Problem Definition Report Specs

COVER MEMO:

• Refer to your original Situation Analysis Report in your Summary Statement? No.
• Highlight the key elements of your Problem Definition report? Yes.
• End with a precise Action Request? Yes.
• Include your contact information? Yes.

PROBLEM DEFINITION REPORT:

Introduction:

 Summarize the key points of your report in a concise and precise paragraph? Good.
 Provide a Context/Background for the Problem? Yes.
 Re-establish your credibility? Good.

Analysis:

Do you describe the problem in detail, using a combination of primary and secondary quantitative and
qualitative research - facts, figures, statistics etc.? Excellent, thorough, well-cited discussion.

Excellent work. Grade: A.

 MEMO

July 10, 2011

To: Shaweta Sharma-Manager, XS Cargo
cc: Bob Basil, Instructor, KPU
From: Guninder Gill, Employee
Subject: Inefficient Receiving Process

This report explains the current Shipping and Receiving process at XS Cargo and its impact on
the employees, customer, and the business overall. The results of the research will be discussed
and displayed in detail to get a better understanding of the current situation. I welcome your
feedback and request authorization to continue my research for the Recommendation Report.

The Shipping and Receiving process is described by listing and describing the steps involved in
the process. See how turning this into a list makes it easier to read.

o Step one, starts with the delivery and getting staff members and equipment ready to
unload the shipment.
o Step two, involves physically taking the merchandise out of the truck.
o Step three, includes counting each item received and this can range from 5000 to 10000
items.
o Step four, \ involves moving the merchandise on to the floor and making it available to
the customers.
Step three, poses a huge problem because it is time consuming and also causes a delay in
putting out the merchandise. This delay causes customers to be upset and they express their
frustration out on the employees. The major impact of these events is loss of sales.

Employees and customers are not satisfied with the current situation. The results indicate that
over 70% of employees are unhappy and 90% of customers may never shop at XS Cargo again.

Sales are a significant part of any business and if sales suffer then the business is at risk of
shutting down, if the problem persists and is significant.[Eliminate as too obvious, and for
brevity.] Comparison of sales was done over four years and the current year shows a 10%
decline from previous years and it is due to the current problem.

If you could please respond to this report by Sunday, July 10 with recommendations and
approval of the research, it would be appreciated. I can be reached at 604-782-5759.

Thank you for your time.

GG
 Shipping and Receiving Process at XS Cargo

Introduction

This report explains the current Shipping and Receiving process at XS Cargo, as well as the
problems that were discovered during the research in the first three months of 2011. The main
problem with the current process is that it is time consuming and leads to loss of sales, unhappy
customers, and decline in employee morale.

After recognizing that a problem may exist, I made observations of the actual process from
beginning to end. I also traced how this problem extends into other areas of operations and
how it affects the employees and customers. Interacting with customers gave me useful insight
to the problem.

I focussed on this particular issue because it has a negative impact on me as an employee as

well as all management, owners, and customers. This problem represents a challenge to put my
education, experience, and expertise to use to define the problem and eventually come up with
a solution.

I have worked at XS Cargo for 3 years and I have experience in all the processes of the different
departments as well as knowledge of how the business is run.

Shipping and Receiving Process

The main problem is the Receiving process which is very time consuming. The steps in the
process are shown below.

Figure 1: Receiving Process at XS Cargo helpful graphics, properly integrated

t o b e g in .
p ro ce ss
r e c e v in g
fo r th e
re a d y
s t a ff
int te m a nsd.
te rq
1 0u,uc0ikp 0. 0m e
t uo, 0l lg0e0t t o
f5
e ry
D e liv
urnoi nlm
fm ouatde sa
3 a0onugr et o
rh
ma aan tt ee ll yy 1
cm
ap
ao pf p omxx iis
pi t rreo
aT1n
n au kdme bs e r
d
tanhte0ee8 adam .
U n lo a emd .
o
b
eA er rcei avn ues saet
p
S tsoouar rrese
h
get oomo7pdl so .y e
t rhoteom 5 4
4
fU
in g
Count c oas unu nattlal yk e
C
tda. k e n t o
tr h e ce otir d mee
y ua en dt o
d
se
handi meal an yu ea dl l
d
M e rc c ot luy n t e d
n
sb ieg n i fi c a
h ao so rt oi s
fl
ta hr rei vsea sl e s
t hna tt o
o
i t reomd u c t s
p
E ad ci shi n g
n
M e rch a
 XS Cargo

This figure illustrates the four steps in the Receiving process and shows that counting the
merchandise is time consuming and causes delays in merchandising. This problem continues on
and leads to unhappy customers, loss of sales, and decline in employee morale.

