PROJECT DESCRIPTION:

1. Six Sigma Project TitleReduce incidence of returned Request for Purchase (RP)Project No.: OAS-07-009(23 September 2007)

2. Division Champion: Cécile LHF GregoryChampion: Paulino P. Santiago, Jr.Team Leader: Noli D. MacariolaMembers:Nemrod Manalo, Kit Palabrica, Edwin Montevirgen, Mila Aquino, Oscar Roman, Jonathan Guevara, Fred Basa, Grace Sioting and Victor Lo

3. DEFINE Project Title: Reduce incidence of returned Request for Purchase (RP) • PROJECT DESCRIPTION: • OAIS-PC receives about 1,500 RPs for goods and services. About 22.34% of these RPs or 335 RPs are defective (insufficient budget and outdated or obsolete specifications) and are returned to the user units. Returning RPs to user units causes procurement process to stop that results to customer dissatisfaction. To ensure that only defect free RPs are initiated by user units that would eliminate or decrease incidence of returning RPs. • PROBLEM STATEMENT: • RPs prepared and initiated by user units with insufficient budget and outdated or obsolete specifications are returned which delay the start of the procurement process or stop the procurement process by OAIS-PC. This in turn results to customer dissatisfaction, lost of opportunity on the user of services or goods, or delay in project implementation.

4. DEFINE Project Title: Reduce incidence of returned Request for Purchase (RP) • GOAL STATEMENT: • How to work with the OAIS-PC’s clients (user units) for them to provide defect-free RP, thus reducing the number of incidence of returned RPs, improving total processing time for processing RPs to PO, and increasing customer satisfaction. The goal is to reduce the incidence of returned RPs by 50%.

5. High Level Process Map DEFINE

6. Detailed Process Map for RP DEFINE

7. Detailed Process Map by OAFA-AP DEFINE

8. Detailed Process Map by OAFA-FM DEFINE

9. Detailed Process Map for RP -OIST DEFINE

10. Detailed Process Map for RP -OIST DEFINE

11. Output characteristics/ Project Y Relationship Matrix DEFINE

12. DEFINE Critical to Quality

13. S P O I C Customer Input Output Supplier Process CTQs DEFINE S I P O C CTQs User Units Initiation of Request for Purchase (RP) 1. User units identifies procurement needs 2. Initiate RP 3. Approver approves RP 4. OAIS-PC receives RP in oracle 5. OAIS-PC (buyer) checks and reviews correctness and completeness of RP 6. Return defective RP 7. OAIS-PC Process defect free RP and start procurement process. Approved RP OAIS-PC 1. Correct specs. 2. Sufficient budget 3. Sufficient need date 4. Correct justification

14. Define Measure Analyze Improve Control Apr – May June Sep Mar - Apr Jul - Aug Time Line DEFINE Time Line

15. MEASURE Data Collection

16. MEASURE PARETO CHART

17. MEASURE PARETO CHART

18. MEASURE PARETO CHART

19. MEASURE PARETO CHART

20. MEASURE Sigma Level

21. Cause-and-Effect Diagram ANALYZE

22. Cause-and-Effect Diagram ANALYZE N N N C N N C N N C N N N C N N N N

23. Cause-and-Effect Diagram (Control Items) ANALYZE

24. Improve Proposed Solution Proposed Solutions • Early OAIS-PC Involvement – Buyer to help and guide end user in RP initiation vis-a-vis procurement procedure, policy and methodology. Buyer to assist in market information as requested by end user. • OAIS-PC to develop a procedure in returning RP – Buyer to advise the end-user before returning the RP. • 3. RP approval hierarchy should be aligned to the PO approval hierarchy. • 4. Buyer to include end user’s suggested suppliers in the RFQ.

25. Improve Proposed Solution • Proposed Solutions • RP initiators should: • (a) add 10% to the last acquisition cost or to the internet price in the RP and add another 10% (indent orders) for the shipping cost. • (b) update the description/specifications of the items they are requesting. • (c) limit the number of items per RP to 20 items. • (d) seek assistance on pricing the items with OAIS-PC prior to initiating RP. • RP initiators should be given training in RP initiation on a regular basis (semi annual) or whenever a new staff is assigned to be RP initiator. Training to be conducted by OAFA-AP and OAIS-PC

26. IMPROVE Piloted Solution To be Process Map

27. Approval Hierarchy IMPROVE As is Approval Hierarchy Proposed Approval Hierarchy

28. IMPROVE Proposed Solution

29. IMPROVE FAILURE MODE and EFFECT ANALYSIS (FMEA) SEV – Severity PROB/OCC – probability of occurrence DET – Detection RPN – Review Risk Priority Numbers: prioritize item that requires additional quality planning or actions

30. IMPROVE Improved Sigma Level

31. MEASURE PARETO CHART

32. MEASURE PARETO CHART

33. IMPROVE Comparison of Sigma Levels

34. Control Risk Assessment Matrix

35. Control Mistake Proofing

36. Control Control Sheet

37. Control Control Sheet

38. Control Stakeholder Analysis

39. Control Financial Savings • SOFT SAVINGS • Reduction on incident of returned Purchase Requisition (RP) • I. Hard Savings – None • Soft Savings:US$5,242.32 • Reduction in Transaction Cost: • – A 50% reduction on incident of returned Purchase Requisition (RP) will free up end users’ time in re-doing RPs, which would result reduction in usage costs (i.e. amount of time on computer system, use of electricity, etc.). This will result in a saving of US$2,621.16 for one year (please see next slide for the computation). • 2. Avoidance of Capacity Enhancement or Increase Efficiency: • – Mitigating or eliminating the incident of returning the RP can free up staff of repeating the process of creating/re-doing an RP. This can create opportunity for them to attend on other important work to improve productivity. Reducing the incident of returned RP by 50% will collectively free up 108 hours of the RP initiators and approvers’ time for a year which could be used to attend to more strategic endeavors. This efficiency will translate to an additional savings of US$2,621.16 per year. • 3. Increase Customer Satisfaction: • – Returning RP is considered as one of the bottlenecks in timely processing of PO. Reducing or minimizing this bottleneck will result in a timely processing of POs which in turn lead to a timely delivery of Goods and Services. This will provide the end user with the opportunity to maximize utilization of the said Goods or Services which will result in increase customer satisfaction.

40. Control Financial Savings

41. Control Financial Savings Cost Analysis for Avoidance of Capacity Enhancement or Increase Efficiency

42. Control Checklist for RP verifier Checklistin verifying RPs • Verifier to check the following: • Estimated unit price per line item (should be sufficient to cover forex fluctuation, inflation and shipping cost); • Budget account number charging code; • Specifications, must be updated; • Description, complete and correct; • Line item type should be the same as line item category; • Justification, if branded or sole source; • Note to buyer, if any

43. Control Guidelines in Returning RP • Salient Points in the Guidelines in Returning Request for Purchase (RP) • The Buyer must notify via email and follow via phone the end user or RP preparer that there is a substantial change to be made to the RP; • Response time by end user or RP preparer: 2 days (If no response in 2 days, the buyer will return the RP); • For multiple line items, the Buyer should prepare the PO for items within the allocated budget and/or with complete specifications before returning the RP; • Buyer to check notification regularly; • Follow-up should be done to confirm whether the RP will be amended or will be cancelled.

44. Thank you to all... The End END OF PRESENTATION