Presentation on theme: "1 Assessment and Improvement of the Part Order Fulfillment Process."— Presentation transcript:
1 Assessment and Improvement of the Part Order Fulfillment Process
2 Introduction Project Charter Methodology Results Backorder Analysis Customer Complaints Analysis Root Cause Analysis Recommendations Economic Impact Tools and Techniques Conclusion Team Nackia Salmon Project Manager Veronica Marcelli Technical Writer Financial Analyst Carol Hernandez Webmaster Business Analyst Agenda Mr. Mario Sanchez Faculty Advisor FIU Jorge Lozan John Kelley
3 Goal Statement To assess and improve the current parts order fulfillment process and ultimately customer satisfaction. Problem Statement Growth 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 Objectives Complete 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 factors 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 Started Sequence of Events Causal Factors Root Cause Corrective Action
5 Cross functional chart validated by Customer Service Manager and Backorder Clerk 6
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.) J5Spare Quilter Parts 8PPrinter Parts J6Miscellaneous Machines Re- sales *Data obtain from X Information System 69Old Printer Parts J4Kits
11 Back Order Analysis (Cont.) J5 Family Part Numbers, Count and Sum of days in BO in 2007 Part NumberPMCumulativeFrequency BOAverage J515001321P3345.0066.80 J5206042P15712.0013.08 J5P30229DP1458.0018.13 J515001130P1431.00143.00 J513195265M1072.0053.50 J5539015000M1061.00106.00 J5P3031910P1051.00105.00 J540000739M984.0024.50 J5Q13072AYM951.0095.00 J5Q180395M762.0038.00 J513193261M753.0025.00 J598271144M742.0037.00 J5P30319P704.0017.50 J5P331910TP684.0017.00 J513770065P671.0067.00
12 Back Order Analysis (Cont.) *Data obtain from X Information System
13 Back Order Analysis (Cont.) 8P Family Part Numbers, Count and Sum of days in BO in 2007 Part NumberPMTotal Days in BOFrequency BOAverage Days in BO 8P3468M813.0027.00 8P2399M505.0010.00 8P67356003P352.0017.50 8P61369002P321.0032.00 8P65158008P311.0031.00 8P65158009P311.0031.00 8P65158010P311.0031.00 8P65158011P311.0031.00 8P65158012P311.0031.00 8P65158013P311.0031.00 8P43625101P301.0030.00 8P67356002P282.0014.00 8P0682P242.0012.00 8P2817M242.0012.00 8P2961M232.0011.50
14 Back Order Analysis (Cont.) *Data obtain from X Information System
15 Back Order Analysis (Cont.) 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 impact Management provided information of Credit Memo, Return Authorization and Manual Entries cost
19 Customer Complaints by Credit Reason 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.)
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
24 Credit Memo Cost Assumptions * Developed in collaboration with X Customer Service Manager
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
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)
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 guidelines 3. 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
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 Tips: Nothing sacred about the number 5.
37 Main Root Causes and Impact *Numerical values illustrated are per year and based on only 2007 data.
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
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