Process Improvement: Six Sigma Methodologies

National Fulfillment Catalog and E-commerce Operation

Situation/Challenge: 20% of employees’ time cards flowing from the distribution center to the Payroll department had at least one tracking error (missing supervisor’s signature, start time, end time, etc.). These errors caused significant delays in payroll processing, created performances out of range, lessened staff morale due to erroneous pay, and introduced inaccurate data input into the productivity incentive program.

Action: The Six Sigma DISC (Define, Investigate, Streamline, Control) approach for problem solving was followed.

Define: Operational definitions were developed for the different type of errors that were tracked for error consistency across the distribution center.

Investigate: Data was collected for 3 weeks to determine the types of errors on the time tracking sheets, and Six Sigma rate and yield for the process were determined for the data. In this phase, the main process issues were identified.

Streamline: A report quantifying the cost savings and benefits of the new process was prepared for the senior management to provide support for the implementation. All non value-adding activities were removed from the process. Productivity reports were made available online and associates were properly trained to complete the time cards accurately. In addition, some departments’ time cards were redesigned and all departments were involved in the decision making process throughout the entire project.

Control: The Payroll department held weekly meetings with the distribution center’s departments to supply feedback. Pareto Charts were prepared to look at the frequency of tracking errors across the distribution center.

Result: The time tracking error rate was reduced by 40% over a 3-week period. The data reporting system accuracy improved from 84.1% to 97.73% as a result of the initiative.

Overall, the company saved more than $100,000 in annual labor costs and eliminated the morale problem created by incorrect paychecks.