A presentation by John Mobley, PMP, CIO

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Georgia Door and HardwoodsLean Six Sigma Overview

John Mobley, CPA, PMPJune 1, 2013

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Overview of Business

A. Largest Manufacture in Georgia of cabinet doors for residential market

B. Revenues of $18.9 million; Pretax Income of $2.11 million

C. 154 employees; 200,000 sq. feet of manufacturing and warehouse space

D. Family business (25 years) - Father, Mother, Daughter, Sons (4)

E. Five lines of business:

A. Cabinet doors – wood LEAN FOCUS

B. Cabinet doors - MDF

C. Hardwood lumber - trim and dimensional

D. Hardwood panels – oak, birch, cherry, maple, hickory, pine, etc.

E. Cabinet hardware - 50,000+ items in inventory

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The Basic ProcessAll Mfg. By The Job – Limited Prebuilt Parts

Salesman ManuallyRecordsOrder

Enter Order DataInto Word Document

Clerk VerifiesOrder

Job Order TicketPrinted

Cutting6 stations

Gluing5 stations(constrained)(Prebuilt slabs)

Shaping6 stations

Sanding5 stations

Quality1 station

PaintingStain2 lines

Quality1 station

Shipping1 station

42 %

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Narrow The Focus of Processes

Material Waste

Unknown material Lead timesMaterial Wait

Time Door Motion Out of material

BottlenecksLabor

BottlenecksMachines

Sales\ProductionCommunication

Too Many Opportunities !!

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Voice of The Customer(Survey of 54 customers out of 527)

-I received all my doors – but one door is wrong I cannot complete the installation on time

- “When” will my order arrive ?

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Voice of The President

- Too many errors in Order Entry by Employees

- I want an online order entry system – give me Amazon capability

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Total Order Error Run Chart

June July August September October November0

2

4

6

8

10

12

14

PERCENT

Average of 11.4% of Orders Are Wrong

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Number Of ErrorsAt least One Door In An Order is Bad

Customer Error Order Entry Quality Wrong Mfg Wrong Material0

20

40

60

80

100

120

Number of Errors (275 of 2398)113 (41.1%)

25 (09.1%)

3 (01.1%)

90 (32.7%)

44 (16.1%)

20%

40%

60%

80%

100%

0%

Average of 11.4% of Orders Are Wrong

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Order Entry Error Run Chart

June July August September October November0

0.51

1.52

2.53

3.54

4.5

PERCENT

PERCENT

Average of 3.75 % of Orders Entered Incorrectly

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Percent of Errors90 order entry errors out of 2398 (8514 Total Doors)

181 doors mis-manufactured ($6630 avg. $36.63 per door)


20

40

60

80

100

120

90 (32.7%)

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Door Data Entry Parameters

- Height (measured to the 1/8 inch)- Width (measured to the 1/8 inch)- Type of wood (Oak, Pine, Maple, Cherry, Birch, Hickory)- Mitered or non-mitered corners- Outside edge profile (16 choices)- Inside edge profile (16 choices)- Panel edge profile (12 choices)- Inside panel Molding type (6 choices)- Stain, Paint, or non-finished- Stain (28 choices)- Paint (56 choices)- Customer Info- Ship Date- Calculated sq. inches- Price calculated- Price up charges

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Potential 6 Sigma EffortsPotentialSolution

