FreestockFloor Stock Vendor Managed Inventory Endries Dax Tripp

Freestock/Floor Stock Vendor Managed Inventory -Endries- Dax Tripp, Jeffrey Howell, Tiffanie Martin, Ben Ruby, Alice Cook Dr. Jimenez, Wes Olive, Psyche Bryant May 5, 2015 1

Problem Statement What is the Current Problem? Out of all the orders that affected Schedule Attainment in December 2014, 13% were related to Freestock/Floor stock Stock-Outs What is Freestock/Floor Stock? Freestock/Floor Stock Typically Comprise Commonly used Fasteners which are Hardware that Adjoin Objects using Screws, Bolts Among Other Components Philips Freestock/Floor Stock Components List Currently Also Includes Wire, Glue, Tape, Bags Among Others Impact of Not having the Correct Mixture of Freestock/Floor Stock Components? • Missed Customer Orders • Assembly Downtime • Firefighting • Confusion on Replenishment Process • Ownership of Process 2 Goal: Reduce stock outs by 25% Confidential DMAIC presentation template

Define Utilized Six Sigma Tools: SIPOC Process to Identify Scope of the Process our Project will Address Suppliers Inputs Process Outputs Decision Tree for Scope of Project 3 DMAIC presentation template Confidential Customers

Measurement Data Gathered • Process Chart – 3. 8% Value Added • DPR – Customer Attainment • Endries Annual Usage – Usage, Lead Time, VMI… • Philips Item Master – 43% Alignment • Bin Measurements – 23% within 20% EOH 4 DMAIC presentation template Confidential

Freestock Issues Stock Outs and Current Process • Endries VMI Classification • Months Usage • Lead Time • Component Type • Philips VMI Classification • Annual Usage 5 DMAIC presentation template Confidential

Analyze Design of Experiments to Verify Root Causes for Stock Outs Analysis of variance table [Partial sum of squares - Type III] • Significant factors have p -values < 0. 05 • R 2 = 0. 79 – Adj R 2 = 0. 4 • Most significant factor is the interaction between Lead Time and Annual Usage. 6 DMAIC presentation template Source Model A-Endries VMI B-Item Master SC C-Months Usage D-Annual Usage E-Lead Time F-Component Screw DE AC CD CE AE AD Residual Cor Total Std. Dev. Mean C. V. % PRESS Sum of p- value df Mean Square F Value Squares Prob > F 13197. 52 41 Rank of Significance 321. 89 2. 03 0. 039 model is significant 722. 27 1 722. 27 4. 56 0. 0442 7 819. 39 1 819. 39 5. 17 0. 0331 6 415. 14 1 415. 14 2. 62 0. 1198 34. 52 1 34. 52 0. 22 0. 6453 47. 27 1 47. 27 0. 3 0. 5905 31. 64 1 31. 64 0. 2 0. 6594 1732. 64 10. 93 0. 0032 1 1198. 89 7. 56 0. 0117 2 1198. 89 1 1198. 89 7. 56 0. 0117 2 1164. 52 1 1164. 52 7. 35 0. 0128 4 848. 27 1 848. 27 5. 35 0. 0304 5 708. 89 1 708. 89 4. 47 0. 046 8 3486. 59 22 158. 48 16684. 11 63 12. 59 6. 33 198. 94 Confidential 29506. 38 R-Squared Adj R-Squared Pred R-Squared 0. 791 0. 4016 -0. 7685 Adeq Precision 7. 226

Analyze Solutions • Desirability at 0. 949 if usage set at < 500. • Desirability reduced to 0. 7 if annual usage required to be > 500. 7 DMAIC presentation template Confidential

Improve Solution: Develop Criterion for Each Category Freestock. VMI Kanban System Freestock Purchase Information Philips Manufacturing Facility 8 DMAIC presentation template Replenish Bin(s) Confidential Vendor Distribution Center

Improve Using Six Sigma Tools: RACI Chart to Clarify Roles and Responsibilities Responsible Accountable Process Map for Source Code Conversion 9 DMAIC presentation template Consulted & Informed Material Flow for Based on Source Code Confidential

Control Dashboards Dashboard to Track Stock-Outs & Performance – Stock-Outs by Week, – Stock-Outs by Source Code/Criteria § Read-Out of Components with Highest Impact and by Criteria – % of Components Seen by Both Parties 10 DMAIC presentation template Confidential

Control Measuring System • Statistical Proof that Methods Implemented have dropped Stock. Outs • We Expect this Trend to Continue as Components are Addressed 11 DMAIC presentation template Confidential

Collaborating With A Special Thank you to: Philips Members • • • Texas State University Members Chris Venicx – Plant Manager Wes Olive – Supply-Chain Manager Psyche Bryant – Assembly/Manufacturing Mgr. Felipe Caldeira – Industrial Engineer Francisco Gutierrez – Senior Industrial Engineer • Dr. Jesus Jimenez – Industrial Engineering Capstone Faculty Advisor Additional Thanks • • • 12 DMAIC presentation template Dr. Tongdan Jin – Industrial Engineering Professor Dr. Clara Novoa – Industrial Engineering Professor Dr. Eduardo Perez – Industrial Engineering Professor Confidential