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Company Profile

Company X is the fastest growing mobile phoneremanufacturing facility here in the Philippineswhich is a wholly owned subsidiary of CompanyY. The facility is located at Calamba Premier

Industrial Park. The parent company, Asurion, isthe largest mobile phone insurance in NorthAmerica with more than 95 million subscribers.Asurion is engaged in the mobile phoneinsurance business which is an emergingindustry driven by the worldwide growth ofmobile phone users.

COMPANY X Site 1 main business process isLiquid Crystal Display Module Repair whileCOMPANY X Site 2 is focus on handset repairand assembly.

AbstractIn line with the 2013 COMPANY X Objectives, the team initiates to contributeon lowering the phone cost of DRDDNA by improving the reclaim usage of DCover which is one of the major parts of a cellular phone and also known asthe back housing cover. From July 2013 to Sept 2013 COMPANY X Site2Lean Lines only achieved an actual reclaim usage of 5% versus the 20% settarget. This paper aims to present the activities done and its results throughPDCA (Plan, Do, Check, Act) approach.

Definition of TermsDRDDNA - HTC smart phone modelReclaim Parts - Are recovered good parts from a phoneD Cover - It can be describe as back housing of a phoneReclaim Usage - Computed by dividing the total reclaim parts used over the total producedReclaim Yield - Computed by dividing the recovered reclaimed parts over the total cores input.N - Represents the market cost of a brand new phoneCost of N - The cost percentage of a remanufactured phone vs the cost of new phoneAEC - Average Equipment CostASC - Asurion Supply ChainSSRS - SQL Server Reporting SystemOEM - Original Equipment Manufacturer

Cores - Phones came from Asurion customers that will serve as Raw Material in Prodn.

PLAREC - Parts RecoveryRTR - Ready to RepairIPC - Incoming Parts Control

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Problem Identification and Selection

Project Timeline

A timeline of planned activities are established by the team as a guide to monitor the progress of the

project. We are guided by the below Gantt that follow the PDCA steps where every activity is observed for

completion according to plan.

The team based the selection of the project from the 2013 COMPANY X OBJECTIVES which was set bythe COMPANY X Management.As stated from the said Objectives of the company, Percentage of PhoneRepair Cost vs N misses the target for 3 consecutive Quarters see Figure 1.

Figure 1: COMPANY X Actual Performance Tally Matrix

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FY2013Q3 Result shows that Percentage of Phone Repair Cost vs. N finished at 30.9% against 26.4%which gives a 4.5% gap from the target (refer to Graph1). The 4.5% Gap were composed of DRDDNA(1.2%), DRDRZR2BLK (0.9%), MOTION (0.7%), DRDMICRO (0.4%), DROID4 (0.4%) and OTHERMODELS (0.9%); and DRDDNA top-notch the reason on not hitting the Phone Repair Cost (refer toGraph2).

Considering that the team cannot control the LCM & Other Factors on the DRDDNA Model, we focus ourProject on the NON-LCM Parts and choose D Cover due to high delta when it comes to Reclaim Usageperformance according to Q3 Actual result (refer to Figure 2).

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Analysis of the Present System

The team would like to present two process flows which include the COMPANY X Supply Chain ProcessFlow and the Parts Recovery Process Flow of DRDDNA D Cover.

COMPANY X Supply Chain Process Flow

This process flow above represents the MACRO Process flow of the whole COMPANY X Supply Chain.Highlighted is COMPANY X where phone repair and parts recovery is being done. COMPANY X Site 2 isthe main focus on the flow since DRDDNA D Cover parts recovery is being done on this Site.

DRDDNA D Cover Parts Recovery Process Flow

This process flow above represents the Micro Process Flow on how to perform parts recovery of

DRDDNA D Cover. Its starts with Cores which is describe as phones came from Asurion customers that

will serve as raw Material in Production and ends with withdrawal of Reclaim DRDRDNA D Cover from

Parts Warehouse, on which this part will later on be used on phone assembly.

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Baseline Data

Upon review of the three months performance of DRDRNA D Cover it showed that there is only anaverage of only 5% reclaim usage versus the 20% target.

