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RUNNING HEAD: FINAL PROJECT 1

Final Project:

The Referral Process

Jason Yearwood

OMGT 312 – Six Sigma Part II

August 16, 2014

Mr. Bruce A. Stephen

Southwestern College Professional Studies

Jason Yearwood Six Sigma Green Belt II Final Project 2

Six Sigma Overview

“The term Six Sigma is a reference to a particular goal of reducing defects to near zero.

Sigma is the Greek letter statisticians use to represent the “standard deviation of a population.”

The sigma, or standard deviation, tells you how much variability there is within a group of items.

In statistical terms,, therefore, the purposes of Six Sigma is to reduce variation to reduce

variation to achieve very small standard variations so that almost all of your products or services

meet or exceed customer expectations” (Pande, Neuman & Cavanaugh, 2002, p. 4).

“One virtue of Six Sigma is that it translates the messiness of variation of variation into a

clear black or white measure of success: either a product or service meets customer requirements

or it doesn’t. Anything that does not meet customer requirements is called a defect. [One]

approach to determining a sigma level is to calculate how many defects occur per opportunities

for things to go wrong. The outcome of this calculation is called Defects per Million”

Opportunities (DPMO) (Pande, Neuman & Cavanaugh, 2002, p. 6). “Six Sigma has three basic

parts, which are process improvement, process design/redesign, process management. These

parts are important because these three parts affect your organization and the process that were

established and are in use on a daily basis. Six Sigma teams when the project is focused on

process improvement finds the critical Xs (causes) that create the unwanted Ys (defects)

produced by the process” (Pande, Neuman & Cavanaugh, 2002, pp. 13-14).

Six Sigma teams use the five step DMAIC method to eliminate or reduce variation in

processes. Define the problem and what customer require, measure the defects and process

operation, Analyze the data and discover the problem, Improve the process to remove causes of

defects, and Control the process to make sure defects don’t recur. I would also add that the new

process must be monitored to ensure there is no variation in what was implemented (Pande,


Neuman & Cavanaugh, 2002, p. 14). In this project, I will use the DMAIC method to eliminate

variation in the Referral Process.

Executive Summary

Introduction

The referral process is designed that when a repair part is requested, the requisition should not

leave Ft. Riley until all warehouses on post have been checked for parts availability. If the part

cannot be requisitioned on post, then and only then the requisition should go to the wholesale

level. We are finding some parts requisitions are leaving the post when we have the parts stocked

in our local warehouse. The results of the parts requisitions not filled at the local level are the

increased wait time and the waste of funds to ship a part from another location.

Analysis

The VoC interview revealed that on average 1-7 parts requisitions per week are being sent to the

wholesale level when there are parts available at the local level to fill the requisitions. The parts

that were requested and sent to wholesale are adding an additional wait time of 13-27 days on the

part to ship and arrive to the post. Once maintenance supervisors realize the part is on post, they

are tempted to walk the part thru and cancel the part that is in route to the post. Canceling the

part is not good supply discipline and maintenance supervisors get frustrated when their request

for walk-thru is denied.

Conclusion

The research shows that the referral process needs to be fixed in order for parts that is in the

warehouses on post would fill the parts requisition instead of the parts request going to

wholesale. Customer units should not have to wait 13-27 days for a part to be shipped and

received in order to fix non-mission capable equipment and vehicles.


Recommendations

Recommend that parameter be set in the SARSS system to check the availability of parts more than once per the required 72 hrs.

Recommend that if the part is zero balance on hand that the SARSS system checks to see if any parts are due in to the warehouse to fill the requisition. If there is a part that is due in and the arrival date is shorter than the date wholesale can get the part to this location, assign part request against the part that is inbound.

Recommend that warning and signs are set in the SARSS system to give clerks inputting the data information to acquire the part in the shortest amount of time.

Recommend that all supervisors and clerks are trained on the new process.


