define

1

Six Sigma Project Title:

Maximize “on time” delivery and reduce delays in delivery of Goods

Project No.: OAS-06-007 (2W) (Revision 7, 7 September 2006)

2

Champion: Paulino P. SantiagoTeam Leader: Bryan C. Cook

Asst. Team Leaders: Ma. Corazon Panganiban and Manolo D. Macariola

Members:Lorna Santillan, Eric De Leon, Janet E. Paterno

Hernand De Chavez and Rey Belza

3

DEFINE

PROJECT DESCRIPTION:OAIS-PC receives a number of complaints for the delayed delivery of goods which causes inconvenience to end user, delay implementation of projects and results in lost opportunity.

PROBLEM STATEMENT:Delay in delivery of goods has a negative impact on customer (user section) satisfaction and results in lost of opportunity on the use of goods, or holds back the implementation of project.

Project Title: Maximize on time delivery and reduce delays in delivery of goods

4

DEFINE

GOAL STATEMENT:

•Reduce the number of delayed deliveries of goods and increase the "on time" delivery and customer satisfaction - KRA

Project Title: Maximize on time delivery and reduce delays in delivery of goods

5

High Level Process MapDEFINE

Receipt of Request for

Purchase (RP) via Oracle

Assign RPSelect

Procurement Methodology

Invite Suppliers/Bidders

Receive quotes/bids Evaluate quotes/

bidsPrepare POs

Issue Purchase Order (PO) to

successful supplier/bidder

Supplier delivers Goods

Receipt of Goods END

START

6

Detailed Process Map for GoodsDEFINE

Detailed Process Map for delivery of Goods

Su

pp

lier

MM

UU

ser

- S

ect

ion

OA

IS-P

C

Receipt of PO via fax / original via

mailSigns

acknowledges PO

Receipt of signed PO & file

Process PODeliver Goods to

ADB

Receipt of GoodsCheck/Inspect Goods – Sign

delivery receipt

Receipt of Goods/ check/inspect

Goods

Print RR

Sign & Return RR to MMU

Prepare delivery receipt/invoice

Receipt of RR Close RR in Oracle

END

Issue PO to successful supplierSTART

Accept GoodsReturn to Goods to Supplier & inform

OAIS-PC

Accept GoodsReturn Goods to

MMU

Receive rejected Goods

Replace Goods

NO

YES

YES

NO

7

Output characteristics/ Project Y Relationship

Matrix DEFINE

Output Characteristics On t

ime

(Y,

N)

Act

ual

no.

of

day

s of

del

iver

y fr

om

iss

uan

ce

of

PO

Corr

ect

spec

ifica

tions

Corr

ect

quan

tity

Corr

ect

del

iver

y re

ceip

t an

d invo

ice

Def

ecti

ve d

eliv

ery

No.

of

com

pla

ints

of

end-u

sers

8 8 8 8 8

8 - Strong relationship

- Moderate relationship

- Weak relationship

Potential Output Measures

Delivery of Goods within specified number of days as

indicated in the PO

8

Critical to QualityDEFINE

Output Characteristic

(Big Y)On time delivery of Goods

Operations DefinitionProcess starts from issuance of PO to the supplier to receipt of Goods and Closing of RR in Oracle

How process will be measured

From the time PO is faxed to the supplier to the time goods arrive at the port (indent orders) or receipt of goods at ADB (local orders).USL = 80% mean of data collectedLSL = 0Target = 50% of the mean

TargetTo maximize on time delivery and reduce delays by 50% of the mean based on the 2005 data.

