warehouse timestudy example

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SEMESTER PROJECTISE 250: Organizational Improvement Capabilities and Skills

Instructor:Dr. Baruch I. Saeed

Team Members:Ramachandran JanakiramanEmma LaraRichard OlasoRonnaporn PasakdeeYoung Shea



Agenda

Six Sigma Storyboard

– Define – Measure

– Analyze

– Improve

– Control

Conclusion




Define Goals:

– To define the project’s purpose and scope

– To obtain background information: Process

Customers

– Understand the voice of the customer (VOC)



D for Define

Goods

Receiving7.44 sec./pc.

Storing3.50 sec./pc.

Picking18.00 sec./pc.

Shipping11.40 sec./pc.

GoodsStored

Goods OrderedShipped

A

B

D

Initiating Order orRequestfor Shipping

WMS

End ofReceivingand Storing

End ofPicking andShipping

WMS

Initiating Arrival ofGoods to be Stored

Process FlowDiagramOverall Process (High-Level)

C

Tools Applied

Problem Statement

Customer(s)?

Business Case

.

.

.

.

CharterProcess Flow

DiagramCritical-to-Quality



Charter

Problem Statement – SuperMicro warehouse not meeting customer needs – No visibility of flow through warehouse, and packages arriving late to customer

– Customers opting to go with competitors if not solved

Business Case – SuperMicro exports microprocessors throughout the country. Menlo Worldwide has been

contacted to analyze the company’s dilemma, and to determine if RFID implementation willsolve existing problems.

Deliverables

– Obtain an efficient and effective proposal, while meeting customer’s needs

Success? – Better visibility – On-time delivery

Scope

– Evaluate current warehousing process – Provide proposal/recommendations within 4 months (February-May)

http://images.google.com/imgres?imgurl=http://www.speeding.co.uk/acatalog/momo_millenium.JPG&imgrefurl=http://www.speeding.co.uk/acatalog/Steering_Wheels.html&h=200&w=198&sz=10&hl=en&start=1&tbnid=95hQGRCx4QJVMM:&tbnh=99&tbnw=98&prev=/images%3Fq%3Dsteering%2Bwheel%26svnum%3D10%26hl%3Den%26lr%3D

http://images.google.com/imgres?imgurl=http://www.tamucc.edu/~wiki/uploads/FRC/frc-compass.gif&imgrefurl=http://falcon.tamucc.edu/wiki/FRC/FRCDocuments&h=918&w=928&sz=174&hl=en&start=4&tbnid=RavdLZeZJVMpTM:&tbnh=144&tbnw=146&prev=/images%3Fq%3Dcompass%26svnum%3D10%26hl%3Den%26lr%3D



D for Define

Goods





GoodsStored


A

B

D

Initiating Order orRequestfor Shipping

WMS

End ofReceivingand Storing

End ofPicking andShipping

WMS


Process FlowDiagramOverall Process (High-Level)

C

Tools Applied

Process FlowDiagram

Critical-to-Quality



Goods

Goods areProcessed by

Receiver1.40 sec./pc.

GoodsStored

WMS

End of Receivingand Storing


Process Flow DiagramReceiving and Storage (A & B)

Notify Supplier andMake Necessary

Arrangements

Enter OrderReceived into theSystem and PrintOrder Location1.44 sec./pc.

Return Order toSupplier

Modify ReceivedOrder

Move Order to theStorage Area2.76 sec./pc.

B

Complete theReceived Orderinto the System

0.84 sec./pc.

Perform Inspection(Count and Damages)

4.50 sec./pc.

A

Updated PFD (with Time Study)

P Fl Di



Process Flow DiagramPicking and Shipping (C & D)

Check if Order is

Available

Ship Order1.80 sec./pc.

Initiating Order orRequest for Shipping

End of Picking andShipping

WMSC

Notify Customerthat Order is Not

Available

Customer ModifyOrder

Cancel Order

Resend Order

Generate Pick-List

1.20 sec./pc.

Pick Order3.60 sec./pc.

Move Order toQuality Control

Area

1.20 sec./pc.

Puller MakesAdjustments of

Wrong Picked orDamaged Items

2.00 sec./pc.

Perform Inspections(Count and Damages)10% ~ 10.00 sec./pc.

Move Order toPacking Area1.25 sec./pc.

Process Shipping Labeland Notify Customer of

Processed Order7.20 sec./pc.


D

Order Verification1.20 sec./pc.





