KNOWLEDGE NOTEBOOK
Viracon
33.154 Reduce Variation in Quoting and Charging for Sizes Below
Coating Minimum
Sandee Keane, Black Belt
Competitive
Advantage
Breakthrough
Improvement
Knowledge
Sustained
Business
Results
Customer
Satisfaction
Problem Statement
The criteria used to classify coated glass lites
as Below Coating Minimums is hard to
understand for us internally, and extremely
confusing for the customer
Estimating Issue
Objective:
Reduce the value stream defects
Define
Team Members
IPO Diagrams
Pareto Chart / Priority Identification
Baseline Historical Performance of the
Process
Process Flow Chart
Define
Team Members
IPO Diagram
33.145 Quote Formatting Process (Parent Project)
Input
Output
Missed Revenue
(reduce)
- $ and # of Customer Missed Items
QuoteRequestComplexity/Sophistication
- Size of Job
- # of Type of Make-ups
CustomerSatisfaction
(increase)
- # of Comments per Quote or Make-up
TechnicalReviewSOPs
ManufacturingLimitations
ISTool / Aurum
EstimatorTraining
EstimatorExperience
CustomerExperience
(Including 33.154)
- SpecificationSophistication
Output Addressed
in Individual Projects
Aurum
Quote
Formatting
Process
Outputs Addressed
in Parent Project
Pareto Chart
Pairwise Comparison for Priority Identification
Items that we may negotiate/credit due to customers misunderstanding/misinterpreting the quote.
60
54
Silkscreen Charges are the easiest to misinterpret HOWEVER
50
44
41
41
38
40
38
35
33
29
30
28
24
18
20
17
15
10
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IPO Diagram
33.154 Reduce Variation in Quoting and Charging
for Sizes Below Coating Minimum
Estimating
Inputs
Estimating SOP's
Process
Project Management
Outputs
% and # of Occurrences of Units
Below Coating Minimums on Takeoff
Inputs
Process
Quote
Quoting "Units
Below Coating % and # of Quotes with the Under
Minimum"
Coating Minimums Comment
Process
included
Viper Capabilities/Limitations
Manufacturing Limitations
Outputs
% of Occurrences of Lites
Below Coating Minimum and
the additional sq. ft. minimum
was charged (Increase Yield)
Charging for
"Units Below
Coating
Minimum"
Process
Manufacturing Limitations
PM Experience
Estimator Experience
PM Training
Estimator Training
Customer Experience
Customer Experience
Primary Output
Measured
Value Stream
2%
Estimating
Order
Processing
Process Yield
9%
Revenue Yield
Variation
of Including
Comment
Comment Confusion
Internally and Externally
Order
Entry Limitations
Inability
to view sizes
when entering charges
Comment Confusion
Internally and Externally
Define
Problem Statement:
Estimating Issue
The criteria used to classify coated glass lites as
Below Coating Minimums is hard to understand for
us internally, and extremely confusing for the
customer.
Order Processing Issue
The charge is hard to enforce due to order entry
system constraints.
Estimating
Baseline definition of Below Coating Minimums:
IF we can figure out which sizes qualify
Estimating
T S -C o a tin g -0 8 5
9 /8 /9 7 R ev . O rig .
Page 1 of 1
( R e p la c e s T S - M a r c o n - 0 8 5 - 6 /2 8 /9 5 )
To:
V ira c o n In s id e S a le s T e a m
F ro m : M ik e D ie d ric h
S u b j: M in im u m S iz e s
T h e f o ll o w in g o u t lin e s th e m in im u m s i z e s th a t y o u c a n ta k e o n o r d e r s /q u o ta tio n s w ith o u t a p p r o v a l b y
m y se lf :
T h e fo llo w in g m in im u m siz e s a p p ly to g la ss 3 /1 6 th ic k o r th ic k e r :
R e c ta n g le s = 2 0 x 2 0
N O T E : O n e d i m e n s i o n c a n b e u n d e r 2 0 , d o w n t o 1 2 , a s l o n g a s t h e o t h e r d i m e n s i o n i s a t l e a s t 2 4 ( i .e . ,
12 x 24)
If o n e d im e n s io n g o e s u n d e r 1 2 , a s th in a s 4 , th e o th e r d im e n s io n m u s t b e a t le a s t 4 8 ( i.e ., 4 x 4 8 )
R ig h t T r ia n g le s = 3 6 x 1 2 B lo c k
N O T E : W ith tr ia n g le s , o n e le g m u s t a lw a y s b e a t le a s t 3 6 a n d th e o th e r le g c a n n o t b e le s s th a n 1 2 .
