Quality management in distribution centers : root cause identification and analysis

Details

Supervisors

Agrell, Per Joakim

Faculty

Louvain School of Management

Degree label

Master [120] en Ingénieur de gestion

Abstract

The main topic of this thesis is the enhancement of the products’ quality in a distribution center. More precisely, it tackles the issue of the damage to sales units that occurs after the exit of the manufacturing plant. The first part of this thesis gives a theoretical background of this issue, highlighting the effects of imperfect quality on cost, variability and customer satisfaction. It then presents a field-oriented analysis of this problem in the Johnson & Johnson European Distribution Center (EDC) for the Ethicon Endo Surgery franchise. In addition, root causes of the problem are identified. Both a general analysis on the bad performing processes and a specific examination of bad performing products are performed. As for the distribution process, the cause of damage appears to be the way pallets are prepared for transportation and the usage of multi item shipping boxes. It is, thus, recommended to develop stronger rules on pallets packing such as building flat layers of boxes of the same height and using carton sheet between layers whenever it is possible. It is also suggested to stop using multi item shippers and only use full cases. The impacts of these two recommendations are presented and it appears that both measures will allow significantly decreasing the cost. With respect to the bad performing items, they are identified through a statistical analysis combined with an assessment of the improvement opportunities. Several criteria were taken into consideration such as product value, quantity of damaged items and the percentage of sales it represents. Three codes were selected. For two of them (POUCH and ACE36E), the problem is identified as being their packaging. Recommendations are then made on how to improve it efficiently. Again the cost impacts are assessed and the result shows that significant savings could be achieved. As to the third one (GEN11), the main cause is the way pallets are shipped without enough protection and without a quality check in the global hub. It is, thus, proposed to better protect the pallets with an outer carton and to perform a quality check before shipping them to the EDC. Finally, it is also recommended to improve the current data collection and communication. For the moment, data are collected on the source and number of damaged items. But it is hard to link numbers and types of damage. Furthermore, communication on damage between the different stakeholders should be enhanced. Very little information is shared between them, the extent of the problem is, hence, not well perceived by all of them and especially by the ones who are responsible for the pallet packing and the packaging design, that are the two main issues.