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Management Consulting Project - Completed December 2010
Citation preview
The Exchange
Presented to:Dr. Michael UmbleBaylor University
Overview of the Company
Army & Air Force Exchange Services
Governmental agency by U.S. Department of Defense
Support the MWR programs
Headquartered in Dallas, Texas
Managed by Major General Keith Lee Thurgood
Our Scope: Distribution Center in Waco, Texas
Receiving
Storage
Picking
Conveyor
Staging
Undesirable Effects
1. Net profits are not as high as expected (CRT, #154)2. The Exchange has a large percentage of expired goods (CRT,
#145)3. There is no real-time information monitoring (CRT, #137)4. The predicted forecast is inaccurate (CRT, #141)5. There is a large number of mistakes related to expiration dates
(CRT, #109)6. There is excessive money tied up in inventory (CRT, #118)7. The Exchange has a large percentage of products discounted
(CRT, #122)8. The Exchange has a large percentage of seasonal products in
inventory (CRT, #150)
103: Data is entered into the warehouse
management system manually
102: There is no vendor standard for recording
expiration dates on goods
105: The buying department attempts to
be cost effective in ordering
108: Buyers order in large quantities
111: Exchange experiences shortages of
goods
104: Distribution center desires
sufficient IT system
116: There is loss sales
opportunities
110: Actual demand is often less than
forecasted demand
115: Warehouse has large percentage of products
discounted(UDE #7)
113: Warehouse has large percentage of expired
goods(UDE #2)
114: There is a large percentage of seasonal products in inventory
(UDE #8)
117: Net profits are not as high as expected (UDE #1)
112: There is excessive money tied up in inventory
(UDE #6)
109: The predicted forecast is inaccurate(UDE #4)
106: Large number of mistakes related to
expiration dates(UDE #5)
107: There is no way to monitor real time
information(UDE #3)
101: There are conflicting goals between buying
department and Distribution Center
(Critical Root Cause)
Executive Summary CRT
Implement a new IT warehouse management
system
Use the current warehouse management system
Accurate real time information available
Stay within the allocated budget
Effective warehouse management
1.Real time information is the only way to effectively run a warehouse management system
2.Accurate data decreases rick of bullwhip through supply chain
3.Need real time data that is accurate for decision making
1.Money is a limited resource
2.All of the excess money is already allocated with the budget
3.One way of evaluating performance is how well you stay within the budget
1.Using the new system will not deplete the data integrity
2.Only way to have real time data is through the new system
3.Only the IT system will improve info availability
1.Employees are resistant to changes
2.Can’t rely on both systems at same time
Injection: A new system will initially cost more than our current system, but future savings will offset the cost of implementation
1.The current system is already within the budget
2.A new system will cost more than our current system
3.The current system does not require additional training
A B
C E
D
Evaporating Cloud
Desired Effects
1. Real time information is available for decision making of distribution center and procurement (FRT, #208)
2. There are minimal expiration date errors in the receiving area (FRT, #209)
3. Less money is tied up in inventory (FRT, #104)4. There are a decreased percentage of perishable inventories (FRT,
#105)5. Procurement department and the warehouse are communicating
effectively to determine inventory levels (FRT, #210)6. Forecast accurately reflects the demands placed on items (FRT,
#211)7. The Exchange has less discounted products (FRT, #106)8. The Exchange achieves expected net profits (FRT, #107)
109: Employees will not have to
manually enter data
112: Less labor is required for the same
tasks
111: Forecast accurately reflects
demand(desired effect #6)
105: Procurement department and warehouse
are communicating efficiently to decide inventory needs
(desired effect #5)
106: There are minimal expiration date errors
in receiving area(desired effect #2)
103: Upgrade current computer system
(Injection #2)
102: Have regular meetings between
procurement managers and the distribution
center(Injection #3)
107: The Exchange will have real time
information(desired effect #1)
101: Build new conveyor belt system (Injection #1)
108: Less money is tied up in inventory (desired effect #3)
110: There is a decrease in
perishable inventory (desired effect #4)
104: Increase velocity of items through
warehouse
113: Have less discounted products (desired effect #7)
116: Achieve expected net profits (desired effect #8)
115: The Exchange is more efficient
114: Exchange can reallocate employees to needed functional areas
within DC(Branch Trimming Injection)
Executive Summary FRT
Obstacles to Implementation
High cost for new IT solution
Natural resistance by top management and employees
Knowledge, skill, and capacity of employees
Managerial implementation policy