Applying DFSS to Transactional Processes

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Applying DFSS to Transactional Processes

Applying DFSS to Transactional Processes

Jeff AldazJeff AldazJune 2005June 2005Jeff AldazJeff AldazJune 2005June 2005

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Confidential and proprietary information of Ingram Micro Inc. — Do not distribute or duplicate without Ingram Micro's express written permission.

How to really make it workHow to really make it workHow to really make it workHow to really make it work

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Confidential and proprietary information of Ingram Micro Inc. — Do not distribute or duplicate without Ingram Micro's express written permission. 000000_2000000_2

Ingram Micro – A Leader in ITIngram Micro – A Leader in IT

The world’s largest The world’s largest wholesale provider of wholesale provider of technology products and technology products and servicesservices

Annual revenues forAnnual revenues for2004 - $25.5 billion2004 - $25.5 billion

13,600 associates 13,600 associates worldwideworldwide

Serves customers in more Serves customers in more than 100 countriesthan 100 countries

Number 81 on Fortune 500Number 81 on Fortune 500

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The Six Sigma JourneyThe Six Sigma Journey

ResultsResultsShare best practicesShare best practices

Deployment ofDeployment ofScorecard conceptScorecard concept

6 6 σ, the way σ, the way we do businesswe do business

DeploymentDeploymentof methodologyof methodology

Create AwarenessCreate Awareness

2004Achievements

2004Achievements

20012001 20022002 20032003 20042004 20052005 20062006 20072007

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Six Sigma & Ingram MicroSix Sigma & Ingram Micro

US started implementing US started implementing Six Sigma in 2002Six Sigma in 2002• OperationsOperations

Global COEGlobal COE• North AmericaNorth America

• EuropeEurope

• Asia PacificAsia Pacific

• Latin AmericaLatin America

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DFSS at Ingram MicroDFSS at Ingram Micro

At the beginning of 2004 IM At the beginning of 2004 IM identified the need for DFSS:identified the need for DFSS:• Customers required new servicesCustomers required new services• Processes optimized with DMAIC did not Processes optimized with DMAIC did not

meet requirementsmeet requirements• DMAIC resulted in measurable DMAIC resulted in measurable

financial/operational benefit, DFSS was financial/operational benefit, DFSS was introduced to drive transformational introduced to drive transformational changechange

First training in April 2004First training in April 2004• Class Details – Class Details –

Oriel delivered trainingOriel delivered training Cross-functional participantsCross-functional participants Selected projects withSelected projects with

cross-functional impact/supportcross-functional impact/support

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1 year into DFSS1 year into DFSS

Projects completed: 8Projects completed: 8

Financial benefits (annualized): $4.5 MMFinancial benefits (annualized): $4.5 MM

Success factors:Success factors:• Start with your customers and end with your customersStart with your customers and end with your customers

• Executive support is critical – even more than in DMAICExecutive support is critical – even more than in DMAIC

• Involve all core functions in the first projectsInvolve all core functions in the first projects

• Select a few good projects in the first waveSelect a few good projects in the first wave

• Tollgate meetings to maintain momentumTollgate meetings to maintain momentum

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U.S. Sales Utilization Metrics

Overview (GB: Frank Kapperman)

U.S. Sales Utilization Metrics

Overview (GB: Frank Kapperman)

Critical Y: Critical Y: Optimization of Sales & Order Management processesOptimization of Sales & Order Management processes

Scope: Scope: U.S. Sales OrganizationU.S. Sales Organization

Solutions: Solutions: Provide an effective tool for managing workload optimization Provide an effective tool for managing workload optimization » Enhanced utilization report» Predictive modeling to forecast capacity requirements» Comparison tool for workload activity versus $GP/head» Drive focus to processes that are more important to our customers

Rationalization of Sales Coverage ModelRationalization of Sales Coverage Model» Diversification of the performance metrics (based on differentiation

in workflow) to accurately assess appropriate staffing levels

Rationalization of Sales CommunicationRationalization of Sales Communication » Reduced non-value added activities in the workflow of the Sales

Rep’s (i.e. e-mails, vendor activities, etc)

Savings:Savings: Rationalization of Sales Coverage Model: 1.200.000 USDRationalization of Sales Coverage Model: 1.200.000 USD

Rationalization of Sales Communication: 500.000 USDRationalization of Sales Communication: 500.000 USD

TOTALTOTAL 1.700.000 USD 1.700.000 USD

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DFSS Tools in TransactionalDFSS Tools in Transactional