Problem Statement

From July to Sept 2013 COMPANY X Site 2 Lean Lines are only achieving 5% Reclaim Usage forDRDDNA D Cover against the 20% target.

Note: The 20% reclaim us age target came from t he first 100 cores assessed b y NPI (New Product

Introdu ction Engin eering).

Identification of the Controllable Root Causes

The team performed brainstorming to determine the potential causes on why we are not achieving the20% reclaim usage of DRDDNA D Cover.

After listing all the potential root causes (potential cause of the problem) in fishbone diagram, wecategorized the final possible causes as C, X, andN items.

C itemControllable items are items that can be corrected immediately.N itemNoise or uncontrollable items.X itemCritical items that need to have further evaluation and study.

Source: SSRS Data

5% Average

Reclaim

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Fish Bone Diagram

The below are the summary of number of potential causes in terms of source of variation.

Validation was conducted on all potential true causes as presented on the following items.

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Validation of 3 Potential Controllable (C Items)

Validation of 5 Potential Controllable (XItems )

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Summary of Possible Causes

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Goal Statement

To increase reclaim usage of DRDDNA D Cover from 5% to 20 % by the end of January 2014.

To confirm the set target, the team used two methods of goal setting validation. These are shown below.However, the team still used the 20% existing target to align with the current usage in parts planning.

Projected Cost Savings

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Selection of Best Alternative Solution

A pay off matrix was establish to determine if a countermeasure will be implemented or not. The teamused a simple but high level decision matrix for this project. The team focused on Benefit and Effort for

the matrix.

The succeeding tables will present all the countermeasures based on the brainstorming and thecorresponding decisions if these will be implemented or not. Decision of the team is based on the abovepay off matrix and on the effectiveness of the alternative solution based on the validation results.

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Potential Problem Analysis

We listed the countermeasures and analyzed if there are potential problems that may arise during theproject implementation.

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Solution Implementation

Implementation Plan

To implement the best solutions provided in this project, an implementation plan was generated.

Description of Implemented Best Solutions

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Evaluation of Results

The below graph shows the remarkable results of improvement in terms of reclaim usage of DRDDNA D

Cover. From a baseline of 5% to an ending project performance of 87% and continuously hitting fromtarget from Feb to March 2014.

Source: SSRS

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Tangible Benefits

Intangible Benefits

Through this project, all members of the team learned and realized the following Asurion operatingprinciples:

DIVINE DISCONTENT- team progressively look up all the aspects concerning on how we canincrease the Percentage of Phone Repair Cost vs. N through DRDDNA Parts Reclaim Usageimprovement and not stopping ourselves even we already meet our targets.

ROOL UP OUR SLEEVES- team shows leadership in their field of expertise and shares theirideas that helped a lot in driving great results.

SHOOT BULLETS- team applied the PDCA and did not fear to fail since we learned a lot fromour experiences.

Standardization

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Self-Evaluation and Future PlanTeam Learning

What went well?

The team was being able to:

Finished the Project in time and gained knowledge on PDCA.

Develop teamwork and integrity

Consciousness on the COMPANY X Objectives and its importance.

Develop skills and capabilities.

Improved Planning and time management

Increase Ownership and Commitment

What went wrong?

Team spends overtime just to support and monitor the project activities.

Some members of the team sacrifice their shifting schedule just to expedite the progress of theproject.

Future Plan

DRDDNA D Cover improvement Phase II: Fan out to DRDRZRHD Family

Acknowledgement

Our team would like to offer our indebtedness thanks to:

- Operations, NPI, PLAREC, PH Analytics, CI, Planning and Warehouse for the great support

that they showed throughout this project.- Our Leaders, Supervisors and Managersfor allowing us to be part of this Project.- Our adviser, Edgardo Peraltafor the continuous guide and inspiration in completing this project.- To the Management, for giving us this learning opportunity.- To God Almighty, the ONE who gives us the knowledge, wisdom and strength and never fails to

guide and bless us in our everyday life.Thank you all!

-End-