Travel ReductionJared D. Amato | Green Belt Reporting

Executive Summary

Our goal is to ship every order complete within 2 work days. We have found that travel time in the warehouse accounts for 28% of all failures.

Project Team Roles and Responsibilities

Jared Amato Operations

Manager

Anni XXXXX Data Collection

Clinton XXXX Simulation

Victor XXXXX Process

Operator

Jose XXXXX Process

Operator

Problem Statement

The Ideal State

Ship all orders complete within 2 days of confirmation from customer, utilizing no more that 8 man hours a day per every 2 FTE

The State Before the Project

February 2015 – April 2015 | 5726 orders | 64 working days | 89 orders per day.

Average Distance Traveled 285 feet per order.

4.8 miles a day.

The consequence if we had done nothing

Continuing to have 15% of shipments late

No time to QC orders

Not giving the staff adequate time to do inbound QC

Not having proper time to cycle count

Project Proposal

Customer Requirements

2 day order ship complete

100% Accuracy

Scope of Project

Reducing order fulfillment travel distance

Warehouse item classification

Objectives

Improve our order turn time to meet customer requirements of shipping complete within 2 days.

Improve our accuracy

Efficiency Improvement

Critical Y – Order Cycle Time

Critical Y - Accuracy

Project Proposal Critical Y – Order Cycle Time

85% of orders ship on time (4867 orders)

15% were late (859)

78 82

107

165

189

238

0

50

100

150

200

250

1

Late orders by reason

Credit Shipping Order Processing QC Build Time Pulling

Project Proposal Critical Y – Order Cycle Time

3

3.5

4

4.5

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5.5

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6.5

1 2 3 4 5 6 7 8 9 10 11 12 13 141516 17 18192021222324252627282930 31 32 33 343536 37 383940414243444546474849505152535455565758596061626364

Xi Chart Distance in miles per day

Distance UCL LCL CL

40

90

140

190

1 2 3 4 5 6 7 8 9 10 11 12 13 141516 17 18192021222324252627282930 31 32 33 343536 37 383940414243444546474849505152535455565758596061626364

Xi Chart orders per day

Orders UCL LCL CL

Project Proposal Critical Y – Order Cycle Time

Project Proposal

Critical Y – Order Cycle Time

Project Proposal Critical Y – Accuracy

Proposed State

Project Proposal

Critical Y – Pareto Top Items

Move the 43 items closer to theshipping dock

$13,515,974.20

$2,520,775.02

$848,382.61

$-

$2,000,000.00

$4,000,000.00

$6,000,000.00

$8,000,000.00

$10,000,000.00

$12,000,000.00

$14,000,000.00

$16,000,000.00

$18,000,000.00

Dollar Value

Inventory Analysis

80% = 43 items 15% = 79 items 5% = 370 items

Protocol and tools

Findings Summary of raw data –

Findings

Summary of raw data -

1

2

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5

6

7

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 65 67 69 71 73 75 77 79 81 83 85 87

Xi Chart Distance in miles per day

Distance UCL LCL CL

40

90

140

190

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 65 67 69 71 73 75 77 79 81 83 85 87

Xi Chart orders per day

Orders UCL LCL CL

Findings Summary of raw data –

Findings Summary of raw data –

78 82107

165189

238

0

50

100

150

200

250

1

Late orders by reason

Credit Shipping Order Processing QC Build Time Pulling

21 23

33

5155

28

0

10

20

30

40

50

60

1

Late orders by reason

Credit Shipping Order Processing QC Build Time Pulling

Before After

Success Factors Reduced Travel Time by 56%

Reduced restocking / put away time (Non validated)

Completed within budget

Excluding light retrofit (Energy Trust Rebate not applied)

Delivered on time (7 days early)

Reduced warehouse foot print by 40%

Average Miles Before 4.82

Average Miles After 2.71

Mile Reduction 2.10

Percent Reduction 56%

Hourly Wages 17.82$ Savings

Weekly Income 712.80$ 401.54$ Weekly Income

Monthly 3,086.42$ 1,738.66$ Monthly

Yearly 37,037.09$ 20,863.87$ Yearly

Control

Part of our new SOP for end of month reporting is running the top products list which outlines product sales and quantity. This will show us if something moves up or down in the ranking of top products. This will flag us to evaluate moving items around so we don’t loose the momentum of the savings.

Benefits

Financial – Cash flow Analysis

Project five year savings - $87,365

Payback Period – End of year one

IRR – 154%

NPV - $32,330

Invoices Paid Sooner

Benefits

Non-financial

Customer Satisfaction

Employee Morale

Marketing

Recommendations

Conclusions to date – Since I only have data for the one month it is hard to speculate but I think the success will still be realized in the coming months.

Learning to date – the big take away are the next two things to tackle (QC and Build Time) Before the project the top 3 accounted for 695 of late deliveries.

Define

Project Prioritization – We have quite a few projects that we need to address. Delivery Performance was the one we all could agree goes to the root of our mission.

Define

Kano Model – We debated the three phases a lot. Everyone had their own thought of what was basic, performance and excitement. At a point in our history we were the only company with a two day turn time. Now it is expected.

Training No System

Too Much Walking

Procedures Spread Out

No Expert

No accountability

Locations to small

No accountability Not having all the tools Not having all the product in one place

Fast moving in the back of the warehouse

Delivery Failures(Y)

Management Man Method

Measurement Machine Material

Cause

Cause

Cause

Cause

Cause

Cause

Cause

Cause CauseCause

Cause

Cause

Cause

Measure

78 82

107

165

189

238

0

50

100

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Late orders by reason

Credit Shipping Order Processing QC Build Time Pulling

Analyze

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3.5

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Xi Chart Distance in miles per day

Distance UCL LCL CL

Improve

Cashflow Cumulative Savings

Investment (10,000.00)$ (10,000.00)$

Savings year 1 13,909.28$ 3,909.28$ Earnings year 1

Net Savings year 2 20,863.87$ 24,773.15$ Earnings year 2

Net Savings year 3 20,863.87$ 45,637.02$ Earnings year 3

Process step Potential failure mode Potential failure effects

S

E

V

Potential causes

O

C

C

Current process controls

D

E

T

R

P

N

Actions recommendedResponsibility (target

date)Actions taken

N

e

w

S

E

V

N

e

w

O

C

C

N

e

w

D

E

T

N

e

w

R

P

N

Pulling Orders

Fail to meet 2 day

delivery

performance

Low customer

satisfation7 Travel Distance 8 Additional People 8 448 ABC Analysis Jared

Warehouse

Layout3 5 4 60

Control

SOP’s identifying when to run Top Products. Validated monthly

Conclusions

The next phase in this would be a software upgrade where the order is packed, QC’dand shipped the moment it is picked.