T h e fo llo w in g m in im u m siz e s a p p ly to g la ss 1 /8 th ic k :
R e c ta n g le s = 2 4 x 1 6
N O T E : If o n d im e n sio n g o e s u n d e r 1 6 , d o w n to 1 2 , th e o th e r d im e n s io n m u st b e a t le a st 3 6
( i.e . 1 2 x 3 6 )
If o n e d im e n s io n g o e s u n d e r 1 2 , d o w n to 8 , th e o th e r d im e n s io n m u s t b e a t le a s t 4 8 ( i.e . 8 x 4 8 )
R ig h t T r ia n g le s = 3 6 x 2 4 B lo c k
Define
Problem Statement:
Estimating Issue
The criteria used to classify coated glass lites as
Below Coating Minimums is hard to understand for
us internally, and extremely confusing for the
customer.
Order Processing Issue
The charge is hard to enforce due to order entry
system constraints.
PM or AAR
processes PO per
SOP's (up to and
including entering
sizes)
y
y
y
y
Yes
At pricing step 1,
change Sq. Ft.
minimum (for line #'s
written down), to
quoted minimum for
lites "Below Coating
Minimums"
No
Manual Process.
Very Confusing!
Are there sizes
"Below Coating
Minimums"?
Finish processing
PO per SOP's
END
Order Entry
Baseline Process
Order Entry Screen Sq. Ft. minimum is changed for lites
Below Coating Minimum (12 x 36 or 24 x 24)
Analyze to Define
Current Definitions...
Published
Definition
24" x 24"
Unit Size
4 sq. ft.
New Definition...
Published
Definition
12" x 36"
Internal
Requirements
TS - Coating - 085
Minimum size
producable
without special
handling
20" x 20"
16" x 24"
Unit Size
3 sq. ft.
Unit Size
Unit Size
All Coated
Lites < 3
sq. ft.
New SOP
Paradigm Shift:
3 Sq. Ft. Definition for Estimating and
Order Entry SOPs
Simplifies Estimating
Reduces Customer Confusion
Order Entry Friendly
Now we can establish a Baseline!
$ 2 ,5 0 0 ,0 0 0
$ 2 ,1 9 2 ,8 0 6
$ 2 ,0 0 0 ,0 0 0
$ 1 ,5 0 0 ,0 0 0
$ 1 ,0 0 0 ,0 0 0
$ 1 9 2 ,7 4 3
$-
A d d itio n a l R e v e n u e A c tu a lly
C h a rg e d
40,000
36,512
35,000
30,000
25,000
20,000
758
5,000
Measure
Cpk / Sigma Level / DPMO
Measure
DPMO / Sigma Capability
Baseline Process
L100 Worksheet - Sigma Scorecard for Attributes
CTQ
Defects
Units
DPMO
Yield
17,877
18,256
979,240
2.08%
-0.54
Analyze
CE / CNX
Quick Hit Improvements
Histogram
FMEA
Improvement Plans Identified
CE / CNX
Measures
Manpower
Methods
No clear defination of
what "Under Coating
Minimums" is (C)
No SOP for
internal time
requirements (C)
PM Experience (C)
PM Training (C)
Current procedure for
entering sizes below coating
minimums very manual and
time consuming (C)
Communication
Skills (C)
Customer Time
Requirements (N)
Computer
Skills (C)
Estimator
Experience (C)
Market Conditions
(C)
Viper
Limitations (C)
Customer
Expectations (N)
Aurum
Limitations (N)
Manufacturing
Limitations (N)
Environment
Machines
Materials
Variation in
quoting and
charging for
coated lites
"Below
Coating
Minimums"
No take-off of sizes
and quantities at
quote stage (N)
CE / CNX
Causes Addressed:
Manpower
Measures
