【Abstract】The paper demonstrates the effectiveness of R-DMAIC-S problem solving model for quality management in both service and production spheres. The recently done case study for Russian national distributing company and its Chinese OEM supplier which applies R-DMAIC-S is described. Paper also proves WMS， which is shared-used by customer and supplier， to be an effective tool to control some upstream phases of the order fulfillment process.

【Key words】DMAIC;R-DMAIC-S;WMS;OEM;Order Fulfillment process

0.Introduction

Following the rapid growth of Chinese economy in the past twenty years many trade and distributing companies made their profit by selling medium quality products from Chinese factories for a relatively cheap price.Faced with this challenge large western industries have also turned to China looking for OEM suppliers to meet market demand for cheaper products and still retaining the brand.This gave even bigger boost to Chinese factories not only to expand their production but also gradually improve the quality of the product.Generally more successful big Chinese suppliers have taken over the small factories forming a cluster of factories over various products types.They were able to gather vast experience and knowledge base under the roof of one Corporation or group of companies.

Despite certain overall quality improvement of existing Chinese goods and collecting enough knowledge to establish new products lines， still much fewer attention has been paid to streamlining the whole process of product delivery to the customer(in this case a distributing company in the buying country)from order placement through order shipment to after sales support.

At least two parties are involved in this processthe supplier and the customer side.Throughout this process employees of all main departments from both of these parties(sales， factory，tech support，RD，logistics supplier side;purchase department，logistics，service department-client side)are facing troubles caused by poor organized product delivery and support process.This result in losses suffered by both parties and may end up with serious damages to both of their reputations.

This study suggests using R-DMAIC-S(Recognize，Define，Measure， Analyze，Improve，Control，Sustain)[1]approach to deal with issues throughout this process and provides a case study on it in which RDMAICS methodology together with WMS(Warehouse management system)[2] introduction was used to deal with production labeling and shipment inaccuracies done by supplier that contained both implicit and explicit threats to the customer’s business.

1.R-DMAIC-S

DMAIC(Define，Measure，Analyze，Improve，Control)[3] is a problem solving model commonly used in Lean Six Sigma methodology-an improvement methodology that blends the best of Lean[4] and Six Sigma[5]. The thorough description of Lean Six Sigma methodology can be found in [6] and[7].

Figure 1 R-DMAIC-S diagram

DMAIC initially provides a consistent，and simplified，improvement framework.DMAIC is a variation of the PDSA (PLAN，DO，STUDY，ACT) model developed by Walter Shewart(())and Edwards Deming(()).The PDSA Cycle is in fact，at the core of the DMAIC model(as illustrated in the diagram).

DMAIC is usually then extended to R-DMAIC-S and placed within an organization context between Recognize and Sustain phases of the model.

Recognize represents the efforts of the organization to identify the problems that exist within the organization and prioritize them so as to set an agenda for change.DMAIC is then applied to address the problem assigned through the Recognize phase.

Sustain embeds the solution developed through DMAIC to other areas of the organization-in essence ensuring that organizational learning and adoption is an explicit function of the model.

In between the Recognize and Sustain components of the model of course，is DMAIC itself.It defines a problem solving approach of:

Define:the performance problem to be solved.Generally the approach is to boil the improvement effort down to a single customer driven performance metric.

Measure:gather hard data relating to the problem.Focus is palced on potential causal factors driving performance.

Analyze:the data gathered through the measurement phase.The emphasis here is on analytic methods that attempt to confirm causal effects.

Improve:implementing evidenced-based solutions that have a hig probability of effectively addressing the performance problem.

Control:adjusting and finally standardizing the solution so that we don’t lose the gains made.Essentially hard wiring the solution into the way things are done.

2.Case study

Figure 2 Product flow

This case study shows the effectiveness of R-DMAIC-S problem solving model in dealing with issues at the order execution and shipment phases of the order fulfillment process.The case study was done by author while being employed in one of the biggest HVAC equipment distributors in Russia(company C).General supplier of C company-S company is an HVAC subsidiary of Chinese electrical appliances giant with total output of several million units per year.C company has been successfully cooperating with S company for several years and has become its biggest client in Eastern Europe.