Defect beyond USL

No. of Defect Opportunities

Per Unit1 opportunity for a defect per PO issued

CTQ

Project Y (Little y) Measure

Specification Limits

9

1. On time delivery2. Correct Specs.3. Correct qty.

UsersDelivery of Goods

1. Issues PO to Supplier2. Receives, acknowledges & signs PO3. Process PO 4. Issues delivery receipt & invoice5. Delivers Goods6. Received Goods & issue RR7. Check, Inspects, accepts Goods & signs RR

Purchase

Order (PO)OAIS-PC

S I P O C CTQs DEFINE

CTQsCTQsSSupplier OOutputPProcessIInput CCustomer

10

Time LineDEFINE

ControlAnalyze ImproveMeasureDefine

Time Line

40 days15 Dec.05 to25 Jan.06

49 days26 Jan.06 to15 Mar.06

45 days16 Mar.06 to30 Apr.06

59 days 2 May06 to30Jun.06

70 days1 Jul.06 to8 Sep.06

11

SAMPLEData Collection MEASUREMEASURE

Please see attached excel worksheets for the data collected

12

Process Capability for Project Y

Local DeliveriesMEASUREMEASURE

Delay

Frequency

1501209060300-30

160

140

120

100

80

60

40

20

0

Mean 10.76StDev 22.46

N 241

Histogram (with Normal Curve) of Local Deliveries

13

1501209060300-30

USL

240220200180160140120100806040201

1000000

100000

10000

1000

100

10

1

Date:

Lower Spec:Nominal: 5 Opportunity:

Reported by:Project:Department:Process:Characteristic:Units:Upper Spec: 8

Actual (LT)

Process Performance Process Demographics

Actual (LT) Potential (ST)

Sigma(Z.Bench)

DPMO

-0.12

548919.9

1.38

84,245.8

Process Benchmarks

Report 1: Executive Summary - Local Deliveries



Distributioncurve

14



241217193169145121977349251

200

100

0

_X=10.8

UCL=61.5

LCL=-40.0

Observation241217193169145121977349251

160

80

0

__MR=19.1

UCL=62.3

LCL=0

ST

* -0.12Z.LSL * *Z.Bench 1.38 -0.12Z.Shift 1.50

LT

1.50P.USL * 0.548920P.LSL * *P.Total 0.0842458 0.548920

Mean

Yield 91.58 45.11DPMO 84245.8 548919.9Cp * *Cpk

5

* *CCpk * *Pp * *Ppk *

10.7635

-0.04

StDev * 22.480Z.USL

8 8

78.2023-56.6754

I and MR Chart

Process Tolerance

Specifications

Potential (ST) Capability

Process Tolerance

Specifications

Actual (LT) Capability

Data Source:Time Span:Data Trace:

Capability I ndices

Report 2: Process Capability for Local Deliveries

15


Indent DeliveriesMEASUREMEASURE

Dlay

Frequency

200150100500-50

40

30

20

10

0

Mean 12.55StDev 32.72N 56

Histogram (with Normal Curve) of Indent Deliveries

16

200150100500-50

USL

5550454035302520151051

1000000

100000

10000

1000

100

10

1

Date:



Actual (LT)



Sigma(Z.Bench)

DPMO

-0.08

530959.5

1.42

77,467.0

Process Benchmarks

Report 1: Executive Summary for Indent Deliveries



Distributioncurve

17



554943373125191371

200

100

0

_X=12.6

UCL=63.5

LCL=-38.4

Observation554943373125191371

200

100

0

__MR=19.1

UCL=62.6

LCL=0

ST

* -0.08Z.LSL * *Z.Bench 1.42 -0.08Z.Shift 1.50

LT

1.50P.USL * 0.530959P.LSL * *P.Total 0.0774670 0.530959

Mean

Yield 92.25 46.90DPMO 77467.0 530959.5Cp * *Cpk

6


12.5536

-0.03

StDev * 32.872Z.USL

10 10

111.17-86.0628

I and MR Chart

Process Tolerance

Specifications


Process Tolerance

Specifications



Capability I ndices

Report 2: Process Capability for Indent Deliveries

18

Pareto Chart for no. of delayed Delivery per Supplier

Pareto Chart for no. of delayed Delivery per SupplierMEASUREMEASURE

Count

Perc

ent

Supplier

Count 2 2 2 2 2 2 2 2 2 28 1 63Percent 7 4 3 3 3 3 3

53 2 2 2 2 2 2 2 2 2

42 1 54

Cum % 7 11 15 17 20 22

3

25 28 29 31 33 34 36 38 40 41

3

43 45 46 100

3 3 3

Oth

er

3:16

Sup

ply Que

st

Viva

Sale

s Ent.

