The document outlines a quality improvement project at Independence Corrugated to reduce damaged products being shipped to customers. It describes the current process which is resulting in high costs from customer credits and returns. A plan is proposed to standardize loading procedures, provide training, implement visual controls, and analyze failure data to reduce damage by 50% through prevention and process improvements.

1. 1EDU 501 12122013 © 2013 The National Graduate School of Quality Management
EDU QSM 572(O)
Cohort 116
Master Business Cost Project
Team Independence
10/10/16
Louis Poggenburg
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2. 2EDU 501 12122013 © 2013 The National Graduate School of Quality Management
Independence Corrugated Loading
Damage Project
Team Members:
 Louis Poggenburg
Manager, Quality Assurance
Independence Corrugated
Oak Creek, WI
 Kistler D. Fletcher Sr.
Senior Advisor, Logistics Automation
Project Manager/T3P
DynCorp International, LLC
Kabul, Afghanistan
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D M A I C
 Yvonne Rutherford
Risk Program Analyst,
Quality Management
Veterans Affairs
Dublin, GA

3. 3EDU 501 12122013 © 2013 The National Graduate School of Quality Management
Champion and Guiding Coalition
 Champion
Chad Gillenwater
The Plant Manager has complete responsibility for the overall leadership, commitment,
implementation, and adherence to Independence Corrugated Production & Quality System.
 Day-to-Day Champions
Joe Sexton
Production Superintendent; responsible for the day to day control of manufacturing
processes, equipment, maintenance and adherence to the Quality System.
Jacob Brandt
Accounts Receivable; gathers and collects data, maintains financial spreadsheets
John Luznicky
Production Coordinator and Safe Trainer; assists with quality as needed
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D M A I C
Define Stage

4. 4EDU 501 12122013 © 2013 The National Graduate School of Quality Management
Problem Statement
 The Independence Corrugated Plant in Oak Creek, Wisconsin, shipped
damaged product to its customers resulting in 57 requests for credits
totaling $11,420 between January 2015 and March 2016. External
nonconformance return costs due to rework and remanufacturing
resulted in an annual cost of poor quality of $89,320 during this time
period.
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D M A I C

5. 5EDU 501 12122013 © 2013 The National Graduate School of Quality Management
Current “As-is” Process
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D M A I C

6. 6EDU 501 12122013 © 2013 The National Graduate School of Quality Management
Fishbone Diagram
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D M A I C
Analyze Stage

7. 7EDU 501 12122013 © 2013 The National Graduate School of Quality Management 7
Shift 3 Shift 2 Shift 1
Value 20 11 2
Cumulative Percentage 61% 94% 100%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
5
10
15
20
25
DamageOccurrences
Customer Credit Requests by Shift Jan-July 2016
D M A I C

8. 8EDU 501 12122013 © 2013 The National Graduate School of Quality Management
Strategic Priority and Project Goals
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 To decrease product damage that occurs prior to loading in a shipping
trailer, resulting in a 50% decrease in monthly customer credit requests
based on receiving damaged product.
 To decrease product damage opportunities at each of the three “points
of contact” within the process flow; facility location drop point,
equipment contact points, and grid location of unit damage.
 Establish a monitoring system that reviews loading damage on a
weekly basis.
D M A I C

9. 9EDU 501 12122013 © 2013 The National Graduate School of Quality Management
Cost Analysis/ COPQ
9
D M A I C
Tasks Average hours
per Task Hourly Rate
Cost of
Element
Material
Costs
External
Failure $
Internal
Failure $
Total Failure
Cost
1. Customer Service
receives complaint
0.20 $25.00 $5.00 N/A $5.00 N/A $5.00
2. Forwards info to QA and
Production
0.10 $50.00 $5.00 N/A $5.00 N/A $5.00
3. Production
Superintendant investigates
problem
0.50 $50.00 $25.00 N/A $25.00 N/A $25.00
4. Cost of part N/A N/A N/A $776.27 $776.27 N/A $776.27
5. Production / QA
investigates the problem
4.00 $50.00 $200.00 N/A N/A N/A $200.00
6. Response and requested
credit is provided to
customer
0.75 $50.00 $37.50 776.00 $813.77 N/A $776.27
Total - - - - - -
$1,011/ea
Avg. Monthly Avg. Labor Avg. Material Avg. Total Total Damage $ Total Failure
Annual annualized
Failures = 52 # QVRs $ per QVR $ per QVR $ per QVR per year per year
4.4 $49.55 $776.27 $825.82 $42,943 $52,586.04
(50% reduction ) = $26,293.02

10. 10EDU 501 12122013 © 2013 The National Graduate School of Quality Management
Pareto
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Table 5.3 Pareto of Failure Costs
Problem Description
Failure Type Annual Failure $ No. of Annual Occurrences
1. Crushed product on 2nd & 3rd Tiers (50%) IF $13,147 26
2. Fork Damage (35%) IF $9,203 18
3. Side swipe (15%) IF $3,944 8
D M A I C

11. 11EDU 501 12122013 © 2013 The National Graduate School of Quality Management
Prevention Plan Costs
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Table 5.4
Root Cause Description
Corrective Action Rationale
Annual Hours
Needed $/hr. Rate Total $
1. Lack of SOP Write SOP
Standardize the
process
2.0 $50 $100
2. Lack of Training (3rd)
Train & qualify 3rd
shift
Standardize the
process
10.0 $50 $500
3. Communication Plan
Implement Visual
Management /
Metrics
Raise Departmental
Awareness
12.0 $50 $600
Total Total $1,200

