1
Author: Roman-Nelson, Grace A.
Title: Six Sigma DMAIC: A Case Study in Resolving Profit Loss for a Cheese
Manufacturing Company
The accompanying research report is submitted to the University of Wisconsin-Stout, Graduate School in partial completion of the requirements for the Graduate Degree/ Major: Master of Science in Operations & Supply Management Research Advisor: John Dzissah, Professor Submission Term/Year: Winter 2020 Number of Pages: 53 Style Manual Used: American Psychological Association, 6th edition I have adhered to the Graduate School Research Guide and have proofread my work. I understand that this research report must be officially approved by the Graduate School. Additionally, by signing and submitting this form, I (the author(s) or copyright owner) grant the University of Wisconsin-Stout the non-exclusive right to reproduce, translate, and/or distribute this submission (including abstract) worldwide in print and electronic format and in any medium, including but not limited to audio or video. If my research includes proprietary information, an agreement has been made between myself, the company, and the University to submit a thesis that meets course-specific learning outcomes and CAN be published. There will be no exceptions to this permission. I attest that the research report is my original work (that any copyrightable materials have been used with the permission of the original authors), and as such, it is automatically protected by the laws, rules, and regulations of the U.S. Copyright Office. My research advisor has approved the content and quality of this paper. STUDENT: NAME: Grace A Roman-Nelson DATE: January 12 , 2020 ADVISOR: (Committee Chair if MS Plan A or EdS Thesis or Field Project/Problem):
NAME: John Dzissah, Professor DATE: January 5, 2020 ------This section for MS Plan A Thesis or EdS Thesis/Field Project papers only Committee members (other than your advisor who is listed in the section above)
1. CMTE MEMBER’S NAME: DATE: 2. CMTE MEMBER’S NAME: DATE: 3. CMTE MEMBER’S NAME: DATE: ------This section to be completed by the Graduate School This final research report has been approved by the Graduate School. Director, Office of Graduate Studies: DATE: 2
Roman-Nelson, Grace A. Six Sigma DMAIC: A Case Study in Resolving Profit Loss for a
Cheese Manufacturing Company
Abstract
Company XYZ has experienced stock variations and an estimated 1% loss in its annual projected profit due to partially filled cases of processed canned cheese. Most of these cases are not captured on the company’s inventory system, thus were accumulated in stock and eventually reprocessed or dumped. The objective of this assessment was to determine the root cause of the problem and identify solutions. Two sets of questionnaires were administered, one to the stakeholders and the other to the warehouse staff. The summary results identified five primary causes which were lab sampling, marketing, dented tins, staff sale and incomplete cases at the end of production run. Using the Cause and Effect Diagram, seven root causes were identified.
These were quality assurance, competitive marketing, preventative maintenance, improper handling, concentration lapse by forklift operators, process variations and unavailability of assigned products for staff welfare. The root causes were linked to human and mechanical factors, thus can be prevented or mitigated. Recommended solutions included, implementing a structure that is more restrictive, accountable and consistent, thus reducing human errors and mechanical issues; as well as, using such products for staff sale, donation and promotion. 3
Acknowledgments
I would love to take the opportunity to express a special thanks to persons who had assisted me in any way to complete this project.
Firstly, I want to thank God to give me the health , strength and courage to undertake the challenges that were faced. A big thank you to my loyal husband Richard , who dedicated so much of his time to assist me in the simplest to the most difficult obstacles that I encountered with the project .
I would like to express a special thanks to Gersham Palmer who worked alongside me regarding this project of the partially filled cases in the warehouse. I would also like to thank members of the Warehouse, Quality Assurance, Finance and Marketing teams who dedicated their time to facilitate me during my investigation of the problem and during my brainstorming of potential solutions to the problem.
4
Table of Contents
Abstract ...... 2
List of Figures ...... 7
Chapter I: Introduction ...... 9
Statement of the Problem ...... 10
Purpose of the Study ...... 10
Assumptions of the Study ...... 10
Definition of Terms ...... 10
Chapter II: Literature Review ...... 12
The DMAIC Method ...... 12
Define ...... 15
Measure ...... 15
Analyse ...... 15
Flowcharting ...... 15
Ishikawa Diagram...... 16
5 Whys Technique ...... 17
Cause Mapping ...... 18
Critique ...... 20
Improve ...... 21
Grid Analysis ...... 21
SWOT Analysis...... 22
Control ...... 22
Force Field Analysis ...... 23 5
ADKAR Model ...... 23
Chapter III: Methodology ...... 25
Research Goals and Objectives ...... 26
Instrumentation...... 26
Data Collection Procedures ...... 27
Data Analysis ...... 27
Limitations ...... 27
Summary ...... 27
Chapter IV: Results ...... 29
Data ...... 29
Table 1: Summary of Responses Provided by Stakeholders to Issues Raised in
Questionnaire on Partially Filled Cases ...... 30
Table 2: Summary Of Responses Provided By Warehouse Staff To Issues Raised In
Questionnaire On Partially Filled Cases ...... 31
Data Analysis ...... 31
Chapter V: Discussion, Conclusion and Recommendation ...... 37
Discussion ...... 37
Conclusion ...... 40
Recommendations ...... 40
References ...... 44
Appendix A: Interview Questions for Warehouse Personnel ...... 48
Appendix B: Interview Interview Questions for Stakeholders ...... 50
Appendix C: Partially Filled Cases on Pallets in Warehouse ...... 52 6
Appendix D: Partially Filled Cases on Shelves in Warehouse ...... 53
7
List of Figures
Figure 1: The DMAIC Cycle ...... 13
Figure 2: Flow Chart ...... 16
Figure 3: Ishikawa Diagram Template Word ...... 17
Figure 4: 5 Whys Worksheet ...... 18
Figure 5: Cause Map ...... 19
Figure 6: Cause Mapping and the 5 Whys Technique ...... 20
Figure 7: Grid Analysis Template...... 21
Figure 8: SWOT Analysis Template ...... 22
Figure 9: Force Field Analysis ...... 23
Figure 10: ADKAR Model - States of Change ...... 24
