This document describes a Lean Six Sigma project to improve processes in the GSD Warehouse Issue Section. The project aimed to reduce average task time by 50%, reduce 100% inventory counts, and reduce labor costs. Key changes included implementing sampling for inventory counts, streamlining physical counts, and reducing redundant tasks. These changes reduced average task time by 47% and labor costs by $366,744 by the end of the contract through position eliminations and reassignments.

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Lean Six Sigma Charter GSD Warehouse Issue Section
Project Information Process Importance
Leader: Robert E. Sparrow
Black Belt: Charlie Martin Medium Priority:
Project Start: February 2007 Reduce process time and labor costs
Project End: January 1, 2008 in the GSD Warehouse Issue Section.
DPPM or COQ: N/A
Team Members Process Problem
Sponsor Bruce Parker
Black Belt: Charlie Martin Average Task Time excessive – 10.8 Hrs
Green Belt N/A Three 100% Counts Redundant
Subject Matter Experts (A.R. Requirement of one 100% Count)
Praveen Kumar – Paula Berrios – Manuel Palos
Mohammed Shahin – Gerald Mack – Haneef Mohammed
Manas Swain – Mohammad Jalaludhin – Vinod Vasudevan Nair
Mubeen Mohammed Usman
Original Process Start/Stop Project Goals
Start Point: Receive Material and Do 1st
100% Count
Stop Point: Load Truck Reduce Average Task Time by 50%
Reduce 100% Counts with AQL Sampling
Reduce Labor Costs
New Process Start /Stop
Start Point: Receive Material From Storage Process Measurement
Stop Point : Load Truck Time Studies – Audits (Data from 100% Counts)

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CURRENT OPERATIONAL FLOW
I Receive Property
A. Physical Count
1. Two Man Rule 100%
2. Senior Associate 100%
3. Review Western Supervisor
B. Match Property with Documents
C. Recounts
1. Property Document Mismatch
2. Quantity Incorrect
3. Incorrect Property Item Nomenclature
D. Electronic Document Reads
1. Electronic Malfunctions
II Property Preparation
A. Wrap and Band Property
B. Transfer MRO’s to Support Operation Branch
RF Tags and Shipping List
1. Property Documents to Issue Administrative Area – Record File
C. Place RF Tags/Shipping List Received from Support Operation Branch on
Property
III Load Property on Trucks

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SAMPLE SIZE FORMULA
Z2 * (P) * (1-P)
SS = ---------------------
C2
Where :
Z = Z Value (e.g. 1.96 for 95% confidence level)
P = Percentage, expressed as decimal (.5 used for sample size
needed)
C = Confidence interval, expressed as decimal (e.g. 0.05 = +5)
Populations = First six month average in 2007.

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SAMPLE SIZE CALCULATION FOR MRO’s
SS = (1.96)2 * (0.5) * (1-0.5)
-------------------------------
(0.05)2
= 3.8416 * 0.5 * 0.5
------------------------
0.0025
= 0.9604
---------
0.0025
SS = 384.16
Z = 1.96
P = 0.5
C = 0.05
MRO Population – 157,095

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SAMPLE SIZE CALCULATION FOR PALLETS
(1.96)2
* (0.5) * (1-0.5)
SS = -----------------------------
(0.0506)2
3.8416 * 0.5 * 0.5
= -------------------------
0.00256
0.9604
= ----------- 1
0.00256
SS = 375.15
Z = 1.96
P = 0.5
Pallet Population – 16,551 C = 0.0506

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WAREHOUSE ISSUE SECTION - CURRENT OPERATIONAL FLOW
VALUE STREAM MAP
Receive
MRO’s / Material Do
100% count from
Storage / Receiving Section
Physical count
Equals
MRO / Material
count
Prep MRO / Material
For shipment
Transfer shipping list
RF Tags from Support
Service Branch for shipment
Put file copy of
MRO / Material
in Issue files and
on Material
Wrap and Band
MRO / Material
for shipment
Load Truck
MRO / Material
and ship
Return
MRO / Material
to
Receiving / Storage Sections
Electronic Malfunction
NO
NO
YES
YES
Transfer MRO’s to
Support Service Branch for
RF Tags & Shipping list
Electronic Read
MRO’s / Material
By CK 31

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Receive MRO/Material
Do 100% count from
Storage/Receiving Sections
First Level 100% Count
of Pick List By
Supply Associates
Storage/Issue
Two Man Rule
Second Level 100% Count
By
Senior Supply Associate
Correct
Third Level Review
Issue Section Shift
Supervisor
Property placed in Tri-wall
Boxes, MRO delivered to
Issue Section ADM
Recount by
Senior Supply Associates
& Associates
01:39
(hh:mm)
YES
Correct
NO
AVERAGE TASK TIME

