CHAMPION: PAULINO P. SANTIAGO TEAM LEADER: FRANCISCO PALABRICA ASST. LEADERS: NORA DAGOY

1. Six Sigma Project TitleImprove Process Cycle From Receipt of RP to Release of RFQ for IT Goods Project No. : OAS-07-008 (3W)

2. CHAMPION: PAULINO P. SANTIAGO TEAM LEADER: FRANCISCO PALABRICA ASST. LEADERS: NORA DAGOY BERNIE RILLO MEMBERS: EDWIN MONTEVIRGEN, OAIS-PC ERIC DE LEON, OAIS-PC

3. Business Case DEFINE There is a need to improve the cycle time from the receipt of the Request to Purchase (RP) until release of Request for Quotation (RFQ) to Suppliers of IT goods, for faster delivery of items for the OIST to function more efficiently and effectively, afford OAIS-PC with more time to undertake value-added functions, like market research, market monitoring, supplier performance evaluation, site inspections, etc.

4. Problem Statement DEFINE The reduction of the process cycle from receipt of Request to Purchase (RP) until release of RFQ to Suppliers for IT goods will expedite delivery of goods. From 1 August 2006 to 31 July 2007, a total of number of 157 Request to Purchase (RP) in the amount from US$251 to US$25,000was received, with an average number of 11.96 calendar-days to process and release RFQ to Suppliers.

5. Project Scope DEFINE The project will only cover the procurement of Goods at the cost category of US$251 to US$25,000 from 1 August 2006 to 31 July 2007. The process commences when the Request for Procurement (RP) are received by OAIS-PC and terminates when the RFQ is released by OAIS-PC to Suppliers. The project will not cover the procurement of Services at any cost categories.

6. Goal Statement DEFINE Reduction of the process cycle by 50% (6 calendar days) is targeted by the end of 2007

7. DEFINE

8. High Level Process Map DEFINE

9. Critical to Quality DEFINE

10. SIPOC => CTQs S P O I C Customer Input Output Supplier Process CTQs DEFINE OIST Request to Purchase (RP) 1. OAIS-PC receives RP in Oracle 2. NO assigns RP to Buyer 3. Buyer reviews RP, prepares RFQ 4. NO approves RFQ 5. Buyer sends approved RFQ to Suppliers RFQ Supplier 1.Timely release of RFQs 2. Accurate specifications 3. Accurate address (fax/email,etc.) 4. Specified deadline for submission of Proposal

11. Time Line Define Measure Analyze Improve Control 2Q Aug Aug - Sep Oct July 3Q/4Q Sep DEFINE

12. Detailed Process Map MEASURE

13. Output Characteristics/ Project Y Relationship Matrix MEASURE

14. MEASURE Variable N N* Mean SE Mean StDev Minimum Q1 Median Q3 Maximum C1 45 0 11.96 1.06 7.08 2.00 7.00 10.00 15.00 33.0

15. MEASURE

16. MEASURE

17. MEASURE

18. MEASURE

19. MEASURE Based on the data gathered and statistics computations using mini tab, the data is not normally distributed since: i) the P value is not more than .05, ii) value points do not lie within a straight line and iii) mean and median values are not approximately the same. The average processing time from RP receipt to RFQ issuance is 12 calendar days with a Six Sigma level of 1.15. 25% of RFQs were issued within 7 calendar days and 75% were issued within 15 calendar days.

20. MEASURE

21. MEASURE • Based on the data gathered wherein 75% of RFQs were issued within 15 calendar days, the reasons were as follows: • Deferred processing – Preparation of RFQs for goods initiated only after current RFQs for services being processed are finished/finalized (To be addressed by the proposed solutions elucidated later). • Pre-empted RFQ preparation (Deferred processing) – RFQ of RPs for projects under AE budget for yearly accrual are given priority over other procurement requirements • De-activated Supplier Name in the Oracle System – Some time is taken before an “inactive” Supplier was restored back into the system • Inadvertent RP assignment – RP assigned to staff of another cluster who deferred work on the project, only to be re-assigned to an IT cluster staff at a later date

22. MEASURE LIMITATIONS: Lack of complete specifications in the RP is beyond the scope of this project, since such RPs are returned to the User Unit, wherein the procedures are covered and espoused by a separate six-sigma project. As such, whenever the RP is returned due to incomplete/wrong specifications, the processing time is set back to zero and will start again when the RP is re-approved. A.O. 4.07 provides no relevance on the analysis, since the processing time data were culled from the time A.O. 4.07 was made effective on 01 August 2007.

