Business Case

1. Project No. : OAS-09-01 (5w)Project Title : Improve the Inventory Management System of Task Chairs at ADB HQChampion : Hendy Widjaja & Chatiya Nantham Team Leader : Ma. Imelda Abao & Nestor Martin Asst. Leader : Cordel Trinchera Members : Martin Ericsson Cruel Gene Oliver Cruz Flordeliza Vargas Ma. Rita Habalo Emmanuel Ongkeko Joanna Paula Tatad Lleda Daquiuag

2. DEFINE Business Case Business Case: The management of the furniture inventory in ADB-HQ posed a huge challenge to OAS. Physical inventory and reconciliation exercises are labor intensive, time consuming and not very cost effective. As a result of the inter-departmental discussions, Administrative Order 4.02 was revised, to conduct random physical inventory of furniture in selected areas and for every major departmental reorganization in lieu of the full furniture inventory.

3. DEFINE Business Case Business Case: In both exercises, i.e. full and random inventories, it revealed that 41% (2007) and 26% (2008) of furniture items have no Property Control Number (PCN). PCNs are item identifiers used to match the inventory with Oracle record. Thus, for this project we have decided to focus on the furniture items with no PCN.

4. DEFINE Definition Business Case - Definition Furniture refer to movable articles in ADB that make it fit for work (e.g. chairs, tables, workstations, filing cabinets, shelves, etc.) There are several types of furniture grouped into 7 packages: Package 1 - task chairs - CH2, CH4, CH5, CH8 Package 2 - lounge and guest seats Package 3 - open plan office system (support staff workstations) Package 4 - Enclosed office system (professional staff workstations) Package 5 - tables Package 6 - storage systems Package 7 – various re-used furniture

5. DEFINE DEFINE Project Charter Inventory 2007 and 2008 An analysis of the two inventory-takings shows a significant number of items with no Property Control Number (PCN). • An analysis of the two inventory-takings shows a significant number of items with no Property Control Number (PCN).

6. Pareto Chart of NO PCN - 2007 DEFINE DEFINE Project Charter • An analysis of the two inventory-takings shows a significant number of items with no Property Control Number (PCN).

7. Pareto chart of NO PCN - 2008 DEFINE DEFINE Project Charter • An analysis of the two inventory-takings shows a significant number of items with no Property Control Number (PCN).

8. DEFINE DEFINE Project Charter Oracle Fixed Assets • An analysis of the two inventory-takings shows a significant number of items with no Property Control Number (PCN).

9. DEFINE DEFINE Project Charter Chairs with NO PCN • An analysis of the two inventory-takings shows a significant number of items with no Property Control Number (PCN).

10. Estimated Administrative Cost DEFINE

11. Problem Statement and Goal DEFINE Problem Statement: The results of the two inventory-takings suggest that there is a problem in the inventory management of task chairs particularly on the items with no Property Control Number. Inadequate inventory system would lead to high administrative cost of inventory reconciliation and inaccurate inventory reports of OAS. Project Goals: To reduce task chair items with no PCN by 50%.

12. High Level Process Map DEFINE Inventory Management System of Task Chairs at ADB HQ OAFA-AB in coordination with OAFA-FM receives and inspects delivery. Creates barcode labels. Add items in Oracle system OAFA-FM stores, receives and issues items. Affixes barcode labels. Start OAFA-FM submits Furniture Alteration / Improvement Form (FAI) OAFA-AB updates Oracle system OAFA-AB reconciles discrepancy, Summarizes No PCN items and submits reports OAFA-AB conducts random physical inventory End

13. As Is Process Map – Affixing of Barcode Labels DEFINE

14. OAFA-AB Detailed As-is process map • Receiving delivery of chairs and • Creating barcode label DEFINE OAFA-AB Receiving team receives and inspects delivery of chairs, with the assistance from CPMI staff Directs supplier to deliver the items to OAFA-FM’s stores. FM staff confirms acceptance by signing the Receiving Report Start • Month-end processing by • OAFA-AB Database • Management & Control Team • Closes FAR transactions • Perform Mass Addition • Creates barcode label OAFA-AB Receiving team closes Receiving Report, submits invoice to CTL for processing of payments Submits barcode label to OAFA-FM for affixing End

15. OAFA-FM Detailed As-is process map - Movement of chairs OAFA-FM Detailed As-is process map – Movement of Chairs DEFINE BCC Design team prepares Furniture Alteration and Improvement (FAI) based on Building Services Request (BSR) issued by OAFA-FM’s Service Desk Start CPMI staff assists AB staff in receiving and inspecting delivery of chairs OAFA-FM staff approves FAI, sends copy to CPMI team for deployment OAFA-FM staff confirms receipt of items, signs Receiving Reports. CPMI staff stores delivery CPMI delivers chairs to end-users CPMI assembles parts and components, affixes barcode label provided by OAFA-AB CPMI and BCC Design team updates CAD, sends copy of FAI to OAFA-AB End

16. Process on Inventory of Task Chairs DEFINE S I P O C Supplier CTQ Input Process Output Customer Receives/Inspects/ Accepts delivery Asset Mass Addition Create and Affix Barcode Labels Issues/Transfers Disposes task chairs Updates Oracle System Conducts Physical Inventory Inventory Reconciliation Accurate Inventory Record Complete and accurate Inventory records Furniture Alteration/ Improvement (FAI) Purchase Order Receiving Report Disposal Report OAFA-AB OAFA-FM Management OAFA-AB OAFA-FM Other Dept/ office

