher, Laticia Wilson, Debbie Nicholas, Becky Hudgins, Erion Lanier, Jason Price, Karla Mack

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DMAIC Road Map

=Tollgate Approval

6

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Current State Process Map

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Current State Data2012 2013 2014 Comments

Total Spend $ 270,085.51 $ 460,415.40 $ 422,685.05 Significant increase from 2012-2013 due to increase in repaired units over 6+ years old

Customer Request Expense

$ 34,478.09 $ 26,703.13 $ 15,189.12 IntraTemp: 15K – 2014 & 4.6K – 2013 Average Cost: $120 ($375 for IntraTemp)

Repair Expense $ 215,239.05 $ 407,595.01 $ 392,081.37 Average Cost: $360

Scrap Expense $ 20,368.37 $ 26,117.27 $ 15,414.56 Average Cost: $40

Note: All figures exclude the IntraTemp business that was transferred to MFG One in late 2013

Analysis Conclusions: % Scrap has decrease year over year (-4%: 2012-2013; -10%: 2013-2014) w/

75% criteria Average book value at time of scrap is $38.68 Units driving repair cost are Warmers (ORS-2038, ORS-2057, ORS-2066)

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Data Supporting Problem Statement

Critical 1: Significant Increase in Repair Expense over Past 36 months

Detail: Repair expense has increased 57% from 2012 – 2014. This excludes the IntraTemp business that was transferred to MFG One in late 2013 70% increase in repair cost from 2012 to 2013 due increase repairs of units 6+ yrs old

Critical 2: Weak Criteria Around Scrap / Repair DecisionDetail: Current Criteria: If estimated repair costs > 75% of cost of new unit, the unit is scrapped

Critical 3: Lack of Visibility To Data / No Reporting Metrics Surrounding Repair ExpenseDetail: No current standardized process metrics

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DMAIC Road Map

=Tollgate Approval

10

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Team used fishbone diagram to identify greatest pain points

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Lack of Consistent & Clear Policies (Scrap & Repair)

Lack of Billing Policies & Training on Customer Driven Cost Misuse Invalid Returns Special Request

Working Units Shipped Back to MFG One Due to Rep Turnover

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What We Found

Units of 6 years old = 15K first year; 70K each additional

45% = 185K

# of times repaired = 25K

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DMAIC Road Map

=Tollgate Approval

13

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Solution Generation & Results

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Process Scrap Customer Request RepairAssign process owner to own metrics, reporting, master data

Scrap if 6+ years old Begin tracking these request through MFG One reporting

Standardized questionnaire for CS and Sales to use to troubleshoot units

Redesign the monthly reporting from MFG One to ensure process control

Scrap if previously serviced twice

Scrap if Basin needs replaced

Scrap if repairs exceed 45% of the value of a new unit

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Future State Process Map

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Business Impact This is a Type 1 savings project

Cost savings for scrap 6+ years Year 1 savings $15k Subsequent year savings $70k

The project determines clear criteria for scrap / repair decision making Scrap units > 6 years of age Scrap returned units that have been previously repaired twice Scrap units with basin damage Scrap units whose cost to repair > 45% of new unit cost

Defined metrics enable process owners to have the data they need to approve invoices and provides quality control.

Metrics provide data to support marketing business decisions around customer management.

Customer Service and Sales Reps troubleshoot using a standardize questionnaire

Financial

Process

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Pilot PlanPilot Test Description Success Criteria Test Team Schedule

Redesign the daily reporting from Ecolab

Add # of times repaired and mfg date

Test 5 units to verify data corresponds to the correct unit Erion, Karla, Becky 2/23-2/27

Reps/CS troubleshooting w/ customer using questionnaire

Test question are for flow and make sure it is a appropriate line of questioning

Rep focus group (3-5 reps of sales mgt) Dave Rawlings 2/23-3/11

Metrics & Reporting

How are metrics measured and reported monthly? What will they look like? How will they be calculated?

