Petdoors Final Report Final
Petdoors Final Report Final
Petdoors Final Report Final
Tony Cohn
Daniel Louis
Anne Shields
Table of Contents
Executive Summary.........................................................................................................................2
Literature Review.............................................................................................................................3
Using ABC Analysis for Inventory Control.........................................................................3
Kanban at the Nexus............................................................................................................4
Ways to Make Your Teaching More Effective.....................................................................4
Select....................................................................................................................5
Issue 1: A Financial Bottleneck............................................................................................6
Issue 2: Disorganization.......................................................................................................6
Issue 3: Timelines and Guidelines.......................................................................................6
Record..............................................................................................................7
Examine...........................................................................................................9
Develop..........................................................................................................12
Option 1: Returns System Redesign..................................................................................12
Option 2: Cease of Non-EnduraFlap Sales........................................................................12
Evaluate..............................................................................................................13
Component 1: Holding Bin and Check-Off Sheet.............................................................13
Component 2: Inspection and Packaging Workstation......................................................15
Component 3: Brand-Based Shelving System...................................................................16
Component 4: Oversized Return Storage Area..................................................................17
Define.............................................................................................................18
Install..........................................................................................................20
Maintain.....................................................................................................20
Works Cited........................................................................................................21
Executive Summary
Over the course of eight weeks, our Industrial and Manufacturing Engineering 223 (IME 223)
team performed a process improvement project at PetDoors. PetDoors, based out of San Luis
Obispo, California, manufactures doors for pets, and serves as a manufacturers representative
for a variety of other companies that produce animal-related goods. A team, including Tony
Cohn, Daniel Louis, and Anne Shields, performed the process improvement project. A variety of
problem solving techniques and lean manufacturing concepts taught in IME 223 were used.
The project focused specifically on improving the return process for products not manufactured
by PetDoors. The existing return process is plagued by complete disorganization and a lack of
rules and timelines instructing PetDoors employees on return process procedures. Not only does
the existing return process pose a physical barrier in the PetDoors warehouse, but also as a
financial barrier subcontracted companies wont refund PetDoors for their returned products
until PetDoors ships back the defected (or unwanted) product.
In order to learn more about the existing return process, our team collected various data samples
at the PetDoors facility, including inventory counts, pictures, conversations with employees, and
spreadsheets of shipping information. Flow process charts, operation charts, spaghetti diagrams,
and Pareto charts were then used to analyze the collected data. Throughout several team
meetings, an ideal-state return process was formulated, and documented through new flow
process charts and spaghetti diagrams.
Improvements to the return process are summarized by:
Literature Review
Using ABC Analysis for Inventory Control
The article Using ABC Analysis for Inventory Control, by Carleen Wong, explains ABC
inventory concepts, describes the purpose of ABC analysis, and lists advantages of implementing
an ABC inventory system. According to Wong, ABC analysis should be the first step when
gauging an inventory situation. ABC analysis is an inventory control method, based off of the
Pareto Principle, which says that a small number of components of a population will likely
dominate the end results the vital few (20% of the population) determine 80% of the outcome.
Similarly, ABC Inventory adapts the Pareto Principle to sort inventory into three categories A,
B, and C items:
A Inventory accounts for approximately 20% of the items and 80% of the financial
outcome
B Inventory accounts for approximately 30% of the items and 15% of the financial
outcome
C Inventory accounts for approximately 50% of the items and 5% of the financial
outcome
Although these percentages tend to vary by company, the advantages of implementing an ABC
Inventory system are similar across the board. Wong claims that by sorting inventory into these
three categories, managers are able to focus efforts on the items that have the largest effect on
revenue. In addition, conducting an ABC Inventory analysis aids industrial engineers in
designing manufacturing facilities for maximum efficiency.
