Measuring Performance of an Order-to-Delivery Process

DEGREE PROJECT IN MECHANICAL ENGINEERING, SECOND CYCLE, 30 CREDITS STOCKHOLM, SWEDEN 2018

Measuring Performance of an Order-to-Delivery Process

A study at Scania CV AB PHILIP SUNDSTR?M KLARA TOLLMAR

KTH ROYAL INSTITUTE OF TECHNOLOGY SCHOOL OF INDUSTRIAL ENGINEERING AND MANAGEMENT

Measuring Performance of an Order-to-Delivery Process

- A Study at Scania CV AB

Philip Sundstr?m Klara Tollmar 2018

Supervisor: Daniel Tesfamariam Semere Examiner: Andreas Archenti

KTH Royal Institute of Technology in Stockholm

School of Industrial Engineering and Management

Acknowledgements

This thesis project is performed as the final part of our master's degree in Production Engineering and Management at the KTH Royal Institute of Technology in Stockholm, Sweden. The thesis was conducted at Scania CV AB in S?dert?lje.

First of all we would like to thank Scania for welcoming us and for giving us this opportunity. We want to acknowledge all of those that we have met at the company and who have answered our questions and given us their time and knowledge. This acknowledgement and gratitude is also extended to the interviewed companies that have participated in our thesis. Above this, we especially want to thank our supervisor, Libna Monteiro, who have supported and helped us in our work. We also want to extend our gratitude to Per Hedlund, the responsible manager, and Daniel Sterner for initiating this thesis project. Lastly we want to thank our KTH supervisor Daniel Semere for his help, time and knowledge. Without all of you this thesis would not have been possible.

S?dert?lje, Sweden

June 2018

_____________________________ Philip Sundstr?m

_____________________________ Klara Tollmar

Abstract

The Order-to-Delivery (OTD) process covers the entire flow from an initiated order until the product or service is delivered to the customer. OTD is considered a core flow in order to successfully deliver products according to the customer's needs. Therefore, is it of importance to track the performance of this flow and all intermediary processes through performance measurements. The key to successful performance measurement is to identify critical factors that can be measured towards previous states, future goals and industry best-practices. However, there are no standardized solutions that can be adopted. Instead performance measurements need to be adapted to each organization's capabilities, limitations and needs. Effective performance measures and indicators can help steer a company in the right direction.

In this thesis, Scania's industrial OTD process and the connecting indicators has been studied. The company would like to know possible indicators to measure the performance of this process so that it will contribute to find deviations, continuous improvement and challenge the current state. There is also a need to increase the knowledge of how to interpret and manage indicators.

The project has been conducted through both empirical and theoretical studies. An extensive literature review has been performed. The study concluded in methods and best practices for performance measurements, as suggested by literature. It has also resulted in an identification of relevant OTD measures. Empirical studies have been conducted through a current state analysis of Scania and a company comparison. Five companies were interviewed on the topic of performance measurements. The aim was to identify the measurements used in each of the companies OTD flow and to investigate if any best practices could be identified. The empirical findings have been analyzed towards the theoretical findings in order to find gaps and improvement suggestions. It was found that lead time and delivery performance are two strategic elements to evaluate a company's OTD flow.

Lastly, a concept has been developed as an additional approach to measure the part of a lead time that has the largest variance - transport time. The concept can, with further work, be extended to include the entire lead time. The aim with the concept was to fairly compare different transport times against each. It is believed that the approach can be used as a tool to visualize the efficiency of the transport flow to different delivery countries and therefore determine if the country behaves according to a normal situation.

The thesis has resulted in recommendations to implement new measures that could be of value to Scania. Process wise it is suggested to better differentiate between indicators and to improve the way they are presented and reported. It is also suggested that that quality of the input data and the reporting process for this should be reviewed.

Keywords

Logistics, Supply Chain Management, Order-to-Delivery, Performance Measurements, Key Performance Indicators, Lead Time, Delivery Performance

Sammanfattning

Order till leverans-processen t?cker hela fl?det fr?n orderl?ggning tills att slutprodukten eller servicen levereras till kund. Processen anses vara en k?rnprocess och ?r kritisk f?r att kunna leverera produkter enligt kundens behov. Det ?r d?rf?r viktigt att f?lja upp prestandan av detta processfl?de genom olika prestationsm?tt. F?r att lyckas med prestationsm?tning ?r det viktigt att identifiera kritiska faktorer och m?ta dessa mot tidigare l?gen, framtida m?l och best practices inom industrin. Det finns dock inga standardiserade l?sningar som kan implementeras p? f?retag. Prestationsm?tt m?ste anpassas efter varje organisations kapacitet, begr?nsningar och behov. Genom att anv?nda effektiva prestationsm?tt och indikatorer kan ett f?retag styras i ?nskv?rd riktning.

I detta examensarbete har Scanias industriella order till leverans-process och dess tillh?rande prestationsm?tt studerats. F?retaget har en ?nskan om att identifiera m?jliga indikatorer f?r att m?ta prestandan av order till leverans-processen, vilket kan bidra till att hitta avvikelser, st?ndiga f?rb?ttringar och att utmana den nuvarande situationen. Det finns ?ven ett behov av att ?ka kunskapen om hur prestationsm?tt ska tolkas och hanteras.

Detta projekt har utf?rts genom empiriska och teoretiska studier. En omfattande litteraturstudie har resulterat i l?mpliga metoder och utf?randen g?llande prestationsm?tt. Studien har ?ven resulterat i relevanta order till leverans-m?tt enligt akademisk forskning. De empiriska studierna har best?tt av en nul?gesanalys av Scania och en j?mf?relsestudie d?r fem olika f?retag har blivit intervjuade inom ?mnet prestationsm?tning. M?let med j?mf?relsestudien var att unders?ka de olika m?tt som f?retagen anv?nder i sin order till leverans-process och f?r att ta reda p? hur de arbetar med prestationsm?tning. De empiriska studierna har analyserats i f?rh?llande till teori, f?r att hitta kunskapsluckor och f?rb?ttringsf?rslag. Det kan konstateras att ledtid och leveransprestanda ?r tv? strategiskt viktiga faktorer f?r att kunna utv?rdera ett f?retags order till leverans-process.

Slutligen har ett nytt ledtidskoncept blivit utvecklat. Konceptet m?ter transporttiden, vilket ?r den del av ledtiden d?r st?rst variation uppst?r. Konceptet har potential att utvecklas och f?rl?ngas till att m?ta den totala ledtiden. M?let med konceptet var att j?mf?ra olika transporttider p? ett r?ttvist s?tt mot varandra. Konceptet kan anv?ndas som ett verktyg f?r att visualisera effektiviteten av transportfl?det till olika leveransl?nder och d?rav avg?ra om landets processer presterar enligt ett normall?ge.

Examensarbetet har resulterat i rekommendationer om att implementera prestationsm?tt som kan skapa v?rde f?r Scania. Det rekommenderas ocks? att s?rskilja olika typer av prestationsm?tt samt f?rb?ttra hur dessa presenteras och rapporteras. ?ven kvalit?n p? indata och hur data rapporters b?r ses ?ver.

Nyckelord

Logistik, f?rs?rjningskedja, order till leverans, prestationsm?tt, nyckeltal, ledtid, leveransprestanda

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