Sutphen Internal Supply Chain Restructuring Project_DFSS

DFSS: Restructuring the
Internal Supply Chain
Inventory management was done as an ad-hoc
process. Floor leads guessed how much
inventory they would need and when they
needed it based on tribal knowledge. Then
they would flood the Purchasing Dept. with
requisition forms, often for parts that were
already on-order and/or ordered in other depts.
The company has been looking to move to a
new ERP system and decided to bring in a
Green Belt to design a new manual inventory
management and a centralized warehouse to
house the process.

D C D O V
Understanding the needs to be fulfilled by the new design
Define
utphen Company: A 120+ year old company
who has survived based on making quality trucks
through hard work as the company has been handled
down from on Sutphen to another. The company has
grown and expanded , their production operations
have been the main focus while it’s business process
have developed ad hoc.
The Approach: Implementing an ERP system at Sut-
phen has been in the works for some time, however
stock-outs were common, purchase orders were never
consistent, floor employees dictated when and how
much to order. Inventory control had to happen be-
fore the move to the ERP system. The company de-
cided to bring in a Green Belt candidate to tackle this
problem by designing a new system. The system is
intended to serve as a “backbone” to aid the company
as they go thorough the acclamation phase of the ERP
transition.
Interviews: The first step was to meet the team.
Talking with them to see who to rely on, what posi-
tions they held/roles they filled and who had what in-
formation was the first task. From them the picture of
how the system actually works could form. However,
it was found that once one had a grasp how a process
would work there often it was met with a response of
“Yes, but not exactly…” There were some process
maps that had been done by previous external consult-
ants for individual processes and after the candidate
compiled a composite, much clarity regarding the
learnings from interviews was reached.
Finding the problem: With the process maps provid-
ing Level 2 detail of operations, we still needed to
zoom out to a Level 1 view to grasp the problem at
hand. The product ended up with a model like the pic-
ture at the bottom right above. It became intuitively
obvious that purchasing was the bottleneck. Then the
candidate went out the warehouse and dimensioned
the building for a baseline.
Voice of the Customer: Going around for a second
round of interviews revealed people’s expectations of
the system. The first House of Quality helped to
translate these into technical features for the design to
focus on.

D C D O VConcept
Solving the problem through
redesign
System Concept: This phase contained a lot of tools
and work. The first thing that had to get figured out
was how to solve the systematic problems. The new
system model that was going to solve the issues of the
old ways turned out to be the picture in the top left
corner above. There will be a central warehouse the
sends material to the floor in the form of kits and re-
plenishment bins, which is noted as the replenishment
loop. Then the warehouse will send Kanbans to pur-
chasing, instead of coming directly from floor, to tell
them when and how much to order.
Measurement Plan: Next, we had to execute the
measurement plan that was developed in the Define
phase. The Yellow Belt candidate that started at the
beginning of the year had the task of extracting the
data from the old system and to build a data ware-
house. The other component of the measurement plan
was to execute the sampling strategy and gather the
physical dimensions of parts. This data would be used
to later to calculate the spatial requirements for and
the capacity of the central warehouse. We used a grid
that marked the sizes for the “buckets” that we laid out
before execution. We would put a part on the grid and
checked which sized bucket it’s footprint would fall
in. The grid is shown above the histogram. The histo-
gram is the results with increasing size buckets going
from left to right.
Process Concept: One thing not shown in the graph-
ic above is the Shipping and Receiving process rede-
sign (which includes storage at central warehouse).
The building that has the S+R office and the ware-
house are adjacent to one another. The concept is to
turn the process into a U-shaped cell to provide visi-
bility between the open end (receiving/QA) and the
back end (material leaving the warehouse). A door
that lead from the office directly to the warehouse was
put in.
Warehouse Concepts: Several layouts were con-
structed and evaluated. The three main plans are
shown in the graphic above. Drawing on team mem-
ber’s previous learnings and warehousing textbooks
the layouts with different flow patterns were concep-
tualized. Pros and Cons were developed for each then
the team decided which one they favored.
This model was used to conceptualize the design
for the new system and highlighted the main
functions.
Before designing a warehouse to store inventory,
we needed to understand the size distribution
for parts. We used a grid to measure the foot-
print of a part and which size category it fell into,
which was used for capacity estimates.

D C D O VDesign
System Design: The system model that was created
in Concept was taken a step further. The system was
drawn out in the form of a value stream map (seen
above). The SOPs for every operation within both
loops were recorded and time estimate for each step
were developed from the SOPs.
Warehouse Design: Initially, we had only a percent-
age of the building for our warehouse. After the po-
tential for benefits sunk in and the project gained
some momentum, the team was able to get the other
part of the building to be added to our scope.
We had dimensions of the shell from Define and the
next step was to establish what kind of material han-
dling equipment we had at our disposal. This deter-
mined the aisle widths. Because the building was long
and too narrow for the MH equipment to come back
around in a circle, the warehouse had to be divided in
half: one side for items requiring the equipment to lift
and one side for the lighter items.
Next, we had to designate area for the attendant to
perform their functions (kitting and receiving in-
bound) . Then the flow patterns for material had to be
thought through. The plan was to do a FIFO method
with the center rack having access on both sides and
the other racks being accessed from only one side.
While getting quotes, we were offered a great deal on
gravity fed racking which we positioned around the
kitting area for most used parts. A cage was added to
the front door so people could come in and place or-
ders but not remove parts unsupervised.
Kanban Design: Once the Kanban type had been se-
lected in concept, we realized that the use case in each
loop was slightly different. Additionally, the same
card had two different audiences. So the front was
design for the person pulling the card and the back
was design for the person receiving the card. The
cards were color coded to indicate which loop they
belonged to.
Build Plan: The needed materials were given to the
company’s three main racking vendors for quotes.
We decided to buy select materials from each that
minimized our total cost. The construction happened
concurrently with the next phase.
Detailed Design
The system, at each major level of inference,
is shown to the left. This system included
elements of lean, set the company up for
success and solved the focal problems ad-
dressed in Define. Below, is the final design
of the Kanban which was selected to be a
card like the sister faculties had.

