1. Project 4B: DMAIC at Dymo

2. Define Phase: Executive Summary
Project Status
Unable to control Inventory efficiently
Current State
Existing process involves multiple departments manipulating data received from other departments to serve their purposes
Findings
Defining product families & market segments is inconsistent across departments
Next Steps
Initiate BI project to address efficiency issues

3. Define Phase: Using BI Business Intelligence can enhance:
Process Improvement
By creating a central data warehouse to manage each department’s information rather than in multiple places
Leadership Decision Making
By developing standard reports via a common definition of SKU, product family and market segment, etc…

4. Define Phase: Summary of LSS Tools
“Be the recognized leader in innovative solutions that help people organize & identify their world.”
Customer Requirements
Who’s the Customer?: Sales, Finance, Production & Demand
Voice of the Customer: Reliable data to assist in decision making
Understanding the Process
SIPOC
Complete Charter
Ganntt Chart

5. Define Phase: SIPOC Suppliers Inputs Process Outputs Customers
Marketing
SKU
Product Description
Market Segment
Product Family
Material ID
12 Month Projections
Excess Obsolete & Sales Projection Reports
Demand Planning
Forecast by Segment & Product Family
Finance
Margin by Product Family Report
Production
Production & Turnover Report
Note = Above shows sample input and outputs, for a complete list please see Appendix A

6. Define Phase: Gantt Chart
Activity
Collect Business Requirements
Define SKU rollup to Product Family
& Market Segment
Link Inputs from Depts. into Access
Create Queries for Reporting Purposes
Obtain Feedback from the customer
Make necessary improvements 1 2 3 4 5 6 7
Week

7. Measure Phase: Executive Summary
Project Status
Investigating inconsistency between market segment and product family definitions
Current State
Sales, demand and production plans created are inconsistent, resulting in high inventory levels
Findings
Inconsistencies in SKU linkage, product family and market segment definitions
Next Steps
Analyze the data collected to validate relationships between variation of inventory and the information gap.

8. Measure Phase: Using BI
Business Intelligence can enhance:
Process Improvement
A cause and effect diagram shows possible factors that might be causing the inaccurate projections
Leadership Decision Making
By eliminating other causes and narrowing down on the causes that warrant further investigation, Management can then take corrective action

9. Cause and effect diagram
Methods/Procedures
Software
Inconsistent SKU linkage
Faulty software
Inconsistent product families
Inconsistent market segments
Inaccurate projections
Lack of training
The cause and effect diagram allows us to list all possible reasons leading to the inaccurate sales projections. By eliminating unlikely factors, we can then narrow down on the factors that warrant further investigation. After reviewing the cost and effect diagram, we identified the 3 factors that were likely responsible for the inaccurate projections – inconsistent SKU linkage and inconsistencies in product family and market segment definitions across departments.
Personnel
Random error 9

10. Analyze Phase: Executive Summary
Project Status
Validate relationships between variation of inventory and information gap.
Current State
Demand plan is created from sales forecast, which in turn determines the production plan. Inventory is byproduct of these.
Findings
The inconsistency between demand plan and production plan could be the culprit in inventory spikes.
Next Steps
Improve demand and production plan using BI tool

11. Analysis Phase: Using BI
Provide better understanding of how inventory varies along with a number of factors such as
The gap between demand plan and production plan
The mismatches of SKU among different departments such as marketing department, sales department, production department, and finance department
Enhance Inventory Management Decision Making
Enhance Demand Plan
Enhance Production Plan

12. Analysis Phase: Summary of LSS Tools
Qualitative Analysis
Cause and Effect Diagram
Understanding the causes of inventory variation
Quantitative Analysis
Regression Analysis
To verify the impacts of inconsistency between production plan and demand plan.

13. Analysis Phase: Qualitative Analysis
Cause and Effect Diagram
Production Plan
Variation
of Inventory
This is a narrowed down version for Cause and effect diagram used earlier in slide 9
Demand Plan

14. Analysis Phase: Quantitative Analysis
Regression Analysis
Hypothesis: Inventory is predicted as Production Plan – Demand Plan
Descriptive Statistics
Note: PP – Production Plan; DP – Demand Plan
Variables N
Min
Max
Mean
Std. Deviation
Inventory
300
243000
7188.9
Gap between PP and DP
-5037
35803
162.1

15. Analysis Phase: Quantitative Analysis
Regression Analysis
Hypothesis: Inventory is predicted as Production Plan – Demand Plan
Regression statistics – model summary
Regression statistics – coefficients
Note: PP – Production Plan; DP – Demand Plan
Model R
R Square
Adjusted R2 1
0.186
0.035
0.031
Model
Unstandardized
Standardized t
Sig. B
Std. Error
Beta
Constant
4.754
.000
Gap between PP and DP
2.024
.620
.186
3.267
.001

16. Analysis Phase: Quantitative Analysis
Regression Analysis
Hypothesis: Inventory is predicted as Production Plan – Demand Plan
Conclusion
The linear relationship between inventory and gap between production plan and demand plan is significant
However, such a gap doesn’t explain the full variance of inventory as it is proposed to be
Need improvement on both demand plan and production plan

17. Improve Phase : Executive Summary
Project Status
Improve demand and production plan utilizing BI system
Current State
Existing process is inconsistent across departments causing demand production plan to be inaccurate.
Findings
We are able to reduce touch points and streamline process by making simple changes; This introduces accuracy and efficiency.
Next Steps
Create uniform control system to keep integrity of the data/process

18. Improve Phase: Using BI
BI system streamlines reports and queries that return consistent results
BI system maintains data integrity by making SKU/Material pair unique and define product family and market segment
BI system reduces touch points that can introduce random inconsistency in the current process.

