Project of Process Management

Scope Overview

Wholesale Large Format Printing. Involves customized printing on various larger items, such as banners, flags, tents, signs, tradeshow displays, and giant inflatables. Scope of this project involves work that is performed on behalf of Wholesale Distributors.

A key challenge in the current environment is inventory management. A large percentage of wholesale large format orders experience internal delays and problems with inventory. The decision was made to focus improvement efforts on the inventory management process, which includes the procurement and monitoring of inventory materials (both hardware and media).

Deliverables

Based on the interview conducted with employees at Marketing Advantage (see below), complete the following four deliverables. Use the template provided on Canvas:

1. Fishbone Diagram: identify and categorize the underlying causes of inventory problems according to 6 areas (Method, Man/People, Management, Measurement, Machine, and Material).

2. List of potential Solutions: Identify at least 8 viable solutions that could help improve the inventory management process at Marketing Advantage. Provide a brief description of solution, the expected level of effort to implement the expected benefit from implementation.

3. Solution PICK Chart: Each of the potential solutions must be plotted on a PICK chart to show the relative value of each solution.

4. Solution Recommendation: Write a 2 page recommendation about the solution(s) that should be pursued. Provide background and justification about why these solution(s) provide the best benefit relative to effort.

Evaluation Criteria

The deliverables for this case study project will be evaluated as followed:

1. Fishbone Diagram:

a. Have all significant problems and their causes been identified and categorized in a reasonable way on the fishbone? Do the underlying root causes show depth? Have you applied the principle of 5 Whys in showing root cause?

b. Do you have a clear problem statement (head of the fish) that includes some quantification?

c. Is there reason and logic behind the grouping of causes according to the six areas (there is no single right answer on how to group these causes, but the grouping must be reasonable and defensible).

2. List of Potential Solutions:

a. Have you identified at least 8 viable potential improvements to the inventory problems at Marketing Advantage? Due the potential improvements involve true process changes? Are the potential improvements related to the underlying root causes of the problem? Do you have a reasonable and defensible level of effort and benefit associated with each potential improvement?

3. Solution PICK Chart:

a. Have you plotted potential improvements accurately along the effort/benefit continuum?

b. Does the PICK chart provide meaningful guidance about which improvements to pursue?

4. Recommendation Summary:

a. Have you offered a clear recommendation about which solution(s) should be pursued?

b. Have you provided supporting justification about the relative benefit compared to effort?

Interview Notes

In the current environment, approximately 40-50% of large format wholesale orders experience some degree of inventory shortage during the order production process. In most cases, neither the wholesale client nor the end customer is aware of the inventory shortage. Marketing Advantage generally uses rush/overnight shipping from its suppliers to buffer delays caused by inventory shortages. The significant cost of rush/overnight shipping takes away from a profit margin on wholesale orders that is already thinner than retail orders.

The large format orders require both hardware (i.e. tent poles) and media (i.e. printed material). Depending on whether the shortage involves hardware and/or media, the delay in order fulfillment could be as long as one week (with most shortages being resolved in 1-2 days).

To better understand the underlying root causes of the inventory problems, various members of the Marketing Advantage team were interviewed. Following are notes from those interviews:

Hardware Shortages:

· Generally, large bulk orders are placed with Chinese suppliers. These bulk orders require several weeks for shipping. These suppliers operate on a cash-only basis, which impacts the cost/cashflow viability of placing large orders for Marketing Advantage.

· Rush orders for hardware are bought from supplier in California. They can provide overnight shipping, but Marketing Advantage incurs cost of rush courier service.

Media Shortages:

· Media material is generally procured through local Salt Lake City suppliers.

· Local suppliers occasionally do not have the required media material in stock, due to their own inventory management issues.

· Local suppliers offer Term-based purchases (as opposed to cash-only deals), which minimizes concerns with cashflow.

Forecasting Difficulties:

· It is currently very difficult to forecast the number and size of upcoming wholesale orders. Marketing Advantage is one-step removed from the end customer on wholesale orders, which makes it very difficult to know what the end customer will require in the future. In addition, most wholesale orders do not involve repeat business with the wholesaler. Many wholesale orders are single orders. This lack of a recurring relationship with a wholesaler contributes to the difficulty of forecasting the inventory required to support them.

Material Ordering Process (hardware and media):

· The ordering of additional materials (inventory) happens only when existing inventory runs out. This delay in ordering materials is largely caused by the lack of a formally defined process for inventory management. Those who place orders for material lack information about the stock on-hand and about stock required to fulfill known orders.

· Orders for additional media are placed by the production manager. Orders for additional hardware are placed by the individual members of the sales team. This difference in procurement responsibilities is not due to any conscious decision, but seems to be the result of an informal and gradual evolution in company processes.

· The wholesale market represents a new sales channel for Marketing Advantage (compared to the amount of experience with retail clients). The fulfillment of wholesale orders is a new and emerging process for Marketing Advantage and internal fulfillment processes (i.e. inventory management) are not well defined.

Supporting Systems:

· Marketing Advantage currently does not have any system (i.e. workflow software tool) that supports inventory management. This creates a lack of visibility into the actual/planned inventory needs.

· Quickbooks provides high-level information about an itemized order, but it does not describe the actual material (hardware and media) that is required to support an order.

People Culture:

· Procrastination and lack of strong urgency seems to be common among those employees who are involved with inventory procurement. This seems to stem from the informal familial culture from which a growing business has evolved.

· Employees involved with inventory management are generally overallocated and are expected to fill various /multiple roles.

· Roles and responsibilities among employees are unclear and undefined. The company has historically operated under very fluid and flexible roles where employees perform various/multiple roles.

Company Management:

· Ordering of inventory/material is performed by members of the management team (both hardware and media).

· Management team seems to have a limited sense of urgency about solving inventory problems. This seems to stem from an informal familial culture from which the company has evolved.

Measurement:

· No metrics or measurements currently exist around the inventory process. No formal tracking mechanism is available to show the degree of success/failure related to inventory management.