C is an exclusive distributor of certain equipment supplied by S，it’s clients are retail dealers and large construction companies.The general product flow is shown on figure 2.Red circles at the top-right corner of certain rectangles denote the processes which cause issues in the downstream processes with Green circles at the top-right corner.By the end of the case study project those issues were resolved.

3.Recognize

A set of meetings with head of departments and first-line managers has been held in order to recognize all the problems which were faced by C company employees involved in the overall product delivery process. The following departments have been engaged:

●Planning and purchasing department

●Logistic department

●Warehouse management department

●Customs clearance department

●Service support department

●Product management department

●Technical engineering department

●Sales department

●IT department

4.Define

Throughout the meetings a list of issues has been put together and prioritized based on how many departments does each issue influence upon and what is the level of this influence.

Figure 3 Pareto chart for process problems

The weighted pareto chart[8]of the problems faced is shown on Figure 3.Amongst all of the problems 3 top-priority issues were chosen to be dealt with straight away，and two of which are covered in this study:

4.1 Incorrect product barcodes:barcodes duplication，wrong format of barcodes，absence of barcode label

This issue affected the work of Logistic department，IT department， Service department，Product management department，Warehouse management department.

This issue has hindered the process of effective warehouse management making impossible accurate product recording.Every incorrect barcode has had to be torn off and the new ones put on instead. Besides that barcodes contained the information crucial for the following service support.Barcodes are more than a delicate part of packing and labeling.

4.2 Shipment inaccuracies:shortages，disparity，wrong data in shipping documents

This issue affected the work of Logistic department，Customs clearance department，Planning and purchasing department，Sales department.

Inconsistent shipment data has great impact on transparency of the whole logistic process both international and local， putting at risk the success of product delivery and opening C company to potential threat of receiving government penalties and experiencing shipments delay.

It is necessary to point out that above mentioned issues were faced mostly while working with one of two product divisions of S company. Similar problems emerged less frequently in the second division and due to smaller product turnover were less painful.That is why the improvement action was aimed mainly on the cooperation with the first division.

The following DMAIC steps for these two problems will be discussed together since the common improvement action has been taken to resolve them.

5.Measure

A way to evaluate and measure a problem is to estimate company’s losses which it has caused.Such an evaluation has been performed for both of issues.

For the incorrect barcodes issue:

-excessive work of warehouse operators(additional expenses roughly -1 FTE)

-excessive work of aftersales support specialists(additional expenses roughly - 1 FTE)

-excessive work of IT department specialist(additional expenses roughly -1 FTE)

For the shipment issue:

-excessive work of logistic department people(additional expenses roughly -1 FTE)

-high risk of penalties during the customs clearance process (additional expenses roughly 10% of shipping container total cost)

-corrective logistics transportation cost(additional expenses roughly 0，5% of total order amount+additional time expenses)

It is necessary to point out that only explicit losses have been estimated.Though there are also potential implicit losses which can’t be directly evaluated，like losses due to reputation damage，lack of control over product flow，inaccurate data for further sales-planning.

6.Analyze

The main task of Analyze step was to find root causes of the problems and to prioritize them based on how much they contribute to the general issue effect.

To get a full picture of what was going on a fishbone diagram[9]was build (Figure 4).

Figure 4 Fishbone diagram for incorrect barcodes problem

Figure 5 Shipment inaccuracies pareto chart

As it is seen on the diagram and based on the feedback from S company employees the primary root causes are in Man and Method categories.Barcode preparation and printing process consists of mostly manual tasks，so there are a lot of possibilities to conduct an error. Unfortunately S company operators do not always pay full attention to their job.Moreover there are no error-proof mechanisms adapted and every mistake simply goes downstream.Also，no full scale filters to check for errors are located anywhere downstream of the process.

For the shipment inaccuracies issue the list of factors that comprise the problem was drawn up.Based on this list and the weight of each factor the weighted Pareto chart has been composed.

An analysis was conducted to find out the root causes of the shipment inaccuracies shown in the pareto chart[8].Using 5 why’s[9] technique it became obvious to see the main root causes for the two main inaccuracies-unknown shortages and shipment disparity:

●simple operational errors (e.g. wrong pick up)

●lack of supervision over warehouse operators and managers

●poor communication channels between S company’s warehouse and sales management(also the main root cause for belated shipment notification)

●since sales department of S company is the main information window for C company managers，poor communication between inner departments of S resulted in information deficit for C.