Although our IME 223 team didnt actually conduct a complete an ABC analysis on NonEnduraFlap (NEF) returns, we used the ABC ideology described in this article to better our
redesigned NEF storage shelf. After conducting NEF inventory counts throughout trips to the
PetDoors facility, our team constructed a Pareto chart, which graphs NEF returns by return
frequency, as can be seen in Figure 3, in the Examine section. This chart allowed our team to
determine which NEF products are most frequently returned, and place those products in
appropriate locations in the proposed shelving system. NEF products with higher return rates are
placed closer to the adjacent shipping station, whereas less frequently returned items are located
further away in the shelf.
The way to establish credibility and commitment to the new returns process is by being confident
and comfortable with the information we are providing. The employees will not fully trust the
new process if they do not think we truly know and believe that the new process will be
significantly better. Establishing credibility and commitment is all determined by the delivery of
the information. When presenting the new process, hand gestures should be used to add emphasis
to what is being said. Additionally, when the new system is in place, demonstrating the process
and explaining each step will make it clear to the employees how it properly operates. During the
presentation we will constantly gauge the audiences level of understanding. The most important
and critical points will be repeated to bring attention to their importance. Overall, the
presentation will be conversational to keep the audience engaged.
With these new skills that I learned from Ways to Make Your Teaching Better, our presentation
will be direct and clear. All of the PetDoors employees will leave the presentation with a
thorough understanding of the new returns process, and will be convinced of its superiority to the
old process.
Select
Despite early challenges with locating a San Luis Obispo based company willing to take on a
process improvement project, our team ultimately selected PetDoors. However, selecting an
individual process within the PetDoors facility also proved to be difficult for several reasons.
Although PetDoors isnt considered a large company, they have a high volume of products being
manufactured, documented, shipped, inspected, and returned, all within their small, San Luis
Obispo headquarters. In addition to manufacturing their own, high-end pet doors under the name
EnduraFlap (EF), PetDoors serves as a manufacturers representative for a variety of other NonEnduraFlap (NEF) companies in the pet industry. These companies include:
Furthermore, the existing system lacks any guidelines that make employees accountable for
shipping back NEF returns, and also lacks timelines concerning how often the task must be
completed. The result is a stack of untouched returns that grows by the day until dealt with by
one employee.
Although the existing NEF returns process is discussed in greater detail in the Record section,
the steps are summarized below:
1.
2.
3.
4.
5.
6.
7.
8.
Record
Originally, there was no inventory of the NEF returns, so our team counted and and recorded the
current NEF. Many of the products were scattered and not organized by brand, type, or date of
return. The existing NEF return area is displayed on the following page, in Figure 1:
Figure 2: Data table with inventory numbers for NEF returns by brand.
Our team gathered information from employees in order to get a better understanding of their
biggest problems regarding the NEF returns process. The biggest problem PetDoors faced was
that there was no current system in place for tracking the NEF returns, as well no routine way to
determine when enough NEF returns had built up so that it was cost efficient for PetDoors to
ship them back to the supplier.
Examine
The examination of inventory for EF and NEF returned products demonstrates the severity of the
problems within the return process at PetDoors. When first deciding whether to focus on EF or
NEF returns for our project, our team collected data for the number of returns for each type of
product. The number of returns for NEF products was drastically higher than the number of
returns for EF products. This disparity is present for a number of reasons; mainly because EF
products are very high quality, top of the line pieces, while NEF are made from cheaper, low
quality parts. After examining this data, we decided to focus on NEF returns for our project
because they represent the larger quantity of all returns at PetDoors, thus accounting for the
majority of the overall problematic returns process.
Focusing only on the NEF returns, our team examined the inventory data collected from trips to
PetDoors facility. We divided the data by brand of each returned product and created a Pareto
Chart for the frequency of NEF returns, shown below in Figure 3. As shown, the brands PetSafe
(PS) and BugOff (BO) are the two NEF brands with the highest frequency of returns.
Figure 3: This Pareto Chart for NEF return frequencies shows the breakdown by brand of the
quantity of returned NEF products.
