Springfield WDC Overview The Springfield WDC served a total of 194 stores. The 194 stores were divided into three categories (A,B and C) by decreasing order of size. There were 57 A stores, 75 B stores and 62 C stores. A total of 12,539 items were stocked at Springfield. About 9,944 were breakpack items and the rest were full-case items. For breakpack items, ELS received cases of a certain size from its suppliers. Stores were allowed to place orders for quantities less than a full case because ELS broke open the cases and shipped the items to the stores in smaller quantities.
The WDC at Springfield had a total area of 1. 1 million square feet and was divided into six modules. Breakpack items were stored in Module 1, while full-case items were stored in Module 3. The other modules were used for sorting and the staging area. They four key processes identified are receiving, inventory storage, order filling, and shipping. Receiving referred to the process of receiving a store order, picking required items from storage, and loading the delivering truck. Shipping referred to the process of transporting the store order from the WDC and delivering it to the store.
These four processes were identified as key because any error in these processes impacted Springfield’s ability to supply a store order on time and in the right quantity. An error in receiving or inventory storage could result in an improper quantity of a particular product showing up in the inventory system. This would cause the delivery to the store to be late. The measurements were taken for different processes with the main focus on receiving process. The receiving is the process of receiving a vendor shipment into the WDC.
The team members included guard, receiving officer, yard driver, unloader, slotter, and putaway driver Methodology The Springfield warehouse performed about 8,000 transactions in receiving on a daily basis. A sample size of 800 transactions was selected for 45 days to analyze the transactions for errors. The main five sources of error that were identified are Slotter, Keying, Letdown, ITR ADJ, Putaway. The main objective of this research was to manage the four processes in the warehouse in such a way that store orders could be delivered in the right quantity at the right time.
This can be achieved by collecting the performance data defining the processes. Analysis The analysis was carried out by collecting the performance data for individual and overall performance. The following observations were made from the analysis: Receiving process: The overall performance of the receiving process was found to be In-Control, whereas its individual modules (Module 1 & Module 3) to be out of control. Tables and Control charts displaying the performance results for overall receiving process and its individual modules are depicted in the excel file attached.
The observed mean, standard deviation and control limits corresponding for the above performances are: Overall performance of receiving data: Control limits for the whole data Average defective =0. 018194444 SD for a sample of size 800=0. 00472538 Upper Control limit = 0. 032370598 Lower Control Limit =0. 004018291 Performance of Module 1: Control limits for the whole data Average Proportion defective =0. 0270 Upper Control limit = 0. 0442 Lower Control Limit = 0. 0098 SD for a samle of 800 =0. 00573051
Performance of Module 3: Control limits for the whole data Average Proportion defective =0. 0094 Upper Control limit = 0. 0196 Lower Control Limit = 0. 0000 SD for a sample of 800 =0. 003409681 Further analysis of the receiving process followed by pareto chart led us to interpret that there were more number of errors in the Slotter function as compared to other functions of the receiving process. So, we did the performance analysis to calculate the variation of the performance and following observations were made:
Performance of Slotter in receiving process: Control limits with complete data Average defective = 0. 0064 Upper Control limit = 0. 0148 Lower Control Limit =0. 0000 SD for a sample of 800 =0. 002817 So, our interpretation was that if the errors are minimized at the slotter function, its error can be reduced and performance of individual modules in receiving process can be improved. Service level agreement Customer set certain service level agreements with the vendors to ascertain the quality of their process And output.
In a particular scenario to judge the service level quality of the process, a margin of 2% error was assumed as acceptable and the number of days meeting this service level agreement was calculated. As we have 800 transactions per day and total errors as 655, the proportion of defectives in the process turned out to be 0. 0182 and standard deviation 0. 4725%. Assuming maximum allowed error as 2% per day, z-value corresponding to 2% from normal distribution table with cumulative probability of 0. 820 was found to be 64. 9%. Interpretation: The above service level requirement of 64. 9% is not a good percentage for any industry. Though, SLA’s differ from industry to industry with highest SLA’s in IT industry, nevertheless, 64. 9% is small percentage for a logistics company. This depicts the lower quality level of Springfield company which should be a concern to them. In connection to the quality improvement and timely delivery, following few suggestions were made to Stalk by our team.
Recommendations: As Slotter function has more number of errors compared to other functions in receiving process, reduction in errors at slotter level can have a significant impact on the overall and individual performances. •Extensive care should be taken in the entry of receiving orders in the system because an error in receiving order would have an impact on further processes. This will obviate the complaints received from customers for quality and late deliveries. •Storage area of Module 1 can be increased so that ELS can order quantities for break pack items In equal quantities to full case and they can be stored comfortably in the storage. An error in process of storing products also have a significant impact on delivery schedule to the customers. So, actions should be taken to minimize the errors at storage level. •Furthermore, store representatives can benefit the storage by ensuring the product is properly displayed and store staff are familiar with the features of the product line, all the while helping to clean and organize their product lines for the store. So, the staff should be trained and imparted knowledge to enable them to avoid the errors and perform their functions efficiently.