Lean Six Sigma Project on Transport cost optimization - Story board


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This Lean Six Sigma Project done by student from Advance Innovation group which is posted to provide for benchmarking and best practices sharing purposes and aimed at providing the insight to students on how to apply Six Sigma in Transport Domain.

This project uses the DMAIC framework of Six Sigma in order to optimize the transport cost in the organization. Increasing Cost it in any area can be a huge concern in an organization as hits the bottom line and margins of the firm. Thus this project focuses on the understanding the transport cost optimization and there by getting the organization save huge money.

This project was initiated keeping in mind the reduction of the overhead cost of transportation pick and drops of employees which was at a much higher side than the Industry standard and was significantly impacting the profit margin of the organization.
We moved ahead with the documentation of the Project Charter, calculating the Process Capability and then moved ahead to identify the Xs and represented them in the project using the Fishbone or the Ishikawa Diagram and the designed a new process map modifying the process steps and after implementing the New Changed process collected the New data on which conducted the Pre Post Analysis and calculated the process capability and in Analyze identified the Root Cause of the Problem, after identifying the Root Cause moved to Improve Phase and designed the Improvement Plan, after implementing the Improvement Plan collected the data and validated the improvement and then designed the Control Plan using the risk management tool Failure Modes and Effects Analysis (FMEA) and the post collecting data checked the process stability using the Control Charts.

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Lean Six Sigma Project on Transport cost optimization - Story board

  1. 1. Story Board:Transport Cost Optimization ProjectDMAIC
  2. 2. 2Understanding the Problem DefineSummaryVoCIf we can bringdown the costof transport perFTE, site’sprofitability willbe increased.Cost per FTE atHyderabad site is veryhigh. It is beyondindustry standards andhighest amongst theother sites of Indiaregion.Commentsfrom theVOCSiTEL Hyderabad (Hyd) provides home pick up and drop to itseach employee to facilitate them in performing theiroperational activities. While the service offered is free toemployees, its cost is borne by the Site & is an overhead . Theexpense incurred is calculated as transport cost per FTE . SITELHyd transport cost per FTE is approximately too high than theindustry average which is adversely impacting the Site’s ProfitMargin. Hence there lies an opportunity to reduce the transportcost per FTE & improve the profitability of Hyd site and thusregion.Business CaseProblem StatementAs per available data Transport Cost per FTE per month atSiTEL Hyd is INR 5552 average for 3 months (June 2011 to Aug2011).Goal StatementGoal of this project is to reduce SiTEL Hyd transport cost toless than INR 4800 per FTE per month by end of Dec 2011.
  3. 3. 3Establishing the Measure MeasureSummarySelect CTQ Characteristics Define Performance StandardMeasurement SystemChanges to Measurement SystemExistingSystem wasreportingincorrectdataProcess CapabilityBaseline Sigma LevelBaseline Sigma Level
  4. 4. 4Vital Xs Identification AnalyzeSummaryVital Xs IdentificationFishboneA brainstorming session identified anumber of causesOut of fishbone results high impacting Xswere identified which were workable andcontrollable.
  5. 5. 5Implementing Improvement Action Items ImproveSummaryUsage based Cost SegregationChanging Billing Process New Drop ProcessRoster Publication in Advance
  6. 6. 6Implementing Improvement Action Items ImproveSummaryImplementation of New PracticesPoint Pick up DropCould not beimplemented as itwas not approvedby the Site Director
  7. 7. 7Establishing New Process Capability ControlSummaryProcess MonitoringNew Process Capability
  8. 8. 8Other Changes Identified by the Project ControlSummaryPractices ObjectiveElimination of Trip Based Model To Prevent Revenue LossDeployment of a new stamp for Back to BackIdentificationTo identify Back to Back and ensure proper BillingCollating scenarios regarding Log Sheet Cancellation To collate, share and execute the same on vendors sothat they remains disciplinedDaily Cost Monitoring To keep a tab to daily cost incurredRaising PI just after 5 days of each fortnight To control vendor dissatisfaction and retain the wrongimage created the Vendors in the market.Removal of Pick up NC NS & Pick up cancellation fromDrop listTo reduce Drop NC NS and increasing the occupancyNo Transport to employees living beyond 35 KM fromoffice who joined after Aug 1; 2011.Objective is to avoid the long distances travel andensure adherence to the already existing policy.Avoid separate cabs to Support Function employees.Support has to align its shift with operations timings.To reduce number of trips and increase occupancyProcess Monitoring
  9. 9. 9Benefits & Lesions Learned EndQuantifiable BenefitsLessons LearnedLess Tangible Benefits-Daily Cost Monitoring is very important & hold key of sustaining the savings-A new experience of managing & streamlining logistics function end to end-Detailed understanding of transport function played key role in identifying the solution
  10. 10. 10Thank you