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CPE Inventory Optimization Project
NOVEMBER 13, 2008
NOMBRE MATRICULA SEDE
Marco Antonio Silva A01048110 CD. JUAREZ
Javier Snchez Flores A00266037 SALTILLO
Miguel Casillas Velasco A00343715 COLIMA
Carlos Sergio Arrieta Serrato A00343714 COLIMA
INGENIERA DE LAPRODUCTIVIDAD
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Inventory Optimization Report
Points of Discussion
Definition of the Problem
Root Causes
Current Process Map
Improvement Opportunities
Suggestions for opportunities found
Financial Benefits
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1.Problem Definition
Shipping costs in May increased $61k due toexcessive overnight shipments of CPE
Stock requirement analysis is manual, timeconsuming, and cumbersome
Suspect we may retain excessive stock in some
products (See Annex # 2 for Details)
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2.Root Causes
Shipping costs in May increased $61k due to excessive overnightshipments of CPE Stock-out due to:
> Delay in approving PO
> Delay from Vendor in getting the PO in their system
> Delay in normal vendor shipping time frame
Re-Stocking analysis is manual, time consuming, and cumbersome Systems provide pieces of data that must be manually manipulated in
Excel to obtain:
> Field shipment orders
> Stock replenishment quantity
Suspect we may retain excessive stock Lack of generally accepted stocking methodology to manage stock
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3.Improvement Opportunit ies
Less Regimented PO approval process
Automatic re-stocking analysis
Utilize bar code scanners to integrate withinventory system
Decrease supplier lead time
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4.Improvement Actions
Develop fully automated daily report to provide re-stock amounts and field shippingdetails. Field Shipping detail:
> Order #> CLLI> TSP Date> Market> Equipment
Re-Stock Amounts> Part Number> Quantity
. Develop process to incorporate scanning devices to place inventory data into inventory
system.
Enhance CPE approval process. Provide Harold with unilateral authority to replenish stock to system-driven stock level Generate daily/weekly reports to advise executive management of capital commitment Special capital purchase circumstances, such as TitleMax, will be handled ICB
Pursue new vendor supply strategy to reduce lead time to delivery. Vendor retain 2 months of stock on hand Commit to next day shipping Will probably have to guarantee payment for on hand stocked items
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5.Mathematical Implementation Model
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6.1 Financial Benefits 1 Day
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6.2 Financial Benefits 5 Days
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7. Summary Enhance PO approval process
Immediate one-time savings of $233,703
Automate Field distribution reporting Eliminate manual labor increasing accuracy
Automate the re-stock analysis system Immediate one-time savings of $326,180~ (Annex 1) Optimizes stock levels Minimizes capital commitment
Potentially decrease supplier lead time Additional potential savings of $ 468,994
We experienced that we were able to implement more than 1 alternative. (1. ReplenishmentSystem, 2. Reduced Supplier Lead Time by giving them POs 6 weeks in advance in order to getweekly shipments, 3. Eliminated PO approval process.
The only alternative we left open was the scanning devices that Javier will continue to develop forthe next few months.
Nuvox personal was very appreciated about the job completed in very short period of time andnow they feel comfortable with the results given.
We noticed that is better sometimes to get an opinion from outside in order to have a betterperspective of the whole system.
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8. Bibliography
Libro de Texto: KEEPING SCORE: Using the Right Metrics to Drive W orld-Class Performance
Autores: Mark Graham Brown
Editorial: Productivity Press
Ao: 2006
ISBN: 978-1-56327-355-1 (ProductivityPress, Paperback )
Libro de Texto: LEAN THINKING : Banish Waste and Create Wealth in Your Corporation
Autores: James P. Womak and Daniel T. Jones
Editorial: Simon & Schuster
Ao: 2003, 2nd edition
ISBN: ISBN 978-0-7432-4927-0
Lean Six Sigma : Combining Six Sigma Quality with Lean Production Speed
by Michael L. George McGraw-Hill; 1 edition (April 25, 2002)
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Annex # 1
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