REDUCTION OF OUTBOUND FREIGHT COSTS - EQUIPMENT

Black Belt - Nicole BrannonChampion - Tony MartinoMBB - Art Girard FA - Diane Brightwell

2

Project Definition

Problem Statement: Excessive freight charges on outbound Equipment across Canada.

IKON is faced with multiple charges for these repeat deliveries.

Project Metric (Y): Reduction of outbound freight charges for Equipment.

Defect Definition: Preventable 2nd deliveries or pickups.

Project Benefits: An overall 70% process improvement and cost reduction across Canada

Documented standardized processes across Canada.

3

Project Background

No detailed reporting

2003 no detailed reporting given to IKON Logistic Leaders. 3rd Party Logistics billing 3rd Party Payable

Jan’04 detailed reports were provided to Logistics.

Scrutinized by Logistic Leaders Became our Measurement System

No Standard Process Across Canada

Differed from Province to Province Marketplace to Marketplace

4

Data Collection reveals Defects

14 13 18 19 23 26 30 45 85139

3.4 3.2 4.4 4.6 5.6 6.3 7.310.920.633.7

400

300

200

100

0

100

80

60

40

20

0Defect

CountPercent

Perc

ent

Cou

nt

65%of all defects were caused by 3 issues:

Customer not expecting

Cancelled en route

Technician required

5

Overview of Findings - Root Causes

Data Collection and the FMEA pointed us towards several manageable root causes. All of which have had IMPROVEMENTS IMPLEMENTED:

Pre-calls Audit revealed 100% of deliveries did not contain pre-call information

Removal process No pre-call attempts No verification of tech scheduled Extra charges incurred for paperwork mishandling

No Accountability No Audits No Controls

6

PROCESS IMPROVEMENT – SOP DEVELOPED FOR BEST FIT SOLUTIONS

Defect Definitions - Provides IKON and 3rd Party Logistics with a standard vocabulary and understanding of specific defects

Equipment Delivery/Tracking Processes - Provides IKON and 3rd Party Logistics with a standard process for reporting delivery and removal transactions.

  

Data Collection and Defect Mapping - Outlines the process by which logistics will accurately track and record all equipment deliveries and pickups.

Setting Customer Expectations  Process update sent to Sales re-enforcing expectations set by Logistics that customer contact must be made prior to delivery or pick-up attempts by 3PL.

Effective Pre-calls Contains a pre-call checklist, escalation process if customer cant be contacted, removal process and process maps.

7

Pre-call Process Flow – 3PL (Exel)

Scheduler isreschedule forpick-up whentechnician hasclosed service

call

Failed pick-up ordelivery

Adhering toEquipment Pickup

/ RemovalTracking

documentation

Driver will note onPOD or RMA and

billing sheetreason for failed

attempt

Driver returnsPOD/RMA and pre-call

checklist to the3PLdispatcher

Notifies IKON Scheduler

3PL Pre-call Process Flow

1 START

3PL makes pre-call utilizing pre-callchecklist

Contact is made via telephone

Acknowledgement to customer thatpick-up will be done with delivery

Scheduler gives RMA back to 3PL

If problem withdelivery

3PL to givethe RMA backto the IKONScheduler

Schedulerchecks OMDfor setup callor Removal

Delivery and Corresponding pick upscheduled

Exel (3PL) outsourced for all Equipment Logistics

across Canada

This process flow was incorporated by Exel into

their Internal Process Documentation

8

Internal Defect Mapping / Reporting and Audit Process Flow to Sustain the Gains

Data Collection and Defect Reporting - Equipment Deliveries/Pickups

Fin

an

cia

l

An

aly

st

CC

Ma

na

ge

rIn

ve

nto

ry

An

aly

st

Re

gio

na

l

An

aly

st

Re

gio

na

l

Inve

nto

ry

Ma

na

ge

r

Exe

l -

3P

L

1.0Provides Billing

Sheet for weeklydeliveries

2.0Maps

defects

3.1Summary of

analysiscompiled

3.0Analyzes

data

3.0aIs the

informationcomplete

YES

YES

4.0Collects data

weekly deliverysheets for 7Provinces

4.0aSummary of allprovinces into

one sheet

5.0Reviews

5.aDoes process failto meet control

limits

6.0Reports

financials perCorporateGuidelines

5.0bContacts CC

Manager a to resolveprocess breakdown

YES

NO

NO2.0a

Gage R/R testgiven to designate

2.0bMaps

defects

gives to cc manager to sign off

2.0cGives back to CCManager to submit

5.0cSummary of

analysis given toDirector ofLogistics

Before Six Sigma there was no standardized process in place for data collection,auditing, or reporting

Before Six Sigma there was no standardized process in place for data collection,auditing, or reporting

9

Process in Control - Prairies

2 1 D a y s o f D e l i v e r i e sP

rop

ort

ion

222018161412108642

0.09

0.08

0.07

0.06

0.05

0.04

0.03

0.02

0.01

0.00

_P=0.0345

UB=0.047

LCL=0

J u n e ' 0 4 = 3 .4 % D e f e c t i v e

20 D a y s o f D e l i v e r i e s

Pro

po

rtio

n D

efe

ctiv

e

2018161412108642

1.0

0.8

0.6

0.4

0.2

0.0

_P=0.241

UB=0.047LCL=0

J a n ' 0 4 = 2 4 % D e f e c t i v e

DPMO = 241,379 Zlt = 0.8 Zst = 2.3DPMO = 241,379 Zlt = 0.8 Zst = 2.3 DPMO = 33,707 Zlt = 1.9 Zst = 3.4 DPMO = 33,707 Zlt = 1.9 Zst = 3.4

10

Process Capability – Improvement TrendJan ’04 – June ’04 Across Canada

Pre-Process Improvement: Jan’04 Post-Process Improvement – June’04

DPMO = 161,378 Zlt = 1.0 Zst = 2.5 DPMO = Zlt = 1.4 Zst = 2.9

Pre-Process Improvement: Jan’04 Post-Process Improvement – June’04

DPMO = 161,378 Zlt = 1.0 Zst = 2.5 DPMO = Zlt = 1.4 Zst = 2.9

16

15

14

13

12

11

10

9

8

7

6

June '04May '04Apr '04Mar '04Feb '04Jan '04

Per

cent

Def

ectiv

e

Index

Trend Analysis Canada for Defective Deliveries - Equipment

11

FINANCIAL BENEFITS

Benefits come from tracking actual defects to actual dollars billed to IKON by 3PL using Jan’04 baseline.

Hard Savings Feb-Jun’04 = 68,804Hard Savings Feb-Jun’04 = 68,804

$6,833.00

$9,770.00

$12,780.00$20,935.00

$13,490.00

FEBRUARY

MARCH

APRIL

MAY

JUNE

Forecasted ’04 savings = $112,000 Forecasted ’05 savings = $263,424 Forecasted ’04 savings = $112,000 Forecasted ’05 savings = $263,424

12

Project Closure

Project is scheduled for close-out presentation to the Steering Committee on August 30th

Process Hand-off documents have been prepared including Process Hand-off Contract signatures from Champion, Financial Analyst, Process Owner and Master Black Belt.

Any Feed-back you may have to prepare this project for closure would be welcomed.