Reduce Rework and Backlogs

In 2007, Theater Logistics Support Center-Europe was receiving an unusually large amount of equipment for repair and refurbishment. A large backlog at one of the center's warehouses quickly developed. This backlog reduced availability of equipment that was sorely needed by soldiers operating in the Middle East. The Center used LSS to decrease the backlog by 90 percent by eliminating bottlenecks in the work areas, increasing daily throughput and increasing the capability of processing equipment. The Center also saved approximately $150,000 per year by making these improvements.

Problem

In April of 2007, the U.S. Army was dealing with high frequency rotations of soldiers and equipment into and out of the Middle East.  During that time, Army equipment was being subjected to the extremely harsh environment of war in a desert thereby necessitating ongoing repair and refurbishment actions.  The Army has many overseas locations that support the war on terror and one of those locations is Theater Logistics Support Center – Europe (TLSC-E).  At this location, U.S. and German personnel work together to repair and refurbish Army equipment.  During the high volume processing of equipment coming in from theater, a backlog of equipment in one particular warehouse started to develop.  This backlog started to form in the receiving department and in the work environments where the equipment was handled.  This backlog of equipment reduced its availability to soldiers and increased costs.  

The backlog was created by process bottlenecks and was due to higher than normal volumes, a diverse labor pool, and balancing of manpower between multiple processing locations within the warehouse.  Even though this was an Army facility, backlog growth is a common warehouse logistics issue faced by many companies and government organizations.  A Black Belt, coached by a Master Black Belt, used the tools of Lean Six Sigma (LSS) and a team of American and German personnel to address warehouse processing issues during a four-month project.

Approach

The Black Belt and team performed the project following the proven LSS Define, Measure, Analyze, Improve, Control (DMAIC) process.  The goals were to realize a throughput improvement of at least 20 percent, reduce the time material spent in the warehouse from 35 days to 10 days, improve workplace safety and comply with regulations. 

During the Measure phase, the team mapped the process to understand the level of effort and time needed to process the incoming equipment.  The team identified bottlenecks in the process and performed “quick win” mini-projects such as improved use of hand-held terminals and improved visual controls for inventory locations.

The Value Stream Map (VSM) was completed in a simple wall chart format and was consulted throughout the project. Though highly informal in nature (multi-colored “sticky” notes affixed to brown paper hung on the walls of a conference room) the information content of the VSM proved to be invaluable to the team. For example, the VSM identified excess motion in the process through physical layout issues.  This led the team to complete a process flow analysis to capture movement of materials and people throughout the process.  During this step, the team captured opportunities for improving warehouse layout and workplace safety.   

The team identified critical process root causes to address in the Improve and Control phases. These included:

• Implement First In – First Out procedures and process visual controls
• Improve receiving and warehouse layout to reduce motion between steps
• Improve report accuracy and use of hand-held scanners
• Update standard operating procedures (SOP) and training guides

At the end of the Analyze phase, the team identified several specific solutions to implement.  The team efficiently implemented the solutions and created a pilot plan.  During the pilot, the team tested the new process, workstations, reports, and SOPs.  The team also audited the process for improvements to safety and reductions in employee motion.  

Results

After completing the pilot and minor refinement to the improvement solutions, the team implemented the new process and completed the project.  The targeted goals were not only met; they were exceeded. The project resulted in 31 percent daily throughput improvement (goal was 20 percent) and a 32 percent increase in production capability. This enabled additional equipment to be processed and work to be performed.  The improved process enabled TLSC-E to almost completely eliminate its backlog--reducing it by 90 percent.  These results also included cost savings of $600,000 across four years and, more importantly, improved support to soldiers in the field.  The cost savings represented a 33 percent reduction and resulted from: reductions in labor to process equipment, reductions in floor space to hold equipment, much smaller backlog of equipment, and reduced shipping costs to alternative locations.