The general implication of the Analyze phase is that both incorrect barcodes and shipment inaccuracies were mainly caused by human mistakes and poor organization.

7.Improve

The main task of the Improve step was to take an action that would most effectively eliminate the influence of the root cause. In our case the main implication of the Analysis stage is that the root causes for both of the problems were human factor and poor organization.

A nice way to deal with those is to standardize the job and then adopt an IT-system to maximally automate it. This substantially reduces the risk of common mistake emergence and also helps to obtain a powerful tool for instant control over employees’ actions.

In our case a necessary tool was already at hand - the existing warehouse management system of C company. This WMS together with barcodes scanning equipment could cope with the root causes. So the solution was to aggregate all orders from C company on one transit warehouse， adapt C’s WMS and conduct initial training.

The main role to be played by WMS was to screen out all the errors in the upstream parts of the process before product has got to the transit warehouse and to control the next phase downstream - the shipment to C company itself. The below diagram demonstrates the idea (Figure 6).

Figure 6 Improved workflow

On one hand C’s WMS was able to filter out all the wrong and duplicated barcodes at the moment units arrived at the supplier’s warehouse(for some reasons supplier’s own WMS didn’t have this feature).Units with non-conforming barcodes could be then immediately returned back to the factory. Thus all the human factors at the factory level were dealt with by simply organizing a global filter at the warehouse level.

On the other hand it could fully trace all the actions taken by the warehouse operators and managers and record all the shipment related information(shipped units，container number etc.).Thus the influence of the human factor at sales level and warehouse level was also minimized.

The decision was made， another project team was formed and after all the necessary preparation， an IT crew from C company arrived to S company transit warehouse and introduced its WMS(more on WMS can be found here [10]).

8.Control

At the control phase project team had to make sure the warehouse users have adapted to the new requirements.This didn’t turn out to be a problem since the warehouse general manager has fully realized the necessity of change， supported the project and made the adaption swift and easy.Of course all the necessary employee trainings have been conducted.

The system fully covered the existing business processes at the warehouse， moreover it has brought additional standardization.

An ongoing task of the control stage is to closely monitor the correctness of barcodes (and error catching) and accuracy of shipments once again to justify the overall process improvement.

9.Sustain

As it was told before the current project was carried out for one out of two product type divisions， though the same issues to a lesser extent do appear at the other division. So the next step is to spread the best practice to the second division.

10.Results

The result is that both of the issues have been coped with and it has positively affected the whole cooperation process in the following way:

10.1 Dealing with incorrect barcodes

a.The grounds were set for the effective warehouse management on both sides of C and S companies.

b.The excessive work has been eliminated which has brought additional cost-savings of 3 FTE to C company.

c.The accurate data-flow has been set， ensuring the effectiveness aftersales support.

10.2 Dealing with shipment inaccuracies

a.The whole logistic process has gain the necessary transparency.

b.The risk of additional penalties and shipment delays was mitigated.

c.The excessive work has been eliminated which has brought additional cost-savings of 1 FTE to C company.

d.Additional transportation cost-savings have been achieved (roughly 0，5% of total order amount + additional time expenses).

The overall result also is that additional control was set over the whole product flow. Also， the some factors that could damage both companies reputation have been sorted out.

11.Conclusion

The conducted case study shows the effectiveness of applying RDMAICS problem solving model in dealing with quality issues both in manufacturing and service processes.

Though the improvement action didn’t correct the root causes， it has become a reliable checkpoint which was crucial to protect downstream process phases from the upstream mistakes. The absence of such a layer was the main root cause of errors spreading so deep downstream. After its introduction all the mistakes could be corrected painlessly and without bringing additional troubles to the customer. It has become a base for further improvement actions in the upstream.

It is necessary to point out that the market is showing signals for a necessity of deeper cooperation between Chinese suppliers and its customers. The customer-supplier relationship and cooperation should be brought to a next level. A nice way to do so is via joint projects aimed to streamline and make the whole supply chain management process fully transparent. [科]

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