Table of Contents

Six Sigma Overview……………………………………………………………………2

Executive Summary…………………………………………………………………….3

Introduction (Define)….………………………………………………………………..6

Measurement and Analysis……………………………………………………………..8

Conclusion……………………………………………………………………………..10

Recommendations (Implementation)…………………………………………………..10

Works Cited –Appendices.……………………………………………………………..11

VoC Interview…………………………………………………………………..12

Data Analysis…………………………………………………………………...13

Introduction


In the Army class IX parts are your repair parts for either ground vehicles or aircrafts. I

work as the Maintenance Management NCO for an Aviation Brigade and we are having some

issues with our class IX parts requisitions process.

The referral process has restrictions/interruptions in the system and customer requisitions

instead of being filled from a local warehouse, parts request are going to the whole sale market

nationally. This leads to costs unknown (this DMAIC Project will give us the costs) and an

average customer wait time that should be 3-5 days turns out to be 13-27 days. Customers are

complaining about parts that are stocked in our local warehouse that are not released to their

request, instead, the request is sent to other warehouses off of Ft. Riley on to the national level in

order for the requisition to be filled.

The requisition process has two sides to filling a parts request; the first part is as follows.

Units will order a part, the Standard Army Retail Supply System (SARSS) searches warehouses

on Ft. Riley to see if any of the five warehouses on post could fill this requisition. If there is a

warehouse on post that has the part, then the requisition is filled from the part that is at that

particular warehouse. A Material Request Order (MRO) is produced in the supplying

warehouse’s system and they release and ship by ground the part to requesting warehouse. This

process cost the Army the cost of the part and zero dollars because the fuel to transport the parts

has already been paid for by a separate account.

The second part is as follows; the request would go out to the warehouses on post and if

the part is zero balance at all of the warehouses, then the part is sent to the wholesale level for

the requisition to be filled. The system only checks the warehouse one time within the 72 hrs

process and it moves on to the wholesale level. If there is a warehouse that has this particular

part inbound after the system checks, the system only recognizes that the warehouse is zero


balance. Some warehouses are getting the parts somewhere between 4-7 days after the system

checks. The maintenance managers while checking their parts status realize that the warehouse is

stocked with the part they need and the part that is coming from wholesale is still on its way to

their location. Some maintenance managers attempt to use the walk-thru process to acquire the

part that is in the warehouse and attempt to cancel the part that is in route.

As the approver of such requests, we deny them immediately and inform them to wait for

their part that is ordered to arrive. We normally approve the parts request with mission essential

considerations and the number of days the equipment or vehicle has been non-mission capable.

Another issue is while the unit has their part and has fixed the vehicle, there is still a requisition

in the supply system that is processing a part to send to the unit. What that means is the unit will

end up paying for that part twice and that is not good supply discipline or maintenance

management.

This project was selected to complete at this time because four of the five customer units

have experienced a delay in parts, complained numerous times and numerous times we have

failed to gain a thorough understanding of why this problem exists. Completing this DMAIC

project will give units a better understanding of the parts requisition process and give us options

as maintainers; especially when we are in a deployed environment and units are spread

throughout theatre. This project will need six members of the logistical management team and

will cost the Army nothing because we are all doing this while at work. The time frame to

complete this DMAIC project will be five weeks, a week for each phase of the DMAIC project.

The goal is to reduce the number of referrals that go wholesale and improve customer

wait time for parts. Conduct a DMAIC project to figure out why requisitions are not being filled

with parts from warehouses at Ft. Riley and are leaving the post for the orders to be filled by


other warehouses at the national level. The reduction of these wait time will also improve our

overall readiness rate.

Measurement and Analysis

After several complaints from customer units about the referral process, the logistics

management team decided to interview the customer unit’s maintenance managers about their

pains with the referral process. The interview lasted about one hour and the interviewees were

the maintenance managers for each of our five customer units. The interview revealed that the

referral process has been failing every customer unit over the past year and most recently 80% of

the customer units have been frustrated about the referral process; because of the increased

customer wait time and the availability of parts at the local warehouse.