Figure 11: Flow Chart of the Problem Area ...... 26
Figure 12: Pie Chart Illustrating the Responses from the Stakeholders for the Causes of the
Partially Filled Cases ...... 32
Figure 13: Histogram Illustrating the Responses from the Stakeholders with Regards to
Recommended Solutions for the Partially Filled Cases ...... 32
Figure 14: Bar Chart Illustrating the Responses from the Stakeholders as to the Suggested
Benefits the Company Would Derived from Implementing Measures to Address Partially
Filled Cases ...... 33
Figure 15: Histogram Illustrating theRresponses from Warehouse Staff for the Causes of the
Partially Filled Cases ...... 33
Figure 16: Pie Chart Illustrating the Responses from Warehouse Staff Providing Reasons why
Partially Filled Cases are not Used Efficiently ...... 34 8
Figure 17: Bar Chart Illustrating the Responses from Warehouse Staff in Regards to the
Recommended Solutions for the Partially Filled Cases ...... 34
Figure 18: Pie Chart Illustrating the Combined Responses (Stakeholders and Warehouse Staff)
for the Causes of the Partially Filled Cases ...... 35
Figure 19: Flow Chart Showing the Root Cause Analysis that was Done Using the Cause
Mapping Method ...... 36
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Chapter I: Introduction
Company XYZ produces a range of milk-based products, one of which is “processed canned cheese”, that are distributed to consumers in the Caribbean Community (CARICOM) and
North America. Processed canned cheese was the company’s first product when it started in
1964, with 12 staff members on a two-shift system. Today, with a more diversified offering, the company employs approximately 33 full time staff and when needed, it uses the services of a team of third-party contract workers (associates). The company has not forgotten its roots and processed canned cheese remains the major profit earner, accounting for 88% of sales.
The guiding principles of Company XYZ are maintaining high quality, food safety and operational excellence. They are contributors for the company’s success over the last decade, in which there were two consecutive years of record profits. In spite of this achievement, the company has experienced losses in its projected profit as a result of product loss through missing cans of processed cheese from partially filled cases.
Partially filled cases are cartons not filled with the maximum number of tins of processed cheese. This can result from the collection of products for assessment, the removal of damaged or defective cans from cases, the collection (picking) of products for donation or promotion purposes. The partially filled cases are identified during quarterly stock taking, when there is the reconciliation of the stored product with the information on the company’s inventory tracking system known as Systems Applications Products (SAP).
Whenever partially filled cases are identified, the company’s policy is to remove them from the stock; thus the cheese in these cans gets reprocessed or written off as bad and dumped when expired. In both cases it result in financial losses. 10
As part of its food safety requirements, the company has to undertake annual risk assessment audit. One of the findings highlighted the proliferation of partially filled cases. The audit recommended that a control mechanism should be developed and implemented to mitigate against the problem.
Statement of the Problem
Company XYZ is experiencing stock variances and an estimated 1% loss in its annual projected profit as a result of continuous increase in the number of unsold processed canned cheese in partially filled cases.
Purpose of the Study
The aim of this assessment is to provide data on what the problem is; to validate reasons for resolving the problem; and to identify meaningful solutions that can be recommended for handling the partially filled cases.
Assumptions of the Study
The quantities of products for bad and dump have not yet been processed; thus, the figure conveyed in the report is based on observation and not documentation.
Definition of Terms
The following words/phrase in bold are technical terms used in cheese manufacturing, therefore it is prudent to explain their meaning as they used throughout this paper.
Buy-in. The support gain from agreeing and accepting a suggestion from another person.
Partially filled cases. Cartons not filled with the maximum number of tins of processed cheese. (Filled cases come in various sizes: 6 tins for 2.2 kilogram cheese, 12 tins for 1 kilogram cheese and 24 tins for 250 gram and 500 gram cheese). 11
Reprocess. The cheese, in small quantities, is added back to the daily formulation for production.
Rework. Ingredient or finished product that is kept for reprocessing. When reprocessed, the rework is used as an ingredient to make finished product. Material designated as rework is assessed for its microbial parameters and its chemical parameters, where necessary, before use.
Assessment is done to ensure that the material is safe for human consumption
Sample pallet. A pallet of products generated during production with products representing each batch of finished product that has been processed and filled during a day’s production run. This is done so that samples corresponding to each batch can be easily collected for assessment. The time code of the product inside the box is written on the carton.
Status change. To transfer items from one status to another. This procedure applies to all raw materials, products in process, finished goods and goods returned from trade. A change of status is required when the following is needed:
• change from finished product to rework,
• change from one brand to another (e.g. Tastee Local to Tastee USA Cheddar),
• or if a product does not meet the requirements for a particular market but can be
utilized in another market.
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Chapter II: Literature Review
Company XYZ produces canned processed cheese in cases, which is distributed to customers in the Caribbean and North America. Although the company places great importance in maintaining high levels of quality, food safety and operational excellence, there is growing customer dissatisfaction as a result of receiving partially filled cases. The company is experiencing stock variances and an estimated 1% loss in its annual projected profit due to continuous increase in the number of unsold processed canned cheese in partially filled cases.
