Post-Improvement
Data
Results of the process project were expected to be seen
on the financial statements and mainly focused on excess costs. We expect
our project to save Athens Printing Company a minimum of 2.2% of total
shipping cost annually. During the project we estimated a savings of
$420 just during a three week period. The project saves the company on
average a cost of $23 dollars for each mistake in shipping.
Costs other than shipping costs were identified during
the process improvement. Labor cost was also reduced through our process
improvement project. Labor costs related to each mistake were estimated at 50 minutes per
occurrence which led to increased hourly wages of employees. Each
occurrence was estimated to create $6.67 dollars in labor costs. These
calculations were generated by management observations and time logs
associated with shipping. Labor costs have also been decreased by
creating an easier process which can be delegated to
Benefits beyond costs were also created by process
improvement. New organization of shelf labels has given management more
control over planning, which has been a help in forecasting demand for
book quantities. The increased control has also led to increased sales due
to less out-of-stock situations. Decreased last minute printing is another
benefit which management noticed. Less printing of uneconomically small
lot sizes have been an indirect cause of increased profit. The last
benefit was increased customer satisfaction. Though there is no way to
measure satisfaction it could ultimately lead to increased profits.
The data which was used to calculate our
improvement process was return authorizations. After implementation we saw
a decrease in return authorizations due to receipt of the wrong item. This
data suggested a good turn around in the area of returns, which
management was mostly concerned with. Efficiency was also showed a 30-40%
improvement, which was measured by shipping clerks, as well as management.
Through our process improvement we also created optimal inventory levels.
Recognition of dead stock could be noticed and sale prices could be
generated to off set these levels with use of inventory labels which
indicated the level of optimal inventory.
Seasonal demand and trends could be accounted for to show necessary
production times. Sluggish sales can also be addressed in certain product
lines, which could lead management to address the profitability of each
individual book.
The cost to implement the process was a very minimal cost in
comparison to what the company saved. The total cost ended up to be almost
$40 dollars, which consisted of mostly supplies. The total cost compared
to the savings was about 1.34%. This created a good situation for The
Athens Printing Company where cash flow has been a problem. The cost was
also very pleasing to the management because their resistant and severe
change.
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