The analysis revealed range for part prices fall between $1000.00 and $7,000.00, the

average ship price is given according to the supplier, location of shipper and number of days

required for part (i.e. high-priority part). The price range to ship parts falls between $400.00 and

$7,000.00 to ship from anywhere in the United States. If part has to travel from an overseas

location, the costs are substantially higher. The warehouse is 5 minutes down the road and if the

clerk drives in a military vehicle to pick up the parts, the government is only charged the cost of

the part, the fuel and shipping is free. Out of 354 parts that were ordered in a month’s time, 52

parts went to national was it was later discovered that only 32 of those parts should have went to

national. The total cost the unit incurred for those parts going to national were $35,019.58. The

average customer wait time was 13-27 days for the parts to ship and arrive at this location. (See

Table 1)


The final issue for the maintenance managers is when they fall below the Army standard

of 90% of operational readiness. The added wait time and the number of equipment and vehicles

that are non-mission capable affect the operational level. The equipment and vehicle could be

collecting down time for two reasons, the first one is for maintenance, meaning the vehicle is in

the shop and being repaired because the parts have arrived and the mechanics are available to

work on the job. The second reasons for collecting down time is due to supply time, meaning

how long it takes for the parts to be processed and shipped to a certain destination. Both times

are reviewed monthly and at the higher headquarters level and while you can explain the

maintenance wait time, you could only voice your frustration with the supply wait time because

that is the way the referral system is currently set up.

Table-1 Data for 20 Parts Sent to Wholesale

# of parts per location

Army Depot Location Cost of Parts Cost of Shipping

Average Customer Wait

Time2 Sierra Army Depot, CA $7,968.50 $3,097.40 133 Red River Army Depot, TX $1,865.37 $567.01 267 Anniston Army Depot, AL $5,982.11 $7,234.94 144 Sierra Army Depot, CA $2,245.08 $1,765.43 153 Red River Army Depot, TX $1,007.63 $1,581.55 171 Letterkenney Army Depot, PA $1,276.54 $428.11 27

Totals: 20 parts 6 Army Depots $20,345.23 $14,674.35 13-27 Days

In the age of rapid deployment and units mandated to remain in a state of operational

readiness, units need predictability as part of their planning process. The referral system hinders

the planning when it comes to equipment available to conduct missions worldwide. When a unit

is not able to conduct its war time mission or support the war fighting exercises, there could be

significant consequences for unit commanders. This referral process affect not only readiness, it

is not practicing good supply discipline, sound maintenance practices, and the additional costs of

acquiring and shipping parts from different locations.


Conclusion

The analysis clearly reveals that the referral system needs to be revamped. The unit is incurring

additional shipping costs; it affects unit readiness, and additional customer wait time. In this

technological age, we should be able to locate parts and resource warehouse that are local instead

of sending parts request to the whole sale level. This project is fully supported by the higher

headquarters and they expect a change in the system that is more aligned with the support the

unit is expected to support to ground troops. The changes made to this system would eliminate

the need to explain the frustrations with waiting for parts to arrive that are already stocked in

local warehouses; it would give unit leaders predictability in planning mission support and

alleviate additional shipping costs.

Recommendations

Set parameters in SARSS to check part availability more than once in the prescribed 72 hrs. (Warehouses might have received the parts after the first checks)

If parts are zero balance, check due-ins and if there are due-ins that is not dedicated to another job, dedicate the part to this parts request.

Set parameters in order for the SARSS to compare shipping times based on location of parts on the wholesale level to the shipping time of due-ins to the local warehouse. If the ship and delivery date is greater for the part dedicated to the local warehouse, then assign parts request to warehouse on the wholesale level and vice versa.

Develop status boxes to identify when parts requests are going to be filled at the wholesale level and give an estimated ship and delivery date.

Recommend that unit maintenance managers, supervisors, and clerks be trained on the new parameters and processes with the SARSS.

Monitor and pull unit data quarterly to ensure the system parameters are working. The SARSS system along with the processes will be inspected semi-annually as part of the Command Discipline Supply Program.


Works Cited – Appendices

The tools used in this project were VoC interview and statistical data analysis. SARSS computer, the SARSS end-users manual, interview with Mr. Hornbaker, supply warehouse manager, interview with maintenance managers, CSDP guidance checklist, SAMS1-E computer and end-users manual, SAMS2-E computer and end users manual.