In addition, our team created a current state operations process chart (Figure 4), as well as a
current state flow process chart (Figure 5) for the NEF returns process. These charts highlight
key issues with the return process at PetDoors, and can be viewed on the following page:
Figure 5: Flow Process Chart for Current State NEF retruns process
While both charts demonstrate an outlined returns process in place, it currently has no
organizational method for sorting the NEF goods once they reach the designated returns section
of the facility. More importantly, once the products reach the return area there is no kanban, or,
for when the goods need to be shipped back to the original supplier.
In the current system, the NEF returns continue to pile up until an employee contacts each
respective supplier to find out their specific policy for returning their products and sends the
products back. However, as previously mentioned, there is no routine time when this is
performed-it is simply dealt with when an employee sees fit or the returns area reaches a point of
over-capacity. The bottom line for PetDoors is that the NEF products that remain in their facility
are basically a net loss for the entire company: the products cannot be resold and if they are
never returned, PetDoors is receiving no reimbursement.
The examination of the current state spaghetti diagram, shown below (Figure 6) shows a
problem with the logistics of the returns process in terms of worker motion. One worker has to
make many trips to place the NEF product in the return area, fill out the RMA form, send the
RMA form to the office, and then process the return for shipment back to the supplier. The
worker has to cross the entire facility multiple times, resulting in wasted time, unnecessary
motion, and product conveyance waste.
Figure 6: Spaghetti diagram modeling the current state returns process for NEF products
Develop
For the Non-EnduraFlap returns process, there were two main solutions to be considered. The
first option includes redesigning the current returns system through implementing a new shelving
system, holding bin, and workstation. The second option explores ceasing sales of NEF products
altogether.
Option 1: Returns System Redesign
The first option would be to completely redesign the returns system, starting from when
PetDoors received the NEF, and finishing when an employee sent the processed good back to the
supplier. To do this, a new organization system for the returns area would need to be built, which
would need to include new shelving and storage. This new system would need to be organized in
a way that is most efficient for storing returns, most likely by the brand of each NEF return. A
more efficient system for processing NEF returns once they are received and stored would also
be implemented. Rather than completing RMA forms for each good received, all forms would be
processed at the same time in order to streamline paperwork for the office. This would allow for
inventory to be adjusted at a routine rate, and make for an organized method of issuing customer
refunds.
The most important aspect of the redesign would be an implementation of a kanban-like system
to notify employees when NEF goods need to be sent back to suppliers. When received, NEF
returns will start to accumulate in the new storage area - working as an indicator that those
packages need to be shipped out. The shelving will allow employees to visually recognize the
need for shipment, and see when the kanban is full. Overall, this will eliminate buildup in the
return area and reduce lost profits from returned items.
Option 2: Cease of Non-EnduraFlap Sales
A second option would be to eliminate the sale of NEF products by PetDoors. This option would
resolve the issue of the returns process all together, but is not a viable option for the company.
According to PetDoors employees, selling NEF products is still an overall benefit because the EF
goods are expensive and do not sell as well as NEF goods. Discontinuing the sale of NEF goods
through PetDoors website would likely result in a large decrease in profit margins. Another
option to look into would be to stop selling the NEF products that are the most returned, but
selling those products is likely still an overall benefit for PetDoors.
Evaluate
As mentioned in the Develop section, our team formulated two options for restructuring the NonEnduraFlap returns process. Ultimately, our team chose Option 2: Returns System Redesign. An
overview of the entire redesign is displayed below, in Figure 7.
The Holding Bin and Check-Off sheet are designed to resolve this issue. Under the redesigned
system, NEF products will be placed into the Holding Bin immediately upon arrival to the Pet
Doors facility. The employee who places the products in the holding bin is also required to
document the returns(s) on the Check-Off List. The Check-Off List requires employees to
document the date that the package was received, the company code, and a short product
description. Documentation of received NEF products will allow Pet Doors to keep inventory on
returns, as well as provide a simple method of sorting documented returns from the nondocumented. The Check-Off List can be viewed below in Figure 8:
The second component of the restructured NEF returns process is a desk workstation. The
workstation will function in two key ways: an area to inspect incoming NEF returns for damage,
and also as an area to package documented NEF returns for shipment to their respective
distributors. Under the current system, PetDoors employees lack a designated area for inspection
and shipment of returns. As a result, employees are forced to inspect and package items on the
facility floor, or work on a cramped desk that serves an entirely different purpose.
