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Reducing Lead Time in Customer Replacement Part Orders by 41% - GoLeanSixSigma.com

GoLeanSixSigma.com Green Belt Jared Krehel’s Project Storyboard illustrates the project team’s success reducing lead time in a process delivering customer replacement parts. The goal was to reduce the lead time from order submission to order delivery from 8.5 days to 5 days or less. As a result of this project, customers were delighted, complaints reduced, and the team also enjoyed a reduction in freight costs by 8%. The goal was met in two months time.

Process analysis revealed wasted motion, disorganized inventory, and non-value-added activities. There were five potential root causes identified, four of which were confirmed by data, and one was refuted. These validated root causes led to efficiencies in time and motion, the implementation of a kanban system to manage inventory, cross training/load balancing, and the elimination of NVA activities.

A monitoring plan was established to track lead times and respond if they become excessive. The improvements in this process can potentially be applied to other processes within the organization.

– Susan Tighe, GoLeanSixSigma.com Master Black Belt Coach

Executive Summary

Business Case

Lead time improvement would result in more satisfied customers by getting their customer service ordered parts more quickly. Additionally, if we are not able to decrease our total lead time, it could damage our reputation with customers. Finally, total lead time improvement could translate to cost reductions by improving efficiencies.

Root Cause Analysis

Data shows that wait times are the main causes for lengthy lead times. Wait times concerned with unbalanced workloads and insufficient inventory are very high and are problematic.

Solutions Implemented

For insufficient inventories, Kanbans were implemented to signal the need for re-orders so that no stock-outs would occur. For unbalanced workloads, cross-training took place for the warehouse workers so productivity could be increased and wait times lessened.

Project Results

Freight cost decreased by 8% with addition of Kanbans that have eliminated stock-outs and need for expedited shipments.

Graphical Display of Improvement

Jared Krehel Project Storyboard - Run Chart - GoLeanSixSigma.com

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

Lead time improvement in our customer service spare parts orders would result in an enhanced client experience. Lead time improvement could also translate into monetary benefits because we may process orders faster thereby increasing the likelihood of retaining our customers. Finally, money could be saved by improving processes that will help to eliminate expedited shipments to customers.

Timeline

PhasePlannedActual
DefineMarch 1March 5
MeasureMarch 16March 19
AnalyzeApril 2April 2
ImproveApril 16April 20
ControlMay 5May 4

Team Members

PositionPersonTitleTime Commitment
Team LeadJaredGreen Belt Candidate20%
SponsorBradManager20%
Team MemberStacyWarehouse Staff15%
Team MemberRaymondWarehouse Staff15%
Team MemberRickyCustomer Service Staff15%

 
Key Takeaway: Lower lead times result in happier customers.

SIPOC

Jared Krehel Project Storyboard - SIPOC - GoLeanSixSigma.com

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

Jared Krehel Project Storyboard - As Is Map - GoLeanSixSigma.com

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

Jared Krehel Project Storyboard - Data Collection Plan - GoLeanSixSigma.com

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

Jared Krehel Project Storyboard - Baseline Project Y - GoLeanSixSigma.com

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

Jared Krehel Project Storyboard - Baseline Spare Part Order Lead - GoLeanSixSigma.com

Key Takeaway: Customers want delivery in 5 days or less, so the spare part delivery process is clearly not capable.

ANALYZE PHASE

Fishbone Diagram

Jared Krehel Project Storyboard - Fishbone Diagram - GoLeanSixSigma.com

Key Takeaway: The biggest areas to analyze further were inventory location, pick & pack, delivery, and worker habits.

Map Segment Showing Analysis

Jared Krehel Project Storyboard - Map Segment Showing Analysis - GoLeanSixSigma.com

Key Takeaway: Process changes include cross-training customer service.

As-Is Detailed Map Segment

Jared Krehel Project Storyboard - Spaghetti Map - GoLeanSixSigma.com

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

Jared Krehel Project Storyboard - Value-Added Flow Analysis - GoLeanSixSigma.com

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

Jared Krehel Project Storyboard - Root Cause Hypothesis - GoLeanSixSigma.com

Key Takeaway: Data confirmed all the hypotheses except for order check – it does not contribute significantly to total lead time.

IMPROVE PHASE

Selected Solutions

Jared Krehel Project Storyboard - Solution Selection Matrix - GoLeanSixSigma.com

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

Jared Krehel Project Storyboard - To Be Map Segment - GoLeanSixSigma.com

Key Takeaway: Process has been streamlined to have inventory checked at beginning of process to avoid delays.

Spaghetti Map

Jared Krehel Project Storyboard - Spaghetti Map - GoLeanSixSigma.com

Key Takeaway: We’ve drastically reduced the amount of motion by storing inventory in only two aisles.

Run Chart Showing Improvement

Jared Krehel Project Storyboard - Run Chart - GoLeanSixSigma.com

Key Takeaway: Improvements that addressed insufficient inventory and also workload balancing helped drastically lower lead time and lessen variation.

CONTROL PHASE

Project Closure

Lessons Learned

  • 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

Jared Krehel

Jared Krehel is a recent MBA graduate with over 12 years of experience in supply chain operations for multiple consumer goods manufacturers. Having spent the last four years as a director, he is responsible for managing and optimizing the supply chain. With the goal of creating and completing multiple continuous improvement projects, he just earned his Lean Six Sigma Green Belt Certification.

Susan Tighe

Susan Tighe is a Senior Consultant at GoLeanSixSigma.com. For over 14 years, she's worked within matrixed organizations driving cross-functional Six Sigma teams through mission-critical projects to determine and realize optimized processes.