Shellsoft T

echn

ology

Corp.

R .M

ORO

Z LT

D.

Pacif

ic Pa

int (

Boys

en)

Nexus

Tec

hnologie

s, In

c.

MATE

RIALS

PRO

VIDER

Globa

lline Offic

e Sys

tems

Centec

h La

bels P

hils.,

Inc.

B AND H

PHO

TO

Amer

ican

Tech

nologies

, Inc.

Next I

nnov

ation, In

c.

LPF Tr

ading

F lex-O

-Matic

Indu

strial

Fire

& Spil

l Tec

h

CLRC E

nterpris

es

Integr

ated

Comput

er S

ystem

s

COVEN

ANT KE

EPER

Qua

rtz Busin

ess P

rodu

cts C

orp.

120

100

80

60

40

20

0

100

80

60

40

20

0

Pareto Chart of Number of Delays per Supplier - Local Deliveries

19

Pareto Chart for cumulative no. of days of delayed

Delivery per Supplier

Pareto Chart for cumulative no. of days of delayed

Delivery per SupplierMEASUREMEASURE

Count

Perc

ent

Supplier

Count 62 61 57 56 55 55 55 55 52 50227 50 48 48 45 44 44 41 39 37647201Percent 9 8 5 3 3 3 3 3 2

1412 2 2 2 2 2 2 2 2 2

892 2 2 2 2 2 2 1 25

Cum %

89

9 16 2225 29 32 35 38 41 43

84

45 47 49 52 54 56 58 60 62 64

82

65 67 69 71 72 74 75100

80

Othe

r

Viva S

ales E

nt.

Power

She

ild

KLG In

terna

tiona

l

PSYC

HO A

SSES

SMEN

T RES

O.

CLRC E

nterpri

ses

3M P

hilipp

ines

Hy tech

I nte

grate

d P ro

ducts

, Inc

.

Affiliia

ted E

lectro

nics S

ervic

e Corp

LPF

Trad

ing

Food

mac

h

I nte

grate

d Com

puter

Sys

tems

SOURC

E SM

ART V

ENTU

RE

R .M

OROZ

LTD.

E-CO

PY C

ORP.

Alzon

Reso

urce

s Mark

eting

T rane P hil

ippine

s

Doby

Mark

eting

TYCO IN

T . SYS

TEM

S

Pacif

ic P ain

t (Boy

sen)

Globall

ine O

ffice

Sys

tems

Nexus

Tec

hnolo

gies,

I nc.

Qua

rtz B

usine

ss P

rodu

cts C

orp.

Ever

Eng

raving

3:16

Supp

ly Q

uest

Fire &

Spil

l Tec

h

Flex

-O-M

atic

Indu

strial

COVEN

ANT KE

EPER

2500

2000

1500

1000

500

0

100

80

60

40

20

0

Pareto Chart of Cumulative number of delayed deliveries per Supplier - Local Deliveries

20

Pareto Chart for no. of delayed Delivery per Supplier

Pareto Chart for no. of delayed Delivery per SupplierMEASUREMEASURE

Count

Perc

ent

Supplier

Count 1 1 1 1 1 2Percent 17 13 13

49 4 4 4 4 4 4 4 4 4

39

Cum % 17 30 43 52 57 61 65 70

3

74 78 83 87 91 100

2 1 1 1 1

Other

Min H

wa E

nvelo

pe Man

ufac

ture

rs Pte.

