Root cause analysis and bringing trustworthy data to light (CS272)

Analysis

A global manufacturing company struggled with low 68.8% OTIF customer fulfillment, $27M of inventory that was moving nowhere, about $10M to $15M in lost sales per month, and a high cost per unit (CPU).

Because no one had clear visibility into the end-to-end supply chain, the entire blame for the situation centered on warehouse backlogs and mismanagement. SGS Maine Pointe stepped in with a mandate to hit the numbers—but first, we had to find the numbers.

The company had an ineffective SIOP process, no cost-to-service metrics, and no executive dashboard. Working hand-in-hand with the executive team (including a new CFO, CCO, and supply chain officer), we opened up visibility to the supply chain, revealing the upstream decisions that drove downstream chaos.

Implementation

• Create Supply Chain Visibility: We implemented a master resource schedule, 11 standard work instructions, vision boards, S&OP reports, and warehouse tracking, all based on trustworthy, daily metrics.
  
  
• Redesign Footprint: Placing new and immediate-need products closer to the production area and redesigning the pick production zone improved productivity, shipping and loading, and throughput.
  
  
• Turn Around Customer Relationships: A new sales & demand model improved the customer experience, reduced chargebacks, and improved OTIF performance. 
  
  
• Improve KPIs: We closed nonproductive third-party logistics (3PLs), which had been driving unnecessary incremental costs, and moved product back to the main facility.

Results

• $8.8 million annualized benefits to P&L. 
• 16% improvement in cost per unit.
• 240% productivity improvement.
• 821% improvement in dock shipping days. 

Conclusion

When manufacturing and distribution companies have fulfillment problems, they often concentrate on that one link in the plan-buy-make-move supply chain. However, every link—even the most upstream—eventually affects all the others.

In this case, by also changing the manufacturing footprint, developing work instructions, and reconsidering the use of third party logistics (3PL), SGS Maine Pointe achieved 98% accuracy in order management a surge in productivity, and a dramatic drop in cost-per-unit. We re-engaged and cross-trained teams to spur growth in skills, collaboration, and critical thinking. Once the C-suite had clearer insight into the supply chain, the sustainable improvements stretched from planning through fulfillment.