PROCESS ASSESSMENT IN THE SUPPLY CHAIN: the eMBARQtM ...

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8 e m b A r Q l o g i s t i c s ’ 2 0 0 4 A s s e s s m e n t The assessment at EMBARQ in 2004 took place when the distribution operations area was facing internal pressures and growing external customer demand for improved service. Not only that, but a quantitative benchmarking project had shown specific metrics that were below average. The objective of the qualitative process assessment was to identify initiatives that would drive significant service improvements and cost savings in distribution operations. The process assessment project was sponsored and staffed by the distribution operations group, and two individuals were assigned full time for the short duration of the project. The scope was focused on distribution processes, with some limited visibility to the planning, sourcing, and enabling processes that directly touched distribution. The steering committee selected 16 process subcategories and 77 process attributes to assess. The core team identified process leaders for each Process Subcategory, located at both headquarters and in the distribution centers (DCs). A facility tour of one representative distribution center in Warsaw, Indiana was included with a corresponding discussion on the differences between what was seen in Warsaw and what would be seen in other DCs. Most of the interviews were held in a conference room, with the exception of some brief staff interviews conducted on the floor at the DC. A total of 45 individuals were interviewed and the total project duration was two and a half weeks. aSSeSSMent FInDIngS As mentioned previously, the distribution operations group was forewarned that it would find weaknesses in the core distribution processes of pick, pack, and ship as a result of the quantitative benchmarking. What it found were good core distribution processes, but weak planning and supply support processes. When the group presented these findings in its steering committee workshop, the team validated them, though not without extended discussions and questions. After validation, the team divided into two groups for an impact assessment breakout session. When the team reassembled, it found that the impact ratings, assigned separately by the two groups, were actually in close alignment. Subsequent discussions on the rationale behind some ratings that differed resulted in even closer consensus. The results of those discussions are shown in the impact rating columns in the example below. Figure 3: Process opportunity Workshop stRAtegic iMPAct sAvings/PeRF iMPAct PlAn grouP A / B A / B Supply Chain Planning Supply Demand Alignment Inventory Management Source Strategic Sourcing Supplier Management Purchasing cuRRent PeRFoRMAnce coMMents Inbound Materials Management Difference in definition – low impact deliver Order Management Warehousing/fulfillment Deliver Infrastructure Transport enABle Product/Service Data Management Measurement Technology Close open initiatives!!! Business Management Execute on current plans Quality Management High Impact Medium Impact Low Impact
Based on this impact assessment, and the consensus previously achieved on the Process Subcategory ratings, the steering committee identified the following areas for improvement: • Supply-Demand Alignment/Inventory Management • Technology • Measurement • Supplier Management The team brainstormed for potential corrective actions. When all ideas had been written down on flip charts, each team member was given three colored dots to “vote” for the action items they felt were most important. This further narrowed the list of ideas to the critical few, and focused attention for the next round of discussions. The team then discussed these alternatives until it understood the complexities and potential difficulties of each alternative. Clarifications and edits were made to the proposed solutions. Another round of voting prioritized the alternatives to arrive at a list of action items that specifically addressed the weaknesses found in the high impact areas of the assessment. The following list of action items was presented to management: • Supply-demand alignment/inventory management – Define goals and criteria – Review categories and treatment – Develop workflow strategy and implement • New technology initiatives needed to support process changes – Manage suppliers and systems enhancements to support Supply-Demand alignment Figure 4: Prioritizing the improvement initiatives iMPAct stRAtegic / sAvings / PeRFoRMAnce Low high supply-Demand Alignment/inventory Management • Define goals and criteria • Review categories and treatment • Develop workflow strategy and implement technology • New initiatives needed to support process changes, especially in management of suppliers and systems enhancements to support Supply-Demand Alignment Measurement • Process measures • Linked measures between management and floor Management of suppliers • Adherence/compliance • Metrics tied to operational goals • Decreased lead-time variability • Supplier portal – Monitor systems feeds and links – Manage outsourced services – Close open initiatives • Measurement – Communicate current measures – Develop process measures – Link measures between management and floor • Management of Suppliers – Define and communicate labeling requirements to all suppliers – Correct lead times in systems – Measure lead-time variability – Measure adherence/compliance to requirements – Tie metrics to operational goals – Decrease lead-time variability – Develop a supplier portal to enhance communication high Low DegRee oF DiFFicuLty / cost Each initiative was rated by the consensus of the team according to the possible gains based on support for corporate strategy, and potential gains in cost savings and/or performance improvements. Each initiative was also rated by consensus on the degree of difficulty to implement it, and also by the potential cost and resource consumption of implementation. Based on the consensus, these initiatives were then prioritized according to impact and degree of difficulty, as shown in the exhibit below, and presented to management. technology • Monitoring systems feeds and links • Management of outsourced services • Close open initiatives Measurement • Communication of current measures Management of suppliers • Definition & communication of requirements • Updates to routing guides • Monitoring performance • Get corrected lead times into systems • Measuring lead-time variability 9
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