GB Stockout (Div Council)

8/8/2019 GB Stockout (Div Council)

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ptimizing Lost Sales ofptimizing Lost Sales of-arkhez G due to Stockarkhez G due to Stockuts during Potato Seasonuts during Potato SeasonSix Sigma Green Belt Project

North Sales Department


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Problem Statement In 2009, three marketing areas (Sahiwal, Okara & Lahore)

observed major stock outs during peak potato season (July-Oct) in Zarkhez green. This resulted into a lost sales of1100MT which is 16% of total sales (6740MT) in these areas.

This resulted in loss of Rs: 3.6 million in CM in 2009.


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Project Goal Statement1) To reduce the %age of Lost Sales w.r.t.

Total Sales to 5%2)3) Develop a process for Inventory

Management at Field Warehouses.


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Project Y % . .ge of Lost Sales w r t TotalSales ( / * )ost Sales Total Sales 100

: ( / )urrent Status 1100 6740 %6 :pper Specification Limit % :arget %


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AnalyzeData Analysis

Outlooks, Sales & Inventory Trends

Inv. Run charts

Focus GroupPO-Zkz, WHI,Core/Extended team members

Process MappingAs Is & Should be Processes

Fish BonePareto Analysis


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Vital XsSafety Stock Development at WHs

Safety Stock Calculation Format

Past Sales history (STDV)Expected Demand during Lead time (EDDLT)Service Level (SL)

Time Staggered Outlooks & Shipment PlansOL & Shipment Plan Development--- WH wiseMonitoring of shipment plan--- WH wise


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The Pilot Run( - . )July Oct 2010

&Data Analysis Benefits


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The Pilot RunPilot Run -- Sahiwal, Okara and Lahore.Warehouse-Wise Outlooks on Weekly were developed and a

Safety Stock Level was defined on Monthly basis

A time staggered shipment plan was finalized with Brandsand Distribution

Brands developed a Weekly Potato Monitoring SheetCoordination of Sales, Brands and Distribution was

maintained as per the pilot run SOPs

Warehouse Closing Inventory Data was monitored throughDSR

Warehouse-wise Sales and Inventory Trends were plottedagainst the Safety Stock Levels

Consumption of Safety Stock was Calculated on Warehouse-wise basis and Project Benefit was estimated

PILOT RUN DATA ANALYSIS 95% Service.xlsx
http://smb//tmp/sv4d5.tmp/PILOT%20RUN%20DATA%20ANALYSIS%2095%25%20Service.xlsxhttp://smb//tmp/sv4d5.tmp/PILOT%20RUN%20DATA%20ANALYSIS%2095%25%20Service.xlsx


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Project BenefitsYear Total Sales

(mt)Lost Sales(mt)

% Lost Sales(Y)2009 6704 1100 16

2010 8450 600 7

ServiceFactor

Safety StockConsumption(mt)

Expected Project Benefit

99 % 1985 23%

95% 1487 (17% )Endorsed byMoney Belt

12-13Million


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Recommendations

Replicability:Safety Stock-- @ 95% Service LevelPotato Crops

Sustainability:Half Day Session with all AMMs of LHE &

FSD ZoneConcept of Safety Stock down the line.


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Appendices


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:roblem Statement, ( , & )In 2009 three marketing areas Sahiwal Okara Lahore observed major stock outs

( - ) .during peak potato season July Oct in Zarkhez green This resulted into a lost% ( ) .sales of 1100MT which is 16 of total sales 6740MT in these areas It has also( ) % -been supported through market research 2008 conducted in OKA that 25 of Non

( % ) %user farmers segment 41 of total population and 21 of the Lapse farmer( % )segment 29 of total potato growers are switching from Zarkhez due to product

. : . .unavailability This resulted in loss of Rs 3 6 million in CM

:roject Goal Statement )1 % . . . %To reduce the age of Lost Sales w r t Total Sales to 5)2 .Develop a process for inventory management at warehouses

:rojected Benefits To reduce the lost sales to% ( : . )5 CM Rs 2 M

Develop a process forinventory management at.warehouses

Increase in revenue by the- .reduction in sale lost

/Part full processes from thisproject can be replicated for

.other crops as well

:usiness Case, -Due to stock outs there were sales lost of 1100 MT of Zarkhez Green during July

( %Oct that is 16 of total Zarkhez Green sold in these three areas for the).mentioned period in 2009 By inventory management at warehouses we can reduce

% %.,the lost sales to 5 which would result in improved revenue generation for.the company

Customers:Internal North Sales Department:External ,Farmers Dealers

:TQ s ; ( )Inventory Management Product Availability at Whs Must have / /Increase Sales Revenue Reduce Stock outs

Team, , , , ,NIq AN MSM NIt MJAK AMdxtended Team

, ,RN ASd

Scope:nclude

( )Potato crop July to Oct , ,Sahiwal Okara Lahore areas Inventory management at

warehousesZkz Production plan for this

time frame /02 03 plant orders Zkz Outlook accuracy

:xclude Import decision &Phosphate Zkz market

dynamics Shipment lead time

:ro jec t S ta rt Da te,arch 26th 2010D e f in eD e f in e :r oj ec t E nd ing D ate. ,ec 31 2010


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:roject Y % . .ge of Lost Sales w r tot al Sa le s( / * )ost Sales Total Sales 100: (urrent Status / )100 6740 %6:pper Specification Limit %

:arget %:roject Y Operational Definition

- -To reduce the product un availability of Zarkhez( - )Green in potato season July Oct to minimize lost.sales

:ro jec t Y S el ect io n E xp la na ti on Potential sales loss due to unavailability of

( ) .product stock outs in peak potato season

:easurement System Analysis on YActual sales Vs outlook and product avails from

/ .all sources mode of last three years

: / :ool Usage Notes GraphsM e a sur e

M e a su r e


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Validationby Market Research ( by Oasis 2008)

Based on the Actual Sales of Three Marketing Area(Sahiwal, Okara and Lahore) in 2009 and Market Research

Data the impact of Product Unavailability during PotatoSeason in the Form of LOST SALES is estimated to be around

1100 Tons.Area JUL AUG SEP OCT TotalSahiwal 457 825 230 1093 2605Okara 490 666 759 1110 3025Lahore 35 137 522 380 1074Total 982 1628 1511 2583 6704

Segment % of totalpopulation

ProductUnavailabil

ity

Lost Sales( )Tons

Lapse Users %29 %21 408Non Users %41 %25 687

Total 1095


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The Analyze PhaseF G (2 days) ZO North ---Core and extended teammembers

2 WHIs and 2 D&Mos

Analyze -- AS IS Process and identified the Areas ofImprovements

SHOULD BE Process was finalizedProcess KPI was segmented into departmental KPIs that

needed to be optimized in order to address the problems

Critical Factors Lack of Timelines of OL & Shipment Plan Lack of synergy/communication among Areas, Zone, PO-Zkz & Zkz-plant Distribution. Lack of follow up of OL Acc. SOP Lack of WH wise OL Development No concept of Buffer Stock Lack of Sales & Inventory Trend Analysis Lack of Past Sales Analysis (Mean, STDV) Lack of monitoring of shipment plan

No concept of Service Level Factor T ki i & hi d t i ti

GB Stockout (Div Council)

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