Estimating Confusion
Customer Confusion
No clear defination of
what "Under Coating
Minimums" is (C)
No SOP for
internal time
requirements (C)
PM Experience (C)
PM Training (C)
Communication
Skills (C)
Customer Time
Requirements (N)
Estimator
Experience (C)
Methods
Market Conditions
(C)
Viper
Limitations (C)
Customer
Expectations (N)
Square Foot
Calculator (C)
Aurum
Limitations (N)
No SOP for quote
w/o a take-off (C)
Manufacturing
Limitations (N)
Environment
Machines
Materials
Variation in
quoting and
charging for
coated lites
"Below
Coating
Minimums"
No take-off of sizes
and quantities at
quote stage (N)
Analyze
Order Entry Interim Process
(Quick Hit Improvement)
Order Entry Screen Sq. Ft. minimum is changed for lites
Below Coating Minimum ( < 3 sq. ft.)
15.0
15.0
15.0
Analyze
Quick Hit Improvement
Charging for Coated Lites < 3 sq. ft.
Additional Revenue Charged: Baseline Process -vs- Interim Process
From Line Data 6/1/04 - 6/30/05
$140,000.00
Baseline Process
Interim Process
~ $16K/Month
~ $95K/Month
$120,000.00
$100,000.00
$80,000.00
$60,000.00
9% of Potential Revenue
$40,000.00
$20,000.00
No Data Available
Dec 04 & Jan 05
$0.00
Jun-04
Jul-04
Aug-04
Sep-04
Oct-04
Nov-04
Dec-04
Jan-05
Feb-05
Mar-05
Apr-05
May-05
Jun-05
Analyze
Quick Hit Improvement
Additional Revenue Collected for Coated Lites < 3 sq. ft.
From Line Data 2/3/05 3/6/05
$2,772
2%
PIF
Credits
$131,405
98%
Analyze
Why $35.00 Each?
Norm al Distribution
M ean = $59.456
Histogram
1400
1200
800
600
400
200
0
15. to <= 30.
# Observations
1000
Analyze
Why $35.00 Each?
Potential Additional Revenue Based on Per Lite (Each) Charge
All Coated Lites/Units < 3 sq. ft.
From Line Data 6/1/04 - 11/30/04
$ 2 ,5 0 0 ,0 0 0
1 2 M o n th E s tim a te
$ 2 ,0 0 0 ,0 0 0
$35 Each
$ 1 ,5 0 0 ,0 0 0
is a charge
$ 1 ,0 0 0 ,0 0 0
$ 5 0 0 ,0 0 0
TOO HIGH!
$-
$ 2 5 /u n it
$ 3 5 /u n it
$ 4 5 /u n it
$ 5 5 /u n it
W e ig h te d
A v e ra g e $ 5 4 .7 8
$ 9 1 2 ,8 0 0
$ 1 ,2 7 7 ,9 2 0
$ 1 ,6 4 3 ,0 4 0
$ 2 ,0 0 8 ,1 6 0
$ 2 ,0 0 0 ,0 6 2
FMEA
Implementing new VIPER order entry system
Product or Process
S
Failure Effects (Effect of failure on
E
Product/User)
V
Causes
O
C
C
D R
E P
T N
Customer Education
24
Multi-tasking
120
Missed Revenue
42
Customer Dissatisfaction
Quote is to complex
288
Misinterpretation of Comment
Customer Dissatisfaction
120
Customer Education
56
PO Comes in
Customer Dissatisfaction
Enforce SOP's
Customer Dissatisfaction
24
Customer Dissatisfaction
Forget to Sort
Missed Revenue
Missed Revenue
Enforce SOP's
128
Enforce SOP's
128
Missed Revenue
Enforce SOP's
112
System Failure
Missed Revenue
Progammed incorrrectly
Test Code
Improper Logic
Missed Revenue
Progammed incorrrectly
Test Code
Failure Modes:
Automation Transition
Ongoing Projects
*
512
384
Improve
Error Proofing
Order Entry Process
Improve
Error Proofing
Estimating:
New Comment is automatically included on all
quoted glass quotes.