Goods





GoodsStored


A

B

D

Initiating Order orRequest for Shipping

WMS

End of Receivingand Storing

End of Picking and

Shipping

WMS


Process Flow DiagramOverall Process (High-Level)

C



D for Define

Tools Applied

Critical-to-Quality



On-Time Delivery

Reduce warehousecycle time

Optimalresponsiveness

Optimal Inventorylevel

Consistently meetingcustomer demand

Need Drives CTQs

Time on hold isminimal

Reduce order

process time

Low Stock-out %

Streamline process

Efficient transportation

Efficient materialhandling

Optimal picking sequence

Fast inventory turnover;FIFO

Fast dock-to-stock time

Easy to identify locationfor customer orders

Good inventorytracking system

Sufficient staffing High Productive output

High accuracy in pickingorders (fill-rates)

Fast delivery, shorttransit time

Quick respond to urgentorders

High service level

Low % transportationdelay

Low loss or damage claims

Shorter promised leadtimes

Critical-to-Quality

….indicate deficiency




Measure Goals:

– Collect the baseline data

– Create a Pareto chart to analyze the currentprocess

– Create a Balance Scorecard for what toimprove and how to measure

– Do benchmarking against competitors andindustry standards



M for Measure

Tools Applied

Balance ScorecardPareto Chart Benchmarking

Benchmarking with Industry Average

18.5%

9.0%

44.5%

28.0%

20%

10%

45%

25%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Receiving Storing Picking Shipping

Tasks

% o

f T i m e s

Client Current Process Industry Standard



P i c k i n g

R e c e i v i n g

S h i p p i n g

S t o r i n g

0

2

46

8

10

12

14

1618

20

s e c / p i e c e

Breakdown of Picking Process

15%15%

25%

45%

Pick the order

Adjustment for

wrong picking

Generate Pick-List

Move to the Q/C

- Time Study- Pareto Chart ( High Level and Detailed Process )



M for Measure

Tools Applied

Balance Scorecard Benchmarking

Benchmarking with Industry Average

18.5%

9.0%

44.5%

28.0%

20%

10%

45%

25%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%


Tasks

% o

f T i m e s




VS Industry Standards VS Competitor

Benchmarking: Processing Time

VS

Industry Standards

18.5%

9.0%

44.5%

28.0%

20%

10%

45%

25%

0%

5%

10%

15%

20%

25%30%

35%

40%

45%

50%


Tasks

% o

f T i m e

s


Benchmarking VS Competitor (RFID)

6230

150

10 10 10

60

5

337

28 22 267 18

434

8

147

0

50

100

150

200

250

300

350

400

Receive

order

Move to

storing

P ick p ar ts M ove to

inspection

Q/C Check Move to

packing

P ack p ar ts M ove to

shipping

Total Time

Tasks

T i m

e ( m i n s )

Current Process (mins) Competitor with RFID (mins)

Benchmarking



Balance Score Card

Financial 33

Warehouse Productivity

Net Received Orders Per Hour 6

Net Stocked Orders per Hour 3

Net Pulled Orders Per Hour 3

Net Shipped Orders Per Hour 6

Expense per Received and Shipped Orders6

National Revenue Growth6

International Revenue Growth3

IBP 20

Service Quality Index

Rejected Orders 4

Shortage Orders 2

Shipped Damaged Orders 2

Received Damaged Orders 2

Committed Services 2

Visibility (2)

Received Orders Confirmed 1.5

Shipped Orders Confirmed 0.5

Claims (4)

Origin Damage Issued 2

Destination Damaged Issued 2

Concern 2

Customer 27

Customer Retention20

Volume Growth7

People 20

Employees Paid Over 9 hours 5

Turnover 1

Safety Index(14)

Injury Frequency/ Expense 7

Accident Frequency/ Expense 7




Analyze Goals:

– Explore potential causes

– Identify and focus on root problems

– Interpret root problems

– Help formulate feasible solutions



A for Analyze

Tools Applied

Cause-and-Effect Diagram



Communication

Work Environment

People

Material Handling

Methods

Machine Equipment

Measure

• Lack of interdepartmental communication

• Inefficient handling procedure

• Improper transport aid

• Poor picking method

• Improper storage configuration

• Inconsistent time study

• Lack of training

Long warehouseprocessing time

Cause-and-Effect Diagram: Analysis and Findings




Improve Goals:

– Plan, develop, and implement solutions

– Prioritize the projects

– Develop project plans

– Actual implementation plan



I for Improve

5SmallEmployee MotivationMonthly$500 per month1 yr$6,000

Reward and Motivation

Program

5SmallEfficient

Communication

Efficient operationalprocedures

Efficient Data

Analysis

1 hour

4 hours

8 hours

(15 Employees)

$60 per person

$250 per person$580 per person1 yr$6,400

Training

Communication

MethodsTools Analysis

5SmallEfficient OperationProcedure

4 Weeks$2,000 per methodmodified

3 yrs$8,250

Revise and ModifyProcess Methods

(use expertise)

