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Case Studies

Case Studies

Same Day Shipping Case Study

A Fortune 500 Software company was not able to process and ship all its orders on the day of receipt resulting in unhappy customers, lost revenue and higher operational cost.

Analysis confirmed that the company was not able to process and ship all orders on the day of receipt leading to large backlog, partial orders and major customer satisfaction issues. Further the company did not have the right mix of inventory of finished goods and components to always satisfy incoming orders and backlog. The manufacturing process was designed for high volume runs, component vendor performance was poor and order picking was grossly inefficient. The organization was in a reactive mode and lack of teamwork was very evident. There were opportunities to gain significant efficiencies in business planning, vendor management, manufacturing and distribution.

Recommendations included re-design of the manufacturing process to include small manufacturing cells for building “make to order” products to ensure product shortages were built on an as needed basis to complete sales orders, creation of a Kanban system for low usage components, shortening of the forecasting horizon, implement JIT, implement batch picking, develop reporting and tools necessary to better manage the entire book-to-ship cycle, organizational changes to improve communication between sales, operations and departments within operations, and streamline staffing.

Execution included obtaining management “buy in” and instituted a “zero backlog” policy, to ship all orders on the day of receipt. Mobilized all employees behind the strategy and empowered teams to drive this change. Documented new processes and procedures, trained employees and validated performance, enhanced forecasting process by defining demand for all active SKUs based on product life cycle, ship history, events, promotions, and subscription factors. Implemented Kanban for low volume components and sub assemblies, identified rev down and end of life products for build to order, increased the frequency of running MRP to improve the component call off from vendors, set up min/max level for all high volume products, batched orders by different sorting criteria so the same product on multiple orders could be pulled and processed collectively, back order reports run every hour.

Formalized communication between business planning and sales, created a new product introduction (NPI) process to manage new product release and to be a liaison between product marketing and operations. Developed “continuous learning” training program ensuring everyone was trained on new processes and changes on an ongoing basis.

Sustainability included testing performance of each sub-process against agreed KPI’s, established “quality circles” and held daily review of each process. Adjusted processes as needed, monitored, adjusted, trained, attained feedback from sales and from customers. Continued this cycle until same day shipping became the normal daily practice of the team