Konica

Minolt

a Bu

siness T

echn

ology

Interm

ec Tec

hnologies C

orp.

HP Ph

ilippin

es C

orp.

Hearn

e Sc

ientifi

c Softw

are Pty

. Ltd.

Effic

ient O

ffice P

te. Ltd.

Datac

raft Com

mun

icatio

ns Sys

tems,

Inc.

Cybernet

Softw

are Sy

stems,

Inc.

B an

d H P

hoto

Gaylord

Bro

s., In

c.

Intercon

tinen

tal S

upply Co

Fujitsu

Phil

ippine

s, In

c.

A. Andr

ews &

Co.

25

20

15

10

5

0

100

80

60

40

20

0

Pareto Chart of Number of Delays per Supplier - Indent Deliveries

21

Pareto Chart for cumulative no. of days of delayed Delivery per Supplier

Pareto Chart for cumulative no. of days of delayed Delivery per Supplier

MEASUREMEASURE

Count

Perc

ent

Supplier

Count 26 24 20 62Percent 32.1 12.4 11.8 6.0 6.0

2265.0 4.1 3.8 3.7 3.4 2.8 8.8

Cum % 32.1 44.5

87

56.3 62.3 68.3 73.3 77.4 81.2 84.9 88.3 91.2 100.0

83 42 42 35 29 27

Other

Cyber

net S

oftw

are S

ystem

s, In

c.

HP Ph

ilippine

s Corp

.

Inter

cont

inen

tal Supp

ly C

o

Russky

Com

mer

cial

Efficien

t Office

Pte. L

td.

Fujitsu

Philip

pines, I

nc.

Interm

ec T

echn

olog

ies C

orp.

Gaylord

Bro

s., In

c.

Konica

Minolta

Bus

iness Tec

hnolo

gy

A. And

rews &

Co.

Min

Hwa En

velope

Man

ufac

turers Pte.

700

600

500

400

300

200

100

0

100

80

60

40

20

0

Pareto Chart of Cumulative number of delayed delliveries per Supplier - Indent Deliveries

22

MEASUREMEASURE

Count

Perc

ent

TypeCount

71.1 99.2 100.0

1386 548 16Percent 71.1 28.1 0.8Cum %

FreightServiceGoods

2000

1500

1000

500

0

100

80

60

40

20

0

Pareto Chart of Type

23

MEASUREMEASURE

Count

Perc

ent

Country

Count 6 19Percent 84.8 6.4 3.3 1.6 1.0 0.8 0.6

16530.4 0.3 1.0

Cum % 84.8 91.1 94.4 96.1 97.0 97.8

124

98.4 98.7 99.0 100.0

64 32 19 15 11 7

Othe

r

Cana

da

Unite

d Kin

gdom

Swed

en

Austr

alia

Japa

n

Sing

apore

Hong

Kon

g

Unite

d States

Philip

pines

2000

1500

1000

500

0

100

80

60

40

20

0

Pareto Chart of Country

24

MEASUREMEASURE

Count

Perc

ent

Supplier

Count 27 25 23 22 21 21 21 21 21 18114 18 17 17 13 12 12 12 12 11 1151 111166

Percent 6 3 3 2 2 2 2

51

1 1 1 1 1 1 1 1 1 1

47

1 1 1 1 1 1 1 1 1 1

45

1 1 60Cum % 6 8 11 13 16 18

43

20 21 23 24 25 26 27 29 30 31

39

32 33 34 35 35 36 37 37 38 39

28

39 40 40 100

Othe

r

TRAN

E PHI

LIPP

INES

RBN KI

TCHEN

WORLD

SUPP

LIES

GLOB

ALIN

E OF

FICE

SYST

EMS

UNISO

N CO

MPUTE

R SY

STEM

S IN

CORP

ORATE

D

QUAR

TZ BU

SINES

S PRO

DUCT

S CORP

ORAT

ION

MEDIC

AL G

ALLERY

TRAD

ING C

O.

