REDUCTION OF OUTBOUND FREIGHT COSTS - EQUIPMENT Black Belt - Nicole Brannon Champion - Tony Martino MBB - Art Girard FA - Diane Brightwell

2 Project Definition Problem Statement: n Excessive freight charges on outbound Equipment across Canada. n IKON is faced with multiple charges for these repeat deliveries. Project Metric (Y): n Reduction of outbound freight charges for Equipment. Defect Definition: n Preventable 2nd deliveries or pickups. Project Benefits: n An overall 70% process improvement and cost reduction across Canada n Documented standardized processes across Canada.

3 Project Background No detailed reporting n 2003 no detailed reporting given to IKON Logistic Leaders. n 3 rd Party Logistics billing 3 rd Party Payable Jan’04 detailed reports were provided to Logistics. n Scrutinized by Logistic Leaders n Became our Measurement System No Standard Process Across Canada n Differed from Province to Province n Marketplace to Marketplace

4 Data Collection reveals Defects 65%of all defects were caused by 3 issues: Customer not expecting Cancelled en route Technician required

5 Overview of Findings - Root Causes Data Collection and the FMEA pointed us towards several manageable root causes. All of which have had IMPROVEMENTS IMPLEMENTED : Pre-calls n Audit revealed 100% of deliveries did not contain pre-call information Removal process n No pre-call attempts n No verification of tech scheduled n Extra charges incurred for paperwork mishandling No Accountability n No Audits n No Controls

6 PROCESS IMPROVEMENT – SOP DEVELOPED FOR BEST FIT SOLUTIONS Defect Definitions - Provides IKON and 3 rd Party Logistics with a standard vocabulary and understanding of specific defects Equipment Delivery/Tracking Processes - Provides IKON and 3 rd Party Logistics with a standard process for reporting delivery and removal transactions. Data Collection and Defect Mapping - Outlines the process by which logistics will accurately track and record all equipment deliveries and pickups. Setting Customer Expectations Process update sent to Sales re-enforcing expectations set by Logistics that customer contact must be made prior to delivery or pick-up attempts by 3PL. Effective Pre-calls Contains a pre-call checklist, escalation process if customer cant be contacted, removal process and process maps.

7 Pre-call Process Flow – 3PL (Exel) Exel (3PL) outsourced for all Equipment Logistics across Canada This process flow was incorporated by Exel into their Internal Process Documentation

8 Internal Defect Mapping / Reporting and Audit Process Flow to Sustain the Gains Before Six Sigma there was no standardized process in place for data collection,auditing, or reporting

9 Process in Control - Prairies DPMO = 241,379 Z lt = 0.8Z st = 2.3 DPMO = 33,707Z lt = 1.9Z st = 3.4

10 Process Capability – Improvement Trend Jan ’04 – June ’04 Across Canada Pre-Process Improvement: Jan’04Post-Process Improvement – June’04 DPMO = 161,378Zlt = 1.0 Zst = 2.5 DPMO = Zlt = 1.4Zst = 2.9 Pre-Process Improvement: Jan’04Post-Process Improvement – June’04 DPMO = 161,378Zlt = 1.0 Zst = 2.5 DPMO = Zlt = 1.4Zst = 2.9

11 FINANCIAL BENEFITS Benefits come from tracking actual defects to actual dollars billed to IKON by 3PL using Jan’04 baseline. Hard Savings Feb-Jun’04 = 68,804 Forecasted ’04 savings = $112,000 Forecasted ’05 savings = $263,424

12 Project Closure n Project is scheduled for close-out presentation to the Steering Committee on August 30 th n Process Hand-off documents have been prepared including Process Hand-off Contract signatures from Champion, Financial Analyst, Process Owner and Master Black Belt. n Any Feed-back you may have to prepare this project for closure would be welcomed.