1

By: Graham Rafferty

Dubai Cable Company

UAE

Business Process

improvement project

To reduce Business Process Cycle time for Quotations

To enhance functionality of the quotation system to the

benefit of both Ducab and the customer.

2

Inroduction to Ducab • Founded in 1979.

• Jointly owned by the Governments of Abu Dhabi and

Dubai

• Leading manufacturer of Electric Cables in the Gulf.

• Sales predominantly in the Gulf region but also exports

to Asia and Europe.

• >800 employees

• 3 manufacturing units in Masafa, Abu Dhabi.

• 4 manufacturing units in Jebel Ali.

• Turnover > 3 Billion AED / year.

• Approx 150,000 t material processed / year.

3

DEFINE

4

Business Case

• Project commenced in 2010 as part of the Operational Excellence initiative.

• Due to a decline in demand arising from the global recession the number of quotations being raised to secure business had dramatically increased.

• Pressure on the quotation system had resulted in an increase in the process cycle time.

• Business opportunity was being lost due to failure to quote in a timely manner.

5

Voice of the customer

• Uncertainty in the market place with construction projects being placed on hold or cancelled.

• Needed very fast response to enquiries for cable.

• Would give preference to supplier who could quote within 24 hours.

• Required short lead times for supply of cable.

• Quotations needed to be in a user friendly format.

6

Opportunity

Ducab had available capacity, manufacturing flexibility and market presence to respond very quickly to demand if more business could be secured.

7

Our Goal

• To establish a system where, as far as

possible, required information is available for

converting relevant enquiries to quotation

without referrals to other departments.

• To give a response within 24 hours to enquiries

for standard items and 3 days for new designs

or by tender due date specified.

8

Project Scope

• In scope:

– Dubai Cable Business

– Enquiry to Quotation

• Out of Scope:

– Ducab Connect Business.

– Pre-enquiry Sales activities.

– Quotation to order

9

Goals

• 70% of enquiries responded to within 24 hours by end of 2010.

• 90% of enquiries responded to within 24 hours by June 2011.

10

Project Team

Name Role Approved By

Chew Wah Tan Sponsor

Ulhas Menon Process Owner G M Sales

Danish Farouque Project Leader Commercial Manager

Graham Rafferty Facilitator G M Technical

Keith D'Souza Team member G M Technical

Keshev / Manna Facilitator Planning Manager

Ahmed Rashid Ali Commercial Expert Commercial Manager

Hadi Mohammed Design Engineer Technical Manager

Sales Managers Voice of the customer G M Technical

11

Project Time line

Phase Start Date End Date Number of Weeks

Define 21/03/2010 08/04/2010 2.6

Measure 09/04/2010 23/04/2010 2.0

Analyse 23/04/2010 30/06/2010 9.7

Improve 01/07/2010 31/08/2010 8.7

Control 01/09/2010 30/09/2010 4.1

12

Project management

Quality Companion.

13

Measure

14

Quotation statistics

Quotation Statistics Jan 2008 to Feb 2010

-

100

200

300

400

500

600

700

800

Jan-

08

Feb-

08

M ar-

08

Apr-

08

M ay-

08

Jun-

08

Jul-

08

Aug-

08

Sep-

08

Oct-

08

Nov-

08

Dec-

08

Jan-

09

Feb-

09

M ar-

09

Apr-

09

M ay-

09

Jun-

09

Jul-

09

Aug-

09

Sep-

09

Oct-

09

Nov-

09

Dec-

09

Jan-

10

Feb-

10

Nu

mb

er

of

qu

ota

tio

ns

• Number quotations raised per month had increased from 244 in 2008 to 582 in 2009.

• Placed great strain on resources in Commercial Department.

15

Process Mapped • Very complicated.

Mode of Enquiry Received

By Fax

By Courier

Tender by Hand

Verbal Enquiry

Is it a complete

enquiry?Is it legible?

Is the enquiry in

English?

Call the customer to send

all pagesGet it translated to English

YES YES YES

NONO NO

Commercial co-ordinator

sorts the enquiries &

brings it to Team leader

Is it a cable enquiry?