The proposed workstation will function as an inspection station immediately after employees
remove returns from the Holding Bin. Employees will place the return on top of the desk, and
begin opening the packaging. After inspection, the employee will use the workstation to
complete an RMA form. The workstation will provide two, wall-mounted baskets one basket
for blank RMAs and the other for completed RMAs. After filling out the RMA form, the
employee will place it in the Completed RMA box. The completed RMA forms will be
brought to the PetDoors office towards the end of the workday, where they will undergo the
filing process, and customer will be refunded.
The workstation will also function as a shipping station for documented NEF returns. As
mentioned in the Develop section, employees will recognize that NEF returns of the same
company are ready for shipment when the particular companys shelving area is filled (a kanban
system). Employees will then remove the returns from the shelf, and use the workstation as an
area to package them for shipment. Since many of the companies represented by PetDoors have
different return policies, each companys respective return policy will be documented
immediately above the desk, allowing employees to easily identify how the returns should be
dealt with. The company policies will be documented on the Company Return Policies sheet,
which can be viewed below in Figure 9 on the following page:
Additionally, Component 7, the Packaging Storage Station, will be used to assist employees in
packaging NEF returns for shipment. The Packaging Storage Station will contain a variety of
different cardboard boxes to accommodate different products sizes. Since the Storage Station is
located immediately to the left of the Workstation, employees will be able to easily reach for
cardboard packaging when necessary.
Component 3: Brand-Based Shelving System
The third component of the redesigned returns process is an improved storage system for
documented NEF returns. As depicted in the Record section, the existing storage system for NEF
returns is in a state of complete disarray. The storage is composed of a large shelf, which lacks
any organizational system for the different NEF brands. Furthermore, the existing system is illequipped to handle large quantities of inventory. As a result, employees have turned to stacking
documented NEF returns on the floor, and in various shelves nearby.
In contrast, the proposed storage system would provide organization by sorting NEF returns by
company. As can be seen in the Figure 7 on page 13, each shelf category is labeled with a NEF
company code. The most commonly returned brands of NEF products would be shelved closest
(upper shelf, top right) to the workstation, to allow for ease of motion when transporting
products to and from the shelf, and reduce the total distance traveled by employees. Similarly,
the NEF brands returned least often would be shelved farthest away from the workstation (lower
shelf, bottom left). As mentioned in the Record section, the data describing the frequency of NEF
returns by brand was collected over several trips to the Pet Doors shipping facility.
The proposed storage system would also prevent over-accumulation of NEF returns by
functioning as a Kanban system. For example, assuming the new system is implemented, NEF
returns will be documented, and stored in the appropriate shelf area each workday. When a
particular brand/section of the shelf reaches maximum capacity, employees will interpret it as a
visual cue to make a mass shipment of the NEF products back to their respective manufacturer.
Not only will this andon inhibit PetDoors from accumulating too much inventory, but it will also
make the shipment process more efficient by allowing employees to make mass shipments of
NEF products of the same brand.
Component 4: Oversized Return Storage Area
The fourth component of the proposed NEF returns process is a storage area specifically
designed for oversized products that are unable to fit in the primary shelving system (Component
3). The current returns system lacks any infrastructure for storing oversized packages. As a
result, employees are forced to stack oversized packages haphazardly on the ground, or in
various corners of the facility (as depicted in Figure 1 in the Record Section).
