W8_LUCKY_DETERMINING ROOT CAUSE(S) OF POOR ON TIME DELIVERY PERGFORMANCE

W8_LUCKY_DETERMINING ROOT CAUSE(S) OF POOR ON TIME DELIVERY PERFORMANCE

1.      Problem Recognition, Definition, Root Cause Analysis and Evaluation

 

(i)                 Problem Recognition

At a recent Supplier Delivery Performance Workshop, the subject firm was presented with a 36 per cent score in line with the scoring formula for on time delivery against a total of 464 Purchase Order line items awarded to the firm. The scoring is quite low compared to other competing firms who scored 75% and 95% respectively for purchase order line items of over 1000.

(ii)               Problem Definition

The score of 36 per cent is poor and is symptomatic of underlying cause(s) that need fixing for the company to remain in business.

Using CAWTOE[i] methodology for a better understanding of the issue exploring the various perspectives, we have

C – Customer’s Perspective: The customer is not pleased with the performance the reason they made public the rating

A – People (Actors): The employees are unaware of this big picture as most of them feel they work too hard

T- Transformation Process: All employees in the procurement department have undergone ACCPAC training (the procurement software used in the department) and a majority of them are proficient in its use.

W- World View: The on time delivery performance metrics for Best in Class and Industry Average companies is 81.8% and 76.6% respectively[ii]

O - Process Owner: Sales/Procurement department managers are equally not impressed with the results.

E – Environmental Constraints: The parts are imported from the OEM overseas either by air or sea freight which takes between 6 – 8 weeks in the minimum and sometimes longer to arrive Nigeria. Custom clearing takes between 1 -4 weeks depending on the category of goods.

(iii)             Root Cause Analysis and Evaluation

The purpose is to figure out why this problem occurred. I am using the popular Root Cause Analysis to do this. The methodology is based on the premise that systems and events are interrelated such that an action in one area triggers an action in another area and so on. Thus it is possible to trace back those actions to the starting point as reasonably acceptable.

I will follow the five step process[iii]  of define the problem, collect data, identify possible causal factors, identify the root cause(s), and recommend and implement solutions

2.      Development of feasible alternatives (Causal factors)

There are three basic types of causes comprising of Physical causes (tangible material failure), Human causes (People did or did not do something) and Organizational causes (Faulty System/process or policy).

Using the 5 Whys [iv] approach:

Sequence of events leading to the problem:-

 

 

 

 

Top level causal factor (Header) can be classified thus:

Consistent late delivery of Purchase Order line items (Physical Cause, Human causes and Organizational causes)

Consistent late receipt of goods from overseas (Physical Cause, Human causes and Organizational causes)

Consistent late placement of order (Physical Cause, Human causes and Organizational causes)

Late pick up of Purchase Order (Physical Cause, Human causes and Organizational causes)

Infrequent check for available Purchase Order with the customer procurement department (Physical Cause, Human causes and Organizational causes)

 

3.      Development of outcomes  for each alternative (causal factor)

The outcomes for each causal factor alternative are as follows:

Using the 5 Whys approach

1.      Consistent late delivery of Purchase Order line items (Physical Cause, Human causes and Organizational causes)

 

2.      Consistent late receipt of goods from overseas (Physical Cause, Human causes and Organizational causes)

 

3.      Consistent late placement of order (Physical Cause, Human causes and Organizational causes)

4.      Late pick up of Purchase Order (Physical Cause, Human causes and Organizational causes)

 

5.      Infrequent check for available Purchase Order with the customer procurement department (Physical Cause, Human causes and Organizational causes)

4.      Selection Criteria causal factors

The selection criteria are as follows:

1.      Short time to implement solution

2.      Implementation impact level

3.      Minimal Cost (within budget)

5.      Analysis and Comparison of the alternatives (causal factors)

 

Attempting to use the non-compensatory model of satisficing[v] to narrow down a causal factor,

Selection Criteria (Attribute)	Minimum Acceptable Value	Maximum Acceptable Value	Causal Factors Requiring further investigation for now
Short Time to implement solution	-	10 days	#5, #1
Solution implementation impact level	High	-	#5
Minimal cost of solution implementation	-	Use currently available resources	#5

Table 1: Feasible Ranges for Satisficing (By Author)

6.      Selection of preferred alternative (causal factor)

Comparing the attributes values against the feasible range reveals that addressing the infrequent check for available Purchase Order with the customer procurement department promises to provide the quickest solution at solving the problem of late on time delivery performance. Incidentally, this aligns with what the Root Cause Analysis reveals as this causal factor lies at the root of the problem.

7.      Performance monitoring and post evaluation of results

I would need to address the lack of know-how by proposing training for all procurement personnel in basic business management skills including basic project management skills, and monitor and evaluate the results six months down line.

Reference

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[i] Mindtools, (2012). Root Cause Analysis Tracing a problem to its origin. Retrieved from http://www.mindtools.com/pages/article/newTMC_80.htm

 

[ii] Jain, A. (2007).P. 6 Underpinnings of Service Excellence: Synchronizing Resource Capacity with Service Demand. Retrieved from http://www.astea.com/en/forms/webinar.aspx?t=whitepaper17

 

[iii] Mindtools, (2012). Root Cause Analysis Tracing a problem to its origin. Retrieved from http://www.mindtools.com/pages/article/newTMC_80.htm

 

[iv] Mindtools, (2012). Root Cause Analysis Tracing a problem to its origin. Retrieved from http://www.mindtools.com/pages/article/newTMC_80.htm

 

[v] Sullivan, W., Wicks, E., Koelling, P., Kumar, p., & Kumar, N. (2012).Chapter 14 Decision making considering Multiattributes (p. 577). Engineering economy (15^th edition). England: Pearson Education Limited.