Is it Connect or Rod or

PVC enquiry?

Co-ordinator prepares

regret letter with Baan

Number & reason code

Forward to concerned

department

YESNO

NO

Is it in Ducab product

Range?

Can we manufacture

it?

ENQUIRY TO ORDER

A

A

NO

Forward to Technical/

Planning

YES

Should we accept the

enquiry?A

NODo we know of the

project?

YES

YES

Do we know the

customer credentials?

YES

Collect information from

the customer on the

project

Do we know the SM/

LOB

NO

NO

Forward to SM. Do we

need to Quote?

Team leader reviews SM’s

decisionSDM to review

Is it a HV Enquiry?YES

Is it a Utility business?

YES NO

Is it part of framework

agreement?

Do we require Bid

Bond?

Is bid bond viable in

this region

NOYES

Consult SM. Inform

customer to use

agreement prices

Is it any other UAE

market enquiry?

Is it a standard cable?

NO

Is the value >= 2M?

Team leader allocates

enquiry to a CO and gives

it to CCO

YES Does the customer

code exist?

Create new customer

code in de database

NOCCO creates a Baan

Quotation# with time and

date, Project identifier, CO

name

A

YES

Does the item code

exist in Baan? (M ->

B)?

Do we require a

Tender Committee

meeting?

Guidelines?

NO

YES

NO

Tender committee

meeting process

Team leader decides the

guidelines to CO

NO

Worksheet data input by

CO based on guidelines in

Baan

YES Prints the worksheet with

factor

Is the NAV/T as per

guidelines?

Worksheet forwarded to

TL for approval/consent

YESNO

Is the price inline with

the market trend?

Revised guidelnes

NO

Is NAV/T as per plan/

previous orders?

YES

NO

Co prepares formal quote alongwith

Commercial T&C, Tech points & No.

of signatories by value

Clarifications/delivery/payment terms

etc

YESQuote sent to TL for

approval

Is T&C as per Ducab

agreeable terms?

TL approves the quote &

worksheet and returns to

CO

TL sends the quote,

worksheet, inquiry,

variation formula, TDS,

compliance, certification to

CDM

Is worksheet/quote as

per agreed tactics/

order with GM Sales

Is the quote value <

20M

CDM & G. Sales to decide

on strategy

Allocated SM signs off the

quote

Is the quote value

>20M & <40M

SM & GM Sales or other

GM to sign off the quote

NO

YES

YES

NO

YES

SM & 2 GM/MD to sign off

quote

NO

Quote received by CO,

copy of quote sent to

customer & SM without

worksheet

CO gets confirmation of

quote to update Baan for

response date & time

Quote filed in Commercial

file

B

Customer contacts SM for

finalising the quotation

Is the price acceptable

to the customer?

Can we offer a price

discount?

Customer sends Order to

Ducab

YES YES

NO

Team leader proposes

discount based on

Minimum NAV/T

guidelines

Is it in agreement with

GM Sales Policy?

Discount to be agreed by

GM Sales

Discount to be agreed by

GM Sales

NO

Revise the worksheet

Is the quote

acceptable to the

customer?

NO

Is the delivery

acceptable to the

customer?

Planning is consulted for

revised delivery schedule

Delivery agreement

communicated to the

customer

NO

YES

Is T&C acceptable?

GM Sales/CFO consulted

for revised T&C as asked

by customer

Revised proposal

communicated to

customer

NO

Does customer send

the order?

YES

YES

NO

B

YESYES

16

ANALYZE

17

Key sources of delay identified

1.Work sheet preparation

2.Interface between Commercial and

Technical Departments.

18

Worksheet preparation

Worksheet data input by

CO based on guidelines in

Baan

Prints the worksheet with

factor

Is the NAV/T as per

guidelines?

Worksheet forwarded to

TL for approval/consent

YESNO

Is the price inline with

the market trend?

Revised guidelnes

NO

Is NAV/T as per plan/

previous orders?

YES

NO

YES

• Worksheet formed part of the ERP system and was used create

quotations.

