HLL has opened a new factory in Himachal Pradesh to manufacture detergent. However, they are facing frequent stock-outs. The factory was started three months ago and now that the winters are here the problem seems to be worsening. We had expected that the processes should have stabilized by now but that doesnt seem to be the case. Can you help us?
- Factory works 24 x 5
- Factory uses seven different types of powers in equal proportion to make detergent
- There are seven silos at the factory for each power
- Stockouts happen at random in any one or more silo
- Each silo gets empty within half a day and needs refilling
- Seven trucks with nine drivers and nine cleaners are responsible for getting the seven powders from the feeder. Two drivers and cleaners are back-ups
- Feeder is 80 kms away
- Feeder has a bucket elevator which loads poweders into the trucks
- Bucket elevator takes two hours to load the poweder into the truck
- One truck can carry only one type of powder
- Drivers are paid well and are not dissatisfied
- Factory earns Rs. 100 crores each day
- Managers are satisfied with work and their bonuses are tied to them meeting targets. Stockouts are not something they want
Analysis and Pointers:
I started off by talking about all the ops jargon that I could think of – cycle inventory, safety inventory, lead time, variability in demand, reorder point. After some time Pranjal said he had no clue of what I was talking about. So I realized that there wasnt anything wrong with these things.
The rest of the case was pure commonsense and creative thinking – which I couldn’t do a lot of :)
In any case, here are my over all learnings from this case and also my ideas about how I will approach such cases in the future.
The problems could be in any stage of the inbound or outbound process. Therefore, the first task should be to identify the exact region where the problem has occured.
a.) For doing this it is very important to understand the entire process end to end. This is a must because each process is bound to be unique and unless you have a grip on the process its difficult to do any intelligent analysis
b.) Next you should track the problem to the exact stage or step where it occurs. It is likely that a problem occurring at one stage may manifest itself at some completely different stage
c.) Once you have isolated the erroneous step you can go about identifying the root cause of the problem
d.) Then, put on your creative thinking hat and get cracking at the problem!
e.) It is very important in a process improvement type case to analyse the impact of the recommendations that you give because changing the process at one stage may lead to new problems downstream or upstream. So do a sanity check
f.) Finally, provide recommendations to ensure that the fix stays fixed even after you (the consultant) have walked out … this might be your chance to wow the interviewer :)
I think after having documented these steps, I will be better prepared while tackling a process improvement case next time. Hope you find this useful too!