Hong Kong Distribution Project
Final Recommendations Presentation
March 26, 2002
Project Objectives
Review current distribution processes, focusing on:
 Order taking
 Order processing
 Warehouse opera...
Processes Reviewed
Order taking with Sales Reps
Accounting Order Entry
Shatin warehouse repackaging
Shatin warehouse recei...
WRITTEN OFF
$600,000 / YR 1.2%
OF GROSS SALES
90%
27 - 33
DAYS
MONTHLY 60' / 40'
CONTAINERS
3 DAYS
ELAPSED
70 - 80%
AT EOM...
Strengths
Dedicated management at AIA and Shatin
Well run distribution, given complexity of
the operation (repackaging, PR...
Floor 17 - Repackaging
Wilson Delivery
Recommendations:
Reduce Cycle Time
Field Sales
 Use PDA/Other device to take and submit order
 Shift order taking hours ...
Take Order
Submit
Order
Enter Order
Pick and
Check
Deliver
Return
Paperwork
to Abbott
Load TruckStage
Assign Pick
List by
...
Orders
Picked &
Staged
Pick
Tickets
Printed at
Shatin
Orders Delivered
Trucks Loaded
Take Orders
Acctg
Enters
Orders
Stage...
STEP RESP. DESCRIPTION Work Time Elapsed Time Work Time A Elapsed A Frequency Value-Add
1 SlsRep Sales reps travel to offi...
Recommendations:
Other Process Improvements
Field Sales
 Minimize travel to office
 Improve order form to enable multipl...
A/C No.:
Customer:
Address 1: Date:
Address 2: Rep:
List No.: Quantity Size Product Unit Price Discount Specials
6620 10 4...
Office Administration
 Use multiple item order form to eliminate need
to consolidate orders for same customer
 Package s...
Shatin Warehouse
 Reorganize 17th
floor
 Relocate PRC order accumulation
 Relocate returns and obsoletes
 Relocate exc...
Floor 17 – Returned Goods
Floor 17 – Empty Pallets,
PRC, Returned Goods,
HK Repackaged Product
Floor 17 – Pick/Stage Area
Floor 16 – Storage Area
Floor 15- Storage Area
Some Racking in Back, PRC, ADD, Pallets, Non-Repacked Product
Shared Shipping Dock
3 Shared Elevators
Shatin warehouse (continued)
 Repackage based on ABC analysis to:
 Balance workload /Minimize setup / Optimize
productio...
Sample
Sales Volume
Forecast
Item
Number Item Name
Current
Location
Location
Storage
Capacity
(PU's)
Annual
Quantity
Sold
...
Total Materials Volume Turnover Plan
% Total
Volume
Forecast
Volume
(PU's)
% Total
Items Class
Current
Turnover
Current
In...
Bulk Storage
Location
Staging
Bulk Storage
Location
Bulk Storage
Location
up
down
up
down
Office
Washroom
Female
Washroom
...
Staging
A
B
A
B
A
B C
C
A C
up
down
up
down
Office
Washroom
Female
Washroom
Male
Wilson
Store
Drugs
Repackaging Area
up
do...
B
A
Staging
Repackaging
A
A
A A
up
down
up
down
Washroom
Female
Washroom
Male
up
down
Lift Lift Lift Lift Lift M
Shatin Wa...
up
down
up
down
Washroom
Female
Washroom
Male
up
down
Lift Lift Lift Lift Lift M
Shatin Warehouse
11th Floor
up
down
up
do...
Shatin warehouse (continued)
 Formalize rush order queuing process
 Possibly add customer segmentation criteria to
batch...
Other Information (continued)
 Safety
 Physical Inventory
 Training Programs and
Records
 Receiving
 Product Picking
...
Standard Operating Procedure
SUBJECT: Logistics NUMBER:
POLICY: Physical Inventory DEPARTMENT: Warehouse
EFFECTIVE DATE: 0...
Shatin warehouse (continued)
 Develop warehousing measurements and
targets
Recommendations:
Other Process Improvements
Other Information (continued)
 Customer
 Order Turnaround Time
 Order Fill Rate
 Order Pick Accuracy
 Employee Appear...
Warehousing Balanced
Scorecard
Timing/
Frequency
(When/How Often)
Construction/
Implementation
(Who/Method/Data Sources)
N...