D C D O VOptimize
Current
State
Designed
StateThe yellow belt candidate that was assigned
the error-proofing hard triggers developed a
Kanban selection tool that will help drive
system towards the idealized design state
Piece-wise Implementation
For the old system data that was extracted, there was
no discipline around recording/tracking. The team de-
cided to go straight to vendors seeking feedback. The
emails asked for a quoted leadtime and for several price
quotes in order to find a bulk order discount.
The current state of the design was planned and implemented as the
first phase in a series of steps (due to not having enough funding) up to
the complete idealized design state.
Warehouse Low Level Design: There were still
parts in the warehouse during construction. After
building, the parts got moved back onto shelves and
the low level design started around those parts. Those
parts were mainly pallet items and weld parts. We
knew that we wanted to keep as many parts as we
could close to the kitting area for quick access. The
small bins (and thus more bins) were put on the bays
closest to the kitting area.
Accordance to EOQ model: In the warehouse, in-
ventory levels will be set according to the EOQ mod-
el. One of the yellow belt members had created a list
of recommended SKU to centrally control and calcu-
lated EOQ, reorder point and safety stock based off of
system data. The Green Belt candidate decided to set
floor levels as (EOQ - reorder point) / 2 / # of POU
locations.
Implementation Plan: We did not have the budget to
completely fund all aspects of the design. So we had
to implement in phases and make a gradual transition
up the idealized design. We did not have the bins to
fill out the floor locations, the warehouse and the emp-
ty ones that would be traded out on the floor. So we
had to sacrifice populating some of the floor locations
not having bins so we could use them for transporting
material out of the warehouse.
Outsourcing Risk Management: We would not get
time to pilot this new system so we had to bring on
two more Yellow Belt candidates to take the risk man-
agement part of the project to ensure a smooth opera-
tion once it come online. The Green Belt helped
guide them and teed up one of the projects. After go-
ing through a rigorous FMEA on the design, they
landed on error-proofing warehouse Kanban/hard trig-
ger selection and proactively seeking out parts at risk
for EOQ change by performing a sensitivity analysis.
Seeking Feedback: The team met to look at the EOQ
calculations and determine if they were feasible.
There is the potential for our EOQ to be off, not due to
any fault on our Yellow Belt ‘s project, but due to how
the data was captured. So the team put together a
spreadsheet to send to vendors for leadtime and price
quotes for 1/2, 1, 2 times the EOQ looking for bulk
order discounts.

D C D O VVerify
Before... After...
To ensure the sustainability and progress of this transition...
System and Kanban Monitoring via Excel EOQ “Watch-out” Tool
(Yellow Belt Project)
Quarterly Review Meetings Visual Management
SustainabilityPlan
Visual Management Elements: A simple element to
add to the design that will error proof operations is
visual management. We plan to paint lines on the
floors of the warehouse for forklift traffic and indicate
to people not to stand, park or drop stuff there. Also,
we plan to paint the outlines of skids on the floor so
the material handler knows where to drop of the ship-
ment without getting in the way of traffic.
Quarterly Review Meeting: Part of sustainability is
continuous review and continuous improvement. To
ensure this, the design calls for key members of the
organization to meet on a quarterly interval to go over
system performance, address issues of concern, listen
to feedback, integrate new information, and plan con-
tinuous improvement activities. In the beginning the
team will have to meet more frequently (bi monthly)
to catch problems of acclamation early which will
gradually change into quarterly.
Review Meeting Tools: For the meeting just dis-
cussed, the team will have several tools and/or inputs
to use in the meeting. For the early meetings, the
team will have the feedback from vendors to adjust
level settings. The team will also have feedback from
the floor, which will be particularly helpful in clean-
ing up the BOM so MRP can be run. The team will
also have a system monitoring tool that watches ware-
house levels and how close they get to reorder point,
dipping into safety stock and running out. The other
metric tracked by the system monitoring tool is the
frequency of cards entering the warehouse (which can
indicate floor levels being set too high or too low) and
the number of expedited orders (which indicates trig-
ger not working, levels not being set correctly, or em-
ployee buy in issues).
Jared Walter is a Green Belt candidate with the Industrial and
Systems Engineering department at The Ohio State Universi-
ty. He has worked Operations Research and Quality Control
at a composite materials manufacturer.
Acknowledgements:
 Adrian Hall, Josh Niewiadomski, and Nick Stagge for their
contributions to this project
 Dr. Scott Sink for being a great mentor
 Jon Corsetti (for his coaching) and the rest of Sutphen

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