• To arrive at final agreed price a quotation may loop through the

worksheet several times.

19

Worksheet preparation – Key Pain areas

• Work sheet was not user friendly

• Limited search facility to identify existing Item Code.

– Only 3 product characteristics could be searched.

– Commercial assistant may have to inspect the contents of each item in detail to identify correct item code to quote against.

– Wrong item code sometimes selected.

– New code created simply because correct code to be used could not be found.

20

Worksheet preparation – Key Pain areas

• A lot of manual adjustment needed to reach target price.

• Amending quotation took the same time as creating a new quotation.

Commercial

Clerk loads

items on to ERP

Worksheet

ERP

Worksheet

defaults to

Ducab list

price

Commercial Clerk

exports ERP

Worksheet to Excel

Commercial Clerk

uses guidelines to

establish prices for

Commercial

Offering

Commercial Clerk

uses excel to

calculate line /

order discount

factors needed to

set prices for

Commercial

Offering

Commercial Clerk manually

adjusts line / order discounts in

ERP Worksheet to set prices

to Commercial offering

Commercial Clerk prints copy

of ERP worksheet and gets

approval from required

authority.

Prices approved

Final Quotation prparedPrices not

approved

21

Worksheet preparation – Key Pain areas

• Poor retention of quotation history.

– Could only retrieve hard copies of previous quotations for comparison

– Inconsistency in pricing.

• No system generated customer / region factor in prices.

• Poor “what if” facility.

– Quotations had to be exported to excel in order to analyse the effect of discounts on margins

• No systematic way of charging for small order quantity.

22

Worksheet preparation – Key Pain areas

• Currency conversions were manual.

• Product descriptions were free flow text.

• Terms and conditions were in free flow text.

• Final Quotations had to be printed and then scanned into pdf format to send to customers.

• Customers disliked the landscape format of quotations.

• Some customers required the quotation in excel format which had to be created manually.

23

Interface between Commercial and

Design Departments.

• No formal protocol for information exchange.

– Mostly done by e-mail.

– Frequent needs to clarify information.

– Repeated requests for the same information.

• Departments working to different sets of priorities.

• No common database of information.

• Need for Commercial to request information even of a trivial nature.

• Hence high workload on Technical Department resulting in delays.

24

Ducab order intake for 2009 • 80% of sales revenue came from 13% of orders

• 80% of man hours spent on 20% of order revenue..

Pareto Analysis of order intake

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

13% of Sales orders 87% of Sales orders

20% of man hours 80% of man hours

Order intake

% o

f S

ale

s R

even

ue

25

Ducab order intake for 2009

• To add value to activities in the Commercial / Technical Departments more

time needed to be directed towards the Commercial offering for large high

value business.

• However, system constraints meant that the time spent on a quotation was

independent of the potential value of the quotation.

• Commercial staff had no free time to put extra effort into high value

quotations.

• This was not good business sense since higher value quotations carried

higher risk and therefore needed more scrutiny.

26

Initial Conclusion

• Minor modifications to the existing mode of operation would not yield the desired

benefit.

• Business Process Re-Engineering was needed.

• Change needed to be:

– Fundamental

• Why to we do it this way?

• Why not differently?

– Radical

• Starting from scratch. Not modifying.

– Dramatic.

• Looking for an “order of Magnitude” change.

• A Quantum leap.

– Processes.

• Work on processes not activities.

27

Questions

1. Could the desired change be achieved within the limits of the existing ERP system?

2. Could the desired change be achieved outside of the existing ERP system?

The first question was of a practical nature. To what extent could the existing ERP

system be modified to accommodate the desired change?

The second question was of a cultural nature. The ERP system was considered to

be sacred. To depart from the ERP system would be a hard sell inside the

company.

It would also be courageous to take such a bold step.

It would certainly qualify as Fundamental, Radical and Dramatic.

28

IMPROVE

29

Two Phase Approach

• Phase 1:

– Improve the Commercial activity.

• Phase 2

– Improve the Commercial / Technical Department interface.

30

Phase 1 Functional Design Specification

• The first step towards answering the burning questions

• The Commercial team put together a functional design specification for what was

needed from the Process.

