IMPROVEMENT OF DELIVERY RATE IN "DELIVREX EXPRESS" USING SIX SIGMA

Deyvisson Oliveira (9752919)Tuyana Khassanova (5652308)

Xiao Hui Wang (9226281) Ying xin Sun (9749209)

Ming Fan (9735070)

Date: April 14th, 2011

CONCORDIA INSTITUTE FOR

INFORMATION SYSTEMS ENGINEERING

TERM PROJECT Course Number: INSE6210 (Winter 2011) Instructor: Dr. Nizar Bouguila

Date: April 14th, 2011

CONTENT

3

Introduction Define Phase Measure PhaseAnalysis Phase Improve Phase Control Phase Conclusion

INTRODUCTION

4

Delivrex Express is a Canadian delivery and logistics services company

500,000 daily deliveries in Canada 2,100 and 3,645 offices inside and outside

For Delivrex Express, customer's satisfaction is critical and applying Six Sigma is very important to improve the quality of services.

INTRODUCTION

5

Critical to Quality Characteristics (CTQs):

On-time deliveryPackage state on delivery Responsiveness of Customer Support CenterPackage traceabilityFlexibility

INTRODUCTION

6

Problem 0.5%(CTQ) of delivery failure of 500,000 parcels=2,500 every day The total cost will be average $15 for the redelivery for each item =2,500 x $15=$37,500 each dayeach year the redelivery costs is $37,500 x 365=$13,687,500.

Opportunities Six Sigma processes and tools is the improvement of customer satisfaction with cost reductionThe Six-Sigma team is targeting a process sigma from level 4.07 to 5.04.

SITUATION IS NOT GOOD

7

DEFINE PHASE

8

Benchmarking Table shows Delivrex Express has low levels of quality satisfaction in comparison with our main competitors. .

DEFINE PHASE - SIPOC

9

Suppplier Inputs Working process Output Customer

Parcel pick-up

Is parcel receiver is located under this

office coverage area?

Central hub (here are happen all operations on

parcel transportation through the world

Delivery to D`Express local office (sender

part)

Arriving to D`Express local office (receiver

part)

Delivery the parcel to the destination place

Yes

No

Customer request/(Initiative) on sending of the

parcel

Acknowledge from receiving side that

the parcel is delivered

D`Express End Customer (receiver)

D`ExpressEnd Customer

(sender)

DEFINE PHASE

10

Voice of customer Similarly to many other service companies - “customer satisfaction in our business is imperative”.

Quantity of Complaints

DEFINE PHASE

11

MEASURE PHASE

12

Why so many complaints about late deliveries?

MEASURE PHASE

13

These numbers lead us to focus the data extraction on the process from the recipient’s local facility to the recipient’s signature and the best way to accomplish this task is to collect information related to delivery exceptions.

MEASURE PHASE

14

DPMO of 5093.15, delivery failure rate of 0.51%,4 Sigma level.

MEASURE PHASE

15

Process Capability and Control Chart100000 deliveries attempts are selected randomly in a day and the

total number of nonconforming (delivery exceptions) is calculated.

MEASURE PHASE

16

Process Capability and Control Chart.

ANALYSIS PHASE

17

Applying the out-of-control rules and patterns to the Control Chart we conclude that it doesn’t contain any out-of-control point and that the process is in statistical control. With that in mind, any improvement to the process should be obtained through changes to the process.

 The current Process Capability is 1.33 and the recommended minimum process capability for an existing process is 1.25.

.

ANALYSIS PHASE

18

Delivery Exceptions versus DPMO

ANALYSIS PHASE

19

Cause and effect diagram

IMPROVE PHASE

20

Identified Root CausesRC01. Availability in personal addresses doesn’t match Delivrex Express delivery hours RC02. Recipient has no idea on when the parcel will be delivered RC03. Recipient doesn’t have the option to schedule initial delivery RC04. Driver in a hurry, just fills the Delivery Notice and erroneously raises a “Recipient Not At Home” delivery exception RC05. Delivery info lacks additional information for delivery RC06. Even if delivery info includes the recipient’s phone number, drivers are not equipped with phone devices

 

IMPROVE PHASE

21

Improvement Plan

S01. Implement weekend delivery hoursS02. Implement delivery alert systemS03. Implement initial delivery schedulingS04. Change employee performance index and implement education program S05. Develop an extension to our tracking web application to allow customers to enter additional information about the delivery using the tracking number S06. Equip drivers with phone devices 

IMPROVE PHASE

22

Improvement results

Delivery Exceptions data we were able to calculate a DPMO of 388.20 for the process and a delivery failure rate of 0.04%. These values show that we obtained a high improvement in the delivery process and that we reached our objectives moving the process to a 4.86 Sigma level.  The stability of the process will be discussed in the next section, Control Phase.  

CONTROL PHASE

23

Control phase is the last step of the six sigma DMAIC process, and is the activity of ensuring that project improvements will be sustained by tracking key performance measures and CTQs.

CONTROL PHASE

24

In control phase, the following procedures are required to ensure that the improvement is implemented properly:

Ensure the project is executed following by the project schedule.

To monitor performance of the project and take corrective action when needed.

Continuing improvement during the project’s life cycle if the results do not meet the requirements.

 

CONTROL PHASE

25

Control ChartWe use np-chart as Control Chart because number of delivery exceptions is an attribute data and presenting number of delivery exceptions instead of percentage of delivery exceptions makes the chart more readable.

 

CONTROL PHASE

26

Project Schedule

This project is from 3rd, January,2011 to 14th,April, 2011.

Financial Analysis A financial analysis conducted in the Control Phase shows annual savings of $13 millions attesting the success of the Sig Sigma project.

CONCLUSION

27

 The development of this Sig Sigma project brought improvements to Delivrex Express delivery process.

Reduce the DPMO from 5093.15 to 388.20 , move the process Sigma level from 4 to 4.86and the process capability was also improved from 1.33 to 1.64.  By reducing the number of delivery attempts we were able to speed up delivery, reduce package deterioration due to numerous trips, simplify tracking information, and reduce inventory and stocking costs, just to name a few improvements. The company will save $13 millions annually and new reports on deliveries attest the increase of the company’s market share.  

THANKS

28