All areas:
 Reduce non-value added activities
Recommendations:
Other Process Improvements
0
10
20
30
40
50
60
Minutes
Value Add - C Value Add - B Preparation Check/Inspect Move/Transport Queue/Wait Redundant
Time...
0
5
10
15
20
25
30
35
40
Minutes
Value Add - C Value Add - B Preparation Check/Inspect Move/Transport Queue/Wait Redundant...
Other Information
Change Management Presentation
 Manage Communication and Maintain Momentum
 Secure Commitment to Chang...
Awareness
Self-concern
Mental tryout
Hands-on
Acceptance
Time
Stakeholder
Resistance
Transition to
Acceptance
begins
Point...
Summary
Cycle time reduction recommendations should net
90% of benefit
Other recommendations will enable Shatin to meet
ch...
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Hong Kong China order fullfillment reengineering warehousing distribution

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Hong kong final presentation

  1. 1. Hong Kong Distribution Project Final Recommendations Presentation March 26, 2002
  2. 2. Project Objectives Review current distribution processes, focusing on:  Order taking  Order processing  Warehouse operations Identify Opportunities to:  Improve customer service (reduction in order cycle time)  Improve distribution of Abbott products  Incorporate technology into the processes
  3. 3. Processes Reviewed Order taking with Sales Reps Accounting Order Entry Shatin warehouse repackaging Shatin warehouse receiving, picking and shipping operations PRC product storage and shipping Order delivery by Wilson
  4. 4. WRITTEN OFF $600,000 / YR 1.2% OF GROSS SALES 90% 27 - 33 DAYS MONTHLY 60' / 40' CONTAINERS 3 DAYS ELAPSED 70 - 80% AT EOM 1 - 2 DAYS SALES COORDINATOR INVOICING TEAM 100% (AI & ADD) HPD SALES PRC 100% CUST. PICKUP/SHIP BY BOAT/AIR HK ADD HK 350 + / DAY PICK LIST SORTED BY TRUCK 2x / DAY 1:00 PM 3:30 PM EMERGENCY: AS NOTIFIED BATCHES MIN 8 MAX 24 FIELD SALES SPECIAL ORDER FORMS 350 + INVOICES NOLA ALOA SINGAPORE JAPAN U.S. ADD HK AIRPORT 10% RETURNED TO RECEIVING HK PORT SEAPORT 23 - 27 DAYS SHATIN RECEIVING 17th FLOOR HK + PRC PRODUCTS PUT AWAY 11, 15-17th FLOOR ~ 500 PRODUCTS HK + PRC RETURN GOODS PICK INSPECT ADD & SETS ONLY REPACK 17th FLOOR 66% WILSON PRC REPACK 17th FLOOR 33% WILSON PEOPLE'S REPUBLIC OF CHINA FREIGHT FORWARDER Dx PRC SPECIAL PACKAGING 17th FLOOR SHIPPING  WILSON-6 AI  TRUCKS - 3 - 2 AI - 1 ADD PRINT INVOICE & PICK TICKET (17th FL) @ SHATIN ORDER ENTRY & VALIDATION INTO AST 4 AIA DELIVERY TRUCK BRINGS BACK RETURNED GOODS $660,000 YR ABBOTT HONG KONG DISTRIBUTION LOGISTICS FLOW FEBRUARY 2002 ADD 6 PND 5 HPD 4 PPD 3 3 MND 2 TRADE REP 1 BLANK ORDER FORMS ADD SHATIN HOURS: 9:00 - 5:30 (6:30) SPACE: 14,000 SQ FT / FLOOR (11, 15-17) 55,000 SQ FT TOTAL - 14 ' CEILING - 2 PALLETS HIGH - SPACE UTILIZATION @ 75 - 80% ~~ ~~ 22 INVOICES / MONTHLY 6532 DR'S OFFICES 1 DRUG STORE 1 CHAIN STORE  DISPENSARY  SUPER MARKET 2 OLD AGE HOMES 2 3 64 HOSPITALS - HA 6432 HOSPITALS - PRIVATE 6 LABORATORIES 52 HOMES TO PRC ADD PRODUCT ADD AI
  5. 5. Strengths Dedicated management at AIA and Shatin Well run distribution, given complexity of the operation (repackaging, PRC, ADD) Knowledgeable warehouse manager Efficient delivery partner in Wilson Dedicated repackaging staff
  6. 6. Floor 17 - Repackaging
  7. 7. Wilson Delivery
  8. 8. Recommendations: Reduce Cycle Time Field Sales  Use PDA/Other device to take and submit order  Shift order taking hours to 7pm Office Administration  Stagger shifts to capture 100% of same day orders Warehousing  Stagger shifts to capture 100% of same day invoices Wilson Delivery  Stagger shifts to capture 100% of prior day shipments
