This newsletter will case study Phase 2 of the improvements made at our Transportation Equipment Distributor client. Last month we reviewed how we streamlined the sales process to give Sales Reps more time to sell and grow profit. This month we will review how we delivered on the promises we made to customers, providing this equipment, on-time.
This company sells transportation equipment and provides service and parts support. The owner had executed a successful growth strategy, and in a few years had grown by 400%. The growth has taxed the ability of the organization to deliver the equipment it sold, on time. The Vice President of Sales spent much of his time running around the company, getting updates on delivery information from various departments. His title may have been V.P. of Sales, but he was really the head of Delivery.
Lean Six Sigma Tools
Daily Work-Flow / Order-Review Meeting
Implementation Details – Daily Scheduling Meeting
1) One of the most effective tools anyone can use to improve on-time delivery, in a complex multi-step operational process is the use of Daily or Weekly “Work-Flow” meetings.
2) These meetings track the progress of customer-orders through the “operational” process. In past months we reviewed how this tool was used by a manufacturing company. This same tool is just as applicable for a distributor that has a multi-step sales and delivery process.
3) The Vice President, Scheduler, Service Manager and Parts Manager attended.
4) This meeting was only 5 minutes long!
5) The scheduler prepared the spreadsheet that tracked order flow.
6) At each meeting the participants only spoke about orders that were stuck or where we knew we had a problem. If the Parts department was short on items that were going to be needed to finish customizing a unit it would be known before it became a problem. If the Service department was out of capacity to option-up a unit, inbound units would be diverted from the manufacturer to a different service center (our Client had 4 service centers around the mid-west).
7) The next day this same 5 minute meeting was repeated. Problems from the day prior were expected to be fixed. This repetition reduced surprises, and missed deliveries to almost zero.
Impact on People
1) More than anything this Daily Work-Flow Meeting freed up time for Vice President to spend more time with Sales Reps and customers and less time tracking deliveries. He used to do all the same work, but did it by going around to every department throughout the day to get updates. After this process was instituted he was able to keep an eye on operations, but give his focus to growing sales and profit.
2) As we stated in earlier newsletters, these tools are all about creating visibility. If you are not performing, every day it is highlighted in this Order-Review meeting. The Service Manager did not last in this high-performing environment. He was replaced about one year after instituting this Daily meeting.
1) As stated last month, Gross Profit % increased 60%! The additional time the V.P. of Sales had to spend with his Sales Reps (instead of tracking product delivery) resulted in dramatically improved profit for our Client.
We hope this Real World Lean Six Sigma case study gives you ideas to improve delivery. Next month we will switch gears and look at administrative processes within a Hospital Human Resource department.