Business Case: Customers are not receiving orders in a timely fashion, waiting several week(s) to receive their orders due to poor efficiency and testing times of blades. TCQ is extremely high due to (hidden factory) as a result of shipping defective blades, RMA's, accounting, and shipping charges. Responding and solving customer complaint time is too long. There is currently no sales training program or inside sales department to generate cost affective sales, responses, and service inbound customer calls. Communication between department(s), staff(s) and customer(s) is poor. All issues are resulting in decreased customer satisfaction, loss of revenues and re-orders, which is significant.
- Increase company efficiency, communication and transparency, with ERP system;
- Increase customer satisfaction;
- Increase revenues and re-order(s);
- Decrease TCQ, RMA's, accounting and customer complaints;
- Create sales training program and an inside sales department;
- Improve warehouse testing time and efficiency
Voice of Customer:
- Meeting customer(s) needs and expectations, shipping order(s) within 3 business days is critical, customer receiving non-defective blades is critical, and addressing customer questions and concerns within 2 business days is important; all are not being met.
Opportunity Statement: Improve Warehouse Testing Time, which will decrease TCQ. Improve testing procedures for efficiency, which will decrease lead time to ship product to customer(s), and will decrease defective blades being shipped to customer(s). This will reduce complaints improving customer satisfaction and the TCQ. Complaints are 50% of order(s); Re-order(s) is 10% of customer(s) order(s). Revenues are currently $5,000.00 per week.
Goal Statement: Customer order(s) are shipped in 3 business days from receipt of order and less customer complaints about late delivery. Increase customer satisfaction, by decreasing customer complaints to 10% or under for all order(s). Increase revenues to $15,000 per week. Increase reorders to 25% or better of customer(s) order.
Stakeholder(s): Sales, Marketing, Logistics, Operations, Accounting, Customer(s).
Team Member(s): Logistic Manager, Operations Manager, (Warehouse / Testing Staff) Employee 1, and Employee 2
Process Owner: Logistic Manager, Sale & Marketing Manager
Champion: VP (Vice President)
Cost: Project budget is estimated at $13,050. Budget includes 3 weeks of salary for Logistics Manager, Operations Manager, two new warehouse / testing employees, and 15 hours for controller's time.
Projected Savings: Project will increase weekly revenues from $5,000.00 to $15,000.00 per week and immediately reduce backorder(s) and generate $15,000.00 in shipments. Total cost of project $13,050.00, total benefit $45,000.00 (time frame 3 weeks), $45,000.00 - 13,050.00 = $31,950.00 in 3 weeks of project.
Risk Analysis: Low Risk
Opportunity Statement: Currently there is no inside sale or customer service. By implementing sales training program and creating an inside sales department customer(s) sales and service question(s) and order(s) can be handled as they are received and can increase revenues, re-order(s) and customer satisfaction. Re-orders are currently at 10% of all sales
Goal Statement: Develop a training program within the next 5 days and provide training to new hire, which will take 5 days. Hire one person within the next 30 days to handle in-bound customer(s) calls, including sales and customer service. Person will be responsible for producing $1,000.00 dollars a week in sales for the first 90 days and $2,500.00 dollars in sales after 90 days. Customer satisfaction will be measured by increase in revenues and increase in re-order(s) of a least 10%.
Stakeholder(s): HR, Accounting, Operations, Sales, and Customer(s)
Team Member(s): Sales Manager and HR Manager
Sponsor: VP (Vice President)
Process Owner: Sales Manager
Cost: 5 days for sales manager to develop and document a training program $800.00, 5 hours for HR to post or list job openings on job boards $90.00, 5 hours for HR to review resumes $96.00, plus 30 hours to interview candidates $540.00, 5 days for sales manager to train new hire $800.00. Total project over 3 weeks = $2,326.00. Plus salary of new hire of $400.00 per week.
Projected Savings: Increase sales of $1,000.00 per week for the first 12 weeks and $2,500.00 per week thereafter. Project will generate a break even after 3 weeks of acquiring a new hire. After 90 days revenues will be $12,000.00 - costs of $7,126.00 - increase or profit of $4,874.00, after one year revenues will be $112,000.00 - costs of $23,126.00 - increase or profit of $88,874.00
Risk Analysis: Low Risk
Opportunity Statement: Improve company efficiency, transparency and customer satisfaction by implementing an ERP system. Current revenues are $5,000.00 per week and 10% in re-order(s). Current order(s) are 50 per week and an additional 5 re-order(s) per week.
Goal Statement: Implement ERP system. Increase efficiency by 20% (number of orders and shipments. Transparency will increase, measured by an 80% reduction in the number of inquire(s) for status checks or updates via inter-department emails. Increase customer satisfaction measured by increase in sales of 25% and increase in re-order to 25%.
Stakeholder(s): All departments in company, customer(s), and vendor(s)
Team Member(s): Operations Manager, Sales & Marketing Manager, Warehouse Manager
Process Owner: VP (Vice President)
Cost: $5,000.00 for user licensing, $15,000.00 for software, $3,000.00 for training on software, $6,000.00 for 1 week of payroll to train all staff. Staff will be trained on a staggered schedule so company does not have 1 week of down time. Total cost: $29,000.00
Projected Savings: An increase of 10 orders per week, and $1,250.00 in revenues, plus increasing re-order to 25% of weekly orders creating an additional $1562.50 in re-order revenues for a total of $2776.50 per week. It would take 10.5 week for the company to break even for project cost of $29,000.00
Risk Analysis: High
Six Sigma in Trucking Logistics
Like other industries the trucking industry is also affected by common forces in the global marketplace. There are pressures from increasing competition, price pressures from customers and operational costs. The industry is also dependent on fuel prices which are constantly increasing. To remain competitive many opportunities exists like
- Streamlining operations
- Eliminating costly waste
- Reducing turnover rate among truck drivers
- Improving customer responsiveness
- Improving resource utilization
- Six Sigma can help in transformation of operations for high performance by reducing waste.
Areas of Improvement
1. Load schedule & Dispatch
Based on historical data inputs, trucking company has to set its delivery estimates. If the data input is unreliable, company can tend to inflate delivery estimates.
Solution: The incorrect delivery estimates can lead to oversized and uncontrolled safety stock. Delivery ...
Three potential six sigma projects related to dto a logistics company is identified.