An approach that can be taken is applying the Lean Six Sigma principle which is a combination of Lean, which speaks to the creation of values for customers by minimizing waste; and Six
Sigma which reduces defects by solving problem. It basically reduces variation, waste, and cycle time and simultaneously promote the use of work standardization and flow. Some of the Lean sigma tools used are discussed below.
The DMAIC Method
DMAIC is “a data-driven improvement cycle used for improving, optimizing and stabilizing business processes and designs” (Bartholomew, 2012, para. 1). It is characterized by
“one of the core techniques behind any process improvement” (Henshell, 2017, para. 2). The thrust of DMAIC is to provide a framework for analysis and identification of problems (Jevgeni et al., 2015). As seen in Figure 1 below, the method consists of five phases; define, measure, analyse, improve and control. DMAIC is central to the Six Sigma methodology which is used to eradicate “defects (driving toward six standard deviations between the mean and the nearest specification limit) in any process – from manufacturing to transactional and from product to service” (iSixSigma, n.d., “What is Six Sigma?”, para. 1). 13
-0 c~ 3
Figure 1. The DMAIC cycle. Reprinted from TQMI, n.d., Retrieved from http://www.tqmi.com/blog/use-dmaic-model-problem-solving/
The benefits of DMAIC have been proven time and again by many diverse businesses, since it was first used by Motorola in 1986 and popularized by General Electric (Paton, n.d.). Motorola has been utilizing the method ever since and described the journey as:
Over the years, we built on this methodology to include the use of statistical tools, and a
step-by-step process to drive improvement, innovation and optimization. Through the
direction of former CEO Bob Galvin, we made the Six Sigma methodology available to
the world. We implemented large-scale training efforts and applied the methodology
beyond manufacturing into transactional, support, service and engineering functions. Six
Sigma became a collaborative effort between our customers, suppliers and stakeholders
and an important tool to engage our employees in a culture of continuous improvement.
Our employees, suppliers and customers quickly discovered this methodology worked
and wanted to use it to improve performance. Other companies soon followed suit by
adopting their own approach to do the same. The Six Sigma methodology gained a 14
strong following and became widely adopted across numerous industries. (Pierce, 2011,
para. 2)
Similarly, the use of the DMAIC training in General Electric’s Six Sigma execution was described as:
Application of Six Sigma at General Electric brought a marked culture change in the
attitude of individual employees toward quality, translating into dramatically lower
service-call rates, and improved product reliability. The Six Sigma effort at GE
contributed $700 million in corporate benefits in 1997, just two years into the program.
From a small beginning to improving product quality by reducing defects at the
workplace, the scope of Six Sigma at GE has expanded over the years, and today Six
Sigma’s customer focused, data driven philosophy defines how GE works. (Nayab,
2011, para. 16)
In another case, the DMAIC was used to revamp a Portuguese tire manufacturing establishment to compete in a highly competitive global market (Six Sigma Daily, 2018, “Case study”). Likewise, the value of the DMAIC model was tested and proven in carpet making (Nagi
& Altarazi, 2017). Even in the automobile industry, with the Toyota and Ford brands, the
DMAIC has been immensely advantageous (Six Sigma Daily, 2018, “Case study”). For Ford:
The Six Sigma team at Ford has learned a lot about what it takes to drive a successful Six
Sigma effort. Beyond all of the training, the commitment of resources, the accessibility of
data and huge sums paid to consultants, Ford has learned that Six Sigma success hinges
primarily on two factors: committed senior leadership and a dedication to understanding
customer needs. Ford’s experience with Six Sigma proves that even a huge organization
can be nimble enough to quickly implement a major restructuring in the way it thinks 15
about the customer, approaches quality improvement and utilizes its most valuable
resource -- its people. (Paton, n.d., para. 36)
These successful examples have convinced the researcher that DMAIC would be the right tool to overhaul Company XYZ and improve its production output. Using the acronym, the process will now be outlined.
Define. The researcher will first define the problem (Rouse, 2012). This includes stating the problem, specifying the customer set, identifying the goals and outlining the target process.
Measure. The researcher will then measure the problem (Rouse, 2012). This includes deciding what variables to be quantified and how to do this, as well as data collection and experimentation.
Analyse. The researcher will then analyze this information by identifying any disparities
(and the cause) between actual and goal performance, as well as determining how process inputs affect outputs, and ranking improvement opportunities (Rouse, 2012). Root cause analysis tools, such as flowcharting, the Ishikawa diagram, the 5 Whys technique and cause mapping can be used at this stage to identify the gaps in the system and the origin(s) of the problem.
Flowcharting. Flowcharting helps to understand a process at a glance. As Walters
(2017) expressed, “every company can benefit” from this tool (para. 1). Using a few words and simple symbols, a flow chart shows clearly what happens at each stage and how this affects other decisions and actions (MindTools, n.d., “Flow charts”). Figure 2 shows an example of a flow chart. 16
Figure 2. Flow chart. Reprinted from BTMS, n.d., Retrieved from https://www.breakthroughmarketingsecrets.com/blog/build-your-process-to-increase-your- profits/attachment/blank-flow-chart/
Ishikawa diagram. The Ishikawa or fishbone diagram looks into cause and effect.
