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The Package Delivery Optimization Six Sigma project focused on eliminating late deliveries of packages in North America. Late package delivery was causing us to pay out more than $1.6 million in late fees and penalties – a direct impact to our bottom line. Targeted focus groups arranged by our marketing team, and other feedback collected randomly across our sales teams indicated that this issue could be costing us as much as 10 to 20 percent in market share. Current market share is close to 40 percent, and the overall size of our market is growing about 5 percent a year.
This means that in addition to the opportunity to eliminate $1.6 million in direct costs, this reduction in late deliveries potentially could grow revenue by as much as 50 percent due solely to increased market share. That amount is equivalent to 10 years in forecasted revenue growth if our current market share were to stay constant. This was clearly a significant opportunity.
With a team of five individuals working on the project during a period of several months, we achieved a 92 percent reduction in defects, saving the company $1.2 million annually in direct expenses.
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