17. CTQ DEFINE

18. Sample Inventory Data MEASURE

19. Pareto Chart Task Chair, No PCN, per Level MEASURE

20. Pareto Chart Task Chair, No PCN, per Level/Zone MEASURE

21. Pareto Chart Task Chair, No PCN, per Type MEASURE

22. Pareto Chart CH4, No PCN, per Level/Zone MEASURE

23. Pareto Chart – Type of CH4 with PCN inventoried at Levels 2 & 3 MEASURE CH4 & CH4A – old CH4B & CH4C - new

24. Pareto Chart – Type of CH4 with no PCN inventoried at Levels 2 & 3 MEASURE CH4 & CH4A – old CH4B & CH4C - new

25. As-is Process Sigma MEASURE

26. Detailed As-Is Process Map – Refurbishing of chairs MEASURE

27. Detailed As-is Process Map – Receiving of Delivery and Affixing Barcode Labels MEASURE

28. Cause and Effect diagram – Task Chair with No PCN ANALYZE People Materials/ Facility Transition of service provider from City Service to CPMI Low priority was given to handling of PCN Limited storage space No dedicated and accountable person to handle the job No segregation of chairs with PCN and no PCN Service Provider lacks personnel due to high turnover No segregation of different types of furniture Constraints during refurbishing Defaced / damaged barcode label Lack of coordination among staff involved in the process Removal of barcode label by staff Task chairs with no PCN Loose adhesive of barcode label Improper affixing of barcode label Barcode labels not affixed by service provider (CPMI) Barcode label covered by another component No assignment of PCN on purchase of components Procurement in parts & components Lenient monitoring of furniture movement No check and balance procedure in affixing barcode Urgency of demand in issuance of chair Lax compliance with the procedure Long process of PO payment which is pre-requisite in creating barcode label Leniency on policy No designated part of chair to affixing barcode label Outdated description used during RP initiation Checking of PCN not in work prioritization Policies/ Procedures Process

29. Cause and Effect diagram – Task Chair with No PCN ANALYZE

30. Cause and Effect diagram – Task Chair with No PCN ANALYZE Barcode labels not affixed by service provider (CPMI) 1.Why were the barcode labels not affixed by the service provider (CPMI)? - Because the task chairs were already deployed when CPMI received the labels generated. 2. Why were the task chairs already deployed before labels were affixed? - Because barcode labels cannot be produced upon receipt of the item, but the urgency of furniture movement has to be met 3. Why can't the barcode labels be produced upon receipt of the item? – Because barcode labels are created only after closing of FA transactions on the month the items were paid. 4. Why are barcode labels created only after closing of FA transactions on the month the items were paid? – Because assets including furniture are booked in General Ledger only after payment. 5. Why are assets booked in General Ledger only after payment? – Because it is the general accounting practice adopted in the Oracle System. People Materials/ Facility Barcode labels not affixed by service provider Task chairs with no PCN Policies/ Procedures Process

31. Cause and Effect diagram – Task Chair with No PCN ANALYZE Task chairs with no PCN

32. Root Cause Analysis ANALYZE Lack parts Incomplete delivery Limited stocks/ Goods in transit Defective parts delivery findings Receiving Report on hold Poor workmanship on leave Unavailability of the approving officer Long process of PO payment which is pre-requisite in creating barcode label on mission Full invoice for partial delivery Suppliers do not issue partial invoice Invoice on hold VAT inclusive invoice Typo error by supplier

33. Cause and Effect diagram – Task Chair with No PCN ANALYZE U Task chairs with no PCN

34. Root Cause Analysis ANALYZE High Staff turnover No dedicated staff to handle warehousing or housekeeping function Staff lacks initiatives Space Allocation problem in ADB Limited Storage Space No segregation of Chairs w/ PCN from No PCN Stores are kept in temporary storage Not aware of warehousing best practices No guidelines in handling stocks on hand Not aware of inventory valuation procedures (FIFO, LIFO)

35. Root Cause Analysis ANALYZE Improper affixing of barcode label Carelessness in affixing barcode label Printer problem Poor printing of barcode label Supplies problem (label, ribbon) Damaged/defaced barcode label Improper affixing of plastic protector Carelessness in affixing plastic protector Poor quality of plastic protector/cover Failure to affix plastic protector Non availability of plastic protector

36. Cause and Effect diagram – Task Chair with No PCN ANALYZE Task chairs with no PCN U

37. Cause and Effect diagram – Task Chair with No PCN ANALYZE No Check and balance in affixing barcode label 1.Why is there no check and balance procedure in affixing barcode label? - Because of lax in compliance with the procedure 2. Why is there lax in compliance with the procedure? - Because of delayed submission of documents (FAI) 3. Why is there a delay in submission of documents (FAI)? - Because there is no dedicated staff from the service provider 4. Why is there no dedicated staff from the service provider? – Because of high staff turnover 5. Why do the service provider have a high staff turnover? - Because of high demand of technical expertise People Materials/ Facility Task chairs with no PCN No check and balance in affixing barcode label Policies/ Procedures Process

38. Detailed (Should be) Process Map Receiving of Delivery & affixing of Barcode Label IMPROVE

39. Detailed (should be) Process Map – Refurbishing of chairs IMPROVE

40. SOLUTIONS MATRIX IMPROVE

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48. FMEA IMPROVE

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50. IMPROVE