  9. 9. Take Order Submit Order Enter Order Pick and Check Deliver Return Paperwork to Abbott Load TruckStage Assign Pick List by Truck Create Batch Pick List Sort by Route Create Invoice Begin: 10:00AM End: 6:00PM Begin: 9:00AM End: 6:00PM Begin: 2:00PM End: 6:00PM Begin: 9:15AM End: 1:00PM Estimated Queue: Max: 23-24Hrs Min: 15-16Hrs Estimated Queue: Max: 7-9Hrs Min: 2-3Hrs Estimated Queue: Max: 26-27Hrs Min: 22-23Hrs Estimated Queue: Max: 4-5Hrs Min: 1Hr Recommend. Cycle = C Other = X C - PDA/Other to take and submit order C - Extend hours to 7PM X - Minimize travel to office X - Improve order form to enable multiple items & multiple discounts X - Segment customers who want 1,2,3 day (price diff.) X - No need to extend order pricing for reporting Recommend: Cycle = C Other = X C - Stagger shifts to capture 100% of prior day shipments Recommend: Cycle = C Other = X C - Stagger shifts to capture 100% of same day invoices X - Use package specific item coding to enhance locating, repackaging, scheduling, etc. X - Repackage based on ABC analysis to balance workload, minimize storage area, and reduce picking effort X - Relocate PRC order accumulation away from floor 17 X - Develop locator scheme X - Create procedure manual and SOP's for repackage scheduling, batching, picking, etc. X - Relocate returns and obsoletes from floor 17 X - Possibly add customer segmentation criteria to batching process X - Develop warehousing measurements and targets X - Rush order queueing X - Relocate pallets from floor 17, other than those necessary to support short term operations Recommend: Cycle = C Other = X C - Stagger shifts to capture 100% of same day orders X - Use multiple item order to eliminate need to consolidate same customer orders X - Package specific item coding to enhance special instructions and eliminate manual effort DAY 1 DAY 2 DAY 3 DAY 1 DAY 2 Current Proposed Hong Kong Distribution Field Sales Office Administration Warehousing Wilson .
  10. 10. Orders Picked & Staged Pick Tickets Printed at Shatin Orders Delivered Trucks Loaded Take Orders Acctg Enters Orders Staged Order Waits Overnite Order Waits Overnite OP &S Orders Picked & Staged Pick Tickets Printed at Shatin Orders Delivered Trucks Loaded Take Orders Accounting Enters Orders Same Day Delv. Order Transmitted Staged Order Waits Overnite CURRENT POTENTIAL 2 4 6 8 10 122 4 6 8 10 122 4 6 8 10 12 2 4 6 8 10 122 4 6 8 10 122 4 6 8 10 12 Day 1 Morning Day 1 Afternoon Day 2 Morning Day 2 Afternoon Day 3 Morning Day 3 Afternoon 2 4 6 8 10 122 4 6 8 10 122 4 6 8 10 12 2 4 6 8 10 122 4 6 8 10 122 4 6 8 10 12 Day 1 Morning Day 1 Afternoon Day 2 Morning Day 2 Afternoon Day 3 Morning Day 3 Afternoon ORDER CYCLE TIME REDUCTION Current Cycle Time Min: 40 Hours Max: 57 Hours Potential Cycle Time Min: 5 Hours Max: 33 Hours . Transfer to Order Sheet
  11. 11. STEP RESP. DESCRIPTION Work Time Elapsed Time Work Time A Elapsed A Frequency Value-Add 1 SlsRep Sales reps travel to office 0 60 0 60 N 2 SlsRep Transcribe orders (approx. 25/day) 30 30 30 90 N 3 SlsRep Transfer to call report for trade account manager 15 15 45 105 N 4 Mktg Mgr Order checked - QA 15-25/batch, to invoicing 3x/day 3-5 min. (12sec. each) 3-5 min. 489 609 N 5 SlsRep Sales briefing 20 20 65 125 Y 6 SlsRep Sales reps travel to zone 30 30 95 155 N 7 SlsRep Take orders (15 customers). Also clean shelves, services expired, damaged product or exchanges (up to 20 min.) Time with customer varies (up to 1 hour) 165 (6.5 hours x 11 min. x 15 cust.) 165 260 320 Y 8 SlsRep Travel to next customer 225 225 (15 min x 15 cust.) 485 545 N 9 SlsRep Go home 0 60 485 605 N TOTAL : 489 609 489 609 