The Oversized Return Storage Area addresses this issue by providing an adjustable, standing
rack system. The rack system would be comprised of three pegs approximately six feet above
ground, and a rectangular enclosure mounted into the floor. Packages would be stacked between
the pegs, with the bottoms of packages resting in the rectangular enclosure. Similar to the
primary storage shelf (Component 3), the oversized area would sort products by brand. Each peg
represents a different NEF manufacturer, and is adjustable to accommodate for varying inventory
levels of a particular brand.
Through several trips to the PetDoors facility, our team found that there are two NEF brands
manufacturing oversize products PetSafe (PS) and BugOff (BO). Thus, the three pegs would be
marked:
Peg 1: PetSafe
Peg 2: BugOff
Peg 3: Miscellaneous
Although our team counted only two brands, PS and BO, that manufacture oversized NEF
products, the miscellaneous peg would accommodate the occasional NEF return manufactured
by a different company.
Define
As stated in the previous Evaluate section, Option 2: Returns System Redesign, was chosen to
improve the existing NEF returns system. After creating the redesigned system, our team further
analyzed how the system would improve the existing process. Due to the nature of our proposed
design, improvements were mainly qualitative, and not quantitative. However, the following
paragraphs contain our improvement analysis.
From the proposed system NEF returns system, we were able to create ideal state operations
process and flow process charts. As depicted below in Figure 10 and Figure 11, there are
actually more steps than the current state process charts show. However, the addition of these
steps creates an efficient process for returning NEF products, where there is currently no process
in place. The added steps focus mainly on the implementation of the new kanban system and
signals for shipping returns back to suppliers.
Figure 10: Operations Process Chart for Ideal State NEF returns process.
Figure
11: Flow
Process Chart for Ideal State NEF returns process
Our team also generated an ideal state spaghetti diagram for the NEF returns process. This
spaghetti diagram features only one flow line, in comparison with multiple crossing lines in the
current state spaghetti diagram. The overall process is streamlined, resulting in less motion and
product conveyance waste. The diagram can be viewed below in Figure 13:
Figure 12: Spaghetti Diagram for Ideal State NEF returns process.
Install
In order to install the new process PetDoors will have to purchase a new work desk, rectangular
trash bins, a rack a pegs for the storage of the larger items, a drop box for the RMA forms as well
as a bulletin board. They will also need to purchase a large bin for the initial storage of the
returned product.
After all of the new furniture and tools are in place we will hold a training session for all
employees, so that everyone in the company will be able to assist in the return process. The
training session would consist of taking a product through the entire processes. It would begin in
the storage bin, then move to the work desk for inspection and the operator would record the
product that had been returned on an RMA for as well as an inventory spreadsheet. The product
would then be repackaged and placed on the shelf labeled with its specific company name.
Finally the completed RMA form would be taken from the drop box to the office so that the
customers money could be refunded.
Maintain
After the training session the employees will be made aware of how efficient the returns process
will become. This will encourage them to continue to utilize the new process since many
employees were frustrated with the clutter and lack of organization. The process as a result will
potentially maintained as long as too much product does not get built up without them being
returned to the supplier.
We also plan to return to PetDoors for a follow up meeting to answer any new questions that
might arise about the new process. We plan to hand out a questionnaire to see how the employees
feel about the new returns process. This will allow us to modify and improve on our original
design if needed.
Works Cited
Philliber, Tyler. "Existing Non-EnduraFlap Returns Process." Personal interview. 1 Nov. 2015.
Schonberger, Richard J. "Kanban at the nexus." Production & Inventory Management Journal.
Summer-Fall 2002: 1+. Academic OneFile. Web. 18 Nov. 2015.
"Ways to Make Your Teaching More Effective." Ways to Make Your Teaching More
Effective. Web. 3 Dec. 2015.
Wong, Carleen. "Using ABC Analysis for Inventory Control." APICS Redwood Empire Chapter.
APICS Redwood Empire Chapter, n.d. Web. 02 Dec. 2015.
Youmans, Kelsey. "Existing RMA Documentation Process." Personal interview. 15 Oct. 2015.