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Out of Stock Project – Which Tool?

Six Sigma – iSixSigma Forums General Forums Tools & Templates Out of Stock Project – Which Tool?

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  • #54217

    Kenneth Jennings
    Participant

    Hi All. I’m currently working on my first GB project and I need some help. I have a list of customers and a list of parts they order. could somebody advise on which statiscal tool to use inorder to capture the extent of Out of stocks. Any help would be gratefully appreicated.

    Thanks

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    #194276

    Nick
    Participant

    Not sure I completely understand your question – please provide more detail. However, I have seen some use a metric to show what percentage of the time a part is available and ready to ship to a customer when it is ordered (i.e. it is the % of the time that a customers order was filled from the warehouse shelf versus when it had to be ordered from the supplier). Once this measurement is taken then you have a metric to improve and the normal DMAIC methodology and the various statistical tools would apply.

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    #194278

    Kenneth Jennings
    Participant

    Hi Nick

    Thanks for the detailed reply. The info I have at hand is the (1) Customers (2) part numbers they order Jan – ytd. I need to see the impact out stock not being available to customers, Example would be : A man goes into a shop to puchase a 50w light and a plug, The shop does not have a 50w light so the man puchases neither. Again thanks for your help

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    #194279

    MBBinWI
    Participant

    @dublinkenneth – In your example, how would you know that the customer was looking to purchase either? You would need to capture the intended purchase (easier to do if phone or computer orders are being taken than in person).
    The more critical question would be what are you trying to understand? That will help to scope the info needed to answer the question (and the tool needed to answer it). Thus far, you haven’t provided sufficient info to help you out.

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    #194303

    Kenneth Jennings
    Participant

    Hi Nick ,Again thanks for the detailed reply, On your last point re: keeping product on shelf,I am working on a project to reduce the current lead-time (3 months) from production (china)to shelf(Ireland)but thats another story. On the project I’ve mentioned in the above post , I belive I have all the info required 1. customers 2. order history from jan 2012- ytd ,My challenge now is how to use the info and present. i’m new to minitab and sigma xml. I need to show the relationships between products when there is a shortage of one product, please keep in mind that we over 500 different product lines, any help on this would be great. Thanks again Nick

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    #194304

    Prabhu V
    Participant

    Hi,

    From my understanding, your objective is on the opportunity cost.

    For that, you need to work on how to improve the out of stock items.

    Of course, for the same you need to collect the relevant information.

    However, some of your assumptions seems to be vague like will the customer wait for your product etc., which canΒ’t be decided since it may not be predicted properly (may be the brand image of your organization, necessity for the customer on the product and availability of product in market etc will influence to choose alternatives incase of out of stock with you)

    Hence you may collect the information from past what are the parts went out of stock, and projecting it under Pareto chart and other tools will help to decide the critical items.

    Once you have identified on some grey area then you can work on those areas which will definitely improve the situation.

    For just my opinion.

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    #194306

    Lucas Xu
    Participant

    I think any “out of stock” items is “defect” to the customer who wants to purchase.First of all, you should have information about how many out of stock items are ordered by customer, then you got the DPMO. Then you need to analyze the reason why the stock is out, use fishbond I suggest and then you can understand the main reason, for example, seasonality? customer behavior? world trend? etc… then you can improve the key X, after that you confirm the performance after improvement by DPMO again. then that’s the satisfaction improvement. If you are going to identify the cost to your company, you can measure % of defect improvement related to the revenue you can get from customer, need some equation to show the $$

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    #194344

    Kenneth Jennings
    Participant

    Thanks Lucas . Your post was very helpfull.

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    #194346

    Mike Carnell
    Participant

    @dublinkenneth I think Lucas is on the right path. Before you go off into the cost of the out of stock you need to understand what causes it. What in your system triggers someone to restock an item? There are probably a couple of catagories at a minimum. It is a very slow mover so it is probably allowed to run down to zero. In those cases the impact is minimal and will probably skew your data. The ones that have importance are the fast movers that run out and to a lesser degree the steady users. Stratify your data because the cost will be different. If you mix it all you will get some very toned down version of the truth.

    Just my opinion.

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    #194401

    Kenneth Jennings
    Participant

    Hi Mike thanks for the reply. In anwser to your question ,yes we have a replen level set for certain sku’s .We try to keep a 3 months supply (which is lead time for product) as our product is made in china in different plants we find it hard to merge our fast moving product into one container,Any way my scope is capture the cost when a customer stop buying a cretain product we have because of no stock, Does the customer wait untill we are restocked or do they buy from a rival. thanks for the response Mike

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