In our recent article on Kaizen events we looked at how short bursts on improvement activities can bring about some real benefits – in this article we’ll look at how Kaizen events work in the workplace by way of a practical case study.

The Problem

Poor delivery adherence from Company A’s supply chain negatively impacted its ability to maintain in service products resulting in poor customer satisfaction (in particular lead customer XYZ) and financial penalties due stock outs.

Target

To improve schedule adherence from company 123 resulting in improved material supply and higher OTIF from company A to customer XYZ and zero financial penalties

Team

Event Leader (kaizen trained)
Financial Dept team member
Senior Buyer from Company A
Buyer from Company A
Customer Service from Customer A
Account Manager from Company 123
IT Systems from Company A

Steps

First step was to understand the size of the current issues
– Data was gathered showing current OTIF (on time in full) to Company A’s customers (findings were 43% OTIF against a target of 90%)
– Metrics on DSA (Delivery Schedule Adherence) for Company A’s supply chain were produced (results found average of 50% adherence leading supplier accounted for 80% of supply)
– Data regarding financial penalties imposed by Customer XYZ were produced
– Workshop held to produce current value stream map

Brainstorm meeting to map review process and capture/discuss issues
Representatives from Company A and Company 123 in attendance – current value stream map was critiqued to capture current issues – these included
o Significant number of Purchase Orders not received by Company 123 and therefore un-actioned until Order expedited by Company A
o No order prioritization process therefore Company 123 build to own priority list resulting in Company A receiving items out of sequence
o Only one delivery transport run a month to Customer XYZ – product often ready for shipping sat idle in warehouse
o Inappropriate packaging of goods often resulted in deliveries being rejected by customer XYZ

Action
New Process designed – which encapsulated
• A Purchase order acknowledgement process– weekly alignment of orderbooks
• Company A provided priority “Build to list” –list of products listed in sequence of priority based on “live” purchase orders for Company 123 to provide against
• Deliveries to customer increased to weekly drop shipments
• Agreed specification of packaging between Company A and customer XYZ resulting in drastically reduced quality issues at Customer XYZ receipt area.
• Metrics deployed and reviewed weekly which covered
o Orderbook misalignments between Company A and Company 123
o Delivery Schedule Adherence metrics for Company A
o Slow turning finished inventory report for Company A
o Number of receipts failures between Customer 123 and Company A

The new process was implemented and metrics monitored for a month.

Findings

• The combination of the Purchase Order acknowledgement process and Build to list made it a lot easier for Company XYZ to meet Company A’s requirements – on time delivery increased considerably and exceptions were managed far more effectively.
• Metrics now managed with Weekly stakeholder review – issues are escalated and discussed/resolved between senior members of the respective management teams
• Transport costs marginally rose with the increased number of shipments however this coupled with an improved supply chain meant that OTIF results increased considerably after a brief setting up period for the new process
• In implementing the new packaging specification quality rejections as a result of substandard containers fell to zero.

Results

An effective kaizen event bought together the stakeholders for the process and captured the key issues affecting performance – this enabled a new process to be designed eradicating some of the issues identified and enabling the workforce to focus on the parts of the process that impacted customer satisfaction.

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