project 4b: dmaic at dymo. define phase: executive summary project status unable to control...
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Project 4B: DMAIC at Dymo
Define Phase: Executive Summary
Project Status Unable to control Inventory efficiently
Current State
Existing process involves multiple departments manipulating data received from other departments to serve their purposes
Findings Defining product families & market segments is inconsistent across departments
Next Steps Initiate BI project to address efficiency issues
Define Phase: Using BI
Business Intelligence can enhance:
Process Improvement
By creating a central data warehouse to manage each department’s information rather than in multiple places
Leadership Decision Making
By developing standard reports via a common definition of SKU, product family and market segment, etc…
Define Phase: Summary of LSS Tools
“Be the recognized leader in innovative solutions that help people organize & identify their world.”
Customer Requirements Who’s the Customer?: Sales, Finance, Production & Demand Voice of the Customer: Reliable data to assist in decision making
Understanding the Process SIPOC
Complete Charter Ganntt Chart
Define Phase: SIPOC
Suppliers Inputs Process Outputs Customers
MarketingSKU
Product Description
Market Segment
Product Family
Material ID
12 Month Projections
Excess Obsolete & Sales Projection
ReportsMarketing
Demand PlanningForecast by Segment &
Product FamilyDemand Planning
Finance Margin by Product Family Report
Finance
Production Production & Turnover Report
Production
Develop BI
Tool
Define SKU Rollup
CreateQueries to Run Reports
Obtain Approval from the
Customers
Create Access
Database to Link Inputs
Define Phase: Gantt Chart
Activity
Collect Business Requirements
Define SKU rollup to Product Family & Market Segment
Link Inputs from Depts. into Access
Create Queries for Reporting Purposes
Obtain Feedback from the customer
Make necessary improvements 1 2 3 4 5 6 7Week
Measure Phase: Executive Summary
Project Status Investigating inconsistency between market segment and product family definitions
Current State
Sales, demand and production plans created are inconsistent, resulting in high inventory levels
Findings Inconsistencies in SKU linkage, product family and market segment definitions
Next Steps Analyze the data collected to validate relationships between variation of inventory and the information gap.
Measure Phase: Using BI
Business Intelligence can enhance:
Process Improvement
A cause and effect diagram shows possible factors that might be causing the inaccurate projections
Leadership Decision Making
By eliminating other causes and narrowing down on the causes that warrant further investigation, Management can then take corrective action
Cause and effect diagram
Inaccurate projections
Methods/Procedures
Software
Faulty software
Random error Personnel
Lack of training
Inconsistent SKU linkage
Inconsistent product families
Inconsistent market segments
Analyze Phase: Executive Summary
Project Status Validate relationships between variation of inventory and information gap.
Current State Demand plan is created from sales forecast, which in turn
determines the production plan. Inventory is byproduct of these.
Findings The inconsistency between demand plan and production
plan could be the culprit in inventory spikes.
Next Steps Improve demand and production plan using BI tool
Analysis Phase: Using BI
Provide better understanding of how inventory varies along with a number of factors such as
The gap between demand plan and production plan
The mismatches of SKU among different departments such as marketing department, sales department, production department, and finance department
Enhance Inventory Management Decision Making Enhance Demand Plan Enhance Production Plan
Analysis Phase: Summary of LSS Tools
Qualitative Analysis Cause and Effect Diagram Understanding the causes of inventory variation
Quantitative Analysis Regression Analysis To verify the impacts of inconsistency between production
plan and demand plan.
