The Improvement of an Order Fulfillment Process: A Case Study in a Vietnamese Distributor

Abstract

This study aims to present a case study in which the methodology of Six Sigma or Define- Measure-Analyse-Improve-Control (DMAIC) is used to improve an order fulfilment process in a small-sized distributor in Vietnam. The DMAIC cycle will be used as the methodology to improve the order fulfilment process of the case company. The goal of the process improvement project is to enhance the flexibility in order fulfilment by increasing the fill rate of customers’ special and urgent orders. The simulation shows that by modifying the inventory policy (i.e., the ordering quantity and interval), the company can save from 48% to 78% of the lost revenue caused by rejecting special and urgent orders. By evaluating financial benefits, there are two options for the company: one option would be using a constant ordering interval and the economically optimal quantity of 60,000 units; the other option would be to implement a ROP inventory policy using the same ordering quantity. The second option is more sustainable in the long run due to its adaptability to the change in demand and overall higher service level. Based on the result of numerical simulation, the selected solution shows the gained profit of approximately 367 million VND. Through the positive outcomes, the research serves as a valuable case study for small firms to realize the benefits of business process improvement, as well as the applicability of DMAIC method in improving process performance.