Process improvement in an office environment …

1 Process improvement in an office environment using lean Six Sigma Finding ways to work smarter instead of harder in day-to-day customer service operations by David G ransson Arnela Tunovic Diploma work No. 100/2012 at the Department of Materials and Manufacturing Technology CHALMERS UNIVERSITY OF TECHNOLOGY Gothenburg, Sweden Diploma work in the Master s Programme Quality and Operations Management Performed at: Panalpina AB Fl jelbergsgatan 18, 431 37 M lndal Supervisor: Anna T rm nen Panalpina AB Fl jelbergsgatan 18, 431 37 M lndal Examiner: Peter Hammersberg Department of Materials and Manufacturing Technology Chalmers University of Technology, SE - 412 96 Gothenburg i Process improvement in an office environment using lean Six Sigma Finding ways to work smarter instead of harder in day-to-day customer service operations David G ransson & Arnela Tunovic DAVID G RANSSON & ARNELA TUNOVIC Diploma work no 100/2012 Department of Materials and Manufacturing Technology Chalmers University of Technology SE-412 96 Gothenburg Sweden Telephone + 46 (0)

2 31-772 1000 Chalmers Reproservice Gothenburg, Sweden 2012 Process improvement in an office environment using lean Six Sigma Finding ways to work smarter instead of harder in day-to-day customer service operations DAVID G RANSSON & ARNELA TUNOVIC Department of Materials and Manufacturing Technology Chalmers University of Technology ii Acknowledgements This thesis is a part of the requirements for a degree in Quality and Operations Management at Chalmers University of Technology, and has been carried out at Panalpina AB in M lndal, Sweden, during the spring and summer of 2012. We would like to acknowledge and thank our supervisors, Anna T rm nen, Area Head of Business Process & Quality Northern Europe at Panalpina AB, and Peter Hammersberg, University lecturer, at the Department of Materials and Manufacturing Technology, Chalmers University of Technology, for their support throughout this project, and for giving us the opportunity to perform this thesis.

3 We would also like to thank the operators at the Ocean Import Department, their managers, and other employees at the Head office for Panalpina Northern Europe for their interest in the project, and their willingness to help us whenever we had any problems or questions. Gothenburg, August, 2012 David G ransson & Arnela Tunovic iii iv Abstract This project aims to analyze the current state and provide improvement proposals for the Ocean Import Department at Panalpina in Gothenburg, Sweden. The department is currently experiencing a heavy workload and feels that there is a need for a new way to improve their processes since they are lagging in performance when benchmarked against other departments within Panalpina.

4 By using lean Six Sigma the project could connect to an ongoing global continuous improvement program within Panalpina as well as the local interest for lean Six Sigma. The project was executed according to the DMAIC cycle known from Six Sigma theory. The first part was dominated by the measurements of the current state and different workshops, with the goal to map the Process and frame problems and causes to variation in the Process . During the second part of the project focus shifted towards lean thinking as this turned out to be the appropriate course for this project. It was realized that the greatest improvements lied in continuous improvements instead of heavy data analysis.

5 Information and communication became the main themes in the project, both excess and lack of them is causing a stress on the operators, partly due to Panalpina s worldwide operations which create room for many cultural differences and makes it hard to standardize processes. But even communication within the office has room for improvements, and waste is created as the customer is not always in focus. Two models were developed that are meant to guide the future work with continuous improvements by identifying problem areas and providing guidance for how to handle them. Future measurements are recommended on variables inside the Process , using Process charts.

6 This is a resource efficient way of measuring a Process that gives easy analysis and a possibility to predict problems so that suitable countermeasures can be applied. v vi List of abbreviations B/L: Bill of Lading (receipt of shipment for legal and practical purposes) DMAIC: improvement methodology used in Six Sigma FCL: Full Container Load LCL: Less then Container Load PDCA: Plan Do Check Act; improvement methodology used in lean . PMT: Process Measurement Tool SOP: Standard Operating Procedure WIP: Work in progress (material being in production) vii viii Table of Contents 1 Introduction ..1 Background ..1 Goal Statement ..2 Project planning ..2 2 Theory.

7 3 Introduction to Six Sigma ..3 Introduction to lean ..4 lean Six Sigma ..7 lean in service and administration ..8 Six Sigma in service and administration ..8 Change management ..9 3 Methodology ..11 Literature study ..11 Action research ..11 Workshops ..11 Observations ..11 Measurements ..12 Interviews ..12 4 Identification of Process and customer Initial identification of problem areas ..17 Fishbone Diagram ..19 A defined summary ..19 5 Measure ..21 Identification and classification of Process parameters ..22 Detailed measurements of the Process ..25 A measured summary ..29 6 Analyze ..31 The measurements ..31 Insight in the Process visit Gemba.

8 32 Investigate the possibilities of a reorganization ..32 Areas of focus for improvements ..33 An analyzed summary ..36 7 Improve ..37 ix Introductory workshops ..37 Identified areas of focus for improvements ..39 Model for continuous day-to-day improvement work ..43 Model for long-term improvements ..45 Benchmarking ..48 Cultural change ..48 An improved summary ..48 8 Control ..51 Control parameters ..52 Updated FMEA ..55 A controlled summary ..56 9 10 Discussion ..61 11 Conclusions ..63 12 References ..65 Appendix A: Problems that would cause a customer to change forwarder ..69 Appendix B: Affinity-Interrelationship Method (AIM) ..70 Appendix C: Cause and Effect Matrix.

9 71 Appendix D: Process Measurement Tool (PMT) ..72 Appendix E: Detailed improvement suggestions for job costing ..73 Appendix F: Detailed improvement suggestions for invoicing ..74 Appendix G: Current state description of the Process ..76 1 1 Introduction Background Panalpina is a global shipping company with around 15 000 employees worldwide, represented with offices in more than 80 countries. The head office for northern Europe is located in Gothenburg, Sweden and has 40 employees. Approximately 20 employees are working directly with the day-to-day operations involved in shipping; air freight as well as ocean freight, import as well as export.

10 Today Panalpina has an internal continuous improvement program called PanCIP, containing elements from both lean and Six Sigma. The goals are, among others, to move away from a fire fighting modus and standardize the way the company works with improvements. This includes involving every employee by performing daily improvements on department level. This project is partly derived from the PanCIP initiative, where identifying problems as well as improvements is central. Global benchmarking within Panalpina shows that the productivity of the six employees at the Ocean Import Department in Gothenburg is quite moderate, at the same time as they are experiencing a high workload with much stress and a high pace in the daily work.