10 Sales Reps Work Elapsed Work Elapsed - Responsible for 3-4 zones 0 0 Work Elapsed - Cover 1 zone per day 165 165 33.74 27.09 Value Add - C 20 20 4.09 3.28 Value Add - B Sales Briefing 0 0 0.00 0.00 Preparation - Training 4 4 0.82 0.66 Check/Inspect - Corrective actions 255 375 52.15 61.58 Move/Transport 0 0 0.00 0.00 Queue/Wait 45 45 9.20 7.39 Redundant 185 185 37.83 30.38 304 424 62.17 69.62 Total Time 489 609 100 100 Preparation Cumulative Hong Kong Distribution Workflow and Classification of Activities Activity: Drugstore Sales (Eddie Ip) % of Total Total Value Add Total Non-Value Add Total Time Check/Inspect Move/Transport Queue/Wait Redundant Value Add by Other Value Added - Customer Value Added - Business Class Code M R R I VB M VC M M
  12. 12. Recommendations: Other Process Improvements Field Sales  Minimize travel to office  Improve order form to enable multiple items & multiple discounts  Segment customers who want same day delivery  Eliminate non-value added activities  Price extending  Sales reporting 0 10 20 30 40 50 60 70 Minutes Value Add - C Value Add - B Preparation Check/Inspect Move/Transport Queue/Wait Redundant Time as a Percent of Total Time for Drugstore Sales Process Work Elapsed
  13. 13. A/C No.: Customer: Address 1: Date: Address 2: Rep: List No.: Quantity Size Product Unit Price Discount Specials 6620 10 4/7/11 oz Selsun Blue (reg) Book 69% buy 3/1 free L759 15 7/11 oz Selsun Blue E. C. Book 73% 6606 9 7/11 oz Selsun Blue E.M. Book 85% Buy 1/1free Murine Plus L220 6 7 oz Selsun Gold Book 63% 2660 3 4 oz Selsun Suspension Book 89% G662 9 15 ml Murine Plus Book 95% L951 6 300 gm/700 gm Formance Plus Book 78% M361 22 kg/1.8kg Grow Book 82% Delivery: Invoice No.: Terms: Distribution:
  14. 14. Office Administration  Use multiple item order form to eliminate need to consolidate orders for same customer  Package specific item coding to enhance special instructions and eliminate manual effort. Recommendations: Other Process Improvements 0 10 20 30 40 50 60 70 80 Minutes Value Add - C Value Add - B Preparation Check/Inspect Move/Transport Queue/Wait Redundant Time as a Percent of Total Time for Accounting Process Work Elapsed
  15. 15. Shatin Warehouse  Reorganize 17th floor  Relocate PRC order accumulation  Relocate returns and obsoletes  Relocate excess pallets Recommendations: Other Process Improvements
  16. 16. Floor 17 – Returned Goods Floor 17 – Empty Pallets, PRC, Returned Goods, HK Repackaged Product
  17. 17. Floor 17 – Pick/Stage Area Floor 16 – Storage Area
  18. 18. Floor 15- Storage Area Some Racking in Back, PRC, ADD, Pallets, Non-Repacked Product
  19. 19. Shared Shipping Dock 3 Shared Elevators
  20. 20. Shatin warehouse (continued)  Repackage based on ABC analysis to:  Balance workload /Minimize setup / Optimize production runs  Minimize storage area  Reduce picking effort  Use package specific item coding to enhance locating, repackaging, scheduling, etc.  Develop product locator scheme  Consider moving repackaging area and office for more efficient use of storage space Recommendations: Other Process Improvements
