Distribution and Manufacturing Business

The Challenge: A $50M distribution and manufacturing business was capacity constrained because of floor space, in-house truck body manufacturing, and the specialized job skills of the employees. Customer service levels and inventories were unacceptable as well.

The Fix: Facility layouts were changed to allow better space utilization and flow. Team concepts were implemented to improve cross training and speed production throughput. The truck body department changed production processes and added the use of kanban inventory. Finally, master production scheduling, purchasing, and other materials management disciplines were improved to control inventory and reduce costs.

The Results: The materials management group reduced inventories from $11M to $8.5M in fewer than six months and completed purchased material cost reductions of $1.25M. Production lead-time was reduced by over 50% in final assembly because of the team concepts. In spite of shrinking the floor space of the truck body department by 33%, monthly production output was doubled from 20 to 40 bodies. This doubling of output came because of process and fixture improvements, cross training, the use of kanban inventories, and the resulting productivity improvements coming from all of these actions. EBITDA improved from -$2M to +$2M on an annualized basis from start to end of the project.

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Posted in Case Study, Case Study - Growing Businesses, Restructuring Businesses and Struggling Businesses

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