A Lean project in Singapore
The company is part of a business concern that does design, manufacture, sales and service of scientific equipments used in the manufacturing industry.
Recently, management has decided to improve its process cycle time and reduce the non-value-added work so as to improve the overall productivity and efficiency of its operations. One such initiative is to improve the Equipment Sales Order Fulfilment Process, an important, high-pressured business process, with associated problems of high overtime and late deliveries.
The management mobilized a cross functional team consisting of key personnel drawn from the major process steps. A Lean consultant from Neville Clarke was appointed to guide the team and help to facilitate the project. As a first step, the team was given training on Lean Thinking to enlighten them on the basics and subsequently, a hands-on training on Value Stream Mapping.
Map the Current State Value Stream
The Equipment Sales Order Fulfilment process is a cross-functional business process that starts from proposal and ends with revenue realization. The major process steps are as follows:
1. Proposal & Credit Evaluation
2. Order Processing & Documentation
3. Equipment Preparation & Delivery
4. Installation & Customer Training
5. Invoicing & Revenue Realization
The team produced the current state Value Stream Maps (VSMs) of not only the process itself, but also the sub-processes, such as the Equipment Preparation and Delivery and the Installation and Training.
Analyze Current State VSM to Identify Areas for Improvement
The team then analyzed the current state VSMs and identified the following improvement opportunities:
1. Disruption to Process Flow
1.1 Inputs needed for processing were not readily available at the point of use, which resulted in
wasted effort and time to get the required information.
- Missing or incorrect information in the pricing bulletin during proposal preparation
- Missing supporting documents for credit evaluation
- Incorrect figures in the costing sheet
- Poor visibility of stock/delivery status and no firm delivery date, which caused significant effort and
time wastage in manually coordinating the checking of stocks, delivery timing and coordinating the
installation and training
- S/N not found in the system, resulting in the need to communicate with Inventory Management.
1.2 Poor coordination between the various parties
- Authority not around to authorize documents, thereby causing delays in processing
- Having to resolve billing clarification, or obtain project number from the account managers and
- Repeated loops of negotiations between sales and finance during credit evaluation
- Having to wait for and remind Legal to approve the necessary.
This consisted of duplicated efforts and excessive manual efforts which consumed resources and
delayed the process:
- High volume of data entry into the Enterprise Resource Planning system, for instance, 2 fields for
- Duplicate data entry into the Order Forecast system which also needed to be updated when
- Laborious manual entry of the customer order data into the Customer Relation Management system
and not able to access this till the Delivery Order closed
- Costing sheet details entered into the Abacus system and again into the ERP system to generate
the Sales Work Orders
- Excessive manual effort to reconcile data between different systems. For example, checking for
discrepancies between the Accessories Distribution Report and the Installation Report, as well as
for discrepancies between the ERP and the Queries Studio
- Unnecessary routing of documents, such as, sending scorecards to departments that did not require
3. Transportation wastes
Two trips were required to install the equipment at the customer’s place. The first trip by the
technicians was to set-up the equipment and another one by the engineer was to conduct the
customer training. Added to that, the effort required of the scheduler to make arrangements with the
customer for the two trips, resulted in not only transportation wastage, but also time wastage.
4 Ineffective inventory planning and control
The forecasting method was used to plan and manage the inventory, including those for parts and
accessories. Due to forecast inaccuracies, there were frequent out-ofstock, or excessive stock
situations and delays in deliveries to customers.
5 ‘Batch and Push’ processing method
Credit Approval would submit contracts in large batch size. This would result in a sudden surge in
workload, causing delays at Invoicing. As a result, the lead-time needed to complete order processing
was unpredictable and orders had to be ‘expedited’ frequently.
The team identified various solutions to tackle these issues:
1 Reduce interruptions to process flow by streamlining the process
- The Bill of Material (BOM) structure was simplified to reduce the data entry fields
- A standard format was introduced to ensure that sufficient information was provided as and when
- The Allocation Report’s format was improved to include the estimated completion for each remark
and highlight changes for that day
- Superfluous and redundant documents were eliminated
- The value for orders that required credit approval was increased.
2 Reduce over-processing by enhancing the capability of the prevailing IT systems
- Integrating the required functions into one system eliminated data entry duplication.
- Improving the interface between systems eliminated the need for data re-entry
- The system was used to reconcile data and generate exception report, with manual intervention only
3 Reduce transportation wastes by restructuring the job scope of installation
Technicians were tasked to not only set up the equipment, but to also conduct standard customer
trainings on how to operate the equipment. Engineers on the other hand, were to focus on trouble-
shooting installation problems and to provide advance level customer training.
4 Implement Pull Systems
Instead of relying completely on the forecasting method to manage the inventory level, the supermarket
pull system was implemented to manage the key inventory items including parts and accessories.
Moreover, instead of using the ‘Batch and Push’ approach to process the orders, the downstream
process was to pull the works from the upstream process. A controlled quantity of works was placed
between major processes as buffers. If demand increased, additional resources would be assigned to
the bottleneck process to increase its throughput. In this way, the lead-time required to complete
processing an order would be predictable and controlled.
Once the needed solutions were identified, the team developed a work plan to implement the solutions. Each improvement solution was handled like a mini project on its own, with a project charter that clearly defined its problem and its objective. The improvement projects were implemented in stages. Some of the solutions were ‘quick hits’ which could be implemented quickly, while others required more time and efforts. Finally, the Equipment Sales Order Fulfilment process was able to attain its true value,
with value streams that flowed smoothly, unimpeded, upon the customer’s pull.
However, this was not the end for the team. Having tasted success with this Lean endeavour, they were then encouraged to continually renew, improve and as per the fifth principle of Lean Thinking, be committed to pursue perfection.
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