Our client is a $1.0B division of a global power leader that designs, manufactures, sells and distributes its product and related technology around the world. The client had a major issue with one of its operations in the American Midwest.
This manufacturing operation was going through a major revamping of its product line. Historically it had produced mufflers for the automotive and truck market. Since its acquisition by a major engine manufacturer, it was being transformed into a plant manufacturing sophisticated filters for emissions control. It had installed a large piece of semi automated production equipment but could not get daily production of more than 25 pieces per day from that production line. This was a last ditch effort to save the plant as the new owners had already decided to set up two smaller operation in other places if this operation failed to deliver.
When we arrived, there was a warehouse full of materials because this operation should have been running at 500 units per day (not 25!). People could not find the inventory in the warehouse because there was no systematic way of finding it. The wrong sub-assemblies were being made to feed into production because there was no production schedule. Worse, the quality of the 25 units that were actually being made was suspect.
We suggested and then took the following actions immediately:
- Created a build schedule, then froze it for three days. This way there would be no confusion as what to build.
- Cleared space in the warehouse. On a Saturday/Sunday we hauled out 18 trailers of excess material from the plant warehouse to an outside warehouse to have free space to organize the warehouse properly.
- Created a process for the warehouse to pick material and deliver it to the production line. This included a process to feed the subassembly feeder lines as well. These were set up in material kanbans so that the associated know exactly what to assemble next.
- Implemented a milk run from the warehouse to the manufacturing operation twice per day. This allowed for more efficient use of the internal warehouse and accommodated planning mistakes because there was a delivery truck on its way at all time.
- Revamped the production line. We closely examined the efficiency of the production line, plant layout and flow of material. This allowed us to eliminate 80% of the material handling and allow us to redeploy that labor on the production line.
- The plant went from 25 filters per day to an average of 625 per day in a 30 day period.
- Annualized sales increased from $30M to $380M in a 6 month period.
- We hit a production high of 1,010 units in one day.
- We hired 400 people and went from a 5 day operation to 24/7, meeting the needs of our parent company’s operations.
- The parent company abandoned plans to relocate production to other centers.