Ease Permanence Impact Cost Agreement Decision

Order Entry 3 5 5 3 5 HighPriority

Glue Bottleneck 4 5 4 2 4 MediumPriority

Move Shapers#2 and #3

2 5 4 2 3 LowPriority

Add Bar Codes To Orders Sheets

5 5 5 4 5 Just Do ItKaizen

JIT Inventory 2 4 2

5 2 Low Priority

Eliminate QA atEnd of Line

5 4 3 5 2 Just Do It

Move from FIFO To Similar Orders

2 2 4 4 3 Low Priority

5 = good 1= not good

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The Order Entry Process

CustomerCalls Salesman orSalesman Visits

Salesman GivesForm To ClerkOr Faxes Form toOffice

Clerk #1 EntersForm Data IntoWord Document

Clerk #2 VerifiesData on WordDocuments

Clerk #2 Goes to ProductionManager

ProductionManager Assigns a CompletionDate

CustomerReviewsOrder

Salesman PlacesOrder InProductionBasket

Order IsWritten OnPreprinted Form

Clerk CallsSalesman with DeliveryDate

SalesmanCallsCustomerAnd Faxes\Emails Order

OrderApprovedByCustomer

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SIPOC For Order Entry

SUPPLIERS

CustomerSalesmenProductionManagement

INPUTS

Request DateCustomer InfoDoor Description-Length, width- Edge profiles- Panel profiles- Stain, Paint, Plain

PROCESS

Automation-Calculate price-Notify Salesman via text message-Edit Door Description

- Length, width- Edge profiles- Panel profiles- Stain, paint, Plain

OUTPUT

Order sheet Text Message to salesmanCustomer – commit date

CUSTOMERS

CustomerSalesmanProductionManagement

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WHY SO MANY ORDER ENTRY ERRORS ??

ORDER ENTRYERRORS

EnvironmentMaterialMethods

Person Machine Measurement

MethodsComplex OrderManual CalcHighly RepetitivePersonHigh TurnoverNot skilled enough

MaterialHandwrittenOrder formHard to read spec bookMachineMinimal use of computerSmall screen

EnvironmentLimited work areaNoisy

MeasurementNo QA for order entry No review of order beforeshipping

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Lean Six Sigma Charter

- Reduce Number of Orders with Order Entry Errors from 3.75 percent to 0.1 percent (Average of 90 down to 3 per month). Complete in 3 months.

- Eliminate one clerk position required for order verification saving $24,000 per year.

- Reduce rework saving $6,630 dollars a month (based on 181 mis-manufactured doors in one month).

-Total projected savings of $103,000 per year.

- Estimated cost to implement $45,000 - $50,000

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DMAIC

• Define A High Number of Orders are Returned\Wrong

• Measure 11.4% Total; 3.75% Of Orders are Entered Incorrectly

• Analyze Poor Paperwork; Complex Order; High Turnover; Limited Validation

• Improve Build Validation Matrix; Eliminate Paper; Implement Intelligent Order EntryEliminate Handoffs In Office; Eliminate Faxes

• Control Upper and Lower Control Limits

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The Order Entry Process

CustomerCalls Salesman orSalesman Visit







SalesmanPlacesOrder InProductionBasket



SalesmanCallsCustomerAnd Faxes\Emails Order


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Redesigned Entry Process - VISION

CustomerCalls Salesman







SalesmanPlacesOrder InProductionBasket



SalesmanCallsCustomerAnd Faxes Order


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Ys and XsY = error free order entered

Xs Are (Each One Must Be Correct)- Height (measured to the 1/8 inch)- Width (measured to the 1/8 inch)- Type of wood- Miter or non miter- Outside edge profile (16 choices)- Inside edge profile (16 choices)- Panel edge profile (22 choices)- Inside panel Molding type (6 choices)- Stain, Paint, or non-finished- Stain (28 choices)- Paint (56 choices)

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The New Process

CustomerEnters OrderOnline

SalesmanVerifiesOrder

Job Order TicketPrinted(Bar-coded)

SalesmanEntersOrder

AutomatedOrder Entry

Validation FilePhase 1

Phase 2

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Control ChartDecember 2012 thru May 2013

December January February March April May0

1

2

3

4

5

6

Perc

ent o

f Wro

ng O

rder

Ent

ries

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Monthly Cost Savings $$$Implementation in December 2012

DecemberJanuary February March April May

-8000

-6000

-4000

-2000

0

2000

4000

6000

8000

10000

$45,000 investment amortized over 5 years $93,000 in projected annual savings $84,000 projected to be added to EBIT per year

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Number Of ErrorsAt least One Door In An Order is Bad


20

40

60

80

100

120

Number of Errors

Next Steps – Provide Customers With TheSame Capabilities

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DOOR PANEL TYPES

A presentation by John Mobley, PMP, CIO

Data & Analytics

Transcript of A presentation by John Mobley, PMP, CIO