Process Improvement Phases Define Measure Analyze Improve Control Home Depot DMAIC Name ISCOM/472 Welcome Amber DeArmond’s presentation on DMAIC and understanding uses of different data, operation management and various statistical process controls clarification within Home Depot. Process improvements are implemented on a daily basis with new employees and existing and new operations will experience different processes such as core competencies and, key performance indicators, operations management, productivity, strategy, and supply chain management functions. In efforts to support the research different objectives and business goals are addressed into many procedures and aspects. At the end of this presentation DMAIC will reveal an iterative problem solving methods creating a better outlook and understanding of operations and management of data and various process controls; enjoy the show! Amber DeArmond; slide 1

Define Problem Work Effort and Scope Pain of customer Problem existence length Project goal to stop reoccurring cycle of event Work Effort and Scope Elimination of problem tools Supplier input and process out put by customer Limitations and capabilities The process step structure of (DMAIC) define, measure analyze, improve, and control are assumption or hypothesis to explore the base of a problem in an organization and helps to formulate possibilities and alternatives (Media Tech Target, 2011). Companies ability to identify the direction an organization should travel in is through core competencies. Despite any argument for or against growth there are intended benefits and unintended consequence within any organization operations. (Media Tech Target, 2011) “Define the problem and scope work effort of the project team” (pg. 15 para 3.). So lets consider the positive outcome of defining, which is the first step in the six sigma process. During the process improvement phase define is an asset to strategic requirements that are used fluidly cultivating direct problems in a business that are a result of business decline, revenue or legal and business channels. The negative outcome to defining is deliberately establishing problems to end venture capital with series of boundaries that bridge businesses on a rational and emotional level. Define process eliminates negative issues and creates positive end-states. Home Depot Home Depot customers complain about minimum staff member in Home Depot retail stores that cannot accommodate the multiple customers, hire skilled master trade people, improve store appearances, processes and better ways to solve home improvement problems (Microsoft, 2011). The defining process identifies create a competitive landscape, create a world wide presence with a business plan with new business processes. Amber DeArmond; slide 2

A New Vision Competitive Landscape Home Depot’s key to success is the way they treat the people well and encourage their associates to speak up and take risk in leadership and development for growth The core values are to take care of the people, give back to the community, do the right things, and provide excellent customer service, create shareholders value, have respect, have an entrepreneurial spirit, and to build strong relationships with customers, associates communities and vendors Home Depot’s supply chain centered on enabling “do-it-yourselfers” succeed Home Depot provides the products, and the training that allow its customers to take on home improvement projects of every size. Building relationships with our customers and providing them with excellent service results in increasing shareholder value. Treating people right is a core value at Home Depot Home Depot values its employee, and looks to its employees for suggestions on how to improve operations and customer support. The training each employee receives empowers them to be able to do the best job possible. The customer is the reason why we are hear, so at Home Depot we are dedicated to doing what ever it takes to satisfy our customers. The type of service discussed is “Home Improvement Retailers”. Home Depot is an American retailer of home improvement and construction products and services. The supply chain strategy provided way for customers to integrate into overall consumer friendly and usable strategies that allow customers to learn how to “do it yourself” techniques to improve homes and provide higher services levels for customers. The core values are to take care of the people, give back to the community, do the right things, and provide excellent customer service, create shareholders value, have respect, have an entrepreneurial spirit, and to build strong relationships with customers, associates communities and vendors (The Home Depot Foundation, 2010). Amber DeArmond; slide 3

