iSixSigma

Case Study: Improving the Flow of Cargo and Documents in a Shipping Company – Part 2 of 2

In this case study, a team wants to be sure their customer-focused business is satisfying its clients. Part 1 focused on reducing the wait times associated with transferring cargo and documents. Part 2 looks at making more improvements using just-in-time (JIT) principles.


It is often possible to make significant improvements in speeding up documentation processes by using just-in-time (JIT) principles:

  • Map the information flow
  • Identify breaks in the process (if any)
  • Capture the information at its generation
  • Move it to the point of use as early as possible
  • Minimize waiting in any activity

The information required for generating a bill of lading (B/L) – as well as a detailed workflow – is shown in Table 5.

Table 5: Information Required and Work Flow for Generating Bills of Lading (s = sail date)

Step NumberBill of Lading – Information RequiredSourceReceiver 1Receiver 2Source of InformationLatest Time Required (Days)
1Customer requests freightCustomer/Department 1From customers-5
2Determine any special clauses required in B/LCustomerDepartment 3Standard/known
3Date/place of issue of B/LDepartment 3Standard/known
4Authorized signatory/stampDepartment 3Standard/known
5B/L numberDepartment 3Standard/known
6Delivery agentDepartment 3Standard/known
7Shipping on board dateDepartment 2Department 1Ship docksStandard/known
8Place of receipt at shipping companyCustomerDepartment 1Booking slips-5
9Port of loadingDepartment 1Booking slips-5
10Port of dischargeCustomerDepartment 1Booking slips-5
11Place of deliveryCustomerDepartment 1Booking slips-5
12Terms of shipmentCustomerDepartment 1Booking slip/delivery order (DO)s-5
13Freight payable atCustomerDepartment 1Booking slip/DOs-5
14VesselDepartment 1DOs-5
15VoyageDepartment 1DOs-5
16Container numberLogisticsDepartment 1CustomerDaily pick-up reports-4
17Shipping marks numberCustomerDepartment 1Shipping bill (S/B)s-2
18Number of packagesCustomerDepartment 1S/Bs-2
19Description of goodsCustomerDepartment 1S/Bs-2
20Another code numberCustomerDepartment 1S/Bs-2
21Gross weightCustomerDepartment 1S/Bs-2
22Net weightCustomerDepartment 1S/Bs-2
23Consignment sizeCustomerDepartment 1S/Bs-2
24Shipping bill (S/B) numberCustomerDepartment 1S/Bs-2
25Seal numberCustomerDepartment 1Load plans-2
26ShipperCustomerDepartment 1B/L draft version 1s-2
27ConsigneeCustomerDepartment 1B/L draft version 1s-2
28Notified partyCustomerDepartment 1B/L draft version 1s-2
29Number of packagesCustomerDepartment 1B/L draft version 1s-2
30Number of original B/LsDepartment 3B/L draft version 1s-2

A process map showed a breakdown in the flow of activity between Department 2 and Department 3, when the process awaits the arrival of the shipping instructions form the customer. Typically three days were lost between the two stages.

Two countermeasures were tried:

  1. Most of the information on shipping instructions were available in previously submitted documents (e.g., the shipping bill), so an attempt was made to get these documents to Department 1 quickly and let them issue the B/L version 1 for verification to the customer. This, however, led to errors.
  2. Make the submission of shipping instructions mandatory before issuing confirmation of receipt of the consignment.

The second measure proved successful.

Step 6: Standardize Procedures

The process was standardized through subsequent voyages.

Step 7: Compile Quality Improvement Story

The quality improvement story was prepared and presented to management.

Sustain the Process

Sustaining the process requires continual daily monitoring by a line team to spot and eliminate any deterioration. A motto of “kill a B/L [longest lead time] a day to keep the doctor away” was instituted. A process tracker was developed to spot any fundamental deterioration. Figure two shows an example of the process tracker with the percentage of B/Ls released in s+1 day, s+2 days and s+3 days for one of the major lines of business.

Figure 2: Percentage of B/Ls Released Coming From Mumbai

Figure 2: Percentage of B/Ls Released Coming From Mumbai

In normal operations, the process gradually stabilized to more than 95 percent of the B/Ls released within s+3 days. In Figure 2, the flatter curve toward the end shows the robustness of the process improving. It was recommended that senior management include this tracker in their monthly performance reviews.

Conclusion

The application of TQM is, essentially, a mindset change. At the end of the project the team members were asked to list what they had learned:

  • Work in flow instead of batches
  • For efficient problem solving – define, measure, analyze, test
  • Increase awareness of qualitative effects at micro-level
  • Think about and tackle problems systematically
  • Collect data meticulously
  • Get total control of business processes
  • Foresee and plug problems
  • Teamwork helps

Team members did not simply learn a new, or better, B/L process, they learned a new way to work that could apply to all sorts of other processes. The director in charge summarized the success as: “The value of this initiative is that now people talk to each other, everyone is involved in improvement and does what is agreed.”

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