• We tried to do this with out basing it around the limitations of the existing ERP

system.

• A table of definitions was created for essential characteristics along with a list of

inputs / outputs to the Process of creating a Quotation.

31

Input variable Data Source

Customer ERP Data base

Customer Code ERP Data base

Sales Rep ERP Data base

Sales Manager ERP Data base

Commercial Officer ERP Data base

Line of business ERP Data base

Area ERP Data base

Project ERP Data Base

Quotation no / Version ERP Data Base

Work sheet input data

32

Input variable Data Source

Date Automatic

Cu price in Sales ERP Data base

LME Copper price ERP Data base

Cu price in Cost ERP Data base

Cu Premium ERP Data base

Order discount Manual Adjustment

Work sheet inputs

33

Input variable Data Source

Item code ERP Data base

Item Description ERP Data base

TPL ERP Data base

Quoted Price QP TPL adjusted by LME

Line factor Variable used to set Price

Net Quoted price / unit NQP QP adjusted by Line factor to give

target NAV.

Target NAV ERP Data base

Quantity Manual input

Line price NQP x Quantity

Work sheet inputs

34

Input variable Data Source

Net Cost Standard cost adjusted by LME and

material escalation factor.

Actual NAV Net price – Net Cost

Actual NAV % (Net price- Net cost) /NP

Actual NAV / Cu t (Net price- Net cost) / Cu t

Cu variation factor ERP Data base

Cu t Cu variation factor / 3.675 x

Quantity.

Min order Quantity MOQ ERP Data base

Surcharge for short length Based on Tgt NAV and MOQ

Work sheet inputs

35

Quotation no / Version

Customer Code Date

Sales Rep Cu price in Sales

Sales Manager LME

Commercial Officer Cu price in Cost

Line of business Cu Premium

Area Order discount

Project

Quotation specific data required

for retreval

36

Quotation no / Version

Serial no

Item Code

Line factor

Quantity

Line specific data required for

retreval

37

Modeling the Solution

• Combining the functional design and

the input / output data requirements

a solution was modelled using Excel.

• Data base tables were exported from

the ERP system to Excel Files.

• Over a period of 4 weeks the model

was reviewed regularly by the

Commercial team and enhanced.

38

Solution Criterea Preference

Criteria Weighting Comments Time needed for

implementation

30% Time was of high importance as lack of solution

was damaging the company.

Needed to be

achieved with existing

human resource

20% Wanted to be clear that Process Improvement is

not dependant on increasing resource

High probability of

success

15% Wanted to avoid a solution that still left the

system constrained to any extent.

User friendly 15% Needed complete buy in from the end users.

No external help

required.

15% An in house solution would generate much better

ownership of the process and incur less cost.

Low cost 5% Cost is always important, but should not over ride

the need for a satisfactory solution.

39

Building the final Solution

• Ducab’s IT department were called in

to see the demonstration model.

• Two options were possible:

• Re-create the model in the

existing ERP system

• Or Write a program to replicate

the functionality of the model.

40

Choosing the Option

Option Points in

favour

Points against

Modify existing

ERP system

All data bases used to create

Quotations existed in the ERP

system and were accessed by

many other processes.

The Company policy was to

migrate all activities to the

ERP system.

The ERP system was very

dated.

The desired functionality

required by the model could

not be achieved without major

upgrade or re-writing of the

ERP system.

Upgrade or re-writing would

be costly and take months to

achieve.

Outside consultants would be

needed.

Customisation of the existing

ERP would make it

incompatible with later

versions of the ERP.

41

Choosing the Option

Option Points in

favour

Points against

Write new

program to

replicate the

function of the

model

Solution could be reached

that 100% met the

requirements.

No external help was needed.

Could be achieved in weeks.

Very low cost solution.

Would not require

customisation of the existing

ERP system.

Would exist outside of the

ERP system.

Data would still need to be

maintained in the ERP

system.

42

Decided to write new program

• Only practical solution.

• Quotations could exist outside of the ERP as they had no impact on the accounts until an order is taken.