ReceivingStoring

PickingShipping

5MediumTime is allocated per

order

4 Weeks$500 per day observed

3 yrs$10,240

Categorize orders and

Establish Standard

Time

ScoreComplexChangeDurationCostEnd of lifeNPVProject


Reward and Motivation

Program

5SmallEfficient

Communication


Efficient Data

Analysis

1 hour

4 hours

8 hours

(15 Employees)

$60 per person

$250 per person$580 per person1 yr$6,400

Training

Communication

MethodsTools Analysis



3 yrs$8,250

Revise and ModifyProcess Methods

(use expertise)

ReceivingStoring

PickingShipping

5MediumTime is allocated per

order

4 Weeks$500 per day observed

3 yrs$10,240

Categorize orders and

Establish Standard

Time


Tools Applied

PDCAPrioritization

Service Level

Productivity Level



Prioritization


Reward and MotivationProgram

5SmallEfficientCommunication


Efficient DataAnalysis

1 hour4 hours

8 hours

(15 Employees)$60 per person$250 per person

$580 per person1 yr$6,400

TrainingCommunicationMethods

Tools Analysis



3 yrs$8,250

Revise and ModifyProcess Methods(use expertise)

ReceivingStoringPicking

Shipping

5MediumTime is allocated perorder

4 Weeks$500 per day observed3 yrs$10,240

Categorize orders andEstablish StandardTime



Reward and MotivationProgram

5SmallEfficientCommunication


Efficient DataAnalysis

1 hour4 hours

8 hours

(15 Employees)$60 per person$250 per person

$580 per person1 yr$6,400

TrainingCommunicationMethods

Tools Analysis



3 yrs$8,250

Revise and ModifyProcess Methods(use expertise)

ReceivingStoringPicking

Shipping

5MediumTime is allocated perorder

4 Weeks$500 per day observed3 yrs$10,240

Categorize orders andEstablish StandardTime




Prioritization

1LargeProvide Visibility

at all times

3 months$3,500 per reader

$.40 per tag (varies)

$20,000 (hardware &

software)

10 years$133,000RFID

Readers

Tags

Antenna

Hardware and

Software

2MediumBetterEnvironment

2 Weeks$15,00030 yrs$17,000Install appropriatelighting system

2LargeBetter

Environment

2 Weeks$40,00030 yrs$48,000Install an efficient

A/C

3LargeEfficient Use of

space

3 Weeks$80,0005 years$80,00Re-Arrange Layout

3SmallReduce Idle TimeYears

life

2 Forklift ($14,000)

3 Dollies ($600)3 Hand Forklift ($3,400)

10 yrs$17,500Buy new Equipment

Forklifts


1LargeProvide Visibility

at all times

3 months$3,500 per reader

$.40 per tag (varies)

$20,000 (hardware &

software)

10 years$133,000RFID

Readers

Tags

Antenna

Hardware and

Software

2MediumBetterEnvironment

2 Weeks$15,00030 yrs$17,000Install appropriatelighting system

2LargeBetter

Environment

2 Weeks$40,00030 yrs$48,000Install an efficient

A/C

3LargeEfficient Use of

space

3 Weeks$80,0005 years$80,00Re-Arrange Layout

3SmallReduce Idle TimeYears

life

2 Forklift ($14,000)

3 Dollies ($600)3 Hand Forklift ($3,400)

10 yrs$17,500Buy new Equipment

Forklifts




I for Improve

Tools Applied

PDCA

Service Level

Productivity Level



PDCA: Service Level



PDCA: Service Level (Gantt Chart)



PDCA: Productivity Level



PDCA: Productivity Level (Gantt Chart)




Control Goals:

