1. BUEN GUIDO, BSME, ASQ-CQE
QA MANAGER
CASE STUDY – ZERO STOCK OUT
NewGen Construction

2. Case Study
• Shortage of Hardware Category C at the
Construction Site
• Installers having to source or buy parts at local
hardware store to fill shortage
• Having to pay premium from buying at local
hardware store – Increased Labor cost
• Having to take special trips to hardware store -
Causes delay
• COPQ high
CASE #1 – ZERO STOCK OUT
What?

3. Problem Statement
CASE #1 – ZERO STOCK OUT
Shortage:
Category C
Hardware at
Construction
Site
DELAYS &
INCREASED
LABOR COST
=
COPQ
Installers
having to buy
from local
hardware
store to fill
shortage!

4. Possible Causes
CASE #1 – ZERO STOCK OUT
BOM Error:
Wrong
Quantity,
Wrong P/N
Callout
Kitting Error:
Wrong
Quantity
Wrong P/N,
etc.
Misplaced
Hardware at
Construction
Site
Why?

5. Proposed Solutions
CASE #1 – ZERO STOCK OUT
Assembly
BOM & Final
Design
Signoff at
NewGen
Implement
In-Process &
Final Audit at
Supplier
Use KANBAN
at
Construction
Site Store
How?

6. Assembly BOM & Final
Design Signoff at
NewGen Construction
CASE #1 – ZERO STOCK OUT

7. AssemblyBOM&FinalDesign
SignoffatNewGenConstruction  Assembly BOM Production Release Review
 Signoff
 Engineering – Design Complete
 Supply Chain – Purchase Quantity
 QA – Package Complete & Accuracy

8. Implement
In-Process & Final Audit
at Supplier
CASE #1 – ZERO STOCK OUT

9. ImplementIn-Process&Final
AuditatSupplier
 Develop In-process Audit of Category-C
Hardware Kits per Part Number
 Incoming material inspection
 Quantities checked per hardware part
number
Incoming
Material
QC Ok!
Check MFR. P/N
Check Material
Check QTY
2nd Tier
Hardware
Supplier
Move parts
to Inventory
Location
Yes
No

10. ImplementIn-Process&Final
AuditatSupplier
 Develop Final Inspection of Category-C
Hardware Job Site Kits
 Final Audit of Job Site BOM hardware
Quantities
Pull needed
parts for Job
Site Store
QC Ok!
Check P/N
Check QTY
Move parts
to shipping
Yes
No
Planner

11. Use KANBAN (Zero Stock
Out) at Construction Site
Store
CASE #1 – ZERO STOCK OUT

12. UseKANBANatConstruction
SiteStore
KANBAN is Japanese word that means
card you can see, posters, signs, etc. and
is a visual signal used to trigger an action.
KANBAN was one of several tools Toyota
developed to ensure that inventory was
based on actual customer orders rather
than managerial forecasts.
What is KANBAN

13. UseKANBANatConstruction
SiteStore
Hardware Store at the Job Site using KANBAN
Method for “Zero Stock Out”.
Hardware Store
at Job Site
Installers pull parts
from store
Replenishment-
Supplier to Job Site
Low stock triggers
Replenishment
Usage being
monitored

14. UseKANBANatConstruction
SiteStore How does KANBAN work?

15. UseKANBANatConstruction
SiteStore
How are parts replenished or pulled from
Supplier?
When container is empty,
Signal to source to replenish Kanban
Wait until minimum order
Quantity is reached
When order minimum is
reached, a Job, PO or
Move Order is created
When received, KANBAN status
is updated and container is
moved to usage area
Planner determines
when to add/remove
cards

16.  NewGen Construction to work with LSS
Black Belt in monitoring Hardware Stores
performance (KPI) – Min. weekly report at
start of program and less frequent when
program achieves it’s “Zero stock out”
objective.
 Develop a learning organization (NewGen
– Supplier) that will find ways to reduce
the number of KANBAN and thereby
reduce and ultimately eliminate the
inventory buffer.
Continuous
Improvement