Background

FabChip (fictitious name) was a leader in the global semiconductor industry, known for its cutting-edge wafer-fabrication equipment. With the semiconductor sector at the core of everything from smartphones to medical devices, FabChip’s role in supplying this vital technology was crucial. The equipment FabChip manufactured, however, was often large and complex. When it arrived at the customer’s facility, it weighed hundreds of pounds and often stood several feet tall. Moving this sophisticated equipment was no easy feat, and to ease the installation and movement process, the company developed a simple but highly effective solution—casters.

These casters were heavy-duty wheels affixed to the bottom of each piece of equipment, allowing customers to maneuver the machines around the factory floor with ease. Once the equipment was in place, the casters were removed, and FabChip expected them to be returned. The casters themselves were not inexpensive; each set cost between $5,000 and $6,000. Despite their cost, they were designed to be reused after refurbishment. The goal was for 80% of casters to be returned for reuse, but in practice, the return rate lingered at just 40%.

The financial implications were stark. With billions of dollars in equipment shipped globally, the failure to recover these casters represented a significant financial loss. The Finance department calculated that the gap between the expected 80% return rate and the actual 40% return rate was costing the company over $3,000,000. It became clear that something needed to change.

What They Did

Recognizing the severity of the issue, FabChip’s leadership assigned a Lean Six Sigma Green Belt to lead a project aimed at addressing the caster return problem. The Green Belt, Sarah, knew this project would be critical not only to her certification but to the company’s bottom line. Sarah formed a cross-functional team comprising personnel from manufacturing, sales, and logistics. This group would be essential in understanding and fixing the root cause of the issue.

The team began by gathering data from customers across the globe, seeking to understand why casters weren’t being returned. Through surveys, interviews, and feedback from the sales teams, they collected what Six Sigma practitioners refer to as the “Voice of the Customer” (VoC). This data was crucial for gaining insight into customer experiences and challenges.

From FabChip’s key markets in the U.S. to their customers in Asia and Europe, the feedback was remarkably consistent. The primary reasons customers cited for not returning casters were:

1. Lack of Awareness: Many customers weren’t aware they were supposed to return the casters. The contract language around caster returns was either vague or buried deep within the fine print.
2. Monetary Credit Expectation: Some customers believed they should receive a monetary credit or rebate for returning the casters. When they realized no financial incentive was being offered, they saw little reason to send the casters back and just threw them out.
3. Keeping Casters for Future Use: In some cases, customers preferred to hold onto the casters in case they needed to relocate the equipment later. Moving the equipment without casters was a significant logistical challenge, so they opted to keep them “just in case.”
4. Concerns Over Refurbished Quality: Customers expressed concerns about the safety and condition of refurbished casters. They feared that receiving a used caster might compromise the stability of their expensive equipment or pose safety risks.

Armed with this valuable customer feedback, Sarah and her team turned their attention to determining whether the low return rate was a result of common cause variation (consistent issues built into the process) or special cause variation (anomalies in specific instances). A control chart was used to map out the trends in caster returns over time, and the results were clear—the problem was systemic and widespread across all regions, pointing to common cause variation.

With the root causes identified, the team moved into the brainstorming phase. They met with both internal FabChip employees from logistics and sales as well as with key customers to come up with potential solutions. The goal was not only to improve caster return rates but also to maintain strong customer relationships throughout the process.

The brainstorming sessions yielded a series of practical solutions:

1. Revise Contract Language: The team recommended revising the contract language to make the return of casters explicitly clear. Previously, the expectation had been vaguely communicated, leading to confusion among customers. By revising the contract and ensuring that both the sales team and customers fully understood the terms, FabChip aimed to eliminate the first barrier to returns.
2. No Monetary Credit: After careful consideration, the team decided not to offer a monetary credit for returned casters. The financials simply didn’t support it, and the $3,000,000 gap was more than FabChip could afford. However, they acknowledged the customer expectation and communicated more clearly why casters should be returned without compensation.
3. Offer Support for Equipment Relocation: To address customers’ desire to keep casters for potential future moves, FabChip developed a new service. If a customer needed to relocate their equipment, FabChip would ship new casters or send service personnel to assist with the move, including reattaching the casters and ensuring the equipment was safely transferred to its new location.
4. Guarantee Refurbished Quality: To ease customer concerns about the safety and quality of refurbished casters, FabChip introduced warranties on refurbished caster sets. This provided customers with peace of mind, knowing that any casters they received had been thoroughly inspected and were guaranteed to meet FabChip’s stringent safety standards.

Outcomes

With these solutions in hand, the team developed an implementation plan. Sales teams were retrained on the importance of caster returns, and contract revisions were rolled out across all regions. Logistics teams updated their workflows to ensure that customers requesting relocations would have quick access to casters. Finally, marketing materials were updated to include information about the refurbished caster warranties.

The initial results were promising. By the end of the first quarter, following the implementation of these changes, the caster return rate had already climbed to 60%. Customers were now more aware of their responsibilities, and the services FabChip offered helped them feel more comfortable returning the casters they no longer needed.

The team projected that by the end of the year, the return rate would reach the full 80%, resulting in a recovery of over $3,000,000 in caster value. This success demonstrated the power of simple Lean Six Sigma tools like process mapping, Voice of the Customer, and control charts. Through collaboration and thoughtful problem-solving, FabChip not only improved its bottom line but also strengthened its relationships with customers worldwide.

In the end, the FabChip caster challenge became a shining example of how focusing on customer feedback and process improvement can lead to tangible, financially significant results.

The image featured at the top of this post is ©Golden Dayz/Shutterstock.com.