On-Time Delivery Charter at a 14-Branch Distributor
Northline Industrial Supply distributes fasteners and fittings through 14 branches. The VP of Sales has chartered a Black Belt project with this draft objective: 'Eliminate all customer dissatisfaction and fix delivery performance across the company, including the new e-commerce site.' Context: 6,200 order lines ship per month, and a customer scorecard penalty of $46,000 was charged last quarter. Three groups report on-time delivery (OTD) differently: branches use ship date, Finance uses invoice date, and the customer scorecard uses the requested delivery date. Only the customer definition produces 78.4%, versus 96.1% and 94.7% for the other two. Complaint volume is up 22% year over year. A new ERP system went live four months ago, and two branches plus one regional carrier account for 61% of late lines. The sponsor wants the project finished in eight weeks and has already told the e-commerce manager that website checkout speed will be in scope.
1. Rewrite the draft objective as a measurable problem statement and define the project boundary (in scope / out of scope). Justify each exclusion.
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Why the draft objective fails
- 'Eliminate all customer dissatisfaction' states no metric, no baseline, no target, and no boundary. It cannot be closed or verified at tollgate review.
- With three live OTD definitions there is no baseline at all until one is fixed.
- Eight weeks plus 'all branches plus e-commerce' is internally inconsistent; a Black Belt project must have a bounded value stream.
Rewritten problem statement (example form) 'For customer-defined on-time delivery on order lines shipped from Branches 4 and 9 and the South carrier lane, OTD is 78.4% (baseline: 6,200 lines/month, three months of data ending 30 June) against the customer scorecard requirement of 95%. The gap is about 1,340 late lines per month and $46,000 in penalties last quarter, and puts two accounts at renewal risk.'
Scope
- In: order release through carrier pickup through proof of delivery on the two branches and the named carrier lane; the OTD operational definition, data source, and reporting.
- Out: e-commerce checkout (different process, different owner, no baseline - charter separately); ERP cutover remediation (treat the cutover as a stratification variable and possible special cause, do not fix it inside this project); carrier contract negotiation (escalate to Procurement).
- Justification: the 61% concentration gives the best return inside eight weeks; each excluded item is a separate value stream with a different process owner, so including it would make the project unmeasurable.
Flag for the sponsor: moving from the 96.1% internal definition to 78.4% is a definition change, not a performance loss. The measurement change must be disclosed to Finance and the baseline restated, or the project will appear to have 'improved' 18 points by relabeling.
2. Which OTD definition should become the operational definition, and what must be specified so the metric is repeatable? Define the unit and the defect.
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Choose the customer's definition - requested delivery date - because the project's purpose is to close a gap the customer already measures and penalizes. Aligning to the internal ship-date metric would optimize a number the customer ignores.
Specification required for repeatability
- Unit: the order line. Defect: a line whose actual delivery (POD timestamp, not carrier pickup) is later than the requested delivery date/time recorded at order entry.
- Rules to write down: time zone; grace window (for example same-day by 17:00); partial shipments (the line is late if any quantity is late); backorders; customer-requested changes or reschedules (excluded, with a documented reason code); customer-caused delays such as dock refusal or credit hold (excluded); which system field is the source of truth; who owns the number; reporting frequency.
- Report both DPU-style (late lines per 100 lines) and the percentage, so volume changes do not masquerade as rate changes.
Measurement system check The late/not-late call is an attribute decision, so run an attribute agreement study: 50 historical lines, three people classifying against the written rule, compared to the customer scorecard. Report kappa. If agreement is below roughly 0.8, the 78.4% is itself uncertain and any improvement target is premature.
Transition rule: run old and new definitions in parallel for one quarter so trend charts stay interpretable.
3. The sponsor wants a stakeholder analysis and one quick win. Identify the key stakeholders with their likely position and one risk each, then name the quick win you would pursue and why.
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Stakeholders
- Branch managers (Branches 4 and 9): likely defensive - they expect the metric to be used against them. Risk: retrospective re-coding of late orders to look better. Mitigation: agree the definition and data lock before baseline publication, and frame the goal as process, not blame.
- Regional carrier: commercially motivated but not accountable to the plant. Risk: they accept the lane review and then miss the agreed pickup windows. Mitigation: written service levels and measured pickup-to-delivery by lane.
- Finance: owns the invoice-date metric and the penalty accounting. Risk: silent resistance to a definition change that shifts reported performance. Mitigation: early sign-off on the restated baseline.
- Customers on the scorecard: the source of truth. Risk: their scoring rules are not what the team assumed. Mitigation: obtain the scorecard methodology in writing.
- E-commerce manager and the ERP team: risk of scope creep and of the ERP cutover being ignored as a special cause. Mitigation: explicit out-of-scope statement, while still stratifying the baseline into pre- and post-cutover periods.
Quick win Target the concentration: 61% of late lines sit in two branches plus one carrier lane. A lane-level pickup/delivery review on that carrier is low cost, needs no capital, and can be measured within three weeks.
Caveat: do not book the change from 96.1% to 78.4% as a gain. The quick win must be judged on the customer definition against a matched pre-period, or the team will report improvement that is purely measurement.