Thursday, December 29, 2005

Process Improvement Case - Pointers

This is a real life case on which Pranjal J had worked. What is mentioned here is a toned down version of the real stuff that he did… great fun :) I recommend that you should catch hold of Pranjal and ask him to give you this case. I am sure you will enjoy it.

Problem Statement:
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?

Facts:
  • 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
I wont mention the solution here... for that you should talk to Pranjal.

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 :)

Possible Approach:
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!

-- Yash

4 comments:

RW said...

More Questions I would Ask/focus on

As Each silo needs to be refilled twice in a day. Each truck would have to carry out two trips to the feeder and back.

Constraint - 24 hours in a day.

Total time per trip = 160Km/Average Speed + 2 hours for loading + 2 Hours/Unloading/ + Any other usual delay

assuming Average Speed = 30-40 km per hours

Minimum time = 160/40+2+2 = 8 + Any other usual delay (Such as stopping at railway crossing)


Miminum Time for two trips during two delays. 16 hours every day

Now clearly if Sleep time + Any other delay in travel more than 8 hours then Houston we have a problem.

We need to hire more Drivers/Cleaners


But it could be a slightly bigger problems ...

Trucks like the usual four wheeled beasts need maintenance. Does it take more than a day/ Half a day. this would mean atleast one of the silos would face stockout for that day.


Solution. Rent out more trucks vis a vis Buy more trucks. So you need to do a CBA for both.



________________
Find me at http://bbirds.blogspot.com

Chiranth Channappa said...

There are two bottlenecks with the set up, one of them has been described by bbirds.

Here’s my explanation of the other more fundamental problem.

Let’s assume for a moment that the feeder is right next door to the factory and there are no trucks used for transportation.

It would take 14 hours for the bucket elevator to load the powder for all seven silos -- I am assuming that a bucket elevator does a serial operation, i.e. loads only one powder at a time.

The above paragraph means that if a silo receives its load of powder at 9:00 AM, it can expect the next load only at 11:00 PM. But as the problem mentions, the silo would run out of stock within half a day, i.e. by 9:00 PM. Bang - you've got a stock-out!!

Yes, if this problem could be resolved using a faster feeder, the problem of transportation, as bbirds has described, would manifest itself.

Ananth said...

A worth while for Market research professionals

Anonymous said...

A great palce for Market research professionals. Really a lot of learning for me