Described as an efficient method for causal analysis, the tool assists in investigating “all potential or real causes that result in a single defect or failure” (ISixSigma, n.d., “Determine the root cause”). Furthermore, it is a particularly useful “brainstorming tool when problem-solving is blocked and little quantitative data is available” (Lin, 2018). Developed by Kaoru Ishikawa, the tool has been judged to be quite effective in the manufacturing sector (Lin, 2018). This makes it suitable to the needs of Company XYZ. An example of the diagram is seen in Figure 3 below. 17
Figure 3. Ishikawa diagram template word. Reprinted from Thealmanac.com, 2020, Retrieved from https://images.app.goo.gl/jdTZKfqTDnJyy6HY6
5 Whys technique. Once the problem(s) is identified, the 5 Whys technique, created by the founder of the Toyota motor company, “can be used to drill down to the root causes”
(ISixSigma, n.d., “Determine the root cause”). As seen in Figure 4 below, the 5 Whys technique simply refers to recurrent enquiry until the origin of the problem is found. 18
IXlinc the problem:
Why is i1h 3ppcning?
L.______Jr Why ;~ lhO
'------JrWhy i~,hfil? 1------J~ "'"'r"·' Note: I( 1he la.sl o.nswcr is something you c.11tn01 '------J~ Why ;~,h>
Figure 4. 5 Whys worksheet. Reprinted from Olivier Serrat, (2017), Retrieved from https://link.springer.com/chapter/10.1007/978-981-10-0983-9_32
Underscoring the value of the 5 Whys technique, Ohno (2006) noted that “Even if initially time- consuming, identifying the root cause of a problem is important, because it allows us to take appropriate countermeasures to prevent recurrence in the long-term” (para. 4).
Cause mapping. A cause map, as seen in Figure 5 below, is a tool that “provides a visual explanation of why an incident occurred. It connects individual cause-and-effect relationships to reveal the system of causes within an issue” (ThinkReliability, n.d., “The cause mapping”).
19 I C Cl) (ii t c:::, :z >mQ) t t t t I m m m I C Cl) (ii t c:::, :z >mQ) I t m mmm
Figure 5. Cause map. Reprinted from ThinkReliability, n.d., Retrieved from https://www.thinkreliability.com/cause-mapping/cause-mapping-method-explained/
Cause mapping has its origins in the fishbone diagram (ThinkReliability, n.d., “The cause mapping”). The most obvious difference between the two is that fishbone diagram starts with the problem on the right and builds the causes to the left (as seen previously in figure three), while a cause map starts on the left and ends on the right. This is because of the Japanese roots of the fishbone diagram. The Japanese language reads from right to left; and in order to adapt the tool for Western use, it necessitated constructing a diagram that reads from left to right, following the conventions of Western languages. The most significant difference between the fishbone diagram and the cause map is that the former
starts with just one, single problem, which doesn’t reflect the nature of real-world
issues… It mixes causes and possible causes without specifying evidence. And, it breaks
apart the fundamental cause-and-effect relationships within an issue by grouping the
causes into general categories. (ThinkReliability, n.d., “The cause mapping”, para. 13)
For cause mapping, while investigating a problem, the ‘why’ question is posed until a satisfactory answer in found. As such, cause mapping can be used with the 5 Whys technique as seen in figure six below, due to the similarity of the techniques. 20
r=l+-r=lc L:::J ~
Figure 6. Cause mapping and the 5 Whys technique. Reprinted from ThinkReliability, n.d.,
Retrieved from https://www.thinkreliability.com/cause-mapping/cause-mapping-method- explained/
Critique. In spite of the benefits associated with the aforementioned tools in the
‘Analyze’ stage of the DMAIC model, they are not without criticism. Yuniarto (2012) argued that root cause analysis tools are limited in their application because they “were not designed for a problem-structuring method” and “lack a systems perspective” (p. 1). This, he believed stemmed from Six Sigma’s primary focus on deducing the reasons for the problem rather than on finding solutions, which
Gives rise to a significant role of Root Cause Analysis (RCA) in the Analyze-phase of
DMAIC. In order to identify the ‘common-cause’ as the inherent root cause of the
problem, the Root Cause Analysis tool should help afford explanations of what caused
the problem, why the problem should arise, and how it developed. Unfortunately,
existing Root Cause Analysis tools fail to address this issue. Their effective use is
limited due to their reductionism. The lack of systems perspective has prevented the 21
existing tools of Root Cause Analysis from representing the interrelatedness among the
causes of problem and the importance of the ‘soft’ factors. (Yuniarto, 2012, p. 2)
Improve. The analysis stage of the DMAIC is followed by the improvement phase
(Rouse, 2012). Here the researcher will not only develop possible solutions, but find those that are the easiest to achieve. The researcher will also experiment with theoretical solutions and put into effect actual improvements. Brainstorming methods such as grid analysis and SWOT analysis can be employed at this stage.
Grid analysis. Grid analysis is a useful technique for making a decision when there are several good alternatives and several factors to consider. As seen in figure seven below, the technique involves listing the options and the factors that are important for making the decision in a table.
Alternatives Weighting of Alternative 1 Alternative 2 Alternative 3 Alternative 4 Alternative 5 Factors
Factor 1
Factor 2
Factor 3
Factor4
Factor5
Overall Weighted 0 0 0 0 0 Score
Figure 7. Grid analysis template. Reprinted from Discover Your Solutions, n.d., Retrieved from http://discoveryoursolutions.com/toolkit/grid_analysis.html
The aim is that the option that scores the highest, based on the weight of the factors that are important, is selected (Jenkins, n.d.). 22
SWOT analysis. SWOT analysis is a useful technique for understanding internal strengths and weaknesses, and for identifying external opportunities and threats when introducing a new strategy (MindTools, n.d., “SWOT analysis”). The technique simplifies complex issues (Ji, 2018). The most effective way to undertake this is in a visual representation, as seen in figure eight below.
s Weaknesses I. I.
