Reducing Lead Time In Customer Replacement Part Orders By 41% With GLSS
Florida
Healthcare
Patient Care
350%
Process analysis uncovered wasted motion, disorganized inventory, and non-value-added activities. Of the five potential root causes identified, four were validated by data and one was ruled out. Addressing the confirmed root causes improved time and motion efficiency, introduced a kanban system for inventory management, enhanced cross-training and workload balancing, and eliminated non-value-added activities.
A monitoring plan was established to track lead times and prompt corrective action when necessary. These improvements may also be applied to other processes across the organization.
– Susan Tighe, GoLeanSixSigma.com Master Black Belt Coach
Executive Summary
Business Case
Reducing lead time would improve customer satisfaction by delivering parts ordered through customer service more quickly. If total lead time is not reduced, customer relationships and the organization’s reputation could suffer. Lead time improvements could also lower costs by increasing process efficiency.
Root Cause Analysis
The data shows that waiting is the primary cause of lengthy lead times. The most significant delays result from unbalanced workloads and insufficient inventory.
Solutions Implemented
To address insufficient inventory, a kanban system was implemented to trigger timely reorders and prevent stockouts. To balance workloads, warehouse employees were cross-trained to increase productivity and reduce wait times.
Project Results
Freight costs decreased by 8% after implementing a kanban system that eliminated stockouts and reduced the need for expedited shipments.
Graphical Display of Improvement
Key Takeaway: The project was very successful. We were able to identify root causes and address them with solutions that translated to faster lead times, money saved and happy customers!
DEFINE PHASE
Project Charter
Project Name: Customer Service Replacement Part Lead Time
Problem Statement
In the last 6 months we have been receiving customer complaints about how long it is taking for customers to receive their spare parts after placing an order. The current lead time for parts is 7-10 days.
Goal Statement
Reduce the average time to deliver spare parts orders from an average of 8.5 days to 5 days or less by May 5th.
Scope
- First Process Step: Customer places order via website or by phone
- Last Process Step: Deliver order to customer
- In Scope: Process steps, warehouse layout, length of process time, vendor management, cross-training
- Out Scope: System upgrades and additional hiring
Business Case & Benefits
Reducing lead time for customer service spare-parts orders would improve the client experience. Faster order processing could also increase customer retention and generate financial benefits. In addition, process improvements could lower costs by reducing the need for expedited shipments.
Timeline
| Phase | Planned | Actual |
| Define | March 1 | March 5 |
| Measure | March 16 | March 19 |
| Analyze | April 2 | April 2 |
| Improve | April 16 | April 20 |
| Control | May 5 | May 4 |
Team Members
| Position | Person | Title | Time Commitment |
| Team Lead | Jared | Green Belt Candidate | 20% |
| Sponsor | Brad | Manager | 20% |
| Team Member | Stacy | Warehouse Staff | 15% |
| Team Member | Raymond | Warehouse Staff | 15% |
| Team Member | Ricky | Customer Service Staff | 15% |
Key Takeaway: Lower lead times result in happier customers.
SIPOC
Key Takeaway: The scope of the project is from the moment we receive the customer order to the moment they receive their spare parts delivery.
As-Is Detailed Map Segment
Key Takeaway: Process walk revealed that orders were walked to the warehouse and two non-value adding checks are in place. Also, with one worker for pick & pack and one for shipping, orders usually end up waiting due to lack of resources.
MEASURE PHASE
Data Collection Plan
Key Takeaway: With exception to order checks, this is a cycle time project, all of the measures turned out to be continuous measures of different segments of time.
Baseline Data – Project Y
Key Takeaway: Lots of variation in the process and the average time to deliver is 8.5 days which is very high!
Baseline Data – Spare Part Order Lead
Key Takeaway: Customers want delivery in 5 days or less, so the spare part delivery process is clearly not capable.
ANALYZE PHASE
Fishbone Diagram
Key Takeaway: The biggest areas to analyze further were inventory location, pick & pack, delivery, and worker habits.