Creating a worldwide presence Business plan and outcome Home Depot Super Store BEFORE Streamline contractor quote submission process Once the initial application has been submitted in-store with the assistance of a Contractor Services associate, enable contractors to be able to submit future requests for quotes (volume discounts) via the Internet (secure log in). Enhance Imaging Solutions Software Provide access to our Imaging Solutions software to customers via the Internet (company website) and expand the templates to include other “do-it-yourself” Home Depot products. Increase visibility of the Home Depot Foundation Post a community service project supported by Home Depot employee volunteers each month via a live web-cam feed. Post a recap of previous Home Depot Foundation activities on the company’s website. The goal is to inform the public on the community service Home Depot and its employees provide. Over the years as Home Depot’s business had changed the supply chain remained the same. To remove the weaknesses created by the outdated supply chain, Home Depot moved from a de-centralized inventory distribution logistics model to a centralized model. In addition to renovating the inventory distribution model, Home Depot has revised the supplier performance standards and created an electronic method of providing immediate and historical feedback to each supplier. Modifications to the supply chain have provided Home Depot a strong competitive edge (The Home Depot Foundation, 2010). AFTER E-business Amber DeArmond; slide 4

Measure Customer Service Levels Data availability Source Flow chart information Calculate process six sigma Source Just in time Key performance indicators The DMAIC process step two is measure. (Media Tech Target, 2011) “ Measure the current process or performance” (pg 15. para 4.). Measure is a performance to show progress and reflect organizations goals. Measurements are taken beforehand to justify quantifiable considerations within a particular organization . As the organizations goals change indicators such as customer service levels, forecast accuracy, and manufacturing cycle time information is required. The use of the monitoring tools or key performance indicators evaluates the performance of an organizations supply chain as well as helps an organization define, reach and measure the advancement of goals within a organization. The importance of service levels is to measure satisfaction levels of customers and how the organization responds to consumer expectations. Defining and measuring forecast accuracy designs decision-making and planning elements that can produce change into systems helping to validate and keep up with trends and cycle data. Evaluating manufacturing cycle time is a performance indicator that finds a solution for time compression with benefits such as value equations. Overall, the importance of the three performance indicators is dynamic, customer service levels, forecast accuracy, and manufacturing cycle time are models used in the complexity of organizations supply chain performance and each indicator relies on another indicators performance (Reh, J. 2010). Customer Service Levels Feedback to company perceptions Sales, complaints, contracts, delivery information, and returned goods and services Amber DeArmond; slide 5

Supply Chain Constraint DIAGRAM Service and Manufacturing Business Strategy Approach Advantages JIT- inventory plan TQM- improvement PR- rethink Benchmarking- partners Disadvantages Supply Chain Strategy JIT- inconsistent TQM- no commitment PR- miss a step; restart Benchmarking- flaws Supply Chain Objectives Ethical Concerns Capacity Constraint Physical Capacity Constraint Policy Strategy Impact The diagram addresses the following points: If organizations have a responsive and efficient supply chain in the middle of the performance is a responsiveness spectrum. Certain demand and uncertain demand implies uncertainty spectrum. Strategic fit and constraints will always make the difference in successful or failed organizations supply chain system and approaches; there is always a decision to be made! DMAIC Operational Approach Used Organization Quality Customer Demand & Expectation Amber DeArmond; slide 6

Flow Chart Amber DeArmond; slide 7 Removing the lines between the functional areas has increased real-time communication and created an environment in which the associates at Home Depot can work together to improve customer service. Improving the inventory management functions within the organization has reduced the lead time between order and delivery insuring items will be available for the customer. The overview of the supply chain for Home Depot appears to be rather straightforward, but through examining the inefficiencies that existed within the former decentralized inventory system model, the management at Home Depot decided to make a change. Although one action was added to the supply chain, the redundancies and inefficiencies that existed in the previous inventory model were removed (The Home Depot Foundation, 2010). Amber DeArmond; slide 7

Statistical Process Chart Statistical process chart helps enforce commitment from the organization across multiple boundaries of the business. An effective SPC chart helps to measure efforts and different components of business functions while referencing objectives (More Stream.com, 2000-2011). Amber DeArmond; slide 8