Coating Minimum Charge
In addition to the square foot price and applicable square foot minimum quoted for this job,
there will be a charge of $35 per coated lite/unit for all lites/units less than 3 square feet. All
coated lites/units less than 2 square feet require manufacturing approval.
Project Management:
Entire process is now automated.
Order entry program automatically calculates the
charge.
No action required by operator.
Improve
Order Entry
Automatically Applies:
- Coated Make-ups
- Sizes < 3 Sq. Ft.
Control
Control Chart
Run Chart
SOPs Order Entry Process is Automated
Estimator Pricing Guideline Sheets (PGS)
ISOd
Control
p Chart
Per Line Defect Rate
Baseline, Interim and Automated Process
1.4
1.2
CEN=0.97513
Baseline
CEN=0.7202
UCL=1.03353
Interim
UCL=0.90878
LCL=0.91673
Automated
0.8
CEN=0.30995
0.6
LCL=0.53162
UCL=0.4587
0.4
0.2
LCL=0.16121
55
53
51
49
47
45
43
41
39
37
35
33
31
29
27
25
23
21
19
17
15
13
11
Control
Per Line Process Yield by Week
Baseline, Interim and Automated Process
Automated Process
7/18/05 9/30/05
90%
80%
70%
Process Yield
60%
Interim Process
2/3/05 6/30/05
50%
40%
30%
Baseline Process
June Nov 04
20%
10%
0%
1
11
13
15
17
19
21
23
25
27
29
31
Week #
33
35
37
39
41
43
45
47
49
51
53
55
Control
Estimating Pricing Guideline Sheets (PGS)
Estimating SOPs in the ISO Documentation System
Coating Minimums
Coated Units/Lites < 3 sq. Ft.
$35.00
Each
Results
Before and After
Process Capability: Cpk / Sigma / DPMO
Estimating Comment
Customer Invoicing
Financial Benefits
Soft Benefits
Results
Sigma Capability
L100 Worksheet - Sigma Scorecard for Attributes
Defects
Units
DPMO
Yield
17,877
18,256
979,240
2.08%
-0.54
3,836
15,608
245,771
75.42%
2.19
1,110
5,742
193,312
80.67%
2.37
3,626
1,379
99.86%
4.49
CTQ
Estimating Comment
Before:
Minimum coating capacity is 12 x 36 (305mm x 915mm) or 24 x 24 (610mm x
610mm) due to fabricating equipment limitations. Sizes below these minimums
are not included in this quotation. However, Viracon may approve a limited
number of sizes below these coating minimums if design changes cannot be
made to accommodate fabrication limitations. Due to special equipment
manipulations, a 15 square foot (1.39m2) minimum charge per unit is applicable
for all glass types, if approved.
After:
In addition to the square foot price and applicable square foot minimum quoted for
this job, there will be a charge of $35 per coated lite/unit for all lites/units less than
3 square feet. All coated lites/units less than 2 square feet require manufacturing
approval.
Improve
Customer Invoicing
Old Invoices
Charge is buried.
No explanation
Customers Confusion
New Invoices
Clear Charge Purpose
Price Obvious.