,. ities ,. Tbttau
swqrApalyg Swnnwv
Figure 8. SWOT analysis template. Reprinted from Ji, 2018, Retrieved from https://topformtemplates.com/blank-swot-analysis-template-word/
Control. At the control (and final) stage of the DMAIC process, the researcher will create a comprehensive monitoring plan for the solution(s) and monitor the implementation process of the plan (Rouse, 2012). The data from the plan will be updated regularly; and the researcher will create and sustain a feasible routine for employee training. At this stage force field analysis and the ADKAR model can be used. 23
Force field analysis. Force field analysis is a method developed by Kurt Lewin in which the expected resistance to a proposed change can be predicted in advance (Connelly, 2017). This is exemplified in figure nine below.
Forces for change Forces resisting change
Figure 9. Force field analysis. Reprinted from MindTools, n.d., Retrieved from https://www.mindtools.com/pages/article/newTED_06.htm
ADKAR model. ADKAR is described as “a goal-oriented change management model that guides individual and organizational change” (Prosci, n.d., “What is the ADKAR model?” para. 1). The goals can be described as, awareness of the need for change, desire to participate in and support the change, knowledge on how to change, reinforcement to sustain the change, ability to implement required skills and behaviors (Change Management Coach, n.d., “ADKAR,” para. 6). ADKAR stresses that each individual should transition positively to the change to make the company successfully. In this regard, change is a process and not an event (Prosci, n.d.,
“Applying ADKAR”), as demonstrated in figure ten below. 24
TRANSITION c:>
Figure 10. ADKAR model - states of change. Reprinted from Prosci, n.d., Retrieved from https://www.prosci.com/adkar/applications-of-adkar
With the information gathered during the initial stages (‘define’ and ‘measure’) of the
DMAIC approach to problem-solving, the best decision possible can be made using some of the supporting methods mentioned throughout the discussion in this chapter. 25
Chapter III: Methodology
Company XYZ produces canned processed cheese in cases, which is distributed to customers in the Caribbean and North America. Although the company places great importance in maintaining high levels of quality, food safety and operational excellence, there is growing customer dissatisfaction. The company is experiencing stock variations and an estimated 1% loss in its annual projected profit as a result of continuous increase in the number of unsold processed canned cheese in partially filled cases. This chapter describes the methods use in the study to identify the reasons for this. It also details the manner in which the data for research and analysis was acquired.
In the factory’s warehouse, partially filled cases (including loose cans) of processed canned cheese results from: the collection of products for assessment, damaged/defective cans, the collection of products for donation/promotion purposes and the manufacture of products that are not made directly for sale (e.g. trial products). The majority of the products is left in limbo, and occasionally not captured on the company’s inventory tracking system, Systems Application
Products (SAP). As a result, these products accumulate in stock (especially in the busy Easter production period) and cause variances in stock count. Eventually, the products get reprocessed
(reworked) or written off as substandard and are dumped. As such, they are not utilized in a cost effective manner. During the month of May 2018, 623kg of cheeses (worth J$327,000) have been reworked and over 140kg (worth J$73,500) were discarded. Figure11 provides a flow chart of the problem area. 26
Full cases PRODUCUON
......
HSunpling/dtfeet Staff sale/Donation IMnkelinc
Partial case BAD&DL'AIP ~..... ----4 in limbo (1fseverely ASSORTID dented, rusted or 1111 e."Pired) Full cues Generated 1--i---3)~ SOLD OK Partial case II 111 REWORK.-~-...,--< with short shelf life
NOT OK WAREHOUSE ...... ···········- ·-·-·-·-.'
BAD&DillIP
Figure 11. Flow chart of the problem area.
Research Goals and Objectives
This assessment is to provide empirical data on what the problem is; to validate reasons for resolving the problem; and to identify meaningful solutions that can be recommended for handling the partially filled cases.
Instrumentation
In order to achieve the goals outlined above, the decision was taken to conduct interviews by way of questionnaires. Staff members from the Warehouse, Marketing, Finance and Quality
Assurance departments were identified for the custom-designed questionnaires (see Appendices
A &B), because they are associated with the handling of the canned cheese. Warehouse staff are responsible for the inventory of products within the warehouse while Marketing and Quality 27
Assurance and Finance departments are responsible for product sales and release of products respectively. Finance undertakes the monetary valuation of the products.
Data Collection Procedures
In order to undertake this research, permission was granted from the manager of the warehouse to conduct interviews with the workers. The researcher visited the main cheese warehouse and observed the state of the partially filled cases that were on pallets (see Appendix
C) and on shelves (see Appendix D). The cases were easily identified because they were unsealed. The researcher interviewed the warehouse personnel to determine the problem and its scope, and methods in place to address the problem or symptoms of the problem. The researcher also interviewed stakeholders in the finance, marketing and quality assurance departments to assess the level of awareness of the problem and to offer solutions.
Data Analysis
A flow chart of the problem area was then created to determine gaps in the system for conducting root cause analysis. Following this, the benefits of addressing the problem (based on the assessment done) were established. Also, the researcher determined if the benefits were meaningful and achievable with buy-in from stakeholders.
