Download - Cal Tech Presentation 2015
Monica Estrada Nuñez
Six Sigma, Green
Belt
Standardized Planning
Codes
1
The Maintenance Department can not anticipate which
vendors will come in to conduct work until 72 hours before
expected
Annually, this inability to forecast incoming costs, regardless
of a robust scheduling program, contributes to $10M over
budget
Problem Statement
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Work Process AnalyzedOUTPUT
Completed Work
Timing
Changes in Schedule
Execution Administration
Things Affecting Work
Execution (INPUTS)
Budget
Labor
Equipment
Materials
Engineering
Inspection
Priority of Work
Availability of equipment to
be worked on
Processes
Planning
Scheduling
Approvals
Procurement
Project Plan
Identified basic infrastructure opportunities in Planning and Scheduling Process
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40 day sample of scheduling data used for evaluation
Planners surveyed on vendors they use for each resource
code in the sample
Actual Work Order costs referenced back to sample
schedule data
Methodology
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Current Vendor Configuration
23
8
23
37
0
5
10
15
20
25
30
35
40
Single Vendor Codes Multi-Vendor Codes
Resource Codes - Vendor Saturation
Resource Codes
Vendors Represented
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Single Vendor
Codes
Multi-Vendor Codes
% Vendor Forecast Uncertainty
Vendor Uncertainty
• Multi-Vendor codes increase uncertainty by 78%, and limit ability to identify which
vendors will be on-site
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SV work consistently costs less than MV work
Zeros omitted from cost averaging because we are targeting the costs of work orders which are in progress, or completed, but have been rescheduled historically
SV Reschedule Average: $3,850
MV Reschedule Average: $9,460
Actual Cost for Single vs Multi-Vendor
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At 79% efficiency, vendors under multi-vendor codes are POTENTIALLY costing our system an average of $47,000 in actual, un-forecasted costs
This is compounded by a 78% uncertainty on which vendors will be on-site on a week-to-week basis
For the 40-day sample, this represents an accepted risk of $4.5M efficiency loss, or $23.6M for the year
Conclusions
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At 92% efficiency and only half the reschedule rate of MV codes, SV code-based work orders present an efficiency risk of only $8,400 per work order. Moving MV codes to a SV infrastructure would require minimal effort, and provide the following benefits:
100% forecast ability per vendor on any timescale
Ability to identify vendors with high reschedule rates
Budget forecast control
Pre-emptive cost control
Recommendations
Align Planner standardized code use
In an effort to reduce redundancies, loss of time, employee frustration, inaccurate cost forecasting
If the process is not improved - $10M is incurred in costs, unnecessarily
The Process Improvement impacts:
Aligns Budgets and Applies Controls
Improves Business Processes
Aligns Resources
Path Forward
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Business process – Lack of standardized code use
$10M in costs are associated with this flawed business process
Process waste includes:
Lack of clarity in use of vendor codes
Short time to coordinate employee resource schedule
Lack of clarity for schedule due to short schedule horizon
Increased employee confusion
Purchase Order confusion and inaccurate entries
Process Waste and Costs
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Steps:
1. Obtain Management Approval for Change
2. Review and Update Codes, Accordingly
3. Develop Communications
4. Partner with SAP Administrator
5. Develop Job Aids
6. Advise and Train Employees
7. Implement Plan
Process Improvement Next Steps
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What will it cost to make the changes?
½ of 1 FTE (20 hours), in addition to engaging IT, Department Leads, Corporate Communications and Training
What steps need to be taken to make the changes?
1. Standardize Planning Codes
2. Update SAP
3. Develop and Deliver Communications
4. Develop and Deliver Employee Job Aids
5. Develop and Implement Employee Training
Process Improvement Recommended
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2015 Quarterly Process Improvement
Implementation Schedule D
MA
IC P
roc
ess
Define Measure Analyze Improve Control
Revisit Plan in 2016
Issue identifiedData collected & analyzed for cause and effect
Eliminate causes & determine effects
Monitor system
Key Stakeholder Role
Sponsor Planning Supervisor
Champion Division Manager
Change Agent Scheduler
Targets/Stakeholders Planners
Key Stakeholders
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Identified “Pros”
Increased accuracy of vendor resource forecasting
Reduced field supervisor process flow frustration
Reduced follow-up time
Omit negative business and process impacts
Improved Purchase Order accuracy and billing
Recapture $10M over multi-year schedule
Sell the Idea
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Questions