logistics topic: Solving one issue in Intel company case study (need only 2 pages )

IOE System

PROBLEM IDENTIFICATION:

Intel Corporation is currently using a new warehouse system known as Inbound and Outbound Excellence (IOE). The IOE performs many functions, such as how orders should be pulled, packaged, and labeled; it is instrumental in handling the higher demand of products from customers. The IOE works in connection with Intel’s Enterprise Resource Planning (ERP) system with System, Applications, and Products (SAP). Intel's SAP system is the software they use to manage their customers ordering and financial information. The IOE system was implemented to assist the SAP system and increase Intel’s efficiency and effectiveness within the warehouse operations. A lot of time and money was used to integrate this new facilitative system. Moreover, a significant number of issues have arisen that are a direct result of the IOE. The three main issues IOE is currently having are compatibility, internal settings, and incorrect master data.

Compatibility issues:

When integrating a new system, it is extremely important to make sure it is compatible with other established products used in daily operations. The IOE, however, does not work with the printers and hardware Intel uses. Incompatibility increases the amount of errors and causes incorrect labeling, the wrong products in the packages, and inconsistent measurements of products.

TIME ZONES:

Internal settings, specifically time zone variances, are not automatically updated. This leads to multiple issues, including shipment timing errors and data related to on-time deliveries. Currently, shipments are being delivered to Eastern Time Zones and are being shipped from Mountain Time Zone. The system needs to account for the different times zones to ensure correct customer delivery. International shipments and long transit times require even more accuracy.

NEGATIVE IMPACT ANALYSIS

MISSING SOLUTION:  needs to be a standardized time?

would be an effect from the solution: If the time zones were correctly input for each order and the system could calculate accurate ship times, changing the time zone when applicable. The accuracy for the data and the number of on-time deliveries would substantially increase. (https://www.entrepreneur.com/article/160228)

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WEIGHT

Within this case, it is assumed that the weight is manually entered for all the products from a scale, and the dimensional weights are standard and are already implemented within the master data. The products weight is being put into the system incorrectly this can either be from incorrect dimensional weights that are within the master data, or the weight is being manually entered in wrong. For international shipments, this can cost the company tens of thousands of dollars from custom agencies that need exact and correct information to allow the shipment into foreign countries CITED SOURCE. Having to re-submit customs paperwork with correct information, refund customer's’ payment for the shipment, losing future business with the international buyer, and inability to recover shipment altogether are all extremely costly

SOLUTION:

need automated weight into the system so they don’t have to type it in manually.

The new process will incorporate a system for weighing boxes of products before they are placed in inventory.

In fact, Intel will have a system that weighs international shipments each box twice along the way. On all measuring computers, it will require each employee to double check and confirm the weight.

The company acknowledges the added costs of close inspection; It will only apply these policies to international shipments where risk is greatest.

COST:

PRINTER:

Printing and driver errors lead to a constant and wasteful use of labor. Technicians and staff need to continuously work around these issues to help Intel avoid incurring unnecessary extra costs. The result of these errors can be measured and assessed. Damaged goods, incorrect delivery address, and wrong product cost Intel $1000; $1000, $500, and $500, respectively.

However, a logical and necessary replacement is printer drivers and the hardware. It is required that Intel eliminates any questions of printer compatibility and usability. Regular updates should keep up with hardware to ensure that they match the demands and processes of the new system. The company has analyzed the costs of printer replacement/updates.

Table 2: PRINTER REPLACEMENT COSTS

http://www.thebarcodewarehouse.co.uk/barcode-printers-label-printers/industrial/

This data was then compared to the cost of defects per week:

The previous costs are compared against one another and the solution is clear. Replacing the printers will save the company far more than the cost of replacement.

There are also external causes for incorrect master data. Many master data errors come from customer specifications. Addresses, advanced shipping data, and shipping instructions are brought in from external sources. Intel’s objective is identification and specification of exactly what the customer needs. Customers need to provide clear and correct input to the company’s master data.  A simple and closed off technique is not effective to take care of customer specifications.

To help with this, electronic communications will be implemented and used to communicate with customers. In fact, outside communication is not limited to customers. Communication with freight carriers and learning their systems is just as important. Intel will dedicate at least one employee to establish good outside communication via EDI (Electronic Data Interchange). EDI is proven to minimize transaction costs and ensure rapid and accurate communication between systems.

Intel can leverage EDI to make sure everyone is on the same page in real time. Of course, EDI is not a magic solution so it will need to be checked and verified at several points. This check will be conducted weekly on the most error-prone SKU’s. The purpose of this solution is to obtain clear, accurate, and filtered customer specification data. It should be made easy for the customer to provide a clear profile of what they expect and need from the warehouse. This information will then be carefully filtered and presented to freight carriers so they can arrange shipment. Thanks to Intel’s improved master data and information flow, advancement shipping data will be more accurate and indicative of what is tendered. Skillful passing of data will save money and time all along the supply chain.

MASTER DATA:

Units, addresses, and individual customer specifications are all input into the master data and sent to the IOE for production labels. If any of these pieces are entered incorrectly, the quality and quantity of Intel’s shipments are compromised; higher lead times, late or no deliveries, label placement, and box organization and safety all are affected by the master data.

The incorrect data causes issues with customs and with verifying shipments. Intel also needs this data to ensure carriers have the correct information for shipments. There is a significant increase in the amount of customer complaints to higher management regarding the ever-growing issues in the reception of their packages. If the master data is wrong and customers are receiving anything other than expected, all costs that apply to labeling errors with printing can all apply here as well. It can cost the company $1000 for not adhering to exact customer specifications and information. Another $1000 will be added into Intel’s losses if labels are not placed per individual requirements

The most significant issue with the IOE system is the incorrect information in the master data.

SOLUTIONS:

Due to the cost of the IOE and the extensive time it takes to implement, simply replacing the system with a different system will not be a viable solution. Although it may be effective, pressure from upper corporate management to cut costs prevents J76’s warehouse from scrapping IOE and starting over. More viable solutions to the compatibility, internal settings, and incorrect master data including contacting engineers, updating current software, integrating checks and balances, and adding additional software within the IOE. The company incurred a lot of costs to fund the project. It is not economical for the company to utilize more funding to replace the system.