Limitations
The results to this study are limited to Company XYZ. The quantities of products for bad and dump have not yet been processed; thus, the figure conveyed in the report is based on observation and not documentation.
Summary
This report describes the need for addressing the problem concerning the underutilization of partially filled cases at Company XYZ. The objective of the assessment was to determine the 28 root cause of the problem, establish the value of addressing the problem and make recommendations using the techniques that were taught during the course.
The problem exists where partially filled cases/loose cans of processed canned cheese are left in limbo; therefore not utilised or dispositioned effectively. They accumulate in stock, especially in the busy production period. As a result, they eventually are actioned for reprocessing or bad and dumped – outcomes which incur cost on the company. The problem was found to be significant because: there is a potential for the reoccurrence of the audit find; there was 623kg (J$327,000) of cheeses from partial cases were dispositioned for reprocessing/rework and approximately 140 kg (J$73,500) of cheeses from partial cases will be dispositioned for bad
& dumped.
The organization stands to benefit from addressing the problem because doing so will help the company meet its strategic objectives regarding bad & dumped IP1, risk and control
IP3, and customer satisfaction C1.
Recommended solutions for addressing the problem include:
▪ Implementing a structure that is more restrictive, accountable, and consistent with the
aim to reduce human errors.
▪ Using the products as feeder for the other avenues of sale which does not require full
cases of products such as staff sale, donation, promotion etc. 29
Chapter IV: Results
The aim of this assessment is to; 1) provide data on what the root cause (s) of the problem is, 2) to validate reasons for resolving the problem and, 3) to identify meaningful solutions that can be recommended for handling the partially filled cases. This chapter first defines the population to which the questionnaires were administered, provide a tabular summary of the responses to the questions, as well as gives a detailed analysis of the responses involving the causes, recommended solutions and benefits to be derived from addressing the problem. In addition, it also provides a flow chart of the problem area which was used to determine gaps in the system for conducting root cause analysis.
Data
Two sets of questionnaires were administered, one to the stakeholders (5 persons) and the other to the warehouse staff (2 persons). The results of both are summarized in tables 1 and 2 respectively. The stakeholders were from the Quality Assurance, Marketing and Finance
Departments and included managers, clerical staff and laboratory technicians. While they are not involved with the day to day handling of the stored products, they do provide supportive roles.
On the other hand, the warehouse staff which included a manager and a warehouse clerk, are directly involved in handling of the stored products and are very much aware of the partially filled cases as they come across them on a daily basis.
30
Table 1
Summary of Responses Provided by Stakeholders to Issues Raised in Questionnaire on Partially
Filled Cases
Partially Filled Cases Issues Response
Awareness Yes -75%; No – 25%
Causes Dented tins, Donations, Lab samples, Marketing,
Sensory removal, Staff sale, Production line
Effect on Work 50% - negative; 50% - positive
Recommended use Donation, Marketing, Staff sale, Repackage cases with
same production dates
Solution Benefits Accountability, efficiency, increase revenue, less
rework, easier workflow, improve customer satisfaction
31
Table 2
Summary Of Responses Provided By Warehouse Staff To Issues Raised In Questionnaire On
Partially Filled Cases
Partially Filled Cases Issues Response
Reasons for Dented tins, Donations, Lab samples, Marketing, Staff
sale, End of production line
Why not used efficiently Dented tins, Donations, Generate daily, production
codes cannot be mixed.
Specific to size No – 100%
Specific to brand No – 100%
Specific to market of product No – 100%
Efforts to reduce Yes -100%
Widespread Yes -66.7%, No -33.3%
Recommended solution Donation, Marketing, Staff sale, Re-work, Consider
mixing production dates
Data Analysis
A more detailed analyses of the responses provided by the stakeholders for causes of partially filled cases, recommended solution to address these partially filled cases and the derived benefit of such by the company are shown in figures 12 -14. Similarly figures 15 – 17 provide detailed analysis of the responses provided by the warehouse staff for causes of partially filled cases, why they are not used efficiently and recommended solutions. Figure 18 provides an analysis of the combined responses for causes, while figure 19 uses the Cause Mapping Method to find the root causes. 32
Sems01y removal _ 9%
Figure 12. Pie chart illustrating the responses from the stakeholders for the causes of the partially filled cases.
35
30
25
20
15
10
5
0 Donation Con1pleted cases Marketing Staff sale with same production dates
Recormnended Solutions
Figure 13. Histogram illustrating the responses from the stakeholders with regards to recommended solutions for the partially filled cases. 33
less generation of rework
increase revenue ..... t;:::1"' Cl) improve customer satisfaction ~ a:l ~ Efficiency ..... "'Cl) g£ Easier workflow ;::: VJ. Create less labom intense environment
Accountability
0 5 10 15 20 25 30 35 40 45 %
Figure 14. Bar chart illustrating the responses from the stakeholders as to the suggested benefits the company would derived from implementing measures to address partially filled cases.
30
25
20
::R0 15
10
5
0 Damaged tins Donation EndI of a Lab samples Staff sale production nm CAUSES
Figure 15. Histogram illustrating the responses from warehouse staff for the causes of the partially filled cases. 34
Production codes
Generate daily ______33%
Figure 16. Pie chart illustrating the responses from warehouse staff providing reasons why partially filled cases are not used efficiently.
Staff sale
"'~ .g Rework ;:::l 0 (ZJ "'O 13 mixed dates ~ 0u 0 Marketing ~
Donation
0 5 10 15 20 25 %
Figure 17. Bar chart illustrating the responses from warehouse staff in regards to the recommended solutions for the partially filled cases. 35
Production line 16%
Figure 18. Pie chart illustrating the combined responses (stakeholders and warehouse staff) for the causes of the partially filled cases.
