MONTVALLEY SHORT$-$HAUL LINES, INC.

Montvalley Short$-$Haul Lines, Inc. $($MSL$)$ is a small

independently owned narrow$-$gauge railway in Mon$-$

tana$.$ It supplies contract transportation services to

many mining firms, hauling ore and mining equip$-$

ment. One of its principal customers, Cranford

Consolidated Products $($CCP$),$ is actively improving

quality by using the Malcolm Baldrige Criteria. In an

effort to improve supplier quality, Cranford 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 MSL participated in this seminar and rec$-$

ognized that MSL 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 MSL$\text{'}$s

shipping documents. CCP would not continue to

tolerate this high number of errors; and if no improve$-$

ments were made, it would seek transportation ser$-$

vices elsewhere.

Rob Langford, president and CEO of MSL$,$ was

concerned. During an off$-$site meeting, he and other

MSL executives developed a comprehensive blueprint to

help MSL 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 priori$-$

ties for improvement.

The Billing Study, Part I

In a good$-$faith attempt to respond to CCP$\text{'}$s feedback,

MSL turned its attention to its billing input errors and

worked on them over the following six months. To

gain some understanding of the situation, MSL con$-$

ducted 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 compa$-$

ny was ready to make another study to determine what

progress had been made. The data in the Montvalley

Case$-$Initial worksheet in the C$08$ Case Data workbook

shows the results of the initial study. The worksheet

Montvalley Case$-$Revised shows the results of the sec$-$

ond study, after improvements were made. Both stud.

ies revealed that field employees were correcting the

errors as they found them. In both cases, rework was

costing the company almost $$2$ per error, but the num.

ber of errors had been substantially reduced between

the two studies. However, field employees still were

not always catching the errors, which led to field ser.

vice and other problems.

Assignment

At this point, MSL 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 inte$-$

grating SPC concepts into MSL$\text{'}$s quality system. Us$.$

ing the results from the base case data, determine

the performance, that is$,$ the process capability, in

a qualitative and quantitative sense, 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 con$-$

clusions do you reach?

Perform the same analysis with the revised data after

improvements were made. How do the results differ?

The Billing Study, Part II

The revelations from the initial study had been starting.

The results from the second study were encouraging,

but not yet where the company wanted to be$.$ Rob Mont$-$

valley personally led a group problem$-$solving session to

address the root causes of the current error rate. During

this session, the group members identified eight causes

of incorrect bills of lading:

Incomplete shipper name or address

Incomplete consignee name or address

Missing container type

Incomplete description of freight

Weight not shown on bill of lading

Improper destination code

Incomplete loader's signature information

Inaccurate piece count