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
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
Process Capability for Project Y
Local DeliveriesMEASUREMEASURE
Distributioncurve
14
Process Capability for Project Y
Local DeliveriesMEASUREMEASURE
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
Process Capability for Project Y
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:
Lower Spec:Nominal: 6 Opportunity:
Reported by:Project:Department:Process:Characteristic:Units:Upper Spec: 10
Actual (LT)
Process Performance Process Demographics
Actual (LT) Potential (ST)
Sigma(Z.Bench)
DPMO
-0.08
530959.5
1.42
77,467.0
Process Benchmarks
Report 1: Executive Summary for Indent Deliveries
Process Capability for Project Y
Indent DeliveriesMEASUREMEASURE
Distributioncurve
17
Process Capability for Project Y
Indent DeliveriesMEASUREMEASURE
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
* *CCpk * *Pp * *Ppk *
12.5536
-0.03
StDev * 32.872Z.USL
10 10
111.17-86.0628
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 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
NAL L
TD.
INTE
RCON
TINE
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
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
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
Technology & Communication
Type of Supplier
Specs. & type of goods
Lack of follow-up or monitoring
Miscommunication
Fax Machine
Lack or not clear specs.
ANALYZEANALYZE
Timely delivery of goods
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
* *CCpk * *Pp * *Ppk *
2.43011
0.39
StDev * 4.789Z.USL
8 8
16.798-11.9378
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 Control
34
IMPROVEIMPROVE
24181260-6
USL
9080706050403020101
1.0000E+06
10000.000
100.000
1.000
0.000
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
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*
36
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.
37
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
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.