  21. 21. Sample Sales Volume Forecast Item Number Item Name Current Location Location Storage Capacity (PU's) Annual Quantity Sold (PU's)* Cumulative Volume Cumulative % Volume Item Volume ABC Class Volume by Class % Total Volume % Total Items 71 A-FERIN KAPSšL AA1 200000 155923 155923 42.02% A 72 A-FERIN PED. SURUP AB5 50000 35792 191715 51.66% A 70 A-FERIN FORT TB AA3 40000 34772 226487 61.03% A 1867 %0,9 NACL 1000 CC(SETS˜Z) SERUM 30000 23482 249969 67.36% A 26 ACTIDEM zURUP DA5 30000 21593 271562 73.18% A 987 %5 DEX 500 CC(SETS˜Z) SERUM 30000 21444 293006 78.96% A 293006 79% 12% 1868 %0,9 NACL500 CC(SETS˜Z) SERUM 30000 20802 313808 84.56% B 986 %5 DEX 1000 CC(SETS˜Z) SERUM 20000 13773 327581 88.27% B 993 %5 DEX LAK.RINGER 1000CC(SETSZ SERUM 10000 6942 334523 90.14% B 41517 11% 6% 19 ACETYLCYSTEIN 600 X10 EF.TB DC3 10000 6328 340851 91.85% C 983 %10 DEX 500 CC(SETS˜Z) SERUM 5000 3982 344833 92.92% C 991 %5 DEX 0.45 NACL 500 CC(SETS˜Z SERUM 5000 3575 348408 93.89% C 24 ACNELYSE KREM AA1 5000 3354 351762 94.79% C 17 ACERILIN 5 MGTB BB2 5000 2597 354359 95.49% C 25 ACT-HIB BUZ 3000 2169 356528 96.07% C 992 %5 DEX 0.2 NACL 500 CC(SETS˜Z) SERUM 3000 2099 358627 96.64% C 994 %5 DEX LAK.RINGER 500CC(SETS˜Z SERUM 3000 2042 360669 97.19% C 15 ACERILIN 10 MGTB CB4 3000 1324 361993 97.55% C 984 %20 DEX 500 CC(SETS˜Z) SERUM 3000 1163 363156 97.86% C 12 ACCOLATE 20 MG28 TAB. AA1 3000 1128 364284 98.16% C 16 ACERILIN 20 MGTB AA1 1000 980 365264 98.43% C 1869 1/3 IZODEKS 500 CC(SETS˜Z) 86997 1000 737 366001 98.63% C 1866 %0,9 NACL 500 CC PLASTIK SISE SERUM 1000 660 366661 98.80% C 1478 %5 FRUKTOZ 500 CC SETSIZ SERU 1000 602 367263 98.97% C 985 %30 DEX 500 CC(SETS˜Z) SERUM 1000 468 367731 99.09% C 988 %50 DEX 500 CC(SETS˜Z) SERUM 1000 458 368189 99.22% C 1865 %0,9 NACL 1000 CC PLASTIK SISE SERUM 1000 432 368621 99.33% C 1477 %5 FRUKTOZ 1000 CC SETSIZ SERUM 1000 418 369039 99.44% C 990 %5 DEX %0,9 NACL 500 CC(SETS˜Z SERUM 1000 413 369452 99.56% C 989 %5 DEX %0.9 NACL 1000CC(SETS˜Z SERUM 1000 356 369808 99.65% C 6440 %5 DEX 500 CC B˜OSEL(SETSIZ) 200 188 369996 99.70% C 7 A-NOX FORT 10 TB DE1 200 154 370150 99.74% C 6448 %10 DEX 500 CC B˜OSEL(SETSIZ) SERUM 200 105 370255 99.77% C 387 A.BALIK YAGI 500 ML AA1 200 103 370358 99.80% C 400 A.BALIK YAGI PORTAKAL200 ML DD 5 200 96 370454 99.83% C 386 A.BALIK YA¦I 1000 ML AC5 200 93 370547 99.85% C 13 ACCOLATE 20 MG56 TAB. CC2 200 78 370625 99.87% C 10 ACAROSAN NEMLI TOZ BC-1 200 73 370698 99.89% C 385 A.BALIK YA¦I SADE 200 ML BC-5 200 70 370768 99.91% C 393 A.BALIK YAGI LIMON 200 ML BB5 100 55 370823 99.93% C 391 A.BALIK YA¦I KIRAZ 200 ML CA5 100 51 370874 99.94% C 395 A.BALIK YAGI MUZ 200 ML BB5 100 49 370923 99.95% C 11 ACAROSAN SPREY BC5 100 42 370965 99.96% C 8 A-NOX FORT 20 TB CC1 100 36 371001 99.97% C 9 ACAROSAN KOPUK SPREYI AD4 100 28 371029 99.98% C 392 A.BALIK YA¦I KIRAZ 250 ML AA-5 100 26 371055 99.99% C 397 A.BALIK YA¦I AHUDUDU 200 ML BC5 100 21 371076 99.99% C 6399 A.BALIK YA¦I AHUDUDU 250 ML AD5 50 14 371090 100.00% C 6400 A.BALIK YA¦I NANE250 ML AC5 50 5 371095 100.00% C 18 ACEROLA PLUS TB DD4 50 5 371100 100.00% C 36,577 10% 82% *Note: PU = Production Planning Unit
  22. 22. Total Materials Volume Turnover Plan % Total Volume Forecast Volume (PU's) % Total Items Class Current Turnover Current Inventory Levels (PU's) Current Turn Index Target Turnover NewTurn Index Target Inventory Levels (PU's) Space Reduction/ Increase 79 293006 12 A 12 24417 144 24 288 12209 -50% 11 41517 6 B 12 3460 72 18 108 2307 -33% 10 36577 82 C 12 3048 984 6 492 6096 100% 100 371100 100 12 30925 1200 16 888 23194 -25%
  23. 23. Bulk Storage Location Staging Bulk Storage Location Bulk Storage Location up down up down Office Washroom Female Washroom Male Wilson Store Drugs Repackaging Area up down R.G. Lift Lift Lift Lift Lift M Shatin Warehouse Current Storage Layout for 17th Floor FlowRacking Samples Not to Architectural Scale