19. Improve Phase: LSS Tools
Current State Diagram
Develop current state
Identifying where breaks occur/major opportunities for improvement
Point out key touch points
Future State Diagram
Develop future state diagram
Simplifies the process with quick/simple changes
Creates a desirable level of output

20. Improve Phase: Current Process Map
SKU belongs to which Product Family?
Demand adjusts sales plan creating a Demand plan by Product group
Sales Creates a Sales Plan by market Segment
What group does the material belong to?
I need Margin & Budget by SKU
Production Creates a production plan based on Demand Plan
Finance creates Budget and Margin at aggregate level.
How does material ID tie to SKU/market segment?

21. Improve Phase: Current State Diagram

22. Improve Phase: Future Process Map
Strategic & Financial Planning
Demand
Forecasting
& Planning
Supply Planning
Distribution Planning
Manufacturing Planning
Material Planning
Shipment Planning
Order Promising
one
plan

23. Improve Phase: Future State Diagram

24. Control Phase: Executive Summary
Project Status
Introduce Controls in process management and planning
Current State
Existing process contains no control or ownership structure in place which causes defects and mistakes to occur.
Findings
By introducing a control priority structure we can measure and control the defects.
Next Steps
Continuous improvement and control

25. Control Phase: Using BI
Use BI system to streamline reports and queries that return consistent results
Exception reporting to show mismatches in SKU/Material linkage.
Exception reporting to show mismatches in supply plan, demand plan and production plan

26. Control Phase: LSS Tools
Control plan
Prevention Vs. detection chart for transaction process
Identifies typical failure cycle and aids in creating proper detection and prevention methods
Monitor
Statistical Process Control using C- chart to monitor outcome for continuous improvement

27. Control Phase: Control Plan

28. Control Phase: C-chart
Current production plan compared to what the production plan should be using the BI tool
BI tool calculation is Demand plan – Inventory (+/- 200 threshold allowed)
Average of Sample is a straight average of calculated.

29. Control Phase: C-chart

30. Dashboards

31. Variations in projections
A column chart showing the projected sales units for the two departments side by side makes it easier to notice the variances in the 2 departments’ projections.

32. Excess & Obsolete Inventory
The inconsistencies in sales projections lead to increased levels of excess and obsolete inventories. A bar chart provides a visualization of the E&O levels by product family. Management can determine how accurate/inaccurate the sales projections are by tracking changes in the level of E&O inventory. 32

33. Inventory - Regression

34. Margin by Product Family

35. Inventory Turnover

36. Questions?

37. Appendix

38. Business Requirements (Dept.)
Sales / Marketing
Demand Planning
Finance
Group
Production /
Supply
SKU
Product Family
Material ID
Product Description
Budget Forecast
Market Segment
Obsolete Inventory
Product Sub Family
Sales Projections
Invoice Sales
Supply Plan
Sales Price
Demand Plan
Actual Units Sold
Material Status
Demand Plan Dollarized
Standard Production Cost
Standard Cost
Margin
Average Sales Price
OH Inventory & Value
OH Inventory Value
* All Projections, Forecasts, Plans are for 12 Months.

39. Business Requirements (Functional)
Marketing & Sales Department
Inputs
Input Source
Outputs
Margin
Finance
12 month Sales Projection
SKU
Self managed
Average Sales price
Product Description
Actual units Sold
Market Segment
Sales price
Excess & Obsolete Inventory
Production
12 month budget forecast
Standard Cost

40. Business Requirements (Functional)
Demand Planning
Inputs
Input Source
Outputs
SKU
Self managed
12 month Demand Plan
Product Description
12 month demand plan dollarized
Market Segment
Product Family
12 month Sales projections
Marketing/Sales
Average Sales Price

41. Business Requirements (Functional)
Finance Department
Inputs
Input Source
Outputs
Product Family
Self managed
12 month budget forecast (Aggregate level)
Excess & Obsolete Inventory
Production
Invoice sales (Aggregate level)
Standard (production) cost
Margin
Actual units Sold
Marketing/Sales
Sales price (List price, net 98, net 95)
OH Inventory
OH Inventory Value

42. Business Requirements (Functional)
Production / Supply
Inputs
Input Source
Outputs
Material ID
Self managed
12 month supply plan
Product Description
standard (production) cost
Product Sub family
Excess & Obsolete Inventory
Material Status
OH Inventory
12 month budget forecast
Finance
OH Inventory Value
12 month Demand plan
Demand Planning