It must be noted that Lab samples and Sensory sampling are combined as “Lab samples” since they both involve testing by the Quality Assurance team. Also Marketing & Donation are combined as “Marketing” since both involve promotion of the company. 36
Because: Because: Because: Lab sample Samples needed for safety Quality Assurance (to pallet/sensory and quality assessment by ensure product meet samples Quality Assurance and quality & food safety Technical Officer. before sale)
Why? Why? Whv?
Because: Because: Donations & Because: Competitive Market Needed for lvlarketing (maintain position in pwposes promotion marketing and good activity. corporate support. ) Why? Whv? Whv?
Because: Machine malfunction Because: dwing processing of the Inadequate robust product preventative maintenance Why? Whv?
Because: Because: Because: Dented Falling of products dwing Improper handling relabeling & in warehouse Why? Whv? Problem: Whv? Partial cases Because: Because: Concentration lapse Forklift movements Why? by forklift operators. Why? Why?
Because: Because: Because: Products picked from Unavailability of Staffsale cases to support the assigned products to activity. support staff welfare. Why? Whv? Whv?
Because: Because: End of Variation in the production process run Why? Why?
Figure 19. Flow chart showing the root cause analysis that was done using the Cause Mapping
Method. 37
Chapter V: Discussion, Conclusion and Recommendation
This chapter seeks to discuss the results obtained, provide a conclusion based on the discussion and subsequently put forward various recommendations. In doing so, information such as the 5-Why’s, Force Field Analysis and ADKAR models, provided by the literature research were utilized.
Discussion
From the surveys, seven causes (Tables 1 & 2) were identified for the proliferation of partially filled cases in the warehouse. Lab sampling (including those cans removed for sensory evaluation) was identified as the main cause with 26% (figure 18). Dented tins and marketing were identified as the second cause, both having 21%. The Cause Mapping Method (figure 19) provided further details on the five combined causes and ultimately identified seven root causes of the problem as follows:
• Quality assurance: - this is an unavoidable cause since quality assurance protocol
requires that the product meet quality & food safety measures before sale. Tins for
lab sampling and sensory evaluation are usually taken from full cases stored in
warehouse. One tin is taken from one case in each batch; therefore if ten batches are
made for the day, there will be total of ten partially filled cases.
• Competitive market: - manufacturing companies must maintain their competitive
edge in the market and as such marketing and donation are two strategies. Marketing
involves promotion of cheese in different sizes while donation garner public support
for the company’s corporate image. Generally, “picking” is the terminology used
where marketing staff would go into the warehouse and randomly take samples from
full cases. 38
• Inadequate robust preventative maintenance:- the processing and packaging of cheese
involves activities on the production line. Inadequate robust preventative
maintenance can cause mechanical problems such as a malfunction in the seamer,
labeler and the conveyance system. When this happens there is a probability of dented
tins.
• Improper handling of products:- dented tins can result from improper handling when
products are repackaged following labelling activity, in circumstances where labelling
was not immediately done during production, or when products are relabeled for a
different market.
• Concentration lapse by forklift operators:- finished products must be transported to
the warehouse for storage and this is done by the use of forklifts. Products destined
for markets are also transported to the trucks from the warehouse by forklifts. Lapses
in the concentration of forklift operators can result in damages to the packaged
products by, 1) forklift blade during loading and unloading of products, and 2) by
direct hit from the body of the forklift during turning movements.
• Unavailability of assigned products to support staff welfare:- in its drive to provide
support to staff, the company offers staff sale at less than market price to employees
on a monthly basis, where each is entitled to a set amount of products. However,
there is no assigned production to support this cause, hence products are randomly
taken from those destined for external market.
• Variation in the process:- prior to the start of production, formulation is done to
produce full cases of cheese at the end the day’s production. However, there are
variations, such as cheese texture and downtime, in the process that will result in loss 39
of tins that were formulated for, thus the probability of getting an incomplete case at
the end is very likely, regardless of the sizes.
The state of the partially filled cases in the warehouse is in definite need for improvement. Having conducted the detailed analysis of the root causes, it is noted that of the seven identified causes, one is unavoidable and as such, has to be accepted. The other six can either be prevented or mitigated against.
A risk assessment findings by the Group Internal Audit recommended that a control should be in place for the proliferation of open boxes (partially filled cases) . In addition, the audit recommended establishing a system that can reduce the amount of finished products that are dispositioned for rework and reject (bad and dump). From the surveys (figures 13 & 17) several recommendations were made to utilize partially filled cases effectively, thus reducing the amount of finished products that are dispositioned for rework and reject. Donation, marketing and staff sale were the preferred recommendations, yet, ironically these were also some of reasons identified for partially filled cases. However, in making these recommendations, the argument is put forward that, rather than continuously picking randomly from filled cases, those that were identified as partial cases, should be used instead.
The survey also revealed that if measures are put in place, either to prevent or to mitigate against the proliferation of partially filled cases, thus reducing the amount of finished products that are dispositioned for rework and reject, the company stands to benefit in several ways. Of the seven suggested benefits, accountability ranked the highest at 40% (figure 14) while the remaining six were considered equally at 10%. Improved accountability would result in a reduction of variation between the stored product with the information on the company’s inventory tracking system SAP. 40
Conclusion
The proliferation of partially filled cases in the warehouse is contributed by seven root causes identified by Cause Mapping Method which involves mechanical and human factors.
