Reducing Damaged and Returned Inventory at MDS Logistics Chris Montell – Project Manager Darioush Moein – Logistics and Supply Chain Manager Amir Samadabadi – Project Coordinator

Team Overview Current system: Shipment comes in at night. Unload and plan the deliveries CSR arrives early to arrange delivery routes CSR Calls POC to let them know when they will be there If no one answers, they leave a message and schedule the delivery anyway. If no one answered, or returned the message, there is a 60% chance that the order will be returned to MDS.

Design Requirements Reduce the number of units damaged. Reduce the number of attempted deliveries. The cost of any changes should have a return on investment in one year. Maintain the current employees. The implementation shall take no longer than one month. Current system: Shipment comes in at night. Unload and plan the deliveries CSR arrives early to arrange delivery routes CSR Calls POC to let them know when they will be there If no one answers, they leave a message and schedule the delivery anyway. If no one answered, or returned the message, there is a 60% chance that the order will be returned to MDS.

Minimum Success Criteria MDS’s average damage rate is roughly 0.50%, while their competitor maintains at about 0.35%. Failed attempted deliveries are about 0.60% for MDS and about 0.40% for their top competitor. The goal of this project is to reduce the percentage of damages and failed attempted deliveries by at least 0.10%. Current system: Shipment comes in at night. Unload and plan the deliveries CSR arrives early to arrange delivery routes CSR Calls POC to let them know when they will be there If no one answers, they leave a message and schedule the delivery anyway. If no one answered, or returned the message, there is a 60% chance that the order will be returned to MDS.

Justification Roughly five thousand returns per year at MDS Logistics MDS is only allowed to return the appliances to GE twice per year. Ties up a large amount of the company’s capital Often responsible for the retail price of the appliances. Current system: Shipment comes in at night. Unload and plan the deliveries CSR arrives early to arrange delivery routes CSR Calls POC to let them know when they will be there If no one answers, they leave a message and schedule the delivery anyway. If no one answered, or returned the message, there is a 60% chance that the order will be returned to MDS.

Overall System Current system: Shipment comes in at night. Unload and plan the deliveries CSR arrives early to arrange delivery routes CSR Calls POC to let them know when they will be there If no one answers, they leave a message and schedule the delivery anyway. If no one answered, or returned the message, there is a 60% chance that the order will be returned to MDS.

What MDS Can Change Current system: Shipment comes in at night. Unload and plan the deliveries CSR arrives early to arrange delivery routes CSR Calls POC to let them know when they will be there If no one answers, they leave a message and schedule the delivery anyway. If no one answered, or returned the message, there is a 60% chance that the order will be returned to MDS.

Brief review of the current system Successful deliveries: 58 Failed deliveries: 31 89 calls made per day. Only 70% of notice calls go through. 10% of clients call back after received missed call. Only 40% of deliveries go true with out notice call 90% of clients who received the notice call have the successful delivery. Current system: Shipment comes in at night. Unload and plan the deliveries CSR arrives early to arrange delivery routes CSR Calls POC to let them know when they will be there If no one answers, they leave a message and schedule the delivery anyway. If no one answered, or returned the message, there is a 60% chance that the order will be returned to MDS.

Proposed Change Customer response will increase to 80%. The chance of them returning the call increases to 50% instead of 10%., due to the multiple missed calls from the same number. Reduction of failed attempted deliveries by 18% Current system: Shipment comes in at night. Unload and plan the deliveries CSR arrives early to arrange delivery routes CSR Calls POC to let them know when they will be there If no one answers, they leave a message and schedule the delivery anyway. If no one answered, or returned the message, there is a 60% chance that the order will be returned to MDS.

Wrapping Machine Cost Analysis Total of 22 times taken Total time measured: 107.32 mins Average Time: 4.88 Current system: Shipment comes in at night. Unload and plan the deliveries CSR arrives early to arrange delivery routes CSR Calls POC to let them know when they will be there If no one answers, they leave a message and schedule the delivery anyway. If no one answered, or returned the message, there is a 60% chance that the order will be returned to MDS.

Challenges of Wrapping Machine The conclusion of the cost analysis was that it would take 16 months for the best fit to pay off Exceeds project requirement of return on investment within one year but will result in a profit of $3,428 by the end of the second year. Current system: Shipment comes in at night. Unload and plan the deliveries CSR arrives early to arrange delivery routes CSR Calls POC to let them know when they will be there If no one answers, they leave a message and schedule the delivery anyway. If no one answered, or returned the message, there is a 60% chance that the order will be returned to MDS.

Moving Blankets Solution – Cardboard Prove the concept that additional padding would reduce damage by using cardboard MDS can use manhours to break down refrigerator boxes, resulting in 2 – 72” x 72” sheets of cardboard per box. Using different configuration, requiring 40 boxes for all 8 trucks, lasting one week per set 21.6’ Current system: Shipment comes in at night. Unload and plan the deliveries CSR arrives early to arrange delivery routes CSR Calls POC to let them know when they will be there If no one answers, they leave a message and schedule the delivery anyway. If no one answered, or returned the message, there is a 60% chance that the order will be returned to MDS. 6.5’

Moving Blankets Pros and Cons Would be a proof of concept that additional padding would reduce damage Material is free If one less appliance is damaged, MDS will save roughly $1000 Con: Costs manhours to prepare. Need to store cardboard between shipments Need to use for an entire quarter to see if method effects GE metrics Current system: Shipment comes in at night. Unload and plan the deliveries CSR arrives early to arrange delivery routes CSR Calls POC to let them know when they will be there If no one answers, they leave a message and schedule the delivery anyway. If no one answered, or returned the message, there is a 60% chance that the order will be returned to MDS.

Budget Semi-automatic wrapping machine ($6,630.00) Proposed changes will take slightly longer than our original requirement, providing a return on investment after sixteen months Additional one-time cost of additional manhours required to produce cardboard padding ($276) Totaling $6,906.00. Current system: Shipment comes in at night. Unload and plan the deliveries CSR arrives early to arrange delivery routes CSR Calls POC to let them know when they will be there If no one answers, they leave a message and schedule the delivery anyway. If no one answered, or returned the message, there is a 60% chance that the order will be returned to MDS.

Future Improvements OTP Consulting would recommend implementing a customer service phone call monitoring system. This would allow MDS to pinpoint issues and develop their own matrices of the effectiveness of the customer service representatives. In continuing their relationship with GE, MDS should push for more points of contact for the customer if possible. Current system: Shipment comes in at night. Unload and plan the deliveries CSR arrives early to arrange delivery routes CSR Calls POC to let them know when they will be there If no one answers, they leave a message and schedule the delivery anyway. If no one answered, or returned the message, there is a 60% chance that the order will be returned to MDS.

Overall Conclusions 18% reduction in failed attempted deliveries, an The reduction should result in a 0.09% reduction, just under our success criteria goal of 0.1% Annual manhour saving of $5,029 per year after the sixteen month return on investment. Potentially a process that will reduce damage incurred during deliveries. Current system: Shipment comes in at night. Unload and plan the deliveries CSR arrives early to arrange delivery routes CSR Calls POC to let them know when they will be there If no one answers, they leave a message and schedule the delivery anyway. If no one answered, or returned the message, there is a 60% chance that the order will be returned to MDS.

Questions? Current system: Shipment comes in at night. Unload and plan the deliveries CSR arrives early to arrange delivery routes CSR Calls POC to let them know when they will be there If no one answers, they leave a message and schedule the delivery anyway. If no one answered, or returned the message, there is a 60% chance that the order will be returned to MDS.