References

Pande, P., S., Neuman R., P., & Cavanaugh, R., R. (2002). The Six Sigma Way Team Field Book. New York, NY: McGraw Hill


Voice of the Customer Interview:

The team will be conducting face-to-face interviews with personnel from the affected units. The results from the face-to-face interviews conducted are as follows (each person was asked the same set of questions):

1. What problems have you encountered with the referral system?a. All five unit representative expressed disgust with the referral system. The system is

supposed to fill the requisitions at the local level in order for customer units to get the parts in a shorter time frame, thus reducing non-mission capable time. The Army conducts and evaluation every month that evaluates the different reasons equipment are non-mission capable. One of the areas that are evaluated is how long the non-mission capable equipment is affected by the supply process or by maintenance procedures (i.e. days in the shop after part is received). The system recognizes that local warehouses are stocked with basic parts according to the fleet at that location and parts are readily available. Instead the customer units have encountered wait times anywhere between 13-27 days depending on the location of the supplier and shipper.

b. How many parts per week are referred to wholesale when the part is sitting in a local warehouse?

a. On average 7-10 parts of different prices are referred to the wholesale level per customer units. (35-50 parts per month for all units combined)c. What is the average wait time as a result of the requisition being filled at the

wholesale level?a. The average wait time increase goes from a normal 3-5 days if filled locally to 13-27

days if filled at the wholesale level.d. How does this affect your maintenance readiness program?

a. The maintenance program is affected because our readiness rate reflects that we have critical equipment down for a period of time. When your readiness rate is < 90% then you have to answer to the higher headquarters. Usually when the parts arrive the mechanics have to work later than usual to get the equipment fully mission capable because the supply side of the maintenance process took up most of the allotted time for the part to arrive. e. What have you done to rectify the problem?f. The units have brought this issue to the attention of the maintenance manager, the

warehouse manager, and also the regional materials manager. g. What were the results of your inquiry?

a. None of these individuals could explain why the requisition process is not working like it should.h. How would fixing the problem reduce or eliminate your pain?

a. Fixing the problem would ensure the referral process is working and parts request are filled at the local level instead of being filled at the wholesale level. It would also help the readiness rate and reduce down time of critical equipment of the units affected and mechanics would not have to work later than usual in order to get the equipment fully mission capable. There could also be some predictability in the maintenance and supply process. It would also save the Army some money on shipping costs of the parts.


The Define Phase Questions

1. What is the name of the process?a. Referral Process

2. What is the aim of the process?a. To fix referral process and shorten wait time for parts.

3. What is the business case (economic rationale) for the project?a. To save money for shipping cost of parts.

4. Why conduct the Referral project at all?a. The Army is spending extra money to ship parts on the wholesale level when the

parts are at one of several local warehouses. 5. Why conduct the Referral project now?

a. The Army tracks how many parts are referred to wholesale and it is part of the Command Supply Discipline Program (CSDP). The unit received a failing grade in this area of the annual inspection. In this fiscal age of downsizing and limited budget, fixing the referral process would save substantial funds for the Army.

6. What business objectives are supported by the Referral project?a. The Referral project is most strongly related to “saving shipping cost” and “reduce

customer wait time” business objectives.7. What are the consequences of not doing the project?

a. The consequences of not doing the project are wasted funds, long wait time for parts, referral system not fixed, and customer complaints.

8. What projects have higher or equal priority?a. This project has the highest priority.

9. What is the problem statement? What is the pain?a. The referral system is broken and long customer wait time for parts.

10. What is the goal (desired state) for this project?a. The goal is to fix the referral system and shorten customer wait time for parts.

11. What is the project scope?a. The following questions will answer this question:

12. What are the process boundaries?a. The starting point is when the clerk enters the data into the SAMS1E box. The

stopping point is when the part status is updated and allocated from a warehouse.13. What are the process boundaries?

a. The project team cannot contact the dedicated warehouse for part information.14. What resources are available for the project?

a. There are six team members, one Standard Army Maintenance System-Enhanced (SAMS1-E) computer, one Standard Army Retail Supply System (SARSS) computer, maintenance worksheets, logistical parts tracking website Logistics Information Warehouse (LIW), and one Standard Army Maintenance System-Enhanced SAMS2-E computer.

