Reducing Lead Time In Customer Replacement Part Orders By 41% With GLSS
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Florida
Healthcare
Patient Care
350%
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
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
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