Select causes using methods Analyze Brainstorm Measure system Adjustment factors Select causes using methods Gap step analysis Process capability Step three in the DMAIC process discusses analyze. (Media Tech Target, 2011) “Analyze the current performance to isolate the problem”(pg 15. para 5). In considering the challenges of productivity this creates innovative leverage in an organizations production process and decides building and buying solutions. The advantages and disadvantages in analyzing business operations provide challenges and rewards. Cognizant personnel support, selecting products, analyzing, sourcing approach, potential supply countries, freight and import cost, export, shipping and import details and contracts information and processes broaden business movement and potential movement (Bendorf, R.,2004). Service and products are managed through established and managed relationships through standard procedures in which a business operates internally. Independent relationships, skills, expertise and investments are entrenched as organizational pride and the existence of cultural barriers are less likely. Identifying cultural barriers effect product and services and the advances through supply channels new market spaces and business models is easily created at the top of the organization instead of across channels to preserve product and service domains in a timely manner internally. (Christensen, T., 2010). Productivity is designed to target new markets, spaces, and business models. Logistics HR, production machinery, capital management, and customer management is discovered through commercialization. Product and service diversity is extended; new line of products is through partner establishment. Focusing power, financial obligations are shared; more resources are found in global external assets so risk cost is reduced. Variety of sources is introduced, no single organization has all solutions, and the value of intellectual property is shared through external connections beyond core competencies (Christensen, T., 2010). Amber DeArmond; slide 9

Purchasing or Procurement Cycle Ordering Cycle Electronic Data Interchange Distribution Purchase Orders Store Environment Manufacturing Excellence Customs Compliance Transportation The procurement cycle of The Home Depot includes electronic data interchange (EDI), distribution information, purchase order methods, store environment conditions, manufacturing excellence, customs compliance, and transportation constraints. Without analyzing these steps, The Home Depot would not be as efficient in delivering needs to clients. The EDI system allows The Home Depot vendor contacts to collaborate effectively with suppliers. Suppliers are required to have the technical equipment necessary to ensure uninterrupted communication. Distribution knowledge includes product, packaging, and freight requirements outlined by The Home Depot. Controlling how products are received allows The Home Depot employees to concentrate on much more important needs, such as inventory control and restocking. Purchase orders are essential in the procurement process. Without a purchase order, products and services cannot be received or paid for. The Home Depot requires the appropriate knowledge of suppliers in the company’s various policies. The store environment and manufacturing excellence requirements of The Home Depot is essential for proper safety and environmental concerns. Suppliers need to have a clear understanding of expectations prior to incorporating displays or support tools. Customs Compliance is essential for international business to be successful. The Home Depot needs to understand requirements set forth through the various agencies of foreign territories. The final major factor of The Home Depot’s procurement cycle is transportations. The Home Depot needs to know where and when product will be delivered or the potential gaps so the appropriate resources can be available. Transportation acknowledgement requirements are outlined by the company in the supplier toolbox (The Home Depot Foundation, 2010). Amber DeArmond; slide 10 10

Process Capability Determine Customer Trends Logistics management department will be the circuit board Streamlining inventory management with order management Improving the companies supply chain functions Determine Customer Trends Shift focus Change direction Supplier relationship Increasing visibility Home Depot’s procurement strategy domestically has evolved as the trends in the housing market and customers needs have been changing. Strategies tying design and product purchase were not successful; Home Depot was not realizing profits from this segment of the business. The home products market is very competitive and consumers will find the best prices, this was leaving Home Depot with inventory specific to design on the stores shelves or floor. A change of strategy was necessary so the company began moving away from the design-product aspect toward a wider range of product availability. The focus is on total spectrum of building, from the average home owner to the commercial builder. Home depot has been achieving this by simplifying the supplier relationship and expanding visibility throughout the chain, thus making the ordering process easier(The Home Depot Foundation, 2010). This provides leaner inventory levels comparing the output of an in-control process whereas reducing cycle times. Amber DeArmond; slide 11

Improve Solutions Test Plans Timelines Interpret charts Plot solutions Step four in the DMAIC process discusses improve. (Media Tech Target, 2011) “Improve the problem by selecting the solution”(pg 15. para 6.). Amber DeArmond; slide 12