INLA

ND CO

RPOR

ATIO

N

ORACL

E (PH

ILIP

PINES

) COR

PORA

TION

NEXUS

TEC

HNOLO

GIES,

INC.

B AND

H PH

OTO-V

IDEO

, INC

.

TRAN

SPRI

NT CORP

ORATI

ON

I BM PH

ILIPP

INES

I NCO

RPORA

TED

RAIN

TREE

TRA

DING

AND

PUBL

ISHIN

G, INC

.

JACK

YS IN

TERN

ATIO

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TD.

INTE

RCON

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NTAL

SUPP

LY CO.

ABLA

ZA-ZA

MORA

ENTE

RPRI

SES

A. AN

DREW

S AND

CO. (

MAIL O

RDER

) LTD

.

TIMES

TRAD

ING

CO., IN

C.

INTE

GRATE

D CO

MPUTE

R SYS

TEMS,

INC.

SHEL

LSOF

T TEC

HNOLO

GY COR

PORA

TION

STAM

P I T

MER

CHAN

DISI

NG

GOLD TO

NE CO

MMER

CIAL

CLRC

ENTE

RPRI

SES

UPTO

WN IN

DUSTRI

AL SA

LES,

INC.

FLEX

-O-M

ATIC

INDUS

TRIA

L SAL

ES

VIVA

SALE

S ENT

ERPR

ISES

P AND

H MDSG

. COR

PORA

TION

LPF T

RADIN

G

COVE

NANT K

EEPE

R MAR

KETI

NG

2000

1500

1000

500

0

100

80

60

40

20

0

Pareto Chart of Supplier

25

Procedure / Policy

Technology & Communication

Type of Supplier

Specs. & type of goods

AO & AC

Lack of supplier’s management policy

Local

Indent

manufacturer

distributor

retailer

Lack of follow-up or monitoring

Miscommunication

Fax Machine

Computer

Softwarei.e. Oracle System

Off-the-shelves

Custom made

Lack or not clear specs.

ANALYZEANALYZE

Timely delivery of goods

Penalty Clauses

Origin of goods

Commitment of the supplier to delivery within the terms of PO

Changes in specs after delivery

Cause-and-Effect DiagramCause-and-Effect Diagram

26

Procedure / Policy


Type of Supplier


AO & AC

Lack of supplier’s management policy

Local

Indent

manufacturer

distributor

retailer


Miscommunication

Fax Machine

Computer

Softwarei.e. Oracle System

Off-the-shelves

Custom made


ANALYZEANALYZE


Penalty Clauses

Origin of goods

Commitment of the supplier to delivery within the terms of PO

Changes in specs after delivery

Cause-and-Effect DiagramCause-and-Effect Diagram

N

C

C

C

C

C

C

NN

N

N

N

N

NN

N

NN

N

Late submission of shipping docs

C

27

Procedure / Policy


Type of Supplier



Miscommunication

Fax Machine


ANALYZEANALYZE


Penalty ClausesCommitment of the supplier to delivery within the terms of PO

Cause-and-Effect DiagramPrioritize list of Cs

Cause-and-Effect DiagramPrioritize list of Cs

Late submission of shipping docs

28

IMPROVEIMPROVEProposed Solution

Proposed Solutions

A. Short Term:• Strict Monitoring of supplier activities from receipt of PO to

delivery of goods;• Call Supplier to confirm if they received the fax copy of PO• Call Supplier three days before the delivery deadline to remind

them of their pending delivery for local and air shipment or as appropriate for sea shipment; and

• To add in the notes to supplier of PO the following: “Please sign the lower right portion to acknowledge PO and fax it back to us. This will expedite payment after complete delivery”

