Operations Assessment Project Examples

Flow Consulting performed an operations assessment for a private equity client late last year at a manufacturer that supplies key components for the trucking and fire truck industry. The private equity firm asked for both an assessment and a project plan with payback for improving performance in areas identified for improvement. Chad Morrison and Reese Bourgeois conducted the assessment.

During the assessment phase, Flow Consulting determined that there was an opportunity to improve labor productivity by as much as 50% across the entire plant if the client implemented the key aspects of LeanSigma manufacturing. Additionally, Flow identified significant opportunities to improve the manufacturer’s purchasing processes. Flow Consulting also provided the private equity firm with a one year intervention plan to help them realize the bulk of the opportunities for improvement. The report out to the leadership of the private equity firm was very well received. If you have a desire to see a ‘scrubbed to protect the innocent’ version of this report, please email a request.

After the acquisition, the private equity firm and the new CEO of the acquisition immediately engaged Flow Consulting to
............1) implement LeanSigma manufacturing in the highest volume product line, and
............2) develop procurement strategies and improve cash flow in the procurement arena.
Meanwhile, the CEO focused on developing relationships with key customers and improving the sales of the firm, knowing that Flow Consulting was focused on the internal aspects of supplying product to customers.


Chad Morrison and Troy Bourgeois worked with the operations team to collect the appropriate data and then they facilitated a lean manufacturing kaizen in the highest volume product line. This kaizen produced the following results.

...........................Description........................................Before ....................... ..After
...........................Capacity ............................................65/shift .......................90+/shift
...........................Resources ....................................40 employees ..............38 employees
...........................Mfg cycle time for basic product........... 5 days .........................1 day

In addition to these results, the kaizen resulted in a checklist of over 100 action items to continually drive improved flow, improved quality, and better control of incoming materials. The production process improved so dramatically that the operators are able to occasionally take one hour at the end of the shift to address these open action items as a team, resulting in continued improvements.

Troy Bourgeois worked with the Purchasing Manager and CFO to begin implementing Best Practices for Lean Procurement, with the following results:

- Replenishment Times were obtained to better estimate inventory needs (kanbans)
- AP balance moved from 7 days to 30 days ($600k improvement) with goals of reaching 45 days then 60 days
- Detailed commodity plans were created with Engineering and Procurement to ensure that all employees understood the strategy for each vendor.

Based on the above success, Flow Consulting has been engaged to drive similar operational improvements for another product line while simultaneously transferring LeanSigma skills to key employees.

 

Operations Assessment 2

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:

  • Could two major facilities be consolidated into one facility using state-of-the-art Lean Manufacturing concepts?
  • Which IT systems should be chosen that would support the new combined entity best?
  • What would the operational and purchasing savings be?

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.

BUSINESS RESULTS:
Over $15 million in annual operational savings were realized broken up in the following categories:

  • $4 million in purchased products.
  • $4 million in labor as a result of the lean product flows and a reduced labor rate at the smaller facility.
  • $7 million in manufacturing support and distribution costs as a direct result of the lean product flows and reduced inventory.