Aim toward local demographic Define the customer Adjust Strategy Aim toward local demographic Balance Local and national purchasing The core values are to take care of the people, give back to the community, do the right things, and provide excellent customer service, create shareholders value, have respect, have an entrepreneurial spirit, and to build strong relationships with customers, associates communities and vendors while using inventory A company can stock every available shelf but if the products do not meet the customer needs then purchasing strategies will need a revisit. Acquiring inventory that does not fit the market is wasting valuable assets; a product which is popular in New York may be wasting space in a store in California. Home Depot has been refining the purchasing to be market specific, this helps reduce unnecessary inventory and target the local consumer. The shift in Home Depots buying patterns highlights a tricky problem for retailers: balancing local demand with national efficiency. In Home Depot’s case, the new, more targeted buying has helped lower merchandising costs by reducing unsold goods (Microsoft, 2011). In essence, gearing inventory that meets the needs of the stores demographic whereas as still maintaining national buying power for standard goods is the goal of Home Depot. The company can maintain the leverage of bulk buying whereas taking care of local customer demand. Amber DeArmond; slide 13 13

Total Quality Management Six Sigma Waste Elimination Reduce Cost Information Systems Internal and External Sourcing Strategy Total Quality Management Innovative Solutions In today’s competitive business environment organizations strive to improve financial performance and achieve sustainable competitive advantage through supply chain management and strategies. Gaining competitive advantage is a strategy that may be accomplished through improving efficiencies within the organization and minimizing waste. Organization can determine the businesses future through organizing assets and the business capacity to produce, and deliver products and services. This process gives and organization and advantage to meet customer expectations because of successful management in the supply chain (Bendorf, R., 2004). Sustainable competitive advantage is through improving efficiencies, quality, inventory management and operations scheduling are examples of the means by which an organization can improve financial performance and gain. By different ways of evaluating the internal operations with the supply chain, organizations can locate existing deficiencies and identify points of improvement while minimizing unnecessary waste. Using a responsive business approach enforces strategies such as total quality management, identified approaches to eliminate waste, reduce costs, and increase productivity resulting in improved customer satisfaction. Changes in the established quality control systems will increase the consistency in quality by establishing standard quality control system placed in service by each location to exceed customer expectations (Bendorf, R., 2004). The alignment of information system technologies with system processes will improve information flow and provide accurate and timely information within the organization and throughout the supply chain. Sustainable competitive advantage and improving financial performance are core objectives driving the decisions made by today’s businesses. Aligning supply chain objectives with the business strategies of the organization, implementing improvements in inventory management and quality control are just a few ways businesses are able to exceed customer expectations while improving their business goals and objectives. Amber DeArmond; slide 14

Control Document Update and Improve Record method outcome Summarize key lessons Update and Improve Monitor implementation Training for new methods Step five in the DMAIC process discusses control. (Media Tech Target, 2011) “ Control the improved process or product performance to ensure the targets are met” (pg 15. para 7.). Solutions resolve problems that should be monitored to sustain. Revisions of the plan may keep the operation in tact as well as evaluations. Amber DeArmond; slide 15

Cause-and-effect Diagrams in Supply Management Human Factors Methods and Design Factors Inadequate supervision Poor training New operator Flawed part design Incorrect manufacturing sequence Inadequate tools Incorrect speed Poor maintenance Multiple suppliers Incorrect specification Variation in purchased components The beginning of the supply chain management system starts through a chain of events that transfers products, good and services through consumer orders or business partners, the use of raw materials, producing items or services, and distributing the goods using an information service network (Rockford Consulting Group, Ltd., 1999). Key concepts in the supply chain management functions are logistics elements and drivers of change, information flow, location and transportation, and performance indicators. The cause and effects to error and progression lye within design, and components that focus on training an maintenance. To control the efforts such as trends and purchasing procurement, sales forecasting and demands, material handling and production and controlling, inventory management and distribution, and customer management an optimally efficient coordination between planning decisions and supply activities is follwed up on and changes as internal and external environments change (Wisner, J. G., Leong, K. G., & Tan, K., 2005). Amber DeArmond; slide 16

