A systems study on the outbound process of Primer Group of Companies

Primer Group of Companies includes 5 strategic business units (SBUs) which houses different brands held by the company. Of which, the SBU constituting the highest sales is Kenrich International Distribution Corp. (KIDC) which handles brands such as Fitflop, Adidas, Dc and Roxy among many others. The outbound process in their warehouse in Bicutan, Philippines became the focus of the study as it caters to multiple merchandise stores all over Metro Manila and other regions of Luzon and is critical to the operations of the company. Their key performance indicators include on-time shipment, fill-rate per order, and inventory record accuracy. In the year 2016, the outbound on-time shipment deviated from 7.5% from the target level of 95%. This resulted to a total opportunity loss of Php240,695,635.09 relating to the items that were not sold due to their late delivery. A 7.5 deviation from the target was attributed to this issue, making it the main problem of this study. A why-why method was conducted to enumerate the possible causes of the problem. These were then validated in order to identify their contribution to the problem. The causes were attributed to prolonged processes due to inefficiencies in the system. Main processes such as picking, packing, document processing, and dispatching had attributed issues that prolong the processes thus incurring delays in deliveries. Alternative solutions were suggested and evaluated using the Kepner Tregoe decision analysis with criteria relating to ease of transition, costs incurred, contribution to long-term growth, and employee resistance. The solutions include acquisition of new equipment, implementation of a barcode system, segregation of boxes according to size, attachment of box label information before sealing during packing, incorporation of encoding in barcode scanning during document processing, and conducting random sampling when the orders are about to be dispatched. These final solutions addressing the validated root causes were subjected to a cost-benefit analysis where it was found that the payback period for the costs attributed to the solutions is 2 months, and an implementation plan providing plans for training and preparation, trial run, and evaluation of trial run was presented in which the company may use when they roll out the solutions