Analysis Phase: Qualitative Analysis
Cause and Effect Diagram
Demand Plan
Production Plan
Variation of Inventory
Analysis Phase: Quantitative Analysis
Regression Analysis Hypothesis: Inventory is predicted as Production Plan – Demand Plan Descriptive Statistics
Note: PP – Production Plan; DP – Demand Plan
Variables N Min Max Mean Std. Deviation
Inventory 300 0 243000 7188.9 25333.79
Gap between PP and DP
300 -5037 35803 162.1 2327.56
Analysis Phase: Quantitative Analysis
Regression Analysis Hypothesis: Inventory is predicted as Production Plan – Demand Plan Regression statistics – model summary
Regression statistics – coefficients
Note: PP – Production Plan; DP – Demand Plan
Model R R Square Adjusted R2
1 0.186 0.035 0.031
ModelUnstandardized Standardized
t Sig.B Std. Error Beta
Constant 6860.81 1443.05 4.754 .000
Gap between PP and DP 2.024 .620 .186 3.267 .001
Analysis Phase: Quantitative Analysis
Regression AnalysisHypothesis: Inventory is predicted as Production Plan – Demand
PlanConclusion
The linear relationship between inventory and gap between production plan and demand plan is significant
However, such a gap doesn’t explain the full variance of inventory as it is proposed to be
Need improvement on both demand plan and production plan
Improve Phase : Executive Summary
Project Status Improve demand and production plan utilizing BI system
Current State Existing process is inconsistent across departments causing demand production plan to be inaccurate.
Findings We are able to reduce touch points and streamline process by making simple changes; This introduces accuracy and efficiency.
Next Steps Create uniform control system to keep integrity of the data/process
Improve Phase: Using BI
BI system streamlines reports and queries that return consistent results
BI system maintains data integrity by making SKU/Material pair unique and define product family and market segment
BI system reduces touch points that can introduce random inconsistency in the current process.
Improve Phase: LSS Tools
Current State Diagram Develop current state Identifying where breaks occur/major opportunities for
improvement Point out key touch points
Future State Diagram Develop future state diagram Simplifies the process with quick/simple changes Creates a desirable level of output
Improve Phase: Current Process Map
Sales Creates a Sales Plan by
market Segment
Demand adjusts sales plan creating a Demand plan by Product group
Production Creates a production plan
based on Demand Plan
Finance creates Budget and Margin at aggregate level.
SKU belongs to which Product
Family?
I need Margin &
Budget by SKU
What group does the material
belong to?
How does material ID tie to SKU/market
segment?
Improve Phase: Current State Diagram
NO
Yes
Demand Solutions
WMS
Hyperion
Sales Creates Sales plan
Data extract
Is the Plan Feasable?
Create a Demand Plan
Adjust the
Supply plan
Create a Supply Plan
Data extract
Review & Merge
DataData extract
Roll up data for Financial purpose
Improve Phase: Future Process Map
Strategic & Financial Planning
Demand Forecasting& Planning
Supply Planning
Distribution Planning
Manufacturing Planning
Material Planning
Shipment Planning
Order Promising
oneplan
Improve Phase: Future State Diagram
Linked Sheets
Demand Solutions
WMS
Hyperion
Data extract
Data extract
Data extract
BI Solution:Central Data
Managing System
Demand Plan
Sales Plan
Supply Plan
budget
Margin
Control Phase: Executive Summary
Project Status Introduce Controls in process management and planning
Current State Existing process contains no control or ownership structure in place which causes defects and mistakes to occur.
Findings By introducing a control priority structure we can measure and control the defects.
Next Steps Continuous improvement and control
Control Phase: Using BI
Use BI system to streamline reports and queries that return consistent results
Exception reporting to show mismatches in SKU/Material linkage.
Exception reporting to show mismatches in supply plan, demand plan and production plan
Control Phase: LSS Tools
Control plan Prevention Vs. detection chart for transaction process Identifies typical failure cycle and aids in creating proper
detection and prevention methods
Monitor Statistical Process Control using C- chart to monitor outcome for
continuous improvement
Control Phase: Control Plan
DetectionDetection
Supply plan created
Mismatch in SKU rollup
Incorrect demand plan
Incorrect info sent to Prod
Incorrect Supply Plan created
Incorrect Supply Produced
PreventionPrevention
Production calls
Run defect report for demand plan
One SKU/Material relationship created-
DetectionDetection
Supply plan created
Mismatch in SKU rollup
Incorrect demand plan
DetectionDetection
Supply plan created
Mismatch in SKU rollup
Incorrect demand plan
Incorrect info sent to Prod
Incorrect Supply Plan created
Incorrect info sent to Prod
Incorrect Supply Plan created
Incorrect Supply Produced
PreventionPrevention
Production calls
Run defect report for demand plan
One SKU/Material relationship created-
Control Phase: C-chart
Current production plan compared to what the production plan should be using the BI tool BI tool calculation is Demand plan – Inventory (+/- 200
threshold allowed)
2286.2
223300
0.74
3.33-1.84
Average of Sample
Number of DefectsSample Size
Avg C
UCLLCL
Control Phase: C-chart
-10
-8
-6
-4
-2
0
2
4
6
8
10
0 50 100 150 200 250 300
Dashboards
Variations in projections
Excess & Obsolete Inventory
Inventory - RegressionInventory
0.00
50000.00
100000.00
150000.00
200000.00
250000.00
300000.00
-503
7.00
-101
3.00
-337
.00
-254
.00
-205
.00
-152
.00
-115
.00
-90.