Based on the assessment done, the proliferation and underutilization of partially filled cases put the company at risk for stock variance and subsequent financial losses. Having identified the root causes, it is determined that several of these can be prevented and for others that cannot be.
Mitigative measures can be employed to reduce the negative impacts; thus allowing the company to better its chances of meeting some of its strategic goals as outlined below:
• Internal Perspective: IP1 - High Operational Efficiencies, Bad & Dumped
• Internal Perspective: IP3 - Effective Risk Management and Internal Controls
• Customer / Consumer Perspective: C1 - Factory provides me with quality products in
the right quantities at the right price/cost and on time.
By implementing a structure that is more restrictive, accountable and consistent, the human and mechanical factors can be eliminated. These measures are outlined under recommendations. Following their implementation, staff will have to be monitored on a weekly basis to determine if adequate practices are being done. The observations made will need to be recorded and assessed to determine areas for improvement. The success of the change will be measured by looking at, 1) the amount of partially filled cases in the warehouse that is not being stored on shelves; 2) the amount of partially filled cases that are status changed for rework and;
3) the amount that is bad and dumped.
Recommendations
The proposed solutions for the respective root causes are as follows: 41
• Quality assurance: - This root cause is unavoidable, therefore the following mitigative
measures should be employed:
a) Consider repacking of partially filled cases to full cases after lab samples are
removed. For example, each case has six tins of 2.2 kg. With the removal of one
tin from ten such cases, there will be ten partially filled cases. With repacking,
this would reduce the number of partially filled cases to one with only two loose
tins in comparison to fifty loose tins from ten partially filled cases.
b) Training of warehouse clerks in Warehouse and Quality Assurance personnel who
are picking and delivering the cheese samples that are needed for the various
assessments by Quality Assurance. The training must include use of a register for
cheese removal which will reconcile with the stock information on the SAP.
c) In addition, warehouse clerks should be given the responsibility of repacking
cases discussed in bullet A.
• Competitive market: - To eliminate “picking” by marketing staff the following
should be employed:
a) trained warehouse clerks are given the responsibility to identify loose tins from
partially filled cases that can be used for promotion/donation.
b) Special production of cheese for this purpose, that are stored separately in an
assigned section of the warehouse.
• Inadequate robust preventative maintenance:
a) Introduced a schedule maintenance programme for each equipment and where
necessary worn parts must be replaced. 42
b) Ensure that manufacturers specifications for maintenance of critical equipment
are adhere to.
• Improper handling of products
a) Implement scheduled refresher training of production staff in the proper protocol
for the handling of finished products during relabelling.
• Concentration lapse by forklift operators
a) Forklift operators are to be reminded of the need to take due care and diligence in
forklift operations to minimize accidents/incidents. Where a forklift operator is
found to be negligible, there should be disciplinary actions.
b) Proper stocking and re-orientation of pallets with stored products in warehouse to
ensure that at all times the section of the pallet designed for the forklift blades is
accessible.
• Unavailability of assigned products to support staff welfare: - Similarly to marketing,
there should be special production of cheese for this purpose that is stored separately
in an assigned section of the warehouse. However, limit the over production for staff
sale, information should be provided by warehouse personnel as to the amount of
partially filled cases in storage that are already assigned for this purpose.
• Variation in the process:- Consideration should be given to packaging of products
with multiple dates. This speaks to merging partially filled cases to generate full cases
with products of different dates. For example at the end of production of day 1, there
was one partially filled cases with four tins of 2.2 kg and at the end of day 2 there was
a partially filled case with two tins of 2.2. kg. By merging these two sets with 43
different dates, a full cases of six tins is produced thus eliminating two partially filled
cases.
In addition to the above preventative and mitigative measures, it is also recommended that a management system be developed for warehouse to address the partially filled cases. This should include:
• Trained personnel to identify, manage and account for partially filled cases in
warehouse.
• Status change procedures (those that have short shelf life and cannot be sold, but need
to be reworked/dumped)
• Designated section of warehouse properly labelled and shelved to show partially
filled cases and their re-assigned purpose (e.g. rework, dumped, staff
sale/donation/marketing).
Before implementation, a Force Field Analysis should be conducted for the solutions proposed in order to identify the areas of resistance. This will allow for redirection of resources to alleviate the opposing forces. In addition, the ADKAR model should be exercised so that each person would have an opportunity to adapt to the implemented change successfully.
44
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Appendix A: Interview Questions for Warehouse Personnel
1. What are the reasons for the partially filled cases in the main cheese warehouse?
______
______
______
2. Why are the partially filled cases not being used efficiently?
______
______
______
3. Is the situation specific to a particular size or brand or market of product?
______
______
______
4. Has any attempt been made to reduce the prevalence of the partially filled cases?
______
______
______
49
5. How widespread is the problem?
______
______
______
6. What solutions do you recommend to fix the problem?
______
______
______
50
Appendix B: Interview Questions for Stakeholders
1. Do you know that there is a problem with the proliferation of partially filled cases in the
main cheese warehouse?
______
______
______
2. What do you think could be the cause for the generation of so many partially filled cases?
______
______
______
3. Does the problem have any negative effect on the work in your department?
______
______
______
4. Do you have any suggestions of how the partially filled cases in the warehouse can be used
up?
______
______
______51
5. How will solving the problem benefit the company?
______
______
______
52
Appendix C: Partially Filled Cases on Pallets in Warehouse
PartiallyOpen cases filled cases
53
Appendix D: Partially Filled Cases on Shelves in Warehouse