A Furniture Company Solves its Business-Threatening OTIF Problem in Less than 6 Weeks
The Situation
A furniture company, FurnitureCo*, had been dealing with poor delivery performance for years. As with most businesses, this was just one of the many issues they had to deal with on a daily basis, but had not yet managed to get under control.
In a world of 20,000+ SKUs, the vast majority of orders for a single SKU, multiple delivery methods, a combination of internal and external logistics, inconsistent customer data on arrival dates, and a patchy network of available data - getting to a clear answer on what to do was management’s nightmare.
In production, the firmly held belief was that raw material availability was the main cause for poor delivery performance - the vast number of different raw material SKUs and a lack of storage space meant that stocks were continually running empty. Planning viewed raw material availability as a minor issue. Instead, they believed it was the external logistics companies that were at fault. They were convinced that finished goods were being dispatched on time, yet customers consistently complained about late deliveries. Others simply believed that the product complexity was too broad to reliably deliver any customer order within the agreed lead time.
This was troubling enough under normal circumstances, but it soon became FurnitureCo’s biggest problem. Their largest customer, accounting for 25% of FurnitureCo’s overall sales, was threatening to leave if FurnitureCo could not increase delivery performance fast. On top of this, orders for this customer were already the first priority to produce in production, and they were still threatening to leave.
Needing to solve this problem quickly and permanently, FurnitureCo brought in Stroud to help them deliver a 60-Day Breakthrough.
Finding Opportunities and Problem Solving
A cross-functional team, including two Stroud facilitators, was set up to delve into the problem.
After a couple of intense weeks digging through the production and delivery systems to factually identify all of the reasons for late deliveries, two things became clear: the initial theories that people had, whilst contributing to the problem, were accounting for less than 5% of the problem; and, the main drivers for the low delivery performance were completely in FurnitreCo’s control.
Two weeks in, and the team had their first big win. Certain parameters in the planning system had been configured such that the customer’s desired delivery date was being interpreted as the date on which the product should have left the plant. This meant that the system was set up to finish production on the same day the customer expected the piece of furniture to arrive at their facility - not very likely given that transport took 1-5 days. The team corrected these parameters, and delivery performance instantly jumped 15%.
For years, this system had been treated as a black box. The status quo had taught everyone to accept the data being spat out by the system and not challenge what that information meant. Challenging such myths was a new way of working, but caught on quickly with people. Seeing delivery performance jump embedded a belief in everyone that this challenge, approached correctly, was not only possible but welcome. The team had just shown the impossible problem to be solvable, and that was powerful.
The Results
Armed with the confidence that solutions were possible, the team drove a further set of improvements by optimizing product scheduling, production workflow, and transportation. With all of the improvements implemented, the team achieved a level of 95%+ delivery performance, 50% better than only a few weeks earlier.
Word of the result achieved spread quickly through the organization. The news of 95%+ delivery performance spread to every department and was revered as a company-wide success. In just a few weeks, FurnitureCo had gone from a business-threatening problem without clear answers to being able to go back to their largest customer with confidence.
*We take our client’s confidentiality seriously - the names are fictional, but the results are real!
Like this case study? You might like:
