John Schuerman Consults

Case Study #1 | Case Study #2 | Case Study #3

Process Performance: Re-engineering your business processes for increased profitability.

Situation: Foreign competition was driving down profitability. This problem was further compounded by internal challenges: A traditional manufacturing process with high inventory and large batch production where inventory turns were unknown, supplier on-time performance not measured, no centralized information system was in place, work areas were crowded, and productivity was not measured.

Solution level 1: A cross-functional team was formed to define a new system for inventory control and inventory reduction. Data was gathered and charted on key variables, such as inventory turns and supplier on-time. Productivity measures were instituted by the production line. Photos were taken to document the plant layout improvements.

Solution level 2: Once key performance indicators were tracked, I led the team to design the new inventory control system and solve problems. We successfully cost-justified a new information system and identified and removed obsolete inventory. The shop-floor organizing system, called 5S, was implemented to more effectively organize work areas. Production lines were redesigned to improve efficiency. For the first time, crucial new processes were implemented: quality controls and suppliers’ on-time performance feedback.

Results: After 5S pictures show production areas with clear space and flow, 100 rack spaces were opened up due to disposition of obsolete material enabling elimination of some racking, productivity doubled on one production line due to redesign of the work station and application of a kan-ban production quantity. Batch size was cut to 1/3, improving flow and productivity. However, inventory turns and supplier performance improved only slightly, and shop floor improvements needed to be more rapid.

Solution level 3: The transformation to a productive system required new resources. Staff changes were made on a variety of levels as expectations were clarified and accountabilities set in place. Key managers joined a peer group of “Lean Manufacturing” companies. A supply-chain and Lean Manufacturing expert was hired to run operations. The new information system was implemented. These changes enabled long-term improvement throughout the company: inventory management, supplier effectiveness, and production.

Results: The business launched 2 new products using existing production lines and was able to accomplish this with a 20% reduction in staff. Given the new information system, and led by the supply chain manager the company was able to reduce inventory by 30% within 6 months. The net result: the company became more competitive in a tough marketplace --higher productivity, reduced inventory.