I have observed this problem from January 31 to April 31, 2011. XS Cargo has fixed dates on
which deliveries are to be made and we usually expect one delivery a week and a total of 12
deliveries have been made from January to April.

The root cause of this problem is the counting of goods which has caused significant damage to
the operations. This step can be excluded because it does not add any value to the functioning
of the store. It is also not necessary, since the goods received are automatically updated to the
stores computer.

The original process can be changed by replacing it with steps that add value and reduce the
time problem. Figure 2 shows how the original process can be improved by making the
following changes shown below.

Figure 2: Proposed Receiving Process at XS Cargo

Deliver
y

Merchandis Unload Unload

e

Count

This figure shows us that we have enough employees to solve the problem by segregating the
duties. In this new model, two processes are going on at one time which allows us to save time
and use our resources efficiently.

This process allows two employees to unload the truck while the third employee merchandises
the unloaded goods. The two employees will still continue to unload the truck until all of the
skids are unloaded. The Counting step is completely eliminated as there is no need for it.

Why it is a problem and what is the effect?

The counting step is a problem because resources (employees) are not used effectively. It also
uses resources and materials where they are not needed or on processes where there is a cost
but no gain.

The major effect of this problem is that sales have declined significantly in three months of this
problem taking place. Graph 1 below shows sales of four years from January 31 to April 31.

Graph 1: Comparison of sales from 2008 to 2001 from January to April.

XS Cargo

As we can see there has been less fluctuation in years 2008 to 2010 but 2011 shows a massive
decline in sales.

This decline is explained by professionals at PWC Retail Consulting Services who suggest that
inefficient processes within an organization can result in a loss of sales from 3 to 10 percent
depending on the size of the retailer.

Who does it affect?

This problem affects everybody employed at XS Cargo as well as the customers who come to
shop here. The company as a whole is affected since the people who run and give business to
the company are affected negatively.

How does it affect them and how much?

Employees are the first ones to be affected because they are the ones providing service to the
customers. The customers display their anger and frustration to the employees because they
are primarily responsible for satisfying the customers’ needs. As a result, employee’s morale
declines because they are getting blamed for something they are not responsible for and in turn
their productivity declines.

Customers who are unsatisfied show their frustration by leaving the store without purchasing
the product and writing emails to customer service about their shopping experiences. Some
even threaten to never shop at XS Cargo again.

Employees were asked if they were satisfied while working at XS Cargo and customers were
asked if they will ever shop again if this problem continues. The results are show below in
Graphs 2 and 3.

Graphs 2 and 3: Show the percentage of Employee and Customer satisfaction.

 Employee Satisfaction

yes
no

XS Cargo

The employee satisfaction chart shows us that 7 out of 10 employees were not satisfied with
their job and most of their decline in satisfaction was related to the current problem.

The customer satisfaction shows that 90% of customers were not satisfied with the customer
service while 5% were satisfied and 5% were unsure.

There is a lot of red or dissatisfaction by both employees and customers. The current problem
has caused significant problems in all areas of the business. Properly organized, short paragraph
“chunks”

How often does it affect them?

Flyer sale starts every Thursday at XS Cargo and lasts until Monday. These four days are the
busiest days with a lot of customer traffic as well as sales. The problem has been studied for 3
months, so for 48 days the store and its employees as well as its customers suffer.

If the problem continues XS Cargo will have a very bad year in terms of sales and based on the 3
month study, this problem will affect it for more than half year if not fixed.

Who is on board to support the research and who will benefit?

After the manager read the situation analysis, she confirmed that there is a possibility that a
problem exists and has agreed for me to continue doing research. The manager, Shaveta has
said “that if a problem does exist and we can find a solution we will be able to meet our sales
target by the end of the year.” While interviewing and questioning employees and customers,
they too agreed that this research is worth pursuing as everyone will benefit.

Which credible experts agree with existence of a problem?

The employees and customers are well aware of the negative impact of this problem because
they experience it firsthand. The manager is also aware of the problem because it’s reflected in
the daily sales report.

PWC Retail Consulting Services also agrees that inefficient processes within an organization can
cause 3 to 10 percent loss in sales.

George Whalin writes in his book Retail Success that “keeping the employees and customers
satisfied will have a positive impact on the company as a whole.” (Whalin, 2001, p. 150)

Work Cited
PwC, “Success in Retail”, Inefficient Processes within a Business, June28, 2011.

http://www.pwc.com/ca/en/publications/index.jhtml

XS Cargo, “About XS Cargo”, June30, 2011.

http://www.shopxscargo.com/pages/productrecall.asp

Whalin, George. Retail Success. Michigan: Willoughby Press, April 1, 2001.