Redesign of procurement processes through the utilization of lean manufacturing techniques and barcode technology

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1 ASQ Vancouver 25th Anniversary Quality and Business Excellence Celebration Redesign of procurement processes through the utilization of lean manufacturing techniques and barcode technology Luis Lopez, MBA, ASQ SSBB, PMP

2 UBC at a Glance Ranked among the 40 best universities in the world 58,284 students (Vancouver: 49,896) 10,181 international students from 149 countries 12,010 degrees granted 300,000 alumni in 120 countries 15,171 faculty and staff $2 billion annual operating budget $10 billion in economic impact

3 UBC Building Operations UBC Building Operations provides comprehensive facilities maintenance, operations and renovation services for lands and buildings owned by the University of British Columbia in its Point Grey Campus UBC Building Operations also provides services that you would normally get from a municipality (i.e. Waste Management Services, Utilities, Soft & Hard Landscape) UBC Building Operations employs approximately 700 staff including trades, custodians, labourers, engineers, architects and management staff.

4 Project Background

5 NEW ZONE SERVICE MODEL ORANGE ZONE RED ZONE GREEN ZONE YELLOW ZONE BLUE ZONE TEAL ZONE 8 Zones, aligned by faculty and location Average of 1 million sq/ft per zone Facilities Manager for each zone Zone Teams assigned by analysis of historical work performed in each zone Zone Teams were given a smart phone, business cards, vehicles (to share) and customer service training to engage clients directly BROWN ZONE GREY ZONE Strategic Goal: Improve Customer Service

6 New Zone Model and MRO parts Trades in the new facilities management zones were responsible for quick repair jobs (2 days or less). A quick turnaround for maintenance parts and supplies was needed to ensure the success of this new service delivery model This triggered an operational review of our supply storeroom and its business processes in early This resulted in a series of recommendation: a) Consolidating our purchases with a MRO supplier capable of acting as a supply/service integrator. b) Redesigning our storeroom lay out, dispensing processes, purchasing processes and inventory policies

7 Variability in Custodial Orders During the redesign of our storeroom operations we found significant variances in the quantities ordered by our custodial supplies. x = s = CoV =0.255

8 Custodial UBC Building Operations Custodial Services is responsible for the custodial care of UBC buildings. Our custodial team provides the following services: custodial cleaning of all offices, classrooms, labs, and common areas waste removal from buildings. recycling and pop / can bins pest control and monitoring Custodial uses a variety of paper products, cleaning solutions and all kind of cleaning supplies and equipment. Product usage is seasonal as a result of our academic year.

9 Custodial Services - Distribution Network Weber Supply s Richmond Branch UBC Building Ops Storeroom Supply Room in each building Janitorial Closet

10 Custodial Orders Variability While some of the variability could be explained by seasonal factors (lower demand during vacation months), there was still significant variance during the high demand seasons that were difficult to explain. This triggered a meeting with the superintendent of the area and a subsequent agreement to look at the cause(s) of this variability and determine possible ways to minimize it. The superintendent of the area, suggested analyzing consumption patterns at the Student Union Building

11 Student Union Building Project The Student Union Building is the most heavily used building in the campus and is run 24x7. It has not only the most popular food court in the campus but also a cinema, a pub, a ball room and all kind of entertainment and commercial establishments.

12 Kaizen event at the SUB A kaizen event was launched in the fall of 2011 in order to identify the source of order variability. Team Membership Custodial Morning Shift Manager Operational Effectiveness, Program Manager Assistant Supervisors (All shifts) Custodians (Morning shift only) A group of students from the Sauder School of Business were added to the project in an information gathering role (daily inventory measurements and staff interviews)

13 Kaizen event at the SUB - Findings Stakeholders indicated that they were running out of supplies frequently. Supervisors were either requesting rush orders from our storeroom or borrowing supplies from other buildings to avoid service interruptions. In the case of the latter one, supplies were rarely returned to the building that lent the supplies. This was so common, that some supervisors had begun to build up inventory to prevent stockouts. Custodians indicated that there were disagreements with supervisors in terms on when and how much to order. Supervisors had no incentive to minimize inventory at the time

14 Kaizen event Ordering Process Custodial Supplies Ordering Process (abridged) Custodial Supervisor Visits supply room and identify items to be ordered and quantity needed Fills out an order form with the part number and quantity needed Each supervisor had its own reorder quantity and reorder point Custodian Distribution Team Picks up order forms from Supervisor Deliver all order forms to the area manager Picks up order from Storeroom and deliver it to the building End Storeroom Area Manager Review all orders and provide all approve orders to Stores Process Order from Storeroom inventory Informs Custodian Dist. Team when the order is ready Purchasing authorization was manual and increasing processing time

