APPROACH USED:
Flow’s Managing Director Reese Bourgeois and consultant Robert LaVigne conducted a two-day assessment that found major problems throughout the production floor from Sales and Engineering to incorrect and inadequate order taking that caused the following:
- Long lead times for specifications and design development..
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Parts shortages for specialty purchases and min/max items caused by inadequate lead times.
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“Design on the fly” on the production floor caused wasted labor, poor overhead absorption and excessive production floor downtime.
- Poor profitability.
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Once the assessment was completed, work started in the Final Assembly area of the production floor. Consultant Robert LaVigne tracked up-stream through the process to identify key bottlenecks. Robert then began to implement “Visual Factory” tools by first instituting “Production Control Boards” at each assembly stall. Teams and team leaders were chosen to be responsible for morning progress “report-outs” of truck-build status for the implementation of future production-meeting “walk-abouts.” Flow provided clear and concise plans to management ensuring that they all understood that a “paradigm shift” was taking place by focusing everyone’s attention on the daily build requirements.
On the production floor, daily production meetings were started with all operations and support functions including Engineering and Purchasing. During the “report-outs” from the stall leads, expectations were communicated and disciplines were installed to ensure that proper action was taken to resolve problems before moving to the next station or department. Daily project lists were then collected and monitored for completion every 24 hours.
Problems related to design engineering, material procurement and control, and hidden “batch and queue” inventory were easily identified. Plans were formulated with the management team and corrections were implemented to eliminate the problems that caused the inefficiencies and move toward “single-piece flow” for the entire production line.
A rudimentary “kitting” function for specialty products was initiated then expanded to min/max items as well. This greatly reduced downtime and material variances because of missing components. Components were “pulled” or identified at receipt, then assigned to a scheduled truck weeks in advance. Single-point responsibility for the scheduling of the total facility was instituted. This ensured continuity throughout the scheduling process from the customer to delivery of the completed vehicle and eliminated all confusion within the operations of the facility. Changes in order retrieval from the customer through engineering were also instituted. Accountability for dates and timing requirements both from the customer and the manufacturer were outlined in the overall schedule pushing the process back to the customer. This ensured total "process flow" visibility throughout the system.
An additional benefit was a 7 percent reduction in headcount through attrition, while increasing throughput. To eliminate downtime because of the needed reduction in labor, Flow developed “skills matrices” to identify training requirements for sensitive processes and to institute cross training in key responsibilities.
RESULTS:
Through the management team’s efforts and with the support of executive-level management, the company increased throughput from 9 vehicles weekly to 12 vehicles, with a weekly run rate of up to 14 vehicles. All of this occurred in less than 6 months.
A 7 percent head-count reduction through attrition versus lay-offs in the same period resulted in an average reduction of about 10 percent in labor-content per vehicle. A new vice president of operations was installed to ensure that Flow’s changes would continue as the company’s "culture."
Profits in March reached $365,000, up from a January loss of $404,000.
Case Study 2
BUSINESS ISSUE:
A $1 billion, 3,000 employee worldwide division of a mineral drilling manufacturer with three manufacturing locations and 26 field sales locations, needed to improve forecasting and inventory turns. Phase one of the project was to improve sales demand forecasting in North America to:
• Improve forecast accuracy
• Increase forecast coverage from 25% to 70% of COGS
• Increase frequency of forecasting from quarterly forecasts to weekly
APPROACH USED:
Flow Consultant Jeff Jackson conducted a 3.5-day Lean Business Process kaizen using data that had been gathered ahead of time at his request. The team consisted of cross-functional representation from Finance, Operations and Sales.
RESULTS:
The kaizen identified the following improvements to achieve the stated goals:
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Creation of a part-number hierarchy focused on how customers order to enable more frequent forecasting on fewer line items, but increased product coverage.
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Development of site-specific forecasting templates to allow all 26 sites to forecast their top 70% of COGS vs. some sites not providing forecasts at all.
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Development and formalization of policies and procedures to ensure proper use of forecast drivers by all sites in SAP to improve accuracy and avoid shipping items even when demand had shifted.
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Formalization of the forecasting process to identify who needs what information on a weekly, monthly and quarterly basis to capture and communicate forecast information to sales, operations/manufacturing and finance.
Case Study 3
BUSINESS ISSUE:
Dramatic capacity increases were needed in a oil and pipeline gas valve producer, as they were projecting significant increases in sales and were struggling to increase production.
APPROACH USED:
Flow Consultant Jim Connolly conducted a one week Lean Manufacturing kaizen using data that had been gathered ahead of time at his request.
RESULTS:
In just one week the team was able to accomplish the following results:
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Increased throughput from just over 400 valves per day in two shifts to 400 in just one shift, and this was demonstrated while the kaizen was occuring.
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Integrated packaging into the end of the line taking pick to ship from 7.5 days to 2 days.
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Developed an improved scheduling approach where they will schedule production 1 week in advance, group by similar "body" size, and feed bulk material into "FIFO" lanes.
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The entire process was moved to a new building location during the week.
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The hourly personnel so embraced the dramatic changes that they made the final presentation to the management team.
Case Study 4
BUSINESS ISSUE:
Two separate private equity firms jointly employed Flow Consulting to study the potential benefits of combining two companies that each of the two firms owned. The two companies competed in providing sales and installation of a specific component within the housing industry - to protect their identities we will not divulge that component, but combined sales for the two companies exceeded $200 million.
The key questions asked of Flow Consulting:
APPROACH USED:
Troy Bourgeois focused on working with both Purchasing teams to determine the opportunity for savings based on volume, different price points obtained at the same suppliers, and an analysis of leveraging existing China sourcing initiatives to a larger degree.
Ric Schildwachter focused on applying lean principles and worked with both Operations Managers to come up with product flows that could be accomplished in the smaller of the two facilities. Ric Schildwachter also used his past experience in consolidating operations to obtain a detailed cost analysis for moving the larger facility operations to the smaller facility.
Jeff Jackson dove into the costs of Operational and Purchasing line items in their P&L, including detailed and exact numbers on the amount of manpower supporting all of the numbers.
He then modeled these inputs into a financial statement that clearly illustrated the outcomes of the efforts in Purchasing and Operations, along with the costs savings of moving to one facility.
Jeff also provided the financial leadership in developing 3-year quarterly financial statements (income statement, balance sheet and cash flow) forecasting the impacts of Purchasing and Operations synergies, including the consolidation of facilities.
Jeff also led the effort to assess the IT capability of each company and provided recommendations on the future integration of IT systems to support the combined companies in the future.
RESULTS:
Over $15 million in annual operational savings were realized broken up in the following categories:
- $4 million in purchased products.
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$4 million in labor as a result of the lean product flows and a reduced labor rate at the smaller facility.
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$7 million in manufacturing support and distribution costs as a direct result of the lean product flows and reduced inventory
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