Validate calculations of agreed upon control metrics Luke, Erion 3/2 - 3/18

Redesign the monthly reporting from MFG1

Finance and service detail: addition of age of unit, # of times repaired, type of service (repair/customer request/scrap) equipment class, unconfirmed/confirmed; nature of service

Test 25 units to verify data corresponds to the correct unit Erion, Karla, Becky 3/11-3/18

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Pilot status will be communicated to team and stakeholders weekly – Owner: Karla Mack

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Action Plan

Action Who Complete StatusFor MFG1 provided data, we will need Kathy T. to modify her monthly repair report Ashley/Jim 18-Feb

Dave, Erion, Karla to develop questionnaire for marketing Karla 19-Feb

Verify R&D about the need for component trending Karla 19-Feb

Review financial numbers with Ross Laticia 19-FebFind out the process and timeline for updating agreement btw Ecolab and MFG1 – Follow-up w/ Legal Karla 23-Feb

Hold meeting w/ stakeholders to establish process owner Karla 25-Feb

Verify Invoice Approver (Process Owner?) Karla 25-FebHave Liesel write script to get # of times unit is repaired and manufacturing date on daily report to MFG One Dave 27-Feb

Hold meeting to establish metrics calculations Karla 27-Feb

Create part drop down list for MFG One reporting Becky/Jason 27-FebCreate nature of service drop down list for MFG One reporting

Erion/Process Owner 27-Feb

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LEGENDGreen = On TrackYellow = At RiskRed = Behind ScheduleWhite = Not StartedBlue = Complete

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Marketing & Sales Customer Management Opportunity

Units being returned that do not need to be returned Customer misuse of equipment Customer special requests

Rep Turnover

R&D Opportunity to upgrade frequently failing components

Quality Process for approval of special request

Identified Future Efforts

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Lessons Learned Process performance metrics need to be monitored, tracked

and shared with Leadership, Department Personnel, and Stakeholders

Every process NEEDS a process owner to maintain evaluate if the process is in control

Kaizens are intensive and require full engagement from all team members, so having a complete focused team increases the odds of having success

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Sign Off

I concur that the Define phase was successfully completed on 02/19/15

I concur the project is ready to proceed with pilot implementation and can officially move to next phase: Improve

Catherine StemperDeployment Leader

Ross MichalsonFinance Representative

Bob PahlProject Coach

Belinda CordinaSponsor

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Next Steps

Team will continue to implement action plan

Pilot plan with start Monday 2/23 with first status update on 3/02

Karla will schedule a meeting with stakeholders to establish future process owner

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Appendix

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Cause and Effect DiagramGaps: Standard metrics were not determined Lack of Policy to bill for equipment misuse Times when units are not returned to MFG One Times when units are shipped back and do not need repairs Incomplete rep training and procedures Unconfirmed complaints Rep turnover possibly leading to units being returned

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FMEAProcess Step /

InputPotential Failure

ModePotential Failure

EffectsPotential Causes Current Controls

Actions Recommended

Resp.

What is the process step and Input under investigation?

In what ways does the Key Input go wrong?

What is the impact on the Key Output Variables

(Customer Requirements)?

What causes the Key Input to go wrong?

What are the existing controls and procedures (inspection and test) that prevent either the cause

or the Failure Mode?

What are the actions for reducing the occurrence

of the cause, or improving detection?

Redesign the monthly reporting

from MFG1

Inconsistent model numbers

preventing data to line up properly

Manual Process None

Identify uniformed part list and use that list on each

report

Becky and Jason to develop list and

provide drop downs in reporting

Redesign the daily reporting from

Ecolab

Changes in queries SF.com may introduce

error

Invalid dataHuman error in query design

NonePiloting the

creation of the report

Liesel to write query, Erion to

test report output, Karla to help Erion

design test plan

Enforcing Scrap Criteria

Customer units sent in that work, but meet criteria and is scrapped

Scrap perfectly good units

Nothing to monitor customers

sending in units because they want

new ones

NoneReevaluate scrap criteria annually

Team to add reevaluating

criteria annually to recommendation

Reps/CS troubleshooting w/

customer using questionnaire

Condition of unit is relative and

CS/Rep may not be able to get out to the location to

evaluate in person

Working units get sent back for

repair and don't need to

Rep/CS are unable to align with opinion of

customer

None

Questions are clear and the reps/cs are

properly trained on how to

troubleshoot

Dave, Karla, Erion to develop

questions; Dave to develop training plan for reps and Erion to develop

training for cs

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Pilot Communication PlanAudience Purpose Media Topic of Discussion Owner Freq.

Team MembersUpdate on progress

on the pilot

Weekly Email on Progress complete with red, yellow,

green status

Pilot progress, remaining action items, barriers and road blocks if applicable

Karla Mack

Weekly

Project Stakeholders

Groups

Update on progress on the pilot

Weekly Email on Progress complete with red, yellow,

green status

Pilot progress, remaining action items, barriers and road blocks if applicable

Karla Mack

Weekly

Belinda Cordina (Project Sponsor)

Update on progress on the pilot

Weekly Email on Progress complete with red, yellow,

green status

Pilot progress, remaining action items, barriers and road blocks if applicable

Karla Mack

Weekly