Project # 1033

Backorder/Backlog Reduction
Channel Operations EMEA

Ramachandharan Venghatachari
© 2004 Hewlett-Packard Development Company, L.P.
The information contained herein is subject to change without notice
 Problem Statement: The huge number of backorders and backlog (approx 11% of total value of
Define orders processed though it was less than 1% in terns of number of orders processed) was a concern
to the EMEA Channel Operations leadership team and the average value in Oct 2007 was US $ 212
Project # 1033 million (Consisting of TBA and Past due cases)
Goals: To reduce the value of back orders and back log to less than US $ 100 Million by March
2008. To develop a methodology for tracking and reducing the value and ensure that this it is
sustainable.

Project scope:
Timelines and Deliverables:
All orders processed by the TP team at Bangalore;
involve the front end teams where appropriate Stage Deliverables Time lines
Incomplete orders are not under the scope of this project Define -Project charter 30th Oct 07
-Operational Definitions
-Scoping and target setting
Measurable Benefits :

•Reduction in Backorders and Backlog value Measure -Data collection plan 30th Nov 07
•Increased revenue generation opportunity for HP -Collect data to analyze

•Reduction in the overall Order-Cycle Time for Analyze - Data analysis 15th Dec 07
Customers
- Pareto charts
•Improvement in Partner satisfaction and consequently
- Trend Analysis
improved TPE
- Cause and Effect Analysis
Other Benefits : More repeat orders from Partner
Improve -Solution Identification 31st Jan 08
Team: -Prioritization of solutions
Project Lead – Ramachandharan Venghatachari -Solution implementation
Project Sponsor – Sunil Swarup
Control -Result validation 30th April 08
Mentor – Vasudev Pawar
-Monitoring plan and
Members – Vinay Chandramohan, Vinodkumar
control charts
Pillai, Deepesh Shah, Jenny Solomon , Nazli Aktas
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 Define Operational Definitions

Definition of Back Orders:

Any orders which has passed the given commit date by the supplier. Typically it
includes all the Past Due (PD) cases

Definition of Back log:

Any order which has been processed by the GBS Order Management team and
which hasn’t been given the commit date by the supplier. It contains all cases
which are To Be Acknowledged (TBA)

Definition of Incomplete orders:

Any order which is not yet processed by the GBS Order Management team.

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 Define Order Management – The Process
Scope of the Project
Purchase Order Partner
A1234A x 1
P2345A x 2 1. Customer sends
B3294AA x 4
Purchase Order
(PO) via EDI or
other means

1b. Order processing

enter the order onto
the Order
Management System
5. The
customer
2b. Factory receives the
2a. Purchase acknowledges 6. The invoice goods
Order (PO) is the order is generated
transferred to the
factory systems

7. The credit and

collection department
collect the payment
3. Factory
produces Problem Area
and ships
the goods to
the
warehouse
4. Goods are
delivered to
the customer
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Measure Data Collection Plan

What data to be Source Period of Responsibility

collected collection

No. of Orders Weekly reports from Oct’07-Dec’07 Deepesh

Processed EMEA Reporting
Corner
Value of Orders Weekly reports from Oct’07-Dec’07 Deepesh
Processed EMEA Reporting
Corner
No. of Weekly reports from Oct’07-Dec’07 Deepesh
Backlog/Backorders EMEA Reporting
line items Corner
Value of Weekly reports from Oct’07-Dec’07 Deepesh
Backlog/Backorders EMEA Reporting
line items Corner

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Measure

Processed Orders Data

Total Line Items Total Value of Line
Month Processed Items Processed (Mn $)
Oct 303433 1940
Nov 298849 1996
Dec 251427 1654

Back Orders/Backlog Data

Month Average Line Items Average Value (Mn $)
Oct 2213 212
Nov 2124 194
Dec 2508 222

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 Analyze Monthly Trend Analysis : EMEA

Average Backlog/Backorder Value : 209 Mn $

Backlog/Backorder Value compared to Value of Orders Processed : 11.35%
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Analyze Contribution of Past Due cases
and TBA cases

On an average, 55% of the value is contributed by Past Due cases.

On an average, 45% of the value is contributed by TBA cases.

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 Analyze Region Wise Analysis

Top Config contributes to more than 80% of the Backorder/Backlog value

Though the no. of cases contributed by Top Config is roughly 17%

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 Analyze
CAUSE and EFFECT Analysis

Status cannot be captured

for partial shipment
No clear responsibility defined
to any team for managing System Issues like
Backorders/backlog updated status of the
product not visible
No escalation path
available Order status report not Orders get stuck due to
accurate from suppliers end System Issues

TPs Knowledge gap on Data segregation is not

back end process accurate in the reporting
Order can be kept on corner backlog report
open till 60 Days

High Backlog
/Backorders
Value
Prioritization not clear No proper follow Material
ups Shortage at
supplier end

