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Optimizing Lost Sales of

Zarkhez - G due to Stock

Outs during Potato Season

Six Sigma Green Belt Project

North Sales Department
Problem Statement
 In 2009, three marketing areas (Sahiwal, Okara & Lahore)
observed major stock outs during peak potato season (July-
Oct) in Zarkhez green. This resulted into a lost sales of
1100MT which is 16% of total sales (6740MT) in these areas.
 This resulted in loss of Rs: 3.6 million in CM in 2009.
Project Goal Statement
1) To reduce the %age of Lost Sales w.r.t.
Total Sales to 5%
3) Develop a process for Inventory
Management at Field Warehouses.

Project Y
 % age of Lost Sales w . r . t Total
 ( Lost Sales / Total Sales * 100 )

Current Status : ( 1100 / 6740 ) 16 %

Upper Specification Limit : 7%
Target : 5%
Data Analysis
Outlooks, Sales & Inventory Trends
Inv. Run charts
Focus Group
 PO-Zkz, WHI,Core/Extended team members

Process Mapping
As Is & Should be Processes
Fish Bone
Pareto Analysis
Vital Xs
Safety Stock Development at WHs
Safety Stock Calculation Format
Past Sales history (STDV)
Expected Demand during Lead time (EDDLT)
Service Level (SL)
Time Staggered Outlooks & Shipment Plans
OL & Shipment Plan Development--- WH wise
Monitoring of shipment plan--- WH wise

The Pilot Run
Data Analysis & Benefits
The Pilot Run
 Pilot Run -- Sahiwal, Okara and Lahore.
 Warehouse-Wise Outlooks on Weekly were developed and a
Safety Stock Level was defined on Monthly basis
 A time staggered shipment plan was finalized with Brands
and Distribution
 Brands developed a Weekly Potato Monitoring Sheet
 Coordination of Sales, Brands and Distribution was
maintained as per the pilot run SOPs
 Warehouse Closing Inventory Data was monitored through
 Warehouse-wise Sales and Inventory Trends were plotted
against the Safety Stock Levels
 Consumption of Safety Stock was Calculated on Warehouse-
wise basis and Project Benefit was estimated
 PILOT RUN DATA ANALYSIS 95% Service.xlsx
Project Benefits
Year Total Sales Lost Sales % Lost Sales
2009 (mt)
6704 (mt)
1100 (Y)
2010 8450 600 7

Service Safety Stock Expected Project Benefit

99 % Consumption 23%
95% (mt)
1487 (17% ) 12-13
Endorsed by Million
Money Belt
Safety Stock-- @ 95% Service Level
 Potato Crops

Half Day Session with all AMMs of LHE &
FSD Zone
Concept of Safety Stock down the line.

Defi Project Start Date : Project Ending Date : Team
ne March 26th , 2010 Dec . 31 , 2010 NIq, AN, MSM, NIt, MJAK, AMd
Extended Team
RN, ASd,
Problem Statement :
In 2009, three marketing areas (Sahiwal, Okara & Lahore) observed major stock outs Scope
during peak potato season (July-Oct) in Zarkhez green. This resulted into a lost Include :
sales of 1100MT which is 16% of total sales (6740MT) in these areas. It has also Potato crop (July to Oct)
been supported through market research (2008 conducted in OKA) that 25% of Non- Sahiwal, Okara, Lahore areas
user farmers segment (41% of total population) and 21% of the Lapse farmer Inventory management at
segment (29% of total potato growers) are switching from Zarkhez due to product warehouses
unavailability. This resulted in loss of Rs: 3.6 million in CM. Zkz Production plan for this
time frame
02/03 plant orders
Project Goal Statement : Zkz Outlook accuracy
1)To reduce the %age of Lost Sales w.r.t .Total Sales to 5%
2)Develop a process for inventory management at warehouses. 
Exclude :
§Import decision
§Phosphate & Zkz market
§Shipment lead time
Business Case :
Due to stock outs, there were sales lost of 1100 MT of Zarkhez Green during July-
Oct (that is 16% of total Zarkhez Green sold in these three areas for the
mentioned period in 2009). By inventory management at warehouses we can reduce
the lost sales % to 5%., which would result in improved revenue generation for
the company.
Projected Benefits :
Internal: North Sales Department To reduce the lost sales to
External: Farmers, Dealers 5% (CM: Rs. 2 M)
Develop a process for
inventory management at
CTQ ’ s : warehouses.
Inventory Management; Product Availability at Whs (Must have) Increase in revenue by the
Increase Sales/Revenue/Reduce Stock outs reduction in sale-lost.
Part/full processes from this
project can be replicated for
 other crops as well.
Tool Usage : Notes / Graphs :

Project Y : % age of Lost Sales w . r . t

Total Sales
( Lost Sales / Total Sales * 100 )
Current Status : ( 1100 / 6740 ) 16 %
Upper Specification Limit : 7%
Target : 5%

Project Y Operational Definition :

To reduce the product un-availability of Zarkhez-
Green in potato season (July-Oct) to minimize lost

Project Y Selection Explanation :

•Potential sales loss due to unavailability of
product (stock outs) in peak potato season.

Measurement System Analysis on Y :

Actual sales Vs outlook and product avails from
all sources/mode of last three years.
by Market Research ( by Oasis 2008)
 Based on the Actual Sales of Three Marketing Area
(Sahiwal, Okara and Lahore) in 2009 and Market Research
Data the impact of Product Unavailability during Potato
Season in the Form of LOST SALES is estimated to be around
Area JUL AUG 1100 Tons.
Sahiwal 457 825 230 1093 2605

Okara 490 666 759 1110 3025

Lahore 35 137 522 380 1074

Total 982 1628 1511 2583 6704

Segment % of total Product Lost Sales

population Unavailabil (Tons)

Lapse Users 29% 21% 408

Non Users 41% 25% 687
Total     1095
The Analyze Phase
 F G (2 days) ZO North ---Core and extended team
 2 WHIs and 2 D&Mos
 Analyze -- AS IS Process and identified the Areas of
 SHOULD BE Process was finalized
 Process KPI was segmented into departmental KPIs that
needed to be optimized in order to address the problems
 Critical Factors
 Lack of Timelines of OL & Shipment Plan
 Lack of synergy/communication among Areas, Zone, PO-Zkz & Zkz-plant Distribution.
 Lack of follow up of OL Acc. SOP
 Lack of WH wise OL Development
 No concept of Buffer Stock
 Lack of Sales & Inventory Trend Analysis
 Lack of Past Sales Analysis (Mean, STDV)
 Lack of monitoring of shipment plan
 No concept of Service Level Factor
 Trucking size & shipped qty variation