  24. 24. Staging A B A B A B C C A C up down up down Office Washroom Female Washroom Male Wilson Store Drugs Repackaging Area up down R.G. Lift Lift Lift Lift Lift M Shatin Warehouse Potential Storage Layout with Current Configuration - 17th Floor FlowRacking Samples Legend Pallet Positions (assumes 2 levels) "A" Items "B" Items "C" Items Flow Racking* Sampling Total: 168 60 64 32 16 340 * Capacity for up to 160 storage positions Drug cage needs to be relocated. Look at storeroom off of repackaging area, or R.G. room in lower left corner. Not to Architectural Scale
  25. 25. B A Staging Repackaging A A A A up down up down Washroom Female Washroom Male up down Lift Lift Lift Lift Lift M Shatin Warehouse Potential Storage Layout with Revised Configuration - 17th Floor Office Drugs Legend Sample Pallet Positions (assumes 2 levels) "A" Items "B" Items "C" Items Flow Racking* Sampling Total: 204 84 36 32 8 372 C C Flow Rack Samples A B Not to Architectural Scale NOTE: May also want to consider moving Repackaging and Office to a different floor
  26. 26. up down up down Washroom Female Washroom Male up down Lift Lift Lift Lift Lift M Shatin Warehouse 11th Floor up down up down Washroom Female Washroom Male up down Lift Lift Lift Lift Lift M Shatin Warehouse 15 - 16th Floor Empty Floor Layouts for Planning Storage Locations
  27. 27. Shatin warehouse (continued)  Formalize rush order queuing process  Possibly add customer segmentation criteria to batching process  Create procedure manual and standard operating procedures (SOP’s) for repackaging, scheduling, batching, picking, etc. Recommendations: Other Process Improvements
  28. 28. Other Information (continued)  Safety  Physical Inventory  Training Programs and Records  Receiving  Product Picking  Shipping  Product Breakage Loss and Expiration  Sanitation  Products Requiring Temperature Control  Pesticide and Rodenticide Control Standard Operating Procedures Examples
  29. 29. Standard Operating Procedure SUBJECT: Logistics NUMBER: POLICY: Physical Inventory DEPARTMENT: Warehouse EFFECTIVE DATE: 01/2001 REVISED DATE: Page 1 of 2 Approved By: Title: Warehouse Manager Date: Approved By: Title: Director of Strategic Programs Date: Purpose The Purpose of this policy is to provide principles and guidelines that will establish the basis for adherence to the standardized procedures of inventory management. Standard procedures are utilized for all major processes in Materials Management activities. SCOPE This policy applies to all storage and warehousing facilities. PROVISIONS 1.0 All locations with inventory assets owned and managed must perform physical inventories at year-end. Warehouse Management can also assist other entities in advice and guidelines for performing physical inventories. 2.0 A Physical Inventory Checklist will be used on all year-end physical inventories. The checklist will be provided by the Warehouse Manager and will be filed with documentation of the inventory. (See Attachment) The Manager will appoint an Inventory Coordinator to oversee the Inventory. 3.0 Teams of two persons, a counter and a recorder will perform the actual counts. Each team will be responsible for counting at least 20 items. The count sheets will include the item number, lot number, unit of measure, location, blank spaces for count quantities and a pricing column. Upon completion, the counter
  30. 30. Shatin warehouse (continued)  Develop warehousing measurements and targets Recommendations: Other Process Improvements
  31. 31. Other Information (continued)  Customer  Order Turnaround Time  Order Fill Rate  Order Pick Accuracy  Employee Appearance  Financial  Overtime Limit  Inventory Turns  Obsolete Inventory  Budget Management  Internal Business Process  MDC Inventory Value Mgmt.  Inventory Accuracy Mgmt.  Receiving & Putaway Efficiency  Order Pick Efficiency  Learning and Growth  Elapsed Time for Training  Orientation  Education KPI / Warehousing Balanced Scorecard