15. Who can approve expenditures?a. We will not have any expenditure.

16. How much can the team spend beyond the budget?a. We do not have a budget.


17. What are the obstacles and constraints of the project?a. The obstacles might be people conducting work on the systems, time to interview

warehouse personnel, SAMS1E, 2E operators, LIW site is down, and the constraints would be no recordkeeping done by affected units or systems data purged as part of 45 day purging process.

18. What time commitment is expected of team members?a. Team members will work from 9:00 a.m. until 6:00 p.m. There may be times when

we have to work later because of systems failures or processing of data. 19. What will happen to each team member’s regular job while working on the project?

a. Team members will be replaced by other individuals and focus on the project.20. Is there a Gantt chart for the project?

a. Yes.21. What are the benefits of the project?

a. The soft benefits of the project are eliminating customer complaints about long wait times and fix the referral system. The hard benefits of the project are costs savings from shipping parts.

22. What are the roles and responsibilities of the team members? a. The team members are:

LT “C”-Maintenance OfficerSFC “N”-Maintenance SergeantChief “T”-Systems OfficerChief “S”-Warehouse ManagerSFC “H”-Materials Manager/ResearcherChief “Q”-Regional Materials Manager/Research


Critical-to-Quality

This test was conducted to eliminate the hypothesis that the clerks were inputting the data incorrectly and causing the parts request to go straight to wholesale.

Operational Definition for CTQ 1: Accuracy of Data Input.Clerks follow steps for inputting data. Any steps missed could hinder parts ordering process.

Test:1. School trained clerk goes through steps for ordering parts.2. Parts ordering process is verified.

Decision:1. If the steps are performed accurately, process complete.2. If the steps are done incorrectly or are missed, clerk will go through entire process again.

Develop a Baseline for Each CTQ:

Shift Clerk Data AccuracyAM #1 10 parts 95%AM #2 10 parts 90%PM #3 10 parts 100%PM #4 10 parts 85%

Average Clerks 1, 2, 4 6 Parts Ordered Wrong 92.5%

*5% was deducted per missed step


SIPOC Analysis (Current)

Suppliers Input (X) Process Output (Y) CustomersLocal Warehouses

Wholesale Warehouses(National) Data Start

Material Request Order (MRO)

Aviation Units Parts Requisitions

Parts request from customer unit

Customer Supported Units

Data splits and goes into two systems

Parts for Supported

Units

SAMSE and SARSS

SARSS checks local warehouse

If part is on hand, an MRO is issued to fill

requisition

If part not on hand

request goes to wholesale

Referral Process SIPOC Analysis


SIPOC Analysis (New)

Suppliers Input (X) Process Output (Y) CustomersLocal Warehouses

Wholesale Warehouses

(National) Data Start

Material Release Order (MRO

Aviation Units

Parts Requisitions

Parts request from unit

Customer Supported Units

Data splits and goes to SAMSE and

SARSS

Parts for Customer

Units

SARSS checks local warehouse for parts

more than once

If local warehouse is zero balance; check

for due-ins

If due-ins are inbound dedicate part for this

parts request

If no parts are

inbound for local warehouse, send

requisition to wholesale

Referral Process SIPOC Analysis (RED indicates New Process)


Risk Assessment Matrix

Risk Assesment Matrix How to

Risk Priority Monitor Action/ReactionWho

Implements Comments

1-10 (1-Highest)

Input of wrong data 1 Supervision Check data Supervisor Clerk not checking

parts due in 2 Supervision Have clerk verify checks by initialing Supervisor

Clerk not recognizing warning signs 3 Supervision Set parameters that

will not allow order to go through Supervisor

Clerk not assigning

part request with 2 SupervisionSupervisor will

check Supervisor part due in 3 times a day


Referral Process

Table-II Dot Chart

0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 5.50

1

2

3

4

5

6

7

8

Parts Going to Wholesale

Y-Values

*Note in week-3 two days in that week there were 3 parts referred to wholesale.

Weeks


Impact/Effect Matrix

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