Results
Baseline Process
Identification
Criteria
Order Entry
Process
Order Entry
Process
Additional
Charge
Invoicing
Hard to
understand
Interim Process
New Process
Easy to
understand
Easy to
understand a
Manual
Manual
Many Steps
Improved
Improved
2 Steps
Confusing
Confusing
Unclear
Unclear
Improved
Improved
More
Automated
No Steps
(Automated)
Improved
Clearly
Defined
$35.00 Each
Improved
Easy to
Understand
Results
Charging for Lites "Below Coating Minimums"
Process Yield (% of Occurences)
120%
100%
100%
75%
80%
79%
60%
40%
20%
2%
0%
Automated Process
7/18 to 9/30
Results
Charging for Lites "Below Coating Minimums"
% of Potential Revenue
120%
100%
100%
80%
60%
77%
49%
40%
20%
9%
0%
Automated Process
7/18 to 9/30
White Paper
Date: 10/28/05
Problem Statement:
The criteria used to classify coated glass lites as Below Coating Minimums is hard to
understand for us internally, and extremely confusing for the customer.
The charge is hard to enforce due to order entry system constraints.
Objective:
Reduce value stream defects.
Implement an appropriate charge that the market can bear.
Tools Used:
IPO Diagram
PF
CE / CNX
FMEA
Pareto Chart
Histogram
Sigma Capability
Error Proofing
SOPs
Business Results:
Increased Potential Revenue 9% to 77%.
Expect 98 - 100% once all existing jobs have been processed
Increased process yield from 2% to 79%.
Expect 98 - 100% once all existing jobs have been processed
The approximate additional annualized revenue: $960,000 to $1,200,00.
Removed market perception of excessive sq. ft. minimums.
Re-evaluation
Count of Coated Lites < 3 Sq. Ft.
By Month
From Line Data June 2004 April 2006
Individuals Chart
7000
6000
UCL=5973.8
5000
4000
CEN=3488.8
3000
UCL=2623.1
CEN=1855.9
2000
1000
LCL=1088.7
LCL=1003.8
0
Jun- Jul-04 Aug- Sep04
04
04
Oct04
Nov- Dec04
04
Jan05
Feb05
Mar05
Apr05
Oct05
Nov- Dec05
05
Jan06
Feb06
Mar06
Apr06
Re-evaluation
Count of Coated Lites < 3 Sq. Ft.
By Month
From Line Data June 2004 April 2006
6,000
5,000
4,946
4,743
4,350
4,033
4,000
3,891
3,816
3,626
3,159
3,000
2,922
2,833
3,211
2,829
2,677
2,660
2,636
2,131
2,116
2,000
By Enforcing Charge:
2,013
1,823
1,617
1,704
1,371
1,000
2,072
April 2006
March 2006
February 2006
January 2006
December 2005
November 2005
October 2005
September 2005
August 2005
July 2005
June 2005
May 2005
April 2005
March 2005
February 2005
January 2005
December 2004
November 2004
October 2004
September 2004
July 2004
June 2004
August 2004
Re-evaluation
Coated Lites < 3 Sq. Ft. as a Percent of ALL Coated Lites
By Month
From Line Data June 2004 April 2006
4.50%
4.18%
4.00%
3.53%
3.43%
3.23%
3.14%
3.00%
2.71%
2.70%
2.58%
2.50%
2.39%
2.47%
2.39%
2.49%
2.30%
2.40%
2.37%
2.00%
1.95%
2.03%
1.94%
1.75%
1.73%
1.56%
1.50%
1.52%
1.39%
1.00%
Coated Glass
0.50%
April 2006
March 2006
February 2006
January 2006
December 2005
November 2005
October 2005
September 2005
August 2005
July 2005
June 2005
May 2005
April 2005
March 2005
February 2005
January 2005
December 2004
November 2004
October 2004
September 2004
August 2004
July 2004
June 2004
0.00%
Re-evaluation
Process Yield Charging for Coated Lites < 3 sq. ft.
By Week
From Line Data June 2004 April 2006
100%
Baseline
90%
Interim
Automated
80%
70%
60%
50%
40%
30%
20%
0%
1
10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 76 79 82 85 88 91 94 97