15 Kaizen event Other findings

16 Kaizen event Other findings The main supply rooms in the SUB were not properly organized and contained all kind of supplies and products that were not used in their operations

17 Kaizen event Ishikawa Inventory Transfers Reorder Practices Kanban System Inventory taken was not replenished Reorder quantity and point was subjective Lack of demand data Custodial Supplies Stockout Lack of inventory visibility Approval process delays Untidy Workplace 5 S Process delays Paper based process Process redesign

18 Implementation of 5S

19 Preparing for implementing 5S Measured inventory baseline Collected consumption information for each item for 6 weeks (Sauder School of Business Student Group) Validated consumption information with historical purchasing trends Identify supplier lead time for each product

20 Implementation of 5S at the Student Union Building An untidy workplace is an inefficient and unsafe place Sort Set in Order Sweep Standardize Sustain Red Tagging Place everything in order Floor markings and signage Eliminate mess and junk Install Kanban Redesign reorder process Embed the 5S discipline into their culture Assign system ownership

21 SORT: Red Tagging Red tagging in this case consisted of placing a red tag on items of questionable need in our stock room. Red Tagging ensures that everyone has the opportunity to review items before they are categorized, moved or discarded, thereby preventing improper disposition (relocation or disposal). In addition, red tagging limits the number of individuals authorized to order the disposition of an item.

22 SORT: Red Tagging Not Needed Discard Red Tag Items Place in Holding Area and start sorting Is it Needed? Often Keep it in stockroom Needed Ocassionally Move to other location Seldom Return to Stores or Vendor

23 Set in Order and Shine Before After

24 Standardize: Kanban Design

25 Standardize: Kanban Design

26 Standardize: Kanban Design Tape Tape Kanban for stacked supplies supplies in a on shelf a shelf 20 days R Qty 15 days 10 days Shelf Edge Strip Post or Side Panel Hand Soap box Hand Soap box Picking direction Buffing Pad Buffing Pad Buffing Pad Hand Hand Soap Buffing box Pad Soap box Buffing Pad Shelf Buffing Pad Buffing Pad Buffing Pad Reorder Point Shelf Hand Soap box Hand Soap box Reorder Here Picking Direction Maximum stock

27 Standardize: Kanban Design We then had the visual aids to know when to order and how much to order but we needed to change the paper-based process

28 Purchasing Process Redesign

29 Purchasing Process Redesign Methodology for Replenishment Notification: 1. Laminated Cards 2. Barcode Selected

30 Purchasing Process Redesign Our ERP at the time was not web-based, limiting our ability to use mobile computer handhelds or any other portable barcode scanners. Weber Supply helped us designing and implementing a simple process that not only uses barcoding technology to generate replenishment notifications but enable the implementation of a just in time approach to inventory.

31 Purchasing Process Redesign

32 Purchasing Process Redesign

33 Then the user has the opportunity to review the order details and make corrections if needed. Once he is satisfied with the order, he can submit it. The system routes the order to UBC Building Operations storeroom and the custodial manager Purchasing Process Redesign

34 Purchasing Process Redesign Building Ops Storeroom receives the replenishment order via and transform it into a purchase order for Weber Supply The custodial manager in charge of the building generating the order is copied in the to Stores. This allows for order audits. Then Weber Supply fulfills the order and ship it to our storeroom Once the order is received, the custodial distribution team delivers the order to the requestor

35 Electronic Replenishment Order Just in Time Electronic Approval

36 Results

37 Results at the Student Union Building 36% less inventory 55% decrease in processing time Elimination of stock outs & rush order Increased space utilization through: The removal of product that was not needed (obsolete, samples, used product, someday maybe, etc) Disposal of shelf A more efficient paper product replenishment process Engaged staff These results convinced the senior leadership at UBC Building Operations of the need of implementing this system in the entire campus

38 By the end of 2012 we had implemented this kanban system and purchasing process in the 8 largest buildings in the campus with an average inventory reduction of 64% 22 more buildings were added to the system in 2013 with an average 45% reduction in inventory By the end of this year we will have 53 buildings using this methodology This process has been implemented to other areas Campus Wide Implementation

39 For Further Questions Luis C. Lopez MBA, ASQ-SSBB, PMP, BSChE Program Manager Building Operations Operational Effectiveness The University of British Columbia 2329 West Mall Vancouver, BC Canada V6T 1Z4 Phone Cell

40 Questions

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