  32. 32. Warehousing Balanced Scorecard Timing/ Frequency (When/How Often) Construction/ Implementation (Who/Method/Data Sources) Notes Customer Order Turnaround Time Pick & Pack target = 4 hours 80%, 24 Hours, 100% Monthly Summary Operations Manager performs random audits one time each week (at least 10 of each order type). If audit shows that target was met for an individual order, a 1 is accrued to the tally. A zero is assigned if turnaround is too long. Results are summed up once each month (by order type) and the total of ‘1’s’ is divided by the number of orders in the sample and multiplied by 100 to express as a percentage. Order Fill Rate 97% line fill rate Monthly/ Report timing depends on ESI As currently measured and reported by ESI Order Pick Accuracy 97% line pick accuracy Monthly 30+ orders are sampled by Operations Manager or designee each month. If order line is accurately picked, then a ‘1’ is accrued to the tally. If not, a zero is assigned. Also, each customer call for the month is either investigated or not investigated. Calls investigated are assigned a ‘1’ and accrue a zero if not. All ‘1’s are summed in the tally and the result is divided by the total number of order lines audited and customer calls received.
  33. 33. All areas:  Reduce non-value added activities Recommendations: Other Process Improvements
  34. 34. 0 10 20 30 40 50 60 Minutes Value Add - C Value Add - B Preparation Check/Inspect Move/Transport Queue/Wait Redundant Time as a Percent of Total Time for Load Truck & Deliver Process Work Elapsed 0 10 20 30 40 50 60 70 80 90 Minutes Value Add - C Value Add - B Preparation Check/Inspect Move/Transport Queue/Wait Redundant Time as a Percent of Total Time for Pick & Stage Process Work Elapsed 0 10 20 30 40 50 60 70 Minutes Value Add - C Value Add - B Preparation Check/Inspect Move/Transport Queue/Wait Redundant Time as a Percent of Total Time for Drugstore Sales Process Work Elapsed 0 10 20 30 40 50 60 70 80 Minutes Value Add - C Value Add - B Preparation Check/Inspect Move/Transport Queue/Wait Redundant Time as a Percent of Total Time for Accounting Process Work Elapsed 0 10 20 30 40 50 60 70 80 90 100 Minutes Value Add - C Value Add - B Preparation Check/Inspect Move/Transport Queue/Wait Redundant Time as a Percent of Total Time for Receiving & Putaway Process Work Elapsed Value vs Non-Value by Process 0 10 20 30 40 50 60 70 80 90 100 Minutes Value Add - C Value Add - B Preparation Check/Inspect Move/Transport Queue/Wait Redundant Time as a Percent of Total Time for Repacking & Putaway Process Work Elapsed Percent PercentPercent PercentPercentPercent
  35. 35. 0 5 10 15 20 25 30 35 40 Minutes Value Add - C Value Add - B Preparation Check/Inspect Move/Transport Queue/Wait Redundant Summary of Time as a Percent of All Processes Work Elapsed Percent
  36. 36. Other Information Change Management Presentation  Manage Communication and Maintain Momentum  Secure Commitment to Change/Culture Shift  Build Teams and Transfer Skills
  37. 37. Awareness Self-concern Mental tryout Hands-on Acceptance Time Stakeholder Resistance Transition to Acceptance begins Point of no return CHANGE ACCEPTANCE Change Acceptance Cycle
  38. 38. Summary Cycle time reduction recommendations should net 90% of benefit Other recommendations will enable Shatin to meet challenges of sales growth  Physical improvements  Operational improvements Recommendations do not appear to adversely impact culture. Providing enhancements (process and technology) that will leverage current strengths

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