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2ND WAVE PowerPoint Presentation

2ND WAVE

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2ND WAVE

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  1. 2ND WAVE Project Title : Reduction of Mail Delivery CostProject No. : OAS-06-011 (2W)Champion : R. RajanTeam Leader : Achilles EstrellaLead Member : Benedicto SantoyoMembers : Reymund Navarro Gloria Tria Gregg GarciaDate: 22 September 2006

  2. DEFINE PROBLEM STATEMENT: The cost of Postage and Freight keeps on increasing yearly by 14% average and in 2005, it reached $931,652 causing serious budget overrun. For 2006, the allocated budget is reduced to $760,000. GOAL STATEMENT: Reduce postage and freight cost by 18.5% by end 2006.

  3. DEFINE Business Case • Communications Unit receives on a daily basis various documents for dispatch locally and abroad. These services incur expenses that are charged to Postage and Freight budget. • Budget for these expenses is centralized in OAS. OAIS-LM monitors the budget utilization of all departments in ADBHQ. • There is no cost control on the part of the sender. The project is aiming to cut Postage and Freight expenses by 18.5% from 2005 costs.

  4. DEFINE Detailed Processing

  5. SIPOC

  6. SIPOC

  7. Define Measure Analyze Improve Control 15 Jan To 30 Jan 1 Feb to 8 Apr 10 Apr to 10 May 11 May To 10 July 11 July To 15 Sep 15 days 67 days 30 days 60 days 66 days

  8. DEFINE High-Level NeedReduce Mail Delivery Cost

  9. DEFINE Cost Drivers in Mail Service Operations

  10. DEFINE

  11. MEASURE

  12. MEASURE

  13. DATA 2005 Summary of Weight/Cost Per Zone ZONE

  14. MEASURE

  15. DATA 2005 Weight/Cost & Per Kg Cost Per Dept

  16. MEASURE

  17. Mean is $17.83/Kg Data based on 1st 20 Depts with the highest total costs.

  18. Six sigma level is 1.50

  19. ANALYZE FACTORS THAT IMPACT COST OF SHIPMENT • CLIENT / STAFF • PROCESS • TECHNOLOGY • POLICIES / PROCEDURES

  20. ANALYZE CLIENT / STAFF POLICIES & PROCEDURES • Unaware of shipping options • Unaware of transit time / timing of request • Incomplete address • Unaware of budget restrictions • Unaware of charging options • Current guidelines are vague • Guidelines not followed • Rules compromised • Consignment other than documents • Unaware of cost implication PROCESS TECHNOLOGY • Weight break limitations • Destination charges unknown • Courier limitations • Multiple address but one destination • Piecemeal dispatches instead of bulk E-publication E-docs CD ROM

  21. ANALYZE C C C C N N C C C C C C C C C C Process Client/Staff weight break limitations unaware of shipping options destination charges unknown unaware of transit time/ timing of request courier limitations incomplete address multiple address but one destination Reduce cost of Postage & Freight by 18.5% unaware of budget restrictions piecemeal dispatches instead of bulk unaware of charging options current guidelines are vague electronic media not maximized guidelines not followed e-publication rules compromised e-docs consignment other than doc unaware of cost implication Technology Policies & Procedures

  22. ANALYZE • After all data pertaining to weight and cost per department, country and supplier are gathered, it was decided in the analysis that weight and cost per department is the most practical area where improvement to cut cost can be done since OAIS-LM have direct control over it. Weight and cost per supplier and destination is fixed since it is covered by a contract.

  23. CONTROL ACTIONS TAKEN TO LOWER COST STARTING JAN 2006 • Negotiate with client to reduce volume of shipment. • Identify and coordinate with client the appropriate charging options if the consignment is covered or related to TA or RETA wherein budget for shipping and distribution is also allocated. • Advise client to submit their materials for shipment early to avoid using the express options which entails more expensive shipping cost due to time constraint. • In case of multiple addressees, collate consignments with one destination (or agency, like World Bank, IMF, etc.) and ship them in one bunch instead of one-transaction-per-envelope to reduce cost. • Negotiate with RMs/ROs Country Directors to forward documents or publications to various Ministries and Executing Agencies in their location. • Inform client of the other shipping options/services offered by the Communications Unit, particularly the use of airmail and airfreight modes for bulk/voluminous dispatches for cheaper shipping cost. • Assist client in searching for additional delivery information (more complete address) of the consignee in case of incomplete addresses to avoid “incomplete or unlocated destinations” which entails additional expense when forwarded to other locations or returned to origin. • Advise client to disseminate information electronically instead of hard copies.

  24. CONTROL 2005 – 2006 WEIGHT / COST COMPARISON PER DEPARTMENT Jan to Dec 2005 Jan to Dec 2006 Note: September to December data for 2006 are projected figures

  25. CONTROL Mean – $37,266 Non-normal distribution

  26. CONTROL Ppk - -0.18 Sigma level – 2.04 USL of 27,000 and LSL of 47,000

  27. CONTROL Mean – $23,650 Non-normal distribution

  28. CONTROL Ppk is -0.26 Sigma Level – 2.28

  29. CONTROL SUMMARY Improvement in mean in Jan-Aug periods of 2005 and 2006; projected improvement in Jan-Dec 2006 Target – Reduce cost to $760,000 for 2006 (budgeted amount) Projected cost reduction for 2006 is $340,393.

  30. CONTROL HARD SAVINGS With the implementation of the proposed solutions (actions taken to lower cost of Postage & Freight), total savings from January to August 2006 for postage and freight is $201,476. It is estimated that at the end of 2006, the total savings would be $340,393.

  31. CONTROL SOFT SAVINGS • We have increased the staff awareness through effective information dissemination, on the most cost effective options and measures OAIS-LM has been implementing. • Increased customer satisfaction – we received lots of emails from both PS and SS extending their appreciations and gratitude for the efforts provided to them. • We were able to help in purging the mailing list, thus eliminating obsolete addresses. • Enhanced business relationship with service providers and clients.

  32. CONTROL LESSONS LEARNED • We can achieve cost reduction and at the same time satisfy our client without jeopardizing the quality of service. • Flexibility, open communication and diplomacy are essential and powerful tools in any negotiations. • We have proven that given a certain amount of budget to work with, we are able to achieve this with teamwork within our unit and close coordination / cooperation with clients.

  33. The End