00-7
6.60
-66.
00-6
1.00
-52.
00-4
3.00
-38.
00-3
2.00
-25.
09-2
2.00
-19.
67-1
3.71
-10.
00-9
.20
-8.0
0-6
.00
-5.0
0-2
.64
-1.0
0-0
.29
0.00
0.00
0.00
0.00
2.00
10.0
020
.00
29.0
038
.00
46.0
060
.00
84.0
011
5.00
404.
0010
00.0
028
83.0
0
Inventory
Margin by Product Family
Finance: Margin by Product Family
-40000
260000
560000
860000
1160000
1460000
1
Product Family
Ma
rgin
CardScan Technology
Computer DrivenTechnologyEndicia Technology
Home Technology
Industrial Technology
Interactive Technology
Professional Technology
Inventory TurnoverInventory Turnover Levels
0
500
1000
1500
2000
2500
3000
3500
4000
4500
1
Product Family
Inven
tory
Tu
rno
ver
Da
ys
CardScan Technology
Computer DrivenTechnologyEndicia Technology
Home Technology
Industrial Technology
Interactive Technology
Professional Technology
Questions?
Appendix
Business Requirements (Dept.)
Sales / Marketing
Demand Planning
Finance
Group
Production /
SupplySKU SKU Product Family Material ID
Product Description Product Description Budget Forecast Product Description
Market Segment Market Segment Obsolete Inventory Product Sub Family
Sales Projections Product Family Invoice Sales Supply Plan
Sales Price Demand Plan Actual Units Sold Material Status
Obsolete Inventory Demand Plan Dollarized
Standard Production Cost
Standard Production Cost
Standard Cost Sales Projections Margin Budget Forecast
Budget Forecast Budget Forecast Sales Price Demand Plan
Actual Units Sold Average Sales Price OH Inventory & Value Demand Plan Dollarized
Margin OH Inventory Value Obsolete Inventory
OH Inventory & Value
* All Projections, Forecasts, Plans are for 12 Months.
Business Requirements (Functional)
Inputs Input Source OutputsMargin Finance 12 month Sales Projection
SKU Self managed Average Sales price
Product Description Self managed Actual units Sold
Market Segment Self managed
Sales price Finance
Excess & Obsolete Inventory Production
12 month budget forecast Finance
Standard Cost Production
Marketing & Sales Department
Business Requirements (Functional)
Demand Planning
Inputs Input Source OutputsSKU Self managed 12 month Demand Plan
Product Description Self managed12 month demand plan dollarized
Market Segment Self managed
Product Family Self managed
12 month Sales projections Marketing/Sales
Average Sales Price Marketing/Sales
Business Requirements (Functional)
Finance Department
Inputs Input Source Outputs
Product Family Self managed12 month budget forecast (Aggregate level)
Excess & Obsolete Inventory Production Invoice sales (Aggregate level)
Standard (production) cost Production Margin
Actual units Sold Marketing/Sales Sales price (List price, net 98, net 95)
OH Inventory Production
OH Inventory Value Production
Business Requirements (Functional)
Production / Supply
Inputs Input Source OutputsMaterial ID Self managed 12 month supply plan
Product Description Self managed standard (production) cost
Product Sub family Self managed Excess & Obsolete Inventory
Material Status Self managed OH Inventory
12 month budget forecast Finance OH Inventory Value
12 month Demand plan Demand Planning