B. Medium Term Solution:• Alert Supplier thru Oracle System every time PO is approved;• Alert Supplier thru Oracle System of their pending delivery prior

to delivery deadline;• Development of Supplier Management System

29

IMPROVEIMPROVEProposed Solution

Control Factor Critical Issues, (C) Proposed Solution Owner Status

A. Technology & Communication

1. Fax Machine a) Ensure fax is workingb) Call supplier to confirm if they received the PO sent by faxc) Scan PO and send it via email

Buyer on going

2. Miscommunications a) communicate clearly to the supplier via phone or email Buyer on going

3. Late submission of shipping documents

a) Call supplier to remind them of pending delivery/shipping documents before the scheduled delivery date.

Buyer on going

4. Lack of follow-up or monitoring

a) Buyer to monitor their suppliersb) see 1 and 3 abovec) Add in the PO notes the following: “Please sign thelower right portion to acknowledge PO and fax to us. This will expedite payment after complete delivery.”d) Develop Supplier Management System

Buyer

OAIS-PC/OIST

on going

Medium Term Solution

B. Specs. & Type of Goods

5. Lack or not clear specs.

a) PO or even the RFQ should have the complete specs. - liaise with end-user and supplier for the complete and correct specs. This is part of the first six sigma project.

Buyer & End-user

Done

C. Procedure/Policy

6. Penalty clauses a) Develop Supplier Management System, which will be used to monitor, warn and suspend erring supplier and implement the penalty clauses.

OAIS-PC/OIST Medium Term Solution

D. Type of Supplier

7. Commitment of the supplier to deliver within the terms of PO

a) Develop Supplier Management System, which will be used to monitor, warn and suspend erring supplier and implement the penalty clauses.

OAIS-PC/OIST Medium Term Solution

30

Piloted Solution“To be process map”

IMPROVEIMPROVE

Detailed Process Map for delivery of Goods

Su

pp

lier

MM

UU

ser

- S

ect

ion

OA

IS-P

C

Receipt of PO via fax / original via

mailSigns

acknowledges PO

Receipt of signed PO & file

Process PODeliver Goods to

ADB

Receipt of GoodsCheck/Inspect Goods – Sign

delivery receipt

Receipt of Goods/ check/inspect

Goods

Print RR

Sign & Return RR to MMU

Prepare delivery receipt/invoice

Receipt of RR Close RR in Oracle

END

Issue PO to successful supplierSTART

Accept GoodsReturn to Goods to Supplier & inform

OAIS-PC

Accept GoodsReturn Goods to

MMU

Receive rejected Goods

Replace Goods

NO

YES

YES

NO

Call supplier for them to confirm receipt of our PO & ask them to sign & fax to us. Send PO by email and have

it signed by supplier.

Call supplier to remind them of pending

delivery (two days before the delivery

schedule)

31

IMPROVEIMPROVEFAILURE MODE and EFFECT

ANALYSIS (FMEA)

Potential Failure Mode and Effects Analysis(Process FMEA)

Item / Process

Potential Failure Mode

Potential Effect(s) of

Failure

Potential Causes of

Failure

Current Process Control

Recommended Action(s)

Responsibility & target

Completion Date

Action Results

SE

V

PR

OB

DE

T

RP

N

Actions taken

New

S

EV

New

O

CC

New

D

ET

New

R

PN

Sending of PO by Fax Machine

PO not sent PO not received by Supplier

10 Defective fax machine (ADB or Supplier)

2 Fax machine confirms sending and receipt of PO.

3 60 1. Ensure fax machine is working (always check fax machine)2. Call supplier to confirm if they received the PO3. Scan PO and send it to supplier by fax

Buyeron going

Added to the process

10 1 1 10

Submission of shipping documents by indent supplier

Shipping documents not received by ADB

Goods will not be cleared from the ports

5 Negligence of supplier to send the shipping docs or shipping docs were sent to wrong recipient

2 None 8 80 Call or email suppliers 3 days before the scheduled delivery date

Buyeron going

Added to the process

5 1 1 5

32

IMPROVEIMPROVEHypothesis Test

Ho: mu1 = mu2

Null Hypothesis: There is no difference between the “as is” process and the “improved” process.Ha: mu1 is not = mu2

Alternative Hypothesis: There is a difference.