23. Cause-and-Effect Diagram ANALYZE People / Buyer Procedure / Policy Institutional Procurement Guidelines - No specific procedure on RFQ issuance Lack of Staff Training Lack of Staff Knowledge Lack of Complete Specifications By user Increased Staff Workload Unavailability of Suppliers in the Database - Supplier deactivated from database Timely Processing from Receipt of RP to Release of RFQ Inadequate Staff Market Intelligence Skills Absence of procedure/timeline in the RFQ issuance Product Shortage Fax/CPU/Printer Down Rigid corporate set up – thru partners only Inadequate number of Contractor/ Supplier Unavailability of contact details Oracle System Down Market Condition Technology

24. Cause-and-effect Diagram ANALYZE People / Buyer Procedure / Policy (N) Institutional Procurement Guidelines - No specific procedure on RFQ issuance Lack of Staff Training (N) Lack of Staff Knowledge (N) Lack of Complete Specifications By user (N) Increased Staff Workload (C) Unavailability of Suppliers in the Database - Supplier deactivated from database Timely Processing from Receipt of RP to Release of RFQ (N) Inadequate Staff Market Intelligence Skills (N) Absence of procedure/timeline in the RFQ issuance (C) Product Shortage (N) Fax/CPU/Printer Down (N) Rigid corporate set up – thru partners only (N) Inadequate number of Contractor/ Supplier (N) Unavailability of contact details (N) Oracle System Down (N) Market Condition Technology

25. Cause-and-Effect Diagram (Controllable Factors) ANALYZE People / Buyer Increased Staff Workload Timely Processing from Receipt of RP to Release of RFQ Absence of procedure/timeline in the RFQ issuance Procedure / Policy

26. Root Causes ANALYZE

27. Proposed Solutions IMPROVE • Encourage Staff to render overtime work to ease backlog due to increased work load • 2. Request BPHR to fill-up vacant OAIS-PC staff position • Rationalization of the Staff’s internal system/procedure with the issuance of RFQs within 6 calendar days from receipt of RP. • Shift review of Staff’s work load from monthly to weekly

28. Proposed Solutions IMPROVE

29. IMPROVE Variable N N* Mean SE Mean StDev Minimum Q1 Median Q3 Maximum C1 22 0 3.409 0.299 1.403 1.00 2.75 3.00 4.25 6.00

30. IMPROVE

31. IMPROVE Based on the data gathered and statistics computations using mini tab, the data is not normally distributed since: i) the P value is not more than .05, ii) value points do not lie within a straight line and iii) mean and median values are not approximately the same. The average processing time from RP receipt to RFQ issuance is 4 calendar days. 25% of RFQs were issued within 3 calendar days and 75% were issued within 5 calendar days.

32. IMPROVE

33. IMPROVE

34. IMPROVE • SIGMA COMPUTATIONS : • Z = 3(Ppk) + 1.5 • Z = 3(1.04) +1.5 • Z = 3.12 +1.5 • Z = 4.62 sigma • The average processing time from RP receipt to RFQ issuance improved from 12 to 4 calendar days with a Six Sigma level improved from 1.15 to 4.62. This is an improvement of 3.47 sigma. DPMO has improved from 636,858 to 900. • The individual chart shows that the data points are within the computed USL and LSL, which indicates that this is under control. However, there are consecutive data points that are the same since: • data were taken at fairly limited time frame that did not allow widespread distribution and • the goods for procurement are fairly similar in nature.

35. Risk Assessment Matrix CONTROL

36. Mistake Proofing CONTROL

37. Stakeholder Analysis CONTROL

38. Financial Savings CONTROL • SOFT SAVINGS • (Reduction of Processing Time from RP Receipt to RFQ Issuance) • Re-allocated Processing Cost - A 50% reduction in the processing time allotted to produce a Request for Quotation (RFQ), translated in the amount of $4,772.17(please see next slide for the computation)will be re-allocated to the processing of goods in other cost categories and/or processing of services. • Increased Order Satisfaction – Improved process cycle from RP receipt to RFQ release from 12 to 6 calendar days (or by 50%) would develop end-user’s comfort level and trust that their requirements would be delivered on time. This would encourage the end-users to order quantities that are only appropriate to their needs, which would result to reduction in inventory levels, increase in supply reliability and reduction of safety stock inventory. • 3. Cost Avoidance – Lowered inventory would translate to lower inventory holding costs. This in turn would improve ADB’s space utilization and minimize/mitigate the need to expand warehouse/storage facilities.

39. Financial Savings CONTROL SOFT SAVINGS (Reduction of Processing Time from RP Receipt to RFQ Issuance) 4. Enhanced Image for the Unit and Department – Prompt processing and release of the Request for Quotation (RFQ) would result to the timely processing of the purchase order and subsequent timely delivery of quality products to the end users. This will enable the end-users to function their jobs well and enhance efficiency and effectivity in the workplace. This would also translate into a positive feedback or favorable word-of-mouth comments to other end-users. 5. Improved Staff Morale – Improved RFQ release processes would result to improved Key Performance Indicator (KPI) for the staff, who would take more pride in their work. This will encourage a more active role in providing possible solutions to problems and process improvements that would directly affect staff’s motivational level and feeling of well-being. 6. Increased Customer Satisfaction – End-user’s perception of the service providers are influenced by the services itself, the service staff and service delivery processes. Evidently, improved process of delivering the end users’ needs would result to positive perception and expectation of OAIS-PC’s performance.

40. Financial Savings CONTROL

41. Thank you !! END OF PRESENTATION