Competition and reduced profitability

Reference no: EM131086705

MANATEY Computer (MC) Inc. is a leading computer company located in the West coast. They assemble computer systems for industrial applications, 30% of their sales are for custom orders where the profit margin per unit is typically higher.

Their finance department estimates a budget overrun cost of $120 per unit for each day late (for extra inventory carrying costs, facility space for storage, internal tracking costs once production of a unit begins in the manufacturing department, and increased shipping costs for late orders)

Competition and reduced profitability has forced the MANATEYmanagement to take a second look at their processes in an effort to improve their revenues. The management considers customer satisfaction paramount and has decided to use customers as a driving force for their process improvement project.

MANATEYmanagement has recently decided to use the Six Sigma method applying the DMAIC structured five-step approach; using this method the current processes are to be benchmarked and improvements made based on customer driven Critical to Quality characteristics (CTQs). They believe that by utilizing this approach to define the project scope and goals, timeline, team members, and the activities of their upcoming projects, will enable the company to create a competitive advantage over others.

In order to initiate this process, MANATEYmanagement plans to reduce the order filling times of their computer systems. The management has put together a team for this project and a detailed description is given below.

As the Six Sigma analyst you are required to use DMAIC on MC based on the in-house data that they have been generated (see EXCEL data ) starting with developing a Six Sigma Project Charter and making a business case to Management that your approach would improve their bottom line. Using the information given in the following memorandum.

Memorandum: Reducing computer system order filling times for MC.

To: Six Sigma Analyst

From: Board of Directors, MANATEY Computers (MC)

After reviewing computer filling times for past three years (2012-2015), MC believes that corrective measures have to be taken to improve the company's bottomline and improve customer's satisfaction

Project Leaders: Varun A./Matthew T. (Team Leaders)
Team Members: Deepak C., Giri C. (Black Belts), Dheeraj G., Shiva K. (R&D Directors),
Vaibhav K., Antonio, P. (Green Belts), Johnathan R. - Construction Engineer
Stakeholders: Dinesh R. -Team Champion, Binoj R. - Production Director, Vinod R., Mohamed S. (Marketing and Sales Directors)

The business case can be rephrased as: Computer order fillings times reduction ad hoc exercises recently completed did not meet the requirements of customers/clients.

MC finance department estimates a budget overrun cost of $120 per unit for each day late (for extra inventory carrying costs, facility space for storage, internal tracking costs once production of a unit begins in the manufacturing department, and increased shipping costs for late orders). Based on a 28-day budget, they had 582 days of late order overruns in the past three months, equating to approximately $70k per quarter (or ~$280K annually).

These issues have created customer dissatisfaction and cost the company roughly $70k per quarter.

Preliminary Plan Target Date Actual Date

Start Date ?

DEFINE ?

MEASURE?

ANALYZE ?

IMPROVE ?

CONTROL ?

Safety Reviews ?

Completion Date ?

The data provided by MC include the following.

The process map for MC computer systems order filling processes

Historical (H) Order filling times data for 244 orders collected over the past three months with 28 days or less requirement.

A more in-depth look at order filling times - Special fill times (S) - To better understand the sources of variations.

Possible causes for late order deliveries

A new and verified order filling times based on your analysis report back to the company (Verification)

Major Tools to be used:

Many Box plots

Many Pareto Charts

Many Cp capability histograms (you must understand the output from Cp analysis and check how that interfaces with your Box plots)

Deliverables.

1. A formal report due August 2, 2016 in a DMAIC Format (Hard Copy)

2. Oral Presentations - 5 Min. July 28.

Reference no: EM131086705

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