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Electronic Read
MRO’s/Material
By CK 31
Prep MRO/Material
For Shipment
Put file copy
MRO/Material in Issue
Files and on Material
With RF Tag
Electronic malfunction
(call service)
Transfer MRO Request
to Support Service for
RF Tag/Shipping List
Receive RF Tags/
Shipping List from
Support Service
8:24
(hh:mm)
NO
YES
AVERAGE TASK TIME

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Wrap and Band
MRO/Material
For Shipment
Load Truck
With
MRO/Material and Ship
00:23
(hh:mm)
00:28
(hh:mm)
AVERAGE TASK TIME

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TASK TIME
(hh:mm)
FREQUENCY STANDARD
(hh:mm)
Receiving
(Recount, Package)
0:46 3 1:38
Electronic Read
(RF Tag / Shipping List
and Sorting)
2:06 4 8:24
Shipment Preparation
(Wrap and Band)
0:23 1 0:23
Load Trucks 0:28 1 0:28
WORK MEASUREMENT STANDARDS

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Receive
MRO’s / Material Do
100% count from
Storage / Receiving Section
Physical count
Equals
MRO / Material
count
Prep MRO / Material
For shipment
RF Tag/Shipping List
Put file copy of
MRO / Material
in Issue files and
on Material
Wrap and Band
MRO / Material
for shipment
Load Truck
MRO / Material
and ship
Return
MRO / Material
to
Receiving / Storage Sections
Electronic Malfunction
NO
NO
YES
YES
Electronic Read
MRO’s / Material
By CK 31
AVERAGE LEAN SIX SIGMA APPLICATION

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AVERAGE LEAN SIX SIGMA APPLICATION
Receive MRO/Material
From
Storage and Receiving
Physical 100% Count Of
Priority-Sensitive
High Dollar-Pilferage
Accept/Count
Return to
Storage / Receiving
Property placed in Tri-wall
Boxes, MRO delivered to
Issue Section ADM
NOYES
00:46
(hh:mm)
Accept Counts for DRMO
Non Priority, Low Dollar
And Low Pilferage Items

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Electronic Read
MRO’s/Material
By CK 31
Prep MRO/Material
For Shipment
RF Tag / Shipping List
Put file copy
MRO/Material in Issue
Files and on Material
With RF Tag
Electronic malfunction
(call service)
04:12
(hh:mm)
NO
YES
AVERAGE LEAN SIX SIGMA APPLICATION

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Wrap and Band
MRO/Material
For Shipment
Load Truck
With
MRO/Material and Ship
00:23
(hh:mm)
00:28
(hh:mm)
AVERAGE LEAN SIX SIGMA APPLICATION

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TASK TIME
(hh:mm)
FREQUENCY STANDARD
(hh:mm)
Receiving
(Recount, Package)
0:46 1 0:46
Electronic Read
(RF Tag / Shipping List
and Sorting)
2:06 2 4:12
Shipment Preparation
(Wrap and Band)
0:23 1 0:23
Load Trucks 0:28 1 0:28
Lean Six Sigma Application – Reduction in Process Time
5:04 (hh:mm)
WORK MEASUREMENT STANDARDS UNDER
LEAN SIX SIGMA APPLICATION

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LEAN SIX OPERATIONAL FLOW
I Receive Property
A. Physical Count
a. Two Man Rule – 100%
1. Priority Items (1-2-3)
2. Sensitive Items
3. High Dollar Items
4. High Pilferage Items
B. Recounts / Returns
a. Property Document Mismatch
b. Quantity Incorrect – Physical Counts
c. Incorrect Item – Nomenclature
C. Accept Storage Count
a. DRMO
b. U.S. Depot Shipments
c. Non Priority Items
1. Low Dollar Value
2. Non Pilferage Items
D. Electronic Document Reads
a. Electronic Malfunctions
II Property Preparation
A. Wrap and Band Property
B. Prepare RF Tags/Shipping List in Issue Section
a. File Issue Documents
III Load Property

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Final Summary Projections
• Reduced Average Task Time By 47% = 5 hours per task performed by 3 personnel.
• Reduced manpower by 8 Eastern Personnel – Positions Not Filled –
Personnel Reassigned
a. Four moved to DS Warehouse
b. Four applied for other positions
c. Five of the eight positions were frozen – Eastern Employees
PCN#s – E201200, E201201, E201202, E201203, and E201205
Reduced 100% Inventory Counts by >/= 67%
a. One 100% count of Priority Sensitive High Dollar Items
b. Remaining counts using AQL (Acceptable Quality Level)
Historical Data and AR 740-26 Section 5-2 Supports this
decision.
• FTE = 176hrs a pay period or 44hrs a week.
• Labor rate $2.23 this is the average wage for GSD.
• Added Non Labor costs = 324.50212% of labor dollars
• FY09 Costs included a conservative 3% escalation.
• 2.23*3.2450212*44*52*4
• TOTAL SAVINGS TO END OF CONTRACT = $366,744
•