Evergreen Products The top managers of Evergreen Products of East Lansing, MI, have asked you to act as a consultant on

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Evergreen Products
The top managers of Evergreen Products of East Lansing,
MI, have asked you to act as a consultant on a problem
plaguing the entire company. Evergreen Products manu-
factures decorated containers and care tags for a market
consisting primarily of small- to medium-sized florists
and
grocery stores. The containers are relatively inexpensive to
make, but they are sold at a high markup (60 percent). The
same is true for the tags. Because of the targeted market
segment, management feels that it must be able to provide
its customers with quick delivery and quality. However,
this has not been happening lately.
To understand what happens, it is useful to first follow
the course of an order received from the customer. Orders
are placed in one of two ways at Evergreen. First, cus-
tomers may notice that their stocks are getting low. They
call the Evergreen sales department with an order, which
is received by one of three clerks. The clerk records on a
sheet the customer number, the type of product, and the
quantity needed. At this point, a customer due date is set
based on the customer’s needs. However, the clerks try to
encourage a due date that is about five working days out
(there is no hard-and-fast rule for this procedure).
Once a day, the sales account manager picks up all sales
orders. He is responsible for ensuring that all orders are
com-
plete and accurately entered and that the customer’s credit
rat-
ing is OK. If it is, the order is put into another pile where it
is
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picked up once every morning. If the order is not acceptable
or
if there are errors, the order is returned to the person who
took
the order. That person is then responsible for correcting the
problem within a reasonable period of time. When the order
has been corrected, the process is repeated. It takes about
half
a day to move from phone order to sales account manager and
about an hour to clear the sales account manager. Forty
per-
cent of the orders experience some form of error.
The second way that an order can be placed is through the
company’s own traveling salespersons that stop in on accounts
and check their inventory stocks. When they see that an item
is low, they fill out an order. They then phone the order
into
the plant (about once every day—this varies depending on
how busy they are). Since each salesperson is rated on the
total dollar sales he generates, there is a built-in incentive
to
be very concerned about clients’ inventory stocks. When the
order is turned over to the sales account manager, the
pro-
cess is identical to the one previously described. On average,
the delay for entering orders through the salesperson is
about
half a day (but it can range up to two days).
Once the order clears the sales account manager, it goes
to accounting, where it first is put into the day’s pile. It
is
then entered into the accounting system. This step marks
the beginning of the billing process. It takes an average of
half a day to clear accounting (but this can range up to two
days). From here, it goes to the shop floor scheduler.
The shop floor scheduler reviews all orders for accu-
racy and completeness. Any problem orders are set aside
and returned to the sales account manager for correction.
About 15 percent of the orders are typically set aside each
day. The rest of the orders are released to the shop floor.
It
typically takes one day to clear the shop floor. The time can
vary depending on the time of year. Christmas, Valentine’s
Day, Easter, Mother’s Day, and other similar holidays put
a great deal of pressure on the shop floor (which runs on
average at 80 percent utilization). The shop floor is held
accountable for meeting all quoted customer due dates.
Top management is concerned over the poor perfor-
mance of the shop floor. Inventories are high and grow-
ing; overtime is excessive; on-time delivery performance
is poor; and customer dissatisfaction is growing. The top
manager has asked you if he should replace the current
shop floor scheduler.
Questions
1. What are the desired outcomes for Evergreen?
What should Evergreen wish to accomplish with its
order entry system? How do we know if the order entry
system is working well or poorly? How is it doing now?
2. What do the customers want from Evergreen? What
types of problems do the existing customers pose for
Evergreen? Why?
3. Apply the process for incorporating value through
process thinking to this problem. What metrics would
you apply to this process? What insights into the pro-
cess did you obtain?
4. How would you improve the operation of the current
order entry process at Evergreen? Be specific.
Hints
1. Make sure that you identify and understand the vari-
ous customers. To simplify the analysis, focus on the
florists as the critical customer.
2. Bound the process by focusing only on the orders that
come into the system by telephone.
3. Make sure that you establish metrics at the outset.
4. Assume no errors in the process.