Alignment of the Nedap UV order fulfilment process

Arkink, H.J.F. (2013) Alignment of the Nedap UV order fulfilment process.

Abstract:This research is introduced to align the order fulfilment process at Nedap UV with the product and market characteristics of the products involved. Nedap UV manages the supply of UV drivers to customers and is the product group of Nedap this research is focussing on. In the UV product group delivery and workload problems arose frequently due to an ineffective, inefficient and uncontrolled order fulfilment process. Order fulfilment is interpreted in this research as the complex process composed of several activities undertaken by different functional entities, starting with planning the future orders up to delivering the customer orders at the right time and right place. To achieve the research goal, a more effective, efficient and controllable order fulfilment process, we stated the research problem as: “How to align the tactical order fulfilment process to the product and market characteristics of Nedap UV?” Tactical decision making based on procedures, rules and control systems is what is missing at Nedap UV to make the order fulfilment process operate effective and efficient. The tactical decision level has been overlooked as the high workload for the operational manager resulted in a lack of attention to structural problem solving. Analysis towards this tactical level of order fulfilment at Nedap UV revealed a lack of cooperation and alignment of internal order fulfilment processes. We solved this business process problem guided by the improvement framework of Rohleder and Silver (1997). The focus of this research is set to three essential tactical order fulfilment processes, all controlled by Nedap UV. The remaining processes were not in control of Nedap UV or not significantly influencing the order fulfilment process performance. These three processes comprise the sales planning, service and inventory management and the supply planning. These processes were researched in combination with the UV product range to obtain a complete understanding of the current situation. Hereafter, we constructed a guide for aligning the three processes with the UV products’ product and market characteristics. The alignment process needs to be initiated for all product types individually as the alignment process is depending on the specific product and market characteristics of the products. To provide more understanding and clearance of the alignment process we introduced a set of pilot implementations according to the constructed process alignment guide. The selection of these processes is based on multi criteria analysis of three characteristics of the product groups. These characteristics influence the need for an aligned process per product and are the demand variability, the growth potential and the importance of the product group. Scoring these characteristics for the three product groups made us conclude that Product Group 1 and Product Group 3 are the most interesting pilot product groups to start a pilot alignment process for. The research structure presented above resulted in an aligned order fulfilment process in which introduced rules and procedures provide structure to the processes involved. Results could not exactly be valued as performance was not measured formerly. However, for the selected pilot product groups we have proven that Nedap is able to improve their service conditions significantly in combination with a decreased inventory level. An example of these results is presented here for Product Type C. Aligning the processes for this product group resulted in a reduced safety stock level of 25%. But most important, 88% of the Nedap UV products are supplied within one instead of eight weeks in the aligned process. Concluding, aligning the order fulfilment for this product type results in less inventory costs while service conditions are improved significantly for 88% of the orders. The process alignment was based on a targeted service level of 97.5% of the products supplied before the agreed delivery date. This service level is not monitored so far, however, employees involved assume this service level not to be attained structurally before. These findings suggest that the order fulfilment process alignment will result in significantly improved service conditions while Nedap UV requires fewer resources. Besides these effects on the customer satisfaction, the aligned order fulfilment process will have a significant effect on the workload problem as well. We expect the average effort to fulfil an order to decrease significantly because of the formalisation of the process. Formalisation of processes increases the standardisation of them which leads to clarified tasks and clear responsibilities for the employees. Apart from that, orders are fulfilled in a smaller time frame. While these orders are completed earlier, customer complaints or order modifications will appear less frequently. We expect all of this to lead to more efficient and effective fulfilment of orders, with a decreased amount of delivery and workload problems. To increase the targeted controllability of the processes we suggested Nedap UV to introduce a performance management system. This system should expose the performances of the processes by measuring several key performance indicators. We introduced a set of performance indicators for this performance management system which measure the sales planning reliability and the stock and delivery performance. These performance indicators are: o (1.1) Nedap 12-month sales planning versus actual sales per product type o (2.1) On-hand stock level per product type o (2.2) Stock turnaround time per product type o (2.3) Total inventory value UV in Euro’s o (3.1) Percentage of products delivered on time per product type o (3.2) Lateness per supplied product in days The performance management system with these performance indicators should aim for a continuous improving process of order fulfilment. This continuous improvement should be attained by learning from and acting on appeared problems and deviations from set targets. After designing a performance management system Nedap UV should implement the order fulfilment process for its complete product range.
Item Type:Essay (Master)
Nedap Light Controls, Groenlo, the Netherlands
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Industrial Engineering and Management MSc (60029)
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