Since P < 0.05 (0.000), we will reject Ho and accept Ha.Therefore, there is a difference between the “as is” and the “improved” sample data.

Two-sample T for Days Orig. vs. Improved N Mean StDev SE MeanDays Orig. 247 11.1 22.7 1.4Improved 93 2.43 4.78 0.50Difference = mu (Days Orig.) - mu (Improved)Estimate for difference: 8.6549195% CI for difference: (5.64415, 11.66568)T-Test of difference = 0 (vs. not =): T-Value = 5.66 P-Value = 0.000 DF = 296

Data

ImprovedDays Orig

180

160

140

120

100

80

60

40

20

0

Boxplot of Days Orig, Improved

33

IMPROVEIMPROVEReport for improved process

918273645546372819101

20

10

0

_X=2.43

UCL=11.97

LCL=-7.11

Observation918273645546372819101

20

10

0

__MR=3.59

UCL=11.72

LCL=0

ST

* 1.16Z.LSL * *Z.Bench 2.66 1.16Z.Shift 1.50

LT

1.50P.USL * 0.122417P.LSL * *P.Total 0.0038725 0.122417

Mean

Yield 99.61 87.76DPMO 3872.5 122417.0Cp * *Cpk

5


2.43011

0.39

StDev * 4.789Z.USL

8 8

16.798-11.9378

I and MR Chart

Process Tolerance

Specifications


Process Tolerance

Specifications



Capability I ndices

Report 2: Process Capability for Control

34

IMPROVEIMPROVE

24181260-6

USL

9080706050403020101

1.0000E+06

10000.000

100.000

1.000

0.000

Date:



Actual (LT)



Sigma(Z.Bench)

DPMO

1.16

122417.0

2.66

3872.5

Process Benchmarks

Report 1: Executive Summary

Report for improved process

Previous Process Sigma is 1.38. Therefore an improvement of 1.28 was realized.

35

Control Stakeholder Analysis

Names(People or Groups)

Strongly Against

Moderately Against

Neutral Moderately Supportive

Strongly Supportive

SUPPLIERS

BUYERS (process owner)

Approvers

Others *

= current

X = desired

= direct influence= indirect influence= End-user*

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ControlRisk Assessment MatrixRisk Assessment Matrix

Risk Assessment Matrix

Control Factor Critical Issues Proposed Solution Risk Remarks

A. Technology & Communication

1. Fax Machine a) Ensure fax is working. b) Call supplier to confirm if it received the PO sent by fax c) Scan PO and send it via email

Low

Some of the suppliers have claimed that occasionally they haven't received a copy of the PO. OAIS-PC can always seek assistance from help desk assistance in ensuring that the fax machine is working.

2. Miscommunicationsa) Communicate clearly to the supplier via phone or email.

LowSpecifications in the PO are already complete.

3. Late submission of shipping documents

a) Call supplier to remind them of pending delivery or shipping documents before the scheduled delivery date.

High

There are cases that shipping documents are lost in transit resulting to the delay of release of the ordered goods.

4. Lack of follow-up or monitoring

a) Buyer to monitor their supplier b) see 1 and 3 above c) Add in the PO notes the following "Please sign the lower right portion to acknowledge PO and fax to us. This will expedite payment after complete delivery d) Develop Supplier Management System

Low

Due to buyer's workload, monitoring of the delivery/shipment of goods is sometimes being neglected.

B. Procedure / Policy

5. Penalty clauses a) Develop Supplier Management System, which will be used to monitor, warn and suspend erring supplier and implement the penalty clauses.

