Reducing non value adding activities in warehouses: DMAIC approach - Case study

Continuing my last article, here is the case study of using DMAIC approach with time studies in warehouse of a retail company. The project was to set labour standards and to identify Non Value Adding (NVA) time and activities for key processes in warehouse of an India’s one of the biggest retail company 

We will see how project was implemented from D through C by DMAIC approach.

Defining the null and alternate hypothesis, the null hypothesis considered here is that all the activities in the warehouse have the NVA less than 10%, whereas alternate hypothesis is that all the activities in the warehouse have NVA greater than 10%. For each of the activity to be studied rates/hr/UOM was obtained from the historical data.

Measuring the current rates and productivity, Video time study as the technic to measure the rates of each activity was used, the aim of the exercise was to micro-analyse each activity to identify the hidden NVA and define the labour rates without NVA. The labour rates or standards built were multivariate and can be fed in LMS to track down each associates work and his day to day efficiency.

Analysing the measured, it was made sure that the study is statistically valid with ± 5% accuracy level covering different scenarios for each activity with a required number of sample. The sigma level of activities ranged from 1.2σ to 6+σ based on the significance of the activity. NVA and essential NVA were defined by the management. Then each activity was further broken down into

1. ·        Pure cycle time

2. ·        NVA

3. ·        and essential NVA

The simple example of NVA here could be waiting time or dependencies on other activities, whereas example for ENVA could be all the infrastructural limitations faced by associates which caused the addition of NVA. The NVA and essential NVA found varied from 1% to 47%.

Improving, the whole idea of this exercise is to improvement and elimination of NVA and reduce the essential NVA. We further dug deep into the videos of each activity finding the best way of doing them. The best practices followed by different associates for different activities were observed. These all suggestions were documented and provided to management to build the SOP and training document based on these best practices.

Controlling the improved process, Once the labor standards are implemented in the warehouse and new SOP and training documents are released to use, it is up to the management to strictly continue with the set standards, SOP to keep NVA and essential NVA under control.

Conclusion,

NVAs are the inherent part of any activity/process. They increase with negligence and oversight which ultimately increase the cost of end product. The best way is to follow the DMAIC approach with proper measuring and analysing technics and finding the root cause for inclusion of NVAs and take necessary actions to eliminate and reduce them.