Mike Hoffman, TeamMBA Class of 2010, walks through the steps his team (Vivian Chi, Jessica Dobbs, Michael Blair and Rob Pauley) followed to complete their TeamMBA Capstone project in April 2010. This slide deck was presented to the TeamMBA Class of 2011 on August 28, 2010.

1. Cost of Quality at Avon Atlanta MBA Team 3 Michael Blair Vivian Chi Jessica Dobbs Michael Hoffman Robert Pauley

2. Overview of Project Assess the cost of quality at Avon Atlanta Quality measures driven by “DPMO” rate DPMO – (Defects Per Million Opportunities) accuracy of order fulfillment based on random audits of completed orders Determine the financial impact of DPMO rate Provide recommendations for improving (i.e.; decreasing) the DPMO rate

3. Why This Project? Project has support of local management Project specific to Avon Atlanta site Can be managed (controlled) locally Access to necessary data, facility, and key stakeholders Assessment of quality and relevant metrics with relationship to cost has not been determined

5. Analysis of facility volumes and throughput

6. Analysis of error rates (DPMO)

7. Development and Analysis of Client Survey

8. Determination of costs associated with errors in order fulfillment

10. DPMO Statistics 2009 DPMO Rate 1310 defects per million pieces shipped Individual Area

12. Development: Joint process between Avon Atlanta and MBA Team.

13. Topics Covered:

14. Merchandise Appeal

15. Quality of Order Fulfillment

16. Customer Service Quality

17. Open Comments

19. 10.5% not confident in Avon order accuracy

20. Why???

21. 33% reported missing items of 2 or more on average

22. 20% received incorrect items of 2-3 on average

23. 41% Dissatisfied with Customer Service willingness to help

26. In motion scales

27. Weight Based procedure for error correction

28. Auditor station at error correction area

29. Change in auditor process of error corrections.

30. Notes:

31. Hand held scanner technologies for CPA

33. Financial Evaluation of Technology Recommendation

34. Summary DPMO Rate 2009 - ~1310 Cost approximately $950K Or $4.14/defect ~ $716/DPMO unit (volume ~173MM) Suggest Improvement in MAS area Automated weight scales Cost to Implement - $159K Savings/year - $100K Payback – 2.25yrs, NPV=$200K(10yrs), IRR=44.2

35. Challenges Project Specific Gathering technology based responses Gathering research data Software constraints Guard against project “scope creep” Capstone Specific Time Team member is employee Communication

36. Hindsight – What Was Our Project Analysis of Business Processes Analysis of current metrics and relevance Customer Survey Capital Costing Project Recommended solutions with cost benefits to company

37. Keys to Success Good Communication Chose well defined project Recognize (and exploit) team members strengths Assign tasks and hold team members to timelines and deliverables Team member worked for project company

38. Questions