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Assessment and Improvement of the Part Order Fulfillment Process

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Presentation on theme: "Assessment and Improvement of the Part Order Fulfillment Process"— Presentation transcript:

1 Assessment and Improvement of the Part Order Fulfillment Process

2 Introduction Team Agenda Nackia Salmon Mr. Mario Sanchez
Project Manager Veronica Marcelli Technical Writer Financial Analyst Carol Hernandez Webmaster Business Analyst Mr. Mario Sanchez Faculty Advisor FIU Jorge Lozan John Kelley Project Charter Methodology Results Backorder Analysis Customer Complaints Analysis Root Cause Analysis Recommendations Economic Impact Tools and Techniques Conclusion

3 Project Charter Problem Statement Goal Statement Objectives
Growth and servicing of old machines has resulted in a challenge to provide customers with Goal Statement To assess and improve the current parts order fulfillment process and ultimately customer satisfaction. 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 Deliverables As-Is Process Map Documentation of Root Cause Analysis Recommendations and their Impact Implementation Strategy Process Control Plan

4 Methodology The TapRoot® Methodology Developed by Mark Paradies and Linda Unger Sequence of Events Corrective Action Causal Factors Root Cause Get Started 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

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

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

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

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

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 Spare Quilter Parts 8P Printer Parts 69 Old Printer Parts J4 Kits J6 Miscellaneous Machines Re-sales *Data obtain from X Information System

11 Back Order Analysis (Cont.)
Part Number PM Cumulative Frequency BO Average J P 334 5.00 66.80 J 157 12.00 13.08 J5P30229D 145 8.00 18.13 J 143 1.00 143.00 J M 107 2.00 53.50 J 106 106.00 J5P 105 105.00 J 98 4.00 24.50 J5Q13072AY 95 95.00 J5Q180395 76 38.00 J 75 3.00 25.00 J 74 37.00 J5P30319 70 17.50 J5P331910T 68 17.00 J 67 67.00 J5 Family Part Numbers, Count and Sum of days in BO in 2007

12 Back Order Analysis (Cont.)
*Data obtain from X Information System

13 Back Order Analysis (Cont.)
Part Number PM Total Days in BO Frequency BO Average Days in BO 8P3468 M 81 3.00 27.00 8P2399 50 5.00 10.00 8P P 35 2.00 17.50 8P 32 1.00 32.00 8P 31 31.00 8P 8P 8P 8P 8P 8P 30 30.00 8P 28 14.00 8P0682 24 12.00 8P2817 8P2961 23 11.50 8P Family Part Numbers, Count and Sum of days in BO in 2007

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
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.)

21 Customer Complaints by Customer

22 Customer Complaints by Customer (Cont.)
The customers that placed more than 7 complaints to X in 2007 are: Customer (Simmons CO, Hazelton, PA) Customer 90R17 (Jiading L&P Machinery Technology, Shanghai, China)* Customer (Serta , Lancaster, PA) Customer 2108 (Continental Silverline Pro, Houston TX) Customer 90N13 (L&P Components Australia Pty. Ltd., Wacol Qld, Australia) Customer (Simmons CO Inc, Janesville, WI) Customer (Consolidated Bedding Inc, Carrollton, TX) *Customer 90R17 is a sister company and X will not take this information into account to make decisions

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

26 Economic Impact by Action

27 Credit Reason by Cost

28 Credit Reason by Cost (Cont.)

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

31 Cause and Effect Diagram

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.

34 Root Cause: Wrong Product on Work Order

35 Root Cause: Inefficient Shipping/Receiving (Cont.)

36 Root Cause: Back-Order Purchasing/Manufacturing

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

39 Recommendations (Cont.)

40 Recommendations (Cont.)

41 Recommendations (Cont.)

42 Recommendations (Cont.)

43 Recommendations (Cont.)

44 Recommendations (Cont.)

45 Cost of Project

46 Cost of Project (Cont.) Cost of Project will not be taken into consideration for cost/benefit analysis

47 Cost/Benefit Analysis
Benefits were calculated assuming a minimum of 5% savings in cost of complaints ROI = (Gain of Investment – Cost of Investment) / Cost of Investment

48 Tools, Techniques and Skills

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?

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