Value-Chain Report -- Error Proofing Improves Supply Chain Reliability

Human errors and equipment failures can be minimized through error-proofing techniques.

It is widely recognized that reducing lead times and inventories, collaborating with trading partners and increasing order and inventory visibility are all significant contributors to improved supply-chain performance. However, the sophisticated technology and new operating practices that are the foundation for many of these improvements often lead to complacency. Users tend to believe that these systems and processes, once implemented, will somehow operate on "auto pilot." In practical application, however, we know that this is not the case. Every new operating practice or system introduced to improve supply-chain operations has its own opportunities for error. The classic analogy used years ago by manufacturing pioneer Oliver Wight and others was that each time that the water level (inventory) was lowered, more rocks (problems causing the need for inventory) would be exposed, which could then be eliminated. So, too, is the need to constantly "expose the rocks" throughout the supply chain and build error proofing into the underlying business processes and technologies that support supply-chain operations. It does not take a tremendous amount of foresight to understand the impact on the supply chain if deliveries are missed, orders are lost or products are defective. Although error-proofing techniques were originally developed for and have found their most widespread use within production activities, application of error proofing techniques to physical and administrative supply chain operations can significantly improve performance reliability. What is Error Proofing? As it applies to supply-chain operations, error proofing is a systematic process for improving the reliability, quality and stability of a supply-chain process or system. Error-proofing techniques help to mitigate the impact of human error and equipment failure, which are natural occurring conditions. By reducing or eliminating the causes of human error or equipment failure, error proofing provides a number of benefits:

  • Enforces operational procedures or sequences, thereby improving quality
  • Signals or stops a process if an error occurs
  • Eliminates choices leading to incorrect actions
  • Prevents damage to products or equipment Common Causes of Errors Error-proofing techniques can be applied to those supply-chain activities that commonly provoke error, such as manual data entry, lack of proper identification of products, missing documentation and similar circumstances. There are six common causes of errors that are likely to occur in supply-chain operations. These include: 1. Processing omissions 2. Processing errors 3. Improper part or product 4. Missing parts or products 5. Specification errors 6. Errors in equipment maintenance or repair Processing Omissions. Processing omissions occur when one or more steps in a defined process or procedure are not performed. For example, allocating inventory to a customer order without verifying that the inventory is actually available to satisfy that demand. Processing Errors. Processing errors occur when processes are not performed according to the prescribed procedure or sequence. An example would be picking perishable product in a warehouse without following the prescribed FIFO procedure, resulting in newer product or product with a longer remaining shelf life being shipped first, rather than the older product with a shorter remaining shelf life. Improper Part or Product. An improper part or product error occurs when the wrong component part or end product is delivered by a supplier, utilized in production or shipped to a customer. In each case, the incorrect part or product has been introduced into the supply chain, likely necessitating costs associated with return, rework or replacement. Missing Parts or Products. Missing component parts or end products are errors in and of themselves, introducing a significant amount of excess cost and waste into the supply chain. Under-delivery by suppliers and/or short-shipment to customers disrupts supply-chain operations and frequently results in redundant logistics costs. Specification Errors. Specification errors occur when the wrong product specifications are utilized, product revision levels are not consistent with order requirements or other specific product documentation is incorrect. For example, if customer requirements call for a certain military standard for heat treatment or non-destructive testing but other standards are actually utilized, then a specification error occurs. Errors in Equipment Maintenance or Repair. Frequently, improper maintenance or repairs to equipment utilized throughout the supply chain results in equipment failure, unplanned downtime and excess costs. An example would be a breakdown of automated storage and retrieval system equipment in an automated warehouse due to improper or lack of preventive maintenance, resulting in late shipments or other supply-chain disruptions. Six Steps to Error Proofing These six steps provide a framework for applying error-proofing concepts in the supply chain and can be implemented either reactively -- in response to observed errors -- or proactively -- after identifying potential conditions that could lead to errors. Step 1: Document the Condition. Identify and describe the error condition in detail, including an examination of the history of the error and any other documentation that helps to fully describe the error condition. For example, how frequently does an order-entry error occur, when does it typically occur, etc. Step 2: Determine the Root Cause. Perform a cause-and-effect analysis to determine the root cause of the error, not just the symptoms or manifestations. Identification of the root cause is essential to elimination of the error condition. For example, if failure to follow FIFO procedures is the error condition, determine the fundamental reason for that error. Are products improperly located? Is product data inaccurate? Step 3: Review the Current Process. Document each step in the process in which the error occurs. Error proofing opportunities will be based on this detailed documentation. An example would be identification of a manual data entry point in a process that creates an opportunity for digit transposition or other keystroke errors. Step 4: Identify Deviations from Standards. Observe the actual process and identify areas where the methods currently being applied deviate from the desired operating procedure. These deviations will point to the areas where procedural improvements are needed. For example, under-shipments or over-shipments may result from counting methods or other practices that are incompatible with the products or materials being counted. Step 5: Determine the Error Proofing Technique to be Utilized. Based on the actual practices involved and the root-cause analysis, define an error-proofing technique that can be applied to eliminate the error condition. Examples for warehouse operations would include application of bar coding, pick-to-light, directed picks and similar technologies and processes to reduce human error. Step 6: Implement and Monitor for Effectiveness. If practical, test the error-proofing technique for effectiveness prior to full implementation. Post-implementation, monitor the results of the error-proofing technique to ensure that the root cause of the error has been eliminated and that performance reliability has improved. Introduction of error-proofing techniques into supply-chain operations helps to ensure that naturally occurring human errors and equipment failures are minimized, thereby significantly improving the overall reliability of the supply chain. Kevin P. O'Brien is a Cap Gemini Ernst & Young practice leader for supply-chain consulting with high-growth and middle-market companies.
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