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Murphy Trucking, Inc.

Murphy Trucking, Inc. (MTI), supplies contract transportation services to many different
manufacturing firms. One of its principal customers, Crawford Consumer Products (CCP), is
actively improving quality by using the Malcolm Baldrige National Quality Award criteria. In an
effort to improve supplier quality. Crawford Consumer Products mandated, last year, that all
suppliers provide factual evidence of quality improvement efforts that lead to highly capable
processes.
As part of its supplier development program, CCP held a seminar for all its suppliers to
outline this initiative and provide initial assistance. The executive officers of MTI participated in
the seminar and recognized that MTI was seriously lacking in its quality improvement efforts.
More importantly, Jeff Blaine, who was the purchasing manager at CCP, told them privately that
many errors had been found in MTIs shipping documents. CCP would not continue to tolerate
this high number of errors; and if no improvements were made, it would seek transportation
services elsewhere. Rick Murphy, president and CEO of MTI, was concerned.
During an off-site meeting, Murphy and other MTI executives developed a
comprehensive blueprint to help MTI develop a total quality focus. One of the key objectives
was to establish an SPC effort to gain control of key customer-focused processes and establish
priorities for improvement.

The Billing Study After Process Improvement


In a good-faith attempt to respond to CCPs feedback, MTI turned its attention to its
billing input errors and worked on them over the following six months. To gain some
understanding of the situation, MTI conducted an initial (base case) study by sampling 20 bills of
lading, each day, over a 20-day period. Initial results were dismal, with defective bills averaging
a horrible 60 percent!
After process improvement and an intensive effort to train shipping clerks not to make
errors, the company was able to make another study to determine what progress had been
made. MTI Base Case Data shows the results of the initial and after improvement studies. Both
studies revealed that field employees were correcting errors as they found them. In both cases,
rework was costing the company almost $2 per error, but the number of errors had been
substantially reduced between the two studies. However, field employees still were not always
catching the errors, which led to field service and other problems.

Discussion Questions
1. At this point, MTI is unsure of how to interpret these results. You have been hired as a
consultant by the executive committee to analyze these data and provide additional
recommendations for integrating SPC concepts into MTIs quality system. Using the
initial results from the base case data, determine the performance, that is, the process
capability, in a qualitative and quantitative senses, of the billing input. What is the
average rate of defective bills? Is the process in control? What error rates might the
company expect in the future? What general conclusions do you reach?
2. Perform the same statistical analysis with the second set of data. How do the results
differ? What is the average rate of defective bills? Is the process in control? What error
rates might the company expect in the future? What general conclusions do you reach?

MTI Base Case Data


MTI Defective Billing Data

Day No. of Defective Bills


Initial Study Results After Process Improvement Study Results
1 10 6
2 9 6
3 13 7
4 10 7
5 15 4
6 10 6
7 14 7
8 13 8
9 14 7
10 14 5
11 12 5
12 13 4
13 14 7
14 13 5
15 12 7
16 12 5
17 14 7
18 16 5
19 14 7
20 10 7

The Billing Study, Part II The revelations from the initial study had been startling. The results
from the second study were encouraging, but not yet where the company wanted to be. Rick
Murphy personally led a group problem-solving session to address the root causes of the
current error rate. During this session, the group members constructed a cause-and-effect
diagram to help determine the causes of incorrect bills of lading.
Eight categories of causes were identified:
1. Incomplete shipper name or address
2. Incomplete consignee name or address
3. Missing container type
4. Incomplete description of freight
5. Weight not shown on bill of lading
6. Improper destination code
7. Incomplete drivers signature information
8. Inaccurate piece count

Using Demings plan-do-study-act process, the group of Murphy designed a plan to


examine all bills of lading over a 25-day period and count the number of errors in each of these
categories. They repeated the six months later to determine what progress, if any, had been
made in error reduction. The tables in the MTI Base Case Data 1 worksheet shows the data for
these studies. Rick Murphy thought that the p-chart developed in the first study and reapplied to
the second study provided significant information about the process; however, he was curious to
find out whether another method could tell them more about the nature of the defects they wer
encountering.
Discussion Questions (cont.)
3. After developing p-chart for the first and second studies, you decide to analyze the data
to determine whether the system is in control by constructing another appropriate control
chart (other than a p-chart) that could better tell you about the nature of the defects. You
also decide that it would be wise to construct a Pareto diagram to gain additional insight
into the problem, and suggest recommendations to reduce billing errors.
4. Complete your analysis by using the three charts from each of the two studies to advise
Rick and his managers at Murphy on the next steps. How do the results differ from the
first to the second study? Is the process in control? What error categories have
improved? Which ones might the company need to work on immediately in order to bring
about further improvements? What general conclusions do your reach?

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