Savings Calculation

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    I have been mentoring a GB in a project to improve our scheduling techniques in our shop.  The problem arose when customers would call, the planner could not get a warm and fuzzy feeling that they date she was telling the customer the job would start was accurate.
    We have implemented in SAP material dispatching that lets the planner dispatch a list of material, with a specific start date for assembly.  the warehouse is given this list as well as the tester so warehouse can always have a job ready, and test is aware of which job to chose to work on after assembly…
    … now that things have been working for a bit, the team feels confident that there’s improvement in the insanity of scheduling, but tying it to financial impact I am having trouble with.  We haven’t reduced time, labor, etc… it’s purley a customer satisfaction project in that we are much more confident in our schedule and dates that we give a customer…
    Is there anything you could help me with? or give me some advice?



    abCAM – it doesn’t always have to be about cost.
    Six Sigma is about reducing variation in processes
    – it sounds like you’ve done that, with better
    customer satisfaction. However, it also relies on
    the collection, validation and analysis of data,
    and then review of how that data variation has been
    reduced following specific improvement actions.Being able to claim specific improvement at the end
    of a project relies on identifying which measures
    need to be improved from the very beginning.Which measure did you attempt to improve? Did you previously have any cancelled orders from
    customers due to late delivery, or did you
    previously pay overtime in order to meet specific
    delivery dates? What was your leadtime before and
    leadtime after.If, on the other hand, your project selection was
    based on warm fuzzy feelings, and that your team
    feels confident that there’s an improvement in the
    insanity of scheduling – then I’m afraid it doesn’t
    really sound like it’s been much of a project.Do the above points help?Davy T



    Definitely the points above helped, and I will pursue those avenues.  Those were the points I was looking for by posting on this site…
    … was definitely not looking to be scrutinized by my verbage “warm fuzzy feelings”…
    … would not do a project if it wasn’t a business need…
    Thanks for the help!



    Davy is right…you should have had an idea of the financial impact up front and a Finance rep involved at square one.
    It’s clear that you didn’t, or you wouldn’t be asking…



    A few sugestions:
    Did you reduce the number of cutomer complains? If so, what is the direct cost of handeling a complaint.
    What was the percentage of returning customers before and after the update. A higher retention rate means you grow the customer base more rapidly (you might need someone in a finace or marketing to quantify this value).
    It sounds like there might have been a reduction in cycle time for the order. that would be a direct cost saving.
    Hope ther was something usefull in this.



    Also, consider the COPQ reduction.  Haven’t you, for instance, reduce the time necessary to deal with dissatisfied customers?  Of course, as Kaare mentioned, customer retention rate should be quantifiable in terms of dollars.


    Michael Mead

    Hello abC,
    Although I am sometimes criticized for being too simple and liberal with interpretations that make sense, I wonder if you had a SixSigma project.
    Clients have asked me what makes 6S different from other approaches to process improvement. I tell them there a 2 distinct requirements for 6S; financial measures for results, and management support.
    You probably had a worthwhile project, but how did you use the basic framework of 6S (DMAIC), if you did not have something to measure? (Step 2)
    Good luck.



    >>Clients have asked me what makes 6S different from other approaches to process improvement. I tell them there a 2 distinct requirements for 6S; financial measures for results, and management support<<
    Wow, I’ve worked with several other approches over the years and I’ve NEVER seen a single approach that didn’t have both those requirements.  Those don’t make Six Sigma different, it just makes them the same as every other approach.  The thing that really made Six Sigma unique was that it measured the process steps (not just value stream mapping) in the Measure phase.  Unfortunately, I rarely see a Six Sigma project anymore that actually does that. 

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