Map Segment Showing Analysis
Key Takeaway: Process changes include cross-training customer service.
As-Is Detailed Map Segment
Key Takeaway: There’s significant waste of motion and a need to consolidate the spare part inventory from six into two or less aisles.
Vale-Added Flow Analysis
Key Takeaway: Biggest opportunity is to remove wait time from checking inventory. This is the average time delayed due to insufficient inventory.
Root Cause Hypothesis
Key Takeaway: Data confirmed all the hypotheses except for order check – it does not contribute significantly to total lead time.
IMPROVE PHASE
Selected Solutions
Key Takeaway: There was no buy-in to add spare parts orders to the ERP so the team focused first on cross-training which resulted in enhanced teamwork.
“To Be” Map Segment
Key Takeaway: Process has been streamlined to have inventory checked at beginning of process to avoid delays.
Spaghetti Map
Key Takeaway: We’ve drastically reduced the amount of motion by storing inventory in only two aisles.
Run Chart Showing Improvement
Key Takeaway: Improvements that addressed insufficient inventory and also workload balancing helped drastically lower lead time and lessen variation.
CONTROL PHASE
Project Closure
Scope
- Do the process walk with everyone involved so that brainstorming will yield better results.
- Don’t draw any conclusions before you measure and analyze the data.
- Do make sure you monitor the results during the Control Phase to avoid slipping.
Customer Impact
- Customers are receiving their orders faster.
- We’ve received less complaints which frees up customer service and also makes them happy!
- Kanbans resulted in less stock-outs which makes retailers happy since customers are not contacting them angrily.
Final Calculations
- Freight costs decreased by 8% with addition of Kanbans that have eliminated stock-outs and need for expedited shipments.
- Cross-training resulted in less wait time, higher productivity, and orders being processed faster.
- Warehouse workers are less tired as a result of the physical inventory shift and re-organization.
Sign-off From Project Sponsor
Excellent job by the team to use the DMAIC methodology to improve our spare part fulfillment process! The documented changes have been approved. – Brad, Project Sponsor
Key Takeaway: We were able to get some cost savings on freight and reduced lead times which yielded more satisfied customers.
Key Words
- Customers: People who’ve purchased our product
- Order Lead Time: Total cycle time from the moment the customer places their order to the moment they receive their spare parts.
- Spare Parts: Any component that is missing and/or damaged from the product parts.
Appendix
- Key Takeaway: The project was very successful. We were able to identify root causes and address them with solutions that translated to faster lead times, money saved and happy customers!
- Key Takeaway: Lower lead times result in happier customers.
- Key Takeaway: The scope of the project is from the moment we receive the customer order to the moment they receive their spare parts delivery.
- Key Takeaway: Process walk revealed that orders were walked to the warehouse and two non-value adding checks are in place. Also, with one worker for pick & pack and one for shipping, orders usually end up waiting due to lack of resources.
- Key Takeaway: With exception to order checks, this is a cycle time project, all of the measures turned out to be continuous measures of different segments of time.
- Key Takeaway: Lots of variation in the process and the average time to deliver is 8.5 days which is very high!
- Key Takeaway: Customers want delivery in 5 days or less, so the spare part delivery process is clearly not capable.
- Key Takeaway: The biggest areas to analyze further were inventory location, pick & pack, delivery, and worker habits.
- Key Takeaway: Process changes include cross-training customer service.
- Key Takeaway: There’s significant waste of motion and a need to consolidate the spare part inventory from six into two or less aisles.
- Key Takeaway: Data confirmed all the hypotheses except for order check – it does not contribute significantly to total lead time.
- Key Takeaway: There was no buy-in to add spare parts orders to the ERP so the team focused first on cross-training which resulted in enhanced teamwork.
- Key Takeaway: Process has been streamlined to have inventory checked at beginning of process to avoid delays.
- Key Takeaway: We’ve drastically reduced the amount of motion by storing inventory in only two aisles.
- Key Takeaway: Improvements that addressed insufficient inventory and also workload balancing helped drastically lower lead time and lessen variation
Project Storyboard