– Document new process methods andstandard data per department

– Present results to management for anapproval

– Training program

– Monitor performance – Evaluate current methods and standard times

every five years



C for Control

Tools Applied

Control Plan

O d M t i Cl ifi ti



4 8 12 15

A B C D

<1200 1 A1 B1 C1 D1

<1400 2 A2 B2 C2 D2<1600 3 A3 B3 C3 D3

<1800 4 A4 B4 C4 D4

Qty

Items

Receiving

Classification Type

4 8 12 15

A B C D

<1200 1 40 50 60 70

<1400 2 45 55 65 75<1600 3 55 65 70 80

<1800 4 60 75 75 85

Receiving

Items

Qty Minutes per order type

1 2 3 4 5

LL L M H HH

<100 1 1LL 1L 1M 1H 1HH

<200 2 2LL 2L 2M 2H 2HH<300 3 3LL 3L 3M 3H 3HH

<400 4 4LL 4L 4M 4H 4HH

Storing

Level

Qty Classification Type

1 2 3 4 5

LL L M H HH

<100 1 5 8 10 15 20

<200 2 7 10 12 17 22<300 3 9 12 14 19 24

<400 4 10 14 16 21 26

Storing

Level

Qty Minutes per order type

1 2 3 4 5

LL L M H HH

<2 1 1LL 1L 1M 1H 1HH

<5 2 2LL 2L 2M 2H 2HH<10 3 3LL 3L 3M 3H 3HH

<20 4 4LL 4L 4M 4H 4HH

Items

Level

Picking

Classification Type

1 2 3 4 5

LL L M H HH

<2 1 5 7 10 13 15

<5 2 6 8 11 14 16<10 3 8 9 13 16 18

<20 4 10 11 15 18 20

Level

Items

Picking

Minutes per order type

5 10 20

S M L

<5 1 1S 1M 1L

<10 2 2S 2M 2L<20 3 3S 3M 3L

Qty

Items

Shipping

Classification Type

5 10 20

S M L

<5 2 5 7 10

<10 3 7 9 12<20 4 9 11 14

Items

Shipping

Minutes per order type

Qty

Order Matrix Classification

C t l Ch t



Storing Control Chart

0

2

4

6

810

12

4 / 3 / 2 0

0 6

4 / 5 / 2 0

0 6

4 / 7 /

2 0 0 6

4 / 9 / 2 0

0 6

4 / 1 1

/ 2 0 0

6

4 / 1 3

/ 2 0 0

6

4 / 1 5

/ 2 0 0

6

4 / 1 7

/ 2 0 0

6

4 / 1 9

/ 2 0 0

6

4 / 2 1

/ 2 0 0

6

4 / 2 3

/ 2 0 0

6

4 / 2 5

/ 2 0 0

6

4 / 2 7

/ 2 0 0

6

Date

O r d e r s P e r H o u r

Storing Dai ly ResultsUpper Control LimitMeanLower Control Limit

Picking Control Chart

20

25

30

35

40

45

4 / 3 / 2 0

0 6

4 / 5 / 2 0

0 6

4 / 7 /

2 0 0 6

4 / 9 / 2 0

0 6

4 / 1 1

/ 2 0 0

6

4 / 1 3

/ 2 0 0

6

4 / 1 5

/ 2 0 0

6

4 / 1 7

/ 2 0 0

6

4 / 1 9

/ 2 0 0

6

4 / 2 1

/ 2 0 0

6

4 / 2 3

/ 2 0 0

6

4 / 2 5

/ 2 0 0

6

4 / 2 7

/ 2 0 0

6

Date


Picking Daily ResultsUpper Control Limit

MeanLower Control Limit

Shipping Control Chart

30

35

40

45

50

4 / 3 / 2 0 0

6

4 / 5 / 2 0 0

6

4 / 7 /

2 0 0

6

4 / 9 / 2 0 0

6

4 / 1 1

/ 2 0 0

6

4 / 1 3

/ 2 0 0

6

4 / 1 5

/ 2 0 0

6

4 / 1 7

/ 2 0 0

6

4 / 1 9

/ 2 0 0

6

4 / 2 1

/ 2 0 0

6

4 / 2 3

/ 2 0 0

6

4 / 2 5

/ 2 0 0

6

4 / 2 7

/ 2 0 0

6

Date


Shipping Daily ResultsUpper Control Limit

MeanLower Control Limit

Receiving Control Chart

0

1

2

3

4

4 / 3 / 2 0 0

6

4 / 5 / 2 0 0

6

4 / 7 /

2 0 0

6

4 / 9 / 2 0 0

6

4 / 1 1

/ 2 0 0

6

4 / 1 3

/ 2 0 0

6

4 / 1 5

/ 2 0 0

6

4 / 1 7

/ 2 0 0

6

4 / 1 9

/ 2 0 0

6

4 / 2 1

/ 2 0 0

6

4 / 2 3

/ 2 0 0

6

4 / 2 5

/ 2 0 0

6

4 / 2 7

/ 2 0 0

6

Date


Receiving Daily Results

Upper Control LimitMeanLower Control Limit

Control Charts

P j t G tt Ch t



Project Gantt Chart



Conclusion

Entire warehouse process was analyzed

Take care of small problems first: – Standardization of process times

– Classification of orders

Install and monitor proposed changes

Start thinking of RFID implementation



The End

Questions………

Balance Scorecard (2006)



Element Sub-element Weight HowMeasured Target

Financial 33

Warehouse Productivity

Net Received Orders Per Hour6

% Eff 100%

Net Stocked Orders per Hour3

% Eff 100%

Net Pulled Orders Per Hour

3% Eff 100%

Net Shipped Orders Per Hour6

% Eff 100%

Expense per Received and Shipped Orders6

98% Matrix 100%

National Revenue Growth6

% Eff 100%

International Revenue Growth3

% Eff 100%

Balance Scorecard (2006)