1.1Evergreen’s desired outcomes are to improve customer satisfaction by delivering its orders on time, reduce inventories, reduce employee overtime expense and determine if the shop floor manager should be replaced. The company needs to improve its demand planning responsiveness to better serve customer needs. By improving its process and capabilities as they relate to orders, the desired results will be realized.
1.2Evergreen should try to improve its order entry system by eliminating/reducing constraints to so that the end accomplishment is a faster delivery time to the customer.
1.3We know that the order entry system is working poorly because the cycle time exceeds the customer timeline, but there may be additional problems causing the late orders since the shop is only operating at 80 percent capacity. Additionally, we are not given any information about the delivery system that would move the product from the shop floor to the customer. However, we can reasonable assume there is a problem with the order system, since it can take anywhere from 17 business hours (2 days) to 42 business hours (5.25 days) (assume 8-hour work day) for order to clear the shop floor. Since the three sale clerks are only encouraged to implement a 5-day out due date for the order, this immediately creates a constraint since it is possible for the order cycle to exceed 5 days. Not to mention that the sales clerks may even promise the products sooner. The multiple-steps in the process are creating undue constraints. Additionally, the high amount of erroneous orders (up to 65 percent) is also a large constraint on the process.
1.4The long cycle time is creating a bottleneck in getting the products to the customer on time. Additionally, the process is a made-to-order system, as opposed to made-to-stock, so the product is not created until the order is received. The variance in the way the company receives the orders is also creating problems, since the two processes are treated equally. When the traveling salesperson contacts the company with an order, the order may be up to two days old already, yet it is handled in the same fashion as when a customer calls in an order. The process is riddled with wait time and defects – two of the “Seven Deadly Sins.” Many of the orders languish in certain parts of the company and are filled out erroneously within a non-digitized system.
Process measures are crucial to the processes success, and this system is only using a casual set of metrics to evaluate the effectiveness of its operations process for filling orders. The time it takes for the order to move from one process to the next should be definite – not an estimate, which describes Evergreen’s current process. Additionally, there are no metrics in place for process improvement. The order process is a serial/sequential. The company could improve by paralleling the order after it clears the Sales Account Manager by sending the order to accounting and to the shop simultaneously. A manager should improve the overall process by combining smaller processes, eliminating waste and rethinking the sequence.
2.The customers want their orders to be delivered on time. The existing customers pose a problem for Evergreen because their business spikes around certain holiday, thus increasing orders during certain times of the year. Evergreen needs to have another process in place for peak times versus the normal business schedule. The peak process could include such contingencies as having additional clerks on staff, mandating the traveling salespeople to visit customers within a standardized time frame before each peak season to gather data and pre-order product and running the shop at 100 percent capacity.
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