Examining Customers and Work Performances External Customers Domestic Customers Novice Homeowners Experienced Homeowners Contractors International Customers Internal Customers Support Core Competencies MET The Home Depot’s client base is extensive and includes external and internal customers. External customers are usually thought of when describing a retail business such as The Home Depot. External customers of The Home Depot are domestic and international. Domestic customers range from novice homeowners to experienced contractors. Some customers do not even own homes, but have needs for the rooms they rent or apartments they are moving into to. The Home Depot provides an array of products and services that most people could use at some point in their lives. Novice clients can benefit from the experience and knowledge of the friendly associates, while experienced homeowners can further their skills through classes and seminars held at their local Home Depot facility. Contractors use The Home Depot to procure necessary products and equipment to keep their own businesses thriving. Internal customers of The Home Depot depend on the proficiency of suppliers to ensure needs are met so day-to-day contributions can continue. The Home Depot’s merchandising execution team (MET) and New Supplier Toolbox aid internal and external clients and suppliers with the tools necessary to realize success (The Home Depot Foundation, 2010). Home Depot’s key to success is the way they treat the people well and encourage their associates to speak up and take risk in leadership and development for growth Amber DeArmond; slide 17 17

Recap and Outcomes of Research Media Tech Target (2011) says “DMAIC project is to improve PFQT—Productivity (how many), Financial (how much money), Quality (how well), and Time (how fast)” (pg 25. para 5.). Define- Big Y Measure-Y = f(X); Big “Y” and of Data little “Ys” Analyze- Y = f(X); Big “Y”; little requirements vs. “Ys” and the “Xs” Improve- Y = f(X) Control- Measurement system Six sigma methods characterize DMAIC Common measures are output, process, and inputs Media Tech Target (2011) says The relationship of these three key items often is described as an equation: Y = f(x), which reads, “Y is a function of X.” The “Y” refers to the output( s); the “X” refers to the key measures from the process variables (inputs and/or the process itself). (pg 25. para 5.) Media Tech Target (2011) says The DMAIC project goal is to identify the critical (or vital few) Xs—the root cause of the problem—and select their optimal level(s) to best drive the desired improvement in the output performance (sometimes called the “Big Y”). (pg 25. para 5.) Amber DeArmond; slide 18

All Information has been cited from the following authors REFERENCE Bendorf, R. (2004) Global Sourcing: What You Need to Know Retrieved from online wed address: http://www.ism.ws/files/Pubs/Proceedings/CKBendorf.pdf Christensen, T. (2010) How Does Outsourcing Affect the U.S. Economy Retrieved from online web address: http://www.wisegeek.com/how-does-outsourcing-affect-the-us-economy.htm Media Tech Target (2011) Define Measure Analyze Improve Control (DMAIC) Retrieved from online web address: http://media.techtarget.com/searchSoftwareQuality/downloads/ect01TreasurechestSixSigma.pdf Microsoft (2011) Home Depot CEO: Sorry we let you down Retrieved from online web address: http://articles.moneycentral.msn.com/Investing/Extra/HomeDepotCEOWeLetYouDown.aspx More Stream.com (2000-2011) Statistical Process Control Retrieved from online web address: http://www.moresteam.com/toolbox/t402.cfm Reh, J. (2010) Key Performance Indicators (KPI) retrieved from online web address http://management.about.com/cs/generalmanagement/a/keyperfindic.htm Rockford Consulting Group, Ltd. (1999) Supply Chain Management Retrieved from http://rockfordconsulting.com/supply-chain-management.htm The Home Depot Foundation (2010). What we do. Retrieved from http://www.homedepotfoundation.org/what-we-do.html Wisner, J. G., Leong, K. G., & Tan, K. (2005). Principles of Supply Chain Management. Nasib, OH: Thomson/Southwestern. All Information has been cited from the following authors All information has been obtained from the following authors listed above. Thank you for tuning in and I hope all enjoyed the show! Amber DeArmond; Slide 19