Applying DFSS to Transactional Processes

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  • 1. Applying DFSS to Transactional Processes Jeff Aldaz June 2005 Confidential and proprietary information of Ingram Micro Inc. — Do not distribute or duplicate without Ingram Micro's express written permission. How to really make it work ®
  • 2. Ingram Micro – A Leader in IT
    • The world’s largest wholesale provider of technology products and services
    • Annual revenues for 2004 - $25.5 billion
    • 13,600 associates worldwide
    • Serves customers in more than 100 countries
    • Number 81 on Fortune 500
  • 3. The Six Sigma Journey Results Share best practices Deployment of Scorecard concept 6 σ, the way we do business Deployment of methodology Create Awareness 2004 Achievements 2001 2002 2003 2004 2005 2006 2007
  • 4. Six Sigma & Ingram Micro
    • US started implementing Six Sigma in 2002
      • Operations
    • Global COE
      • North America
      • Europe
      • Asia Pacific
      • Latin America
  • 5. DFSS at Ingram Micro
    • At the beginning of 2004 IM identified the need for DFSS:
      • Customers required new services
      • Processes optimized with DMAIC did not meet requirements
      • DMAIC resulted in measurable financial/operational benefit, DFSS was introduced to drive transformational change
    • First training in April 2004
      • Class Details –
        • Oriel delivered training
        • Cross-functional participants
        • Selected projects with cross-functional impact/support
  • 6. 1 year into DFSS
    • Projects completed: 8
    • Financial benefits (annualized): $4.5 MM
    • Success factors:
      • Start with your customers and end with your customers
      • Executive support is critical – even more than in DMAIC
      • Involve all core functions in the first projects
      • Select a few good projects in the first wave
      • Tollgate meetings to maintain momentum
  • 7. U.S. Sales Utilization Metrics Overview (GB: Frank Kapperman)
    • Critical Y: Optimization of Sales & Order Management processes
    • Scope: U.S. Sales Organization
    • Solutions: Provide an effective tool for managing workload optimization
            • Enhanced utilization report
            • Predictive modeling to forecast capacity requirements
            • Comparison tool for workload activity versus $GP/head
            • Drive focus to processes that are more important to our customers
    • Rationalization of Sales Coverage Model
            • Diversification of the performance metrics (based on differentiation in workflow) to accurately assess appropriate staffing levels
    • Rationalization of Sales Communication
            • Reduced non-value added activities in the workflow of the Sales Rep’s (i.e. e-mails, vendor activities, etc)
    • Savings: Rationalization of Sales Coverage Model: 1.200.000 USD
    • Rationalization of Sales Communication: 500.000 USD
    • TOTAL 1.700.000 USD
  • 8. DFSS Tools in Transactional
    Understand Voice of the Customer Translate VOC into CTQs Prioritize CTQs House of Quality #1
  • 9. Results
      • Gross Profit / Day increased from $40 K to $50K
      • Productivity increased from 70% to 85%
    Increased GP/day from $40K to $50K Increased utilization from 70% to 85%
  • 10. Current State-Sales Communication Sales Force (700 Rep’s) 50-100 E-Mails/Day Marketing Product Mgt. Vendor Other
    • Action Required
    • What Types of communication do rep’s receive?
    • Volume by type?
    • Operational & Financial Impact (Orders, Revenue, Machine Margin %, Etc.)
    • Interview Stakeholders
    • Assess Impact to PD&R and Marketing Revenue
    How much of the Rep’s day do we influence? 20% Sales Mgt. 10% Other 20% Vendor 20% Product Management 20% Marketing % of Influence Channel
  • 11. Future State-Sales Communication Prioritized Workflow Marketing Product Mgt. Vendor Other
    • Results
    • Pre-Formatted tools and templates
    • Regularly scheduled delivery of communication (a.m. & p.m.)
    • Channel communication to appropriate tool (e-mail, champ site, huddle, etc.)
    • Prioritize Workflow (Orders, Revenue, Machine Margin %, Etc.)
    How much of the Rep’s day do we influence? Sales Force (700 Rep’s) 75% Sales Mgt. 10% Other 5% Vendor 5% Product Management 5% Marketing % of Influence Channel Communication Filter
  • 12.
    • Identification of sales rep’s, teams & branches that are below peer average and development of action plan to improve results.
    • Establishment Of A Formal Utilization Review Process
      • Sales Manager Review With:
        • Sales productivity team for branches that are out of tolerance for 30 days
        • Area sales director after 60 days
        • General manager after 90 days
    • Identification, evaluation, and thresholds established for activities that were previously excluded from measurement
      • Electronic commerce orders, team e-mail boxes, e-forms, etc.
    • Linkage to skills for success performance criteria and career path
    • Identification of additional project opportunities:
      • Enhanced EDI Order Processing Efficiency
      • Special Pricing Administration
    Project Results
  • 13. Pitfalls to Avoid in DFSS
    • Don’t assume you understand what the external customers want
    • Don’t assume internal functional departments understand linkages and how end results impact customers
      • Marketing / Sales / Product Management
    • DFSS projects are different than DMAIC projects
      • Timing
      • Complexity
      • Team members
  • 14. Confidential and proprietary information of Ingram Micro Inc. — Do not distribute or duplicate without Ingram Micro's express written permission. ®