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Office Supplies Cost Optimization Using Six Sigma
Kitchaiya, Piyachat
Kitchaiya, Piyachat
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Abstract
Six Sigma is quality management philosophy used by many successful companies. The DMAIC (Define-Measure-Analyze-Improve-Control) Methodology is a commonly used the Six Sigma tool designed to improve an existing process. V&P has chosen to use Six Sigma to reduce the cost of office supplies.
The office supply procedure is inconsistent as divisions purchase different products from different vendors resulting in unnecessarily high supply expenditures. These purchases fall into two categories: On-Contract and Off-Contract purchasing. Off-Contract purchasing has the greatest impact on high supply cost. Within Off-Contract purchasing, five trends was identified. Special requests and personal preference had the most significant impact.
Benefit calculations based on detailed breakdown of causes of variations combined with expert estimates provides expectations for improvements future purchasing transactions.
Purchasing data was statistically analyzed to determine the process capability.
For the new process the process capability improved from 44 percent to 24 percent.
Cost will be lowered by expanding the list of On-contract supplies, negotiating additional on contract pricing, minimizing off-contract ordering, and reducing a other vendor ordering. The project is expected save approximately $120,000 in 2006.
Description
Date
2006-05-19