MEASUREMEASURE

Understand Voice of the CustomerUnderstand Voice of the Customer

Translate VOC into CTQsTranslate VOC into CTQs

Prioritize CTQsPrioritize CTQs

House of Quality #1

House of Quality #1

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ResultsResultsGro

ss P

rofit %

GP afterGP before

60

55

50

45

40

35

30

Boxplot of GP before & after

Observations

Gro

ss P

rofit %

90817263544536271891

60

55

50

45

40

35

30

_X=50.60

UCL=59.99

LCL=41.21

Before After

I Chart of GP before & after

Observation

% o

f Utiliza

tion

90817263544536271891

95

90

85

80

75

70

65

60

_X=85.12

UCL=93.14

LCL=77.10

Before After

I Chart of Utilization before & after

% o

f Utiliza

tion

Util afterUtil before

90

85

80

75

70

65

60

Boxplot of Utilization before & after

Increased Increased GP/day from GP/day from $40K to $50K$40K to $50K

Increased Increased utilization from utilization from

70% to 85%70% to 85%

Gross Profit / Day increased from $40 K to $50K Gross Profit / Day increased from $40 K to $50K Productivity increased from 70% to 85% Productivity increased from 70% to 85%

Gross Profit / Day increased from $40 K to $50K Gross Profit / Day increased from $40 K to $50K Productivity increased from 70% to 85% Productivity increased from 70% to 85%

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Current State-Sales CommunicationCurrent State-Sales Communication

Channel % of Influence

Marketing 20%

Product Management 20%

Vendor 20%

Other 10%

Sales Mgt. 20%

Sales Force Sales Force (700 Rep’s)(700 Rep’s)

50-100E-Mails/Day

Marketing

Product Mgt.

Vendor

Other

Action Required• What Types of communication do rep’s receive?

• Volume by type?

• Operational & Financial Impact (Orders, Revenue, Machine Margin %, Etc.)

• Interview Stakeholders

• Assess Impact to PD&R and Marketing Revenue

Action Required• What Types of communication do rep’s receive?

• Volume by type?

• Operational & Financial Impact (Orders, Revenue, Machine Margin %, Etc.)

• Interview Stakeholders

• Assess Impact to PD&R and Marketing Revenue

How much of the Rep’s How much of the Rep’s day do we influence?day do we influence?

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Future State-Sales CommunicationFuture State-Sales Communication

Prioritized Workflow

Marketing

Product Mgt.

Vendor

Other

Results • Pre-Formatted tools and templates

• Regularly scheduled delivery of communication (a.m. & p.m.)

• Channel communication to appropriate tool (e-mail, champ site, huddle, etc.)

• Prioritize Workflow (Orders, Revenue, Machine Margin %, Etc.)

Results • Pre-Formatted tools and templates

• Regularly scheduled delivery of communication (a.m. & p.m.)

• Channel communication to appropriate tool (e-mail, champ site, huddle, etc.)

• Prioritize Workflow (Orders, Revenue, Machine Margin %, Etc.)

Channel % of Influence

Marketing 5%

Product Management 5%

Vendor 5%

Other 10%

Sales Mgt. 75%

How much of the Rep’s How much of the Rep’s day do we influence?day do we influence?

Sales Force Sales Force (700 Rep’s)(700 Rep’s)

Communication Filter

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Identification of sales rep’s, teams & branches that are below peer average and development of action plan to improve results.

Establishment Of A Formal Utilization Review Process• Sales Manager Review With:

Sales productivity team for branches that are out of tolerance for 30 days Area sales director after 60 days General manager after 90 days

Identification, evaluation, and thresholds established for activities that were previously excluded from measurement • Electronic commerce orders, team e-mail boxes, e-forms, etc.

Linkage to skills for success performance criteria and career path

Identification of additional project opportunities:• Enhanced EDI Order Processing Efficiency• Special Pricing Administration

Project ResultsProject Results

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Pitfalls to Avoid in DFSSPitfalls to Avoid in DFSS

Don’t assume you understand what the external Don’t assume you understand what the external customers wantcustomers want

Don’t assume internal functional departments Don’t assume internal functional departments understand linkages and how end results impact understand linkages and how end results impact customerscustomers• Marketing / Sales / Product ManagementMarketing / Sales / Product Management

DFSS projects are different than DMAIC projectsDFSS projects are different than DMAIC projects• TimingTiming

• ComplexityComplexity

• Team membersTeam members

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Confidential and proprietary information of Ingram Micro Inc. — Do not distribute or duplicate without Ingram Micro's express written permission.

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Applying DFSS to Transactional Processes