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 ManagerVeronica MarcelliTechnical WriterFinancial AnalystCarol HernandezWebmasterBusiness AnalystMr. Mario SanchezFaculty AdvisorFIUJorge LozanJohn KelleyProject CharterMethodologyResultsBackorder AnalysisCustomer Complaints AnalysisRoot Cause AnalysisRecommendationsEconomic ImpactTools and TechniquesConclusion
3 Project Charter Problem Statement Goal Statement Objectives Growth and servicing of old machines has resulted in a challenge to provide customers withGoal StatementTo assess and improve the current parts order fulfillment process and ultimately customer satisfaction.Correct desired partQuality desired partWithin desired timeObjectivesComplete a thorough assessment of current process and construct a feasible list of recommendations toDecrease return authorizationsDecrease credit memosDecrease customer complaintsDecrease lead time of order fulfillmentDeliverablesAs-Is Process MapDocumentation of Root Cause AnalysisRecommendations and their ImpactImplementation StrategyProcess Control Plan
4 MethodologyThe TapRoot® Methodology Developed by Mark Paradies and Linda UngerSequence of EventsCorrective ActionCausal FactorsRoot CauseGet StartedGather informationconcerning• Company○ Background○ Mission○ Vision○ Policies○ Procedures○ Contacts• Problem background•Needed/Missing InformationDeterminesequence of eventsByInterviews•Current StateProcess Map• Needed/Missing InformationDefine causalfactors of theproblem by• Data Collection and Pareto Analysis○ Customer Complaints○ Parts on Back Order• Brainstorming Session•Cause and Effect DiagramAnalyze causalfactor’s rootcause by• Focus Group ofKey employees• 5 Whys Method• Root Cause DiagramDevelop andevaluate correctiveaction 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
6 Cross functional chart validated by Customer Service Manager and Backorder Clerk 7
7 Cross functional chart validated by Customer Service Manager and Backorder Clerk 8
8 Cross functional chart validated by Customer Service Manager and Backorder Clerk 9
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 Parts8PPrinter Parts69Old Printer PartsJ4KitsJ6Miscellaneous Machines Re-sales*Data obtain from X Information System
11 Back Order Analysis (Cont.) Part NumberPMCumulativeFrequency BOAverageJP3345.0066.80J15712.0013.08J5P30229D1458.0018.13J1431.00143.00JM1072.0053.50J106106.00J5P105105.00J984.0024.50J5Q13072AY9595.00J5Q1803957638.00J753.0025.00J7437.00J5P303197017.50J5P331910T6817.00J6767.00J5 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 NumberPMTotal Days in BOFrequency BOAverage Days in BO8P3468M813.0027.008P2399505.0010.008PP352.0017.508P321.0032.008P3131.008P8P8P8P8P8P3030.008P2814.008P06822412.008P28178P29612311.508P 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 collectionExclude 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 dataData was analyzed by the type of complaint or credit reason to determine most commonData was analyzed by customer to determine root of most complaintsData 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 A total number of 485 complaints was analyzed from X Complaint Log system for the year of 2007
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 customerCredit Memo (CM): Complaint incurring in administrative cost and the accreditation of the cost of the part (s) to the customerManual 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 ObservationsThe 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 ofideas of the causes to the problem identified.Steps followed:1. Introduction2. Objectives and guidelines3. The problem or effect of interest was identified and placed at thehead of a fishbone diagram4. Major categories of the fish bone were the main process steps andthey were placed on the diagram5. Entire group brainstormed for more detailed causes and wrote themon sticky paper6. Each person shared their ideas after which they were placed on thefishbone diagram under respective category7. Diagram was reviewed and critical causes were identified8. 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 IdentificationInefficiencies in Shipping/ReceivingBack-ordered parts contributing to long lead times
33 Root Cause Analysis5Whys MethodA 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/ManufacturingTips: 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 Customers6S Implementation in Parts Storage AreaFocused on sort, set in order and sustainFormal Training for Parts RepresentativesContinuous Improvement Program Teams (CIP) for each top 5 codesValue 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 areaDetailed documentation of parts revisionwill benefit X financially and time wise sinceone semester is offered as time frame for completionRecommendations given do not only focus on cost saving but on process standardization for control of the systemCustomer satisfaction will be positively impacted by our recommendationsProbability of sales increase should not be discarded after recommendations have been implemented