• New program would access the existing ERP data base for costs / BOM.

43

CONTROL

44

Trial period

• New software written inside 4 weeks.

• Trialled in parallel with existing

system from Mid August to end

September 2010. Modifications made

• Used 100% for all quotations from 1st

October 2010.

• Minor issues only incurred.

45

Training program

• To facilitate the implementation an

interactive training program was

developed for users.

46

Key improvements

• All functionality needed to create

quotation existed in the new program.

• No need for any off line working in

Excel.

• 75% reduction in the time needed to

prepare a quotation.

• 95% reduction in the time needed to

revise a quotation.

47

Key improvements

• Comprehensive search facility to find

correct product code for quotation.

• Library of Standard descriptions and

Terms and Conditions created which

could be directly imported into the

quotations.

• Direct export of quotation to pdf file in

user friendly portrait format.

• Direct export of quotation to Excel file

to meet customer preference.

48

Key improvements

• Good storage and retrieval facility to

search previous quotations

49

Goal Achieved

Quotation performance Oct 2010 to Jun 2011% of quotations sent within target time.

70%

75%

80%

85%

90%

95%

October November December January February March April May June

Month

% w

ith

in t

arg

et

tim

e

50

Phase 2 Commercial / Technical Interface

• Three actions identified

1. Create a database of frequently asked questions and Technical Data Sheets to reduce the

need for repeated referrals from Commercial to Technical for the same information.

2. Establish a protocol for information exchange between the two departments

3. Automate the system for providing Estimated Material Weights for quotations for new

products.

51

Data base of information

• A data base of Technical \Data sheets was created and indexed such that it could

be easily accessed by the Commercial Department.

• Over a period of time a data base of answers to frequently asked questions was

created and made available to the Commercial office.

Golden Rule:

Before you try to improve an interface, first eliminate

where ever possible the need for the interface

52

Establish protocol for information

exchange

• Formal structure set up with on-line forms for communication between the

Commercial and Technical Departments.

• Forms included such fields as responsibility allocated to task and dead line for

information required.

• Forms also monitored progress status.

• The use of free flow e-mails as a form of communication almost eliminated..

53

Automation of creation of estimated

material weights.

• Existing cable design system created comprehensive BOM required to make a

product.

• It was time consuming and created a lot of extra detail not needed for quotation

purposes.

• A simpler, faster system was needed to create designs with the bare minimum of

information needed for quotations.

• In house program created by a Design Engineer and an IT expert.

• Time required to produce Estimated Material Weights reduced by >50% (still under

evaluation)

54

Reduction in queries from Commercial

Department to Technical.

Requests for Information

From Commercial to Design

0

15

30

45

60

75

90

105

120

135

150

165

180

195

210

Jan-

11

Feb-

11

Mar-

11

Apr-

11

May-

11

Jun-

11

Jul-

11

Aug-

11

Sep-

11

Oct-

11

Nov-

11

Dec-

11

No

. o

f re

qu

est

s

Average 2010

55

Summary.

• Large scale improvements were achieved by making fundamental

improvements to the Business processes.

• No increases were made to the resource in any area.

• Zero costs were incurred in contracting in outside help.

• All improvements including software writing were achieved using in house

talent.

• By using resources already employed by the company the project was

achieved at zero cost.

56

Recognition.

• One Employee from the Project Team was selected as Employee of the

month.

57

Key lessons learned.

• To achieve Business Process Improvement you have to be prepared to break

the rules.

• Most constraints exist in our minds only.

• Make the Process fit the needs of the Company. Don’t try to fit the Process

into a constraining system.

• Make life easy for people.

• Look for a large scale improvement.

• Do not start with the objective of cost reduction. An improved process will be

more efficient and will improve Return On Capital Employed.

• In house talent exists and is far more cost effective than outside consultancy.

58

Final Comment.

Within 3 months of implementing the new

Quotation system the Company came to

the conclusion that the existing ERP

system no longer met the business needs.

An upgrade of the ERP system was

rejected in favour of a brand new

implementation.

Ducab is approaching the new

implementation with opened minds.