Improving On-Time Delivery A key customer contacted a machine tool manufacturer about poor recent performance they had experienced regarding on-time delivery of the product. On- time deliveries were at 85%, instead of the desired target value of 100%, and the customer could choose to exercise a penalty clause to reduce by up to 15% of the price of each tool, or about a $60,000 loss for the manufacturer. The customer was also concerned about the manufacturer's factory capacity and its capability to meet their production schedule in the future. The customer represented about $8 million of business volume for the immediate future the manufacturer needed a revised business process to resolve the problem or the customer might consider seeking a second source supplier for the critical tool. A team was formed to determine the root causes of the delivery problem and implement a solution. One team member was a project engineer who was sent to a supplier factory, with the purpose to work closely with the supplier, to examine all the processes used in manufacturing of the tool, and to identify any gaps in the processes that affected delivery. Some of the supplier's processes might need improvement. 1

- Improving On-Time Delivery A key customer contacted a machine tool manufacturer about poor recent performance they had experienced regarding on-time delivery of the product. Ontime deliveries were at 85%, instead of the desired target value of 100%, and the customer could choose to exercise a penalty clause to reduce by up to 15% of the price of each tool, or about a $60,000 loss for the manufacturer. The customer was also concerned about the manufacturer's factory capacity and its capability to meet their production schedule in the future. The customer represented about $8 million of business volume for the immediate future - the manufacturer needed a revised business process to resolve the problem or the customer might consider seeking a second source supplier for the critical tool. A team was formed to determine the root causes of the delivery problem and implement a solution. One team member was a project engineer who was sent to a supplier factory, with the purpose to work closely with the supplier, to examine all the processes used in manufacturing of the tool, and to identify any gaps in the processes that affected delivery. Some of the supplier's processes might need improvement