Industrial Components Manufacturing Business

The Challenge: This business with 50 personnel and a 40,000 square foot facility was plagued with poor financial performance, product quality problems, excessive inventories, space constraints, and long production lead-times.

The Results: A marketing study was performed and targeted price increases were implemented on high-end products and service parts. The personnel were trained in Lean Manufacturing concepts. The facility was completely reorganized from a process-oriented layout into a product-oriented design, with teams, production cells, and kanban inventories. The product BOM structures were flattened and the production planning system was simplified to match these new planning system structures. Finally, a rigorous cross-training program was put in place for all employees.

The Results: The flattened BOM structures allowed reduction of shop floor routings from 14 operations scattered throughout the plant to only one set of operations within one of the two new cells. The raw material inventory was reduced by 25% while WIP inventories were reduced by 80%. The total inventory of $1.25M was reduced by 84% to $250K. The production lead-times were taken from 6 weeks to only 2 shifts and unplanned overtime was virtually eliminated. In addition, the distance the parts traveled within the building was reduced by 95% and the entire effort freed up 25% or 10,000 square feet of the facility for other uses. The actions generated $500K of additional margins on sales of $6M.

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Posted in Case Study and Case Study - Struggling Businesses

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