LowThis is a medium term solution which would be implemented in 2 years time

C. Type of Supplier

6. Commitment of the supplier to deliver within the terms of PO

a) Develop Supplier Management System, which will be used to monitor, warn and suspend erring supplier and implement the penalty clauses. Low

There are only few suppliers do not check the actual availability of goods when bidding and give false delivery date.Please see item 5.

Risk Identification:

High Risk - is one in which issues exist that are beyond team's control, there is no plan for resolution or has a low probability of successful resolution.

Low Risk - is one in which issues exist that are within team's control, has a plan for resolution and has a high probability of successful resolution.

No Risk - is considered to have either no risk or even though there is an issue, experience indicates that it can be solved within the normal course of design.

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Control Mistake Proofing & Control Sheet

Mistake Proofing & Control Sheet

Maximize on time delivery and reduce delays in delivery of goods

User-Unit

OAIS-PC Supplier Timing Mistake Proofing

ImplementationStatus

1 Buyer includes in the notes of PO the following: "Please sign the lower right portion to acknowledge PO and fax it back to us. This will expedite payment after complete delivery.”

X

Every time PO is issued

NO will check notes of PO before signing.

on going

2 Buyer sends hard copy of PO to supplier via fax

X

Every time PO is approved and signed the proper approving authority.

Buyer will call or email the supplier if the supplier received the PO. PO will be sent also by email.

on going

3 Supplier to send copy of signed PO to OAIS-PC by fax or email to acknowledge PO

XEvery time PO is received

see no. 2 above on going

4 Supplier to send copy of shipping docs. to OAIS-PC by fax or email

X

Before delivery of indent order.

Buyer to follow up delivery 3 days before air shipment of goods. For sea shipment as appropriate.

on going

38

Financial BenefitsFinancial Benefits

SOFT SAVINGS

• Avoidance of Capacity Enhancement

• Increase Customer Satisfaction

• Increase Employee Satisfaction

39

Financial BenefitsFinancial Benefits

Please see attached worksheet

40

Financial BenefitsFinancial BenefitsProject No. OAS-06-007 (2W)

Project Title:Maximize "on time" delivery and reduce delays in delivery of goods

Team Leader:Bryan C. Cook

Project Goal: Reduce the number of delayed deliveries of goods and increase the "on time" delivery and customer satisfaction.

Champion:Paulino P. Santiago, Jr.

Financial Benefits:

No.Savings Item Description

Quantity RateHard Savings

($)

Soft Savings

($)

1 Actual Savings due to reduction of delayed delivery from 6.08 to 4.5 incident per month.

1.58 incident per month x 12 months

USD75 USD1,422.00

2 Potential Savings if delayed delivery is reduced to zero

6.08 incident per month x 12 months

USD75 USD5,472.00

3

4

5

Net Savings

Total Financial Benefits (Hard + Soft Savings) USD1,422.00

Notes: As a result in the reduction of delayed deliveries (i.e. strict monitoring of deliveries) from 6.08 to 4.5 incidents per month a savings of US$1,422 was realized. This was computed by multiplying the rate (USD75), which was taken from UNDP-IAPSO study of the cost of processing PO, by the number of incidents per annum. The rate is also the cost of follows up made by the end-user, NOs and the buyers to the suppliers. The potential savings would be zero delay, which would translate to USD5,472 per annum.

Disruption to business and potential additional costs for delivery delays - potentially cost impact may be High (IT critical software, major building maintenance disruptions) Medium (spare parts and accessories to key equipment and services) Low (consumable supplies and routine equipment)Figures are hard to estimate due to the range of goods and equipment concerned and the relative risk impact.Please see attached risk analysis.

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Risk Analysis of Goods & Equipment

Risk Analysis of Goods & Equipment

define

Documents

time delivery

delivery of goods project

delayed delivery of

delivery of goodsuser

use of goods

sample proportion percentage

independent sample variances

oracleendissue po