Constraints in production Unreleased products

ordered by the partners
Component not
available
Product status not available to
the dependent teams
Products on
allocation

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Improve Solutions Identification & Prioritization

Vital X Probable solutions Controllable

factors
Improper To use tools to have proper NO
Forecasting by forecasting
supplier

Prioritization not Influencing suppliers towards YES

clear prioritising the shipment of Goods. To
send the weekly reports of High Value
orders and more line item orders to
supplier
No clear To take the ownership of YES
responsibility Backlog/backorder management.
defined to any Influencing TMs to highlight the High
team for Value orders to CFMs and thus by
managing reducing the TBA cases.
Backorders/bac To send the weekly reports and calls
klog relating to High Value orders and
more line item orders
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Improve Solutions Identification & Prioritization

Vital X Probable solutions Controllable

factors

TP knowledge To have a Bi-Weekly call with YES

Gap on Backend supplier to understand the process
process and mould the reports as per
supplier requirements

No Escalation Escalation path to be created YES

Path available

Products stuck To pull the report and work on the YES

due to system orders stuck due to system issues by
issues raising calls with BAS Team

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 Improve Solution Implementation Plan

Scope / Activity Purpose Frequency Responsibility

Reports to be pulled Gives the information on Value Weekly TP

from Info corner and line items which helps in
prioritising the action items send
to TM's and supplier
Calls with supplier To have a call with supplier to Weekly TP /TM
understand the process and
mould the reports as per supplier
requirements

To review the High aged and Bi-Weekly TP /TM /

Calls with supplier value orders Supplier

Calls with supplier & To review the calls raised with Monthly TP /Support /
Support support and supplier with BAS Supplier

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 Improve Solution Implementation Plan

Scope / Activity Purpose Frequency Responsibility

Initiated the Bengal This was initiated to have a cleat Bi- TP/SUPPLIER
Co-Ordination with understanding on the Back-end Weekly/Monthly
PSG suppliers process of PSG Suppliers and
thorough follow up on back
orders
Weekly Back order Initiated the Weekly Back order Weekly TP
region wise trend region wise trend with Front end
team to review the trend

To review the High aged and Monthly TP /TM

Calls with Front End value orders with the Front End
Team Team

Past due responsibility TPs responsibility to follow up on Weekly TP /TM/

past due cases with suppler & Supplier
TM
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 Control
Actions
Weekly Reports to be pulled
from Info corner
& format of aging
standardised
Meetings with supplier and
Front End Team
Reports
Initiated the Bengal Co-
Ordination with PSG
suppliers
Providing the data on TBA
Actions taken to reduce the Back
Orders/Backlog value
Steps involved Implemented
Started to work on the > 90 days cases Yes
First started with > 90 Days and then broken
the aging into > 30 <60 days,60-90 and >
C:\Documents and
90 days for better control Settings\shahd\Desktop\
Started to have week/Bi weekly/Monthly Yes
calls with supplier and front end team Outlook Item
Started preparing the weekly reports and Yes
also forwarded the same to TM's to take
action Outlook Item
This was initiated to have a cleat Yes
understanding on the Back-end process of
PSG Suppliers and thorough follow up on
back orders C:\Documents and
Settings\shahd\Desktop\
Providing the status on TBA to TM's and thus Yes
pushing the country managers to release the
orders Outlook Item
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 Control Actions taken to reduce the Back
Orders/Backlog value

Actions Steps involved Implemented

Monthly Calls Monthly calls with the support team to Yes

resolve cases

Weekly Back order Initiated the Weekly Back order region Yes
region wise trend wise trend with Front end team to
review the trend C:\Documents and
Settings\shahd\Desktop\

Call Logging Any system issue to log a call and Yes

thorough follow-up on the calls raised
with BAS.

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Control Results

Before : Oct-Dec ‘07 After : Jan-Apr ‘08

Average : 209 Mn $ for Average : 33 Mn $ for

complete EMEA region complete EMEA region

84.2% reduction in Back Orders/backlog Value

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Control Results

Monthly Average Trend

89% reduction in Overall Back 96% reduction in PD value,

Orders/backlog Value 76% reduction in TBA value
(Apr ’08 compared to Oct ’07) (Apr ’08 compared to Oct ’07)

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 Control Control through documented procedures

> Started to work on the Back Orders/Backlog on Customer Request:

\\Fileshares.corp.hp.com\GROUPS\OMCMISC\Backlog
Analysis\Backlog_Trackers

> Request from Front end team on Weekly Region wise presentation

Outlook Item

> Approval as a part of PL’s activity

Outlook Item

\\Fileshares.corp.hp.com\GROUPS\OMCMISC\Backlog
Analysis\Backlog_Trackers
> Logged a change control : Change ID:CR081502

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 Control Appreciations from Customers

Thebelow attached are the appreciations

received from the customers.

Outlook Item
Outlook Item Outlook Item
Outlook Item

Project Closure

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Thank You

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