12. 12EDU 501 12122013 © 2013 The National Graduate School of Quality Management
Recommendations - Prevention
 Internal Damage Audits - Internal damage data was not being collected; routine but random
audits were implemented during the measure phase and logged per shift by supervisors for
tracking and trending. Identifying internal damage before loading onto trailer will minimize
customer credit requests. The scrutiny has already improved damage occurrences. This
practice will continue.
 Develop SOP - Developing a written procedure for the loading process will standardize the
process which is a practice of highly reliable organizations and a best practice.
 Implement training with competency validation (3rd shift) - Drivers will have a standardized
method of loading and moving product, providing training regarding methods, methodology,
and best practices will give the drivers the skills and competency to load and move product
with less damage. Ensuring the drivers understand the training will be assessed using
competency skill validation.
 Implement Verbal and Visual Communication Plan - Communicating cost and frequency of
damage with expected goals between leadership and drivers will encourage personal
investment and result driven behavior. Routine communication will include the drivers in the
process improvement aspect encouraging buy-in.
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13. 13EDU 501 12122013 © 2013 The National Graduate School of Quality Management
Recommendations – Failure Analysis
 Identify 1st Shift Best Practices - Examining the process and environment on 1st shift will help
guide improvement efforts on 2nd and 3rd shift. This results in focused improvement efforts for
root causes. This information will assist in writing the SOP and training modules.
 Consult w/ Rite Hite Corp for Best Practices - Independence will benefit from other company's
lessons learned and research results regarding loading damage. Implementing best and proven
practices will minimize damage frequency prior to shipment. This effort may impact the SOP and
training aspects.
 Research dunnage utilization for truck load - Using dunnage (waste) to cushion product during
transport is a best practice used by other similar companies to avoid shipping damage.
Minimizing shipping damage positively impacts customer satisfaction and credit requests. This
research may take some time and will begin once all internal recommendations have been
initiated.
 Pursue benchmark venture w/ Ecologic bottles - Working with an innovative company and
expanding the uses of the product will increase business opportunities for the company. This
process may take months to establish a business contact and relationship. This is reflected in
the timeline.
 Add cameras facing inside of loading trailers - Using video footage to review loading practices
and the end results of product loads can be used for lessons learned and investigating shipping
damage. This step will likely cost the most and logistical research is needed therefore will occur
once drivers are trained.

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14. 14EDU 501 12122013 © 2013 The National Graduate School of Quality Management 14
Future State Process
D M A I C
Improve Stage

15. 15EDU 501 12122013 © 2013 The National Graduate School of Quality Management
Implementation Strategy
15
D M A I C
Prevention
Failure
Analysis

16. 16EDU 501 12122013 © 2013 The National Graduate School of Quality Management
Implementation Cost
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D M A I C
Prevention Plan Costs
Root Cause Description
Corrective Action Rationale
Annual Hours
Needed $/hr. Rate Total $
1. Lack of SOP Write SOP
Standardize the
process
2.0 $50 $100
2. Lack of Training (3rd)
Train & qualify 3rd
shift
Standardize the
process
10.0 $50 $500
3. Visual Management
Implement Visual
Management /
Metrics
Raise Departmental
Awareness
12.0 $50 $600
Total Total $1,200
Failure Reduction Analysis
Root Cause Description
Corrective Action Rationale Annual Hours Needed $/hr. Rate Total $
1st shift had 6% total damage reported
Implement Visual
Management / Metrics
Improvements to be added to SOP 4.0 $50 $200
Independence has not conducted a benchmark study to date
Consult w/ Rite Hite Corp for
Best Practices
Utilize lessons learned to further
reduce damage
4.0 $250/hr. $1,000
Missed opportunities to expand business opportunities in this
direction
Pursue benchmark venture
w/ Ecologic bottles
Expanding market share TBD TBD TBD
No real time monitoring of trailer damage inside trailer
Add cameras facing inside
of loading trailers
to obtain additional information for
root cause analysis
2.0 + 12.0 $35/hr; $3000 Equip. $3,490
Total Total $5,890

17. 17EDU 501 12122013 © 2013 The National Graduate School of Quality Management
Return on Investment (ROI)
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ROI
Achievable failure reduction (50%) $26,293
Prevention dollars
=
$1,200
=
21.91
Benefit / cost ROI = 21.9 : 1
D M A I C
ROI with Failure Reduction Analysis
Achievable failure reduction (50%) $26,293
Prevention dollars
= $5,890
= 4.46
Benefit / cost ROI = 4.46 : 1

18. 18EDU 501 12122013 © 2013 The National Graduate School of Quality Management
Payback Time
18
Prevention investment $1,200
Achievable savings
=
$26,293
=
0.05years
Payback = 18days
D M A I C
Payback with Failure Reduction Analysis
Prevention investment $5,890
Achievable savings
=
$26,293
=
0.22years
Payback = 80days

19. 19EDU 501 12122013 © 2013 The National Graduate School of Quality Management
Control Plan
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Control Stage
 Continue monthly Quality Variance Report monitoring and communicate frequency and cost with drivers monthly.
 Monitor trailer loading with cameras and utilize for training and staff meetings (lessons learned).
 Continue quality control audits for internal damage.
 Maintain annual refresher training to include annual competency skills testing on forklift and loading process.
D M A I C

20. 20EDU 501 12122013 © 2013 The National Graduate School of Quality Management
References
Fujii, R. (2013, July 19). Liquids in Cardboard Containers? The Record, pp. 1, 2.
Wood, Douglas C. (2013). Principles of Quality Costs (4th ed.). Milwaukee, WI:
ASQ Quality Press. 138-142.
Lean Six Sigma & Minitab Handbook, Quentin Brook, 2010, OPEX Resources, pg.
241.