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Category: Supply Chain

The Challenge

A global pharmaceutical company’s conversion (manufacturing) cost in $USD per 1000 tablets had increased steadily in recent years and the company wished to take steps to reduce it.

Explic8 consultants defined the Lean strategy for the USA division.

The Challenge

A global medical device company was unable to supply its products to the market because of delivery failures from vendors.

The company was so frustrated, it was considering building a brand-new, giant warehouse facility to hold stock of the offending items.  However, this strategy was fraught with issues such as cost of buildings, increased stock holdings, increased transport costs, effect on cash flow and profit and the time taken to plan and build.

The Challenge

A pan-European group with turnover in excess of £130m employing over 1300 people was failing to hit its customer service promise of 99% next day delivery by a large margin and the actual achievement figure was below 45%!  The company was seeking ways to achieve its customer service promise of 99% next day delivery without increasing costs or stock.

The Ask:

A leading manufacturer of electronics for the communications industry that was struggling to achieve customer demand. 4-week delivery promise was failing to attain even 50% OTIF within 7-weeks. Over 700 employees and on a recruitment drive to try and match demand. Despite this performance, sales were spiralling and overtime was “the norm” to try and catch-up

Results and Benefits

  • Initial pilot cell reduced space required from 45k ft2 to 15k ft2 of factory
  • Cell produced 66% of total demand with a team of 25 team members (was 120)
  • 6-weeks of stock around the factory eliminated completely
  • Moved to flexible cell, single-piece flow with Kanban control between equipment
  • Overtime for the pilot product was running at 20% of factory and became zero
  • The 7-week for 50% OTIF delivery became an achieved 1-week delivery @ 100%
  • Lean concepts and cells rolled-out across all areas within a 12-month period
  • Work rebalanced to be achieved with a fixed workforce of 150 (from 700 and rising)
  • Live and accurate order status progress visible at all times within the Visual Factory

Challenges:

  • Massive overdues and everyone chasing their own tails to move products around the factory
  • The layout was functionally organised with large batch production and significant amounts of WIP, totally uncontrolled
  • Priorities changing within each day according to which customer was shouting the loudest (both internal and external customers complaining)
  • No visibility of job status – current batch methods were out of control with WIP piles everywhere, no evidence of batch control or lot control so jobs were being repeated
  • Plan was to invest in more buildings, equipment and people to quell demand

Implication

  • Key accounts were threatening to take their work elsewhere
  • Threat of line stoppages at customers being charged back to supplier
  • Significant hit to the organisation’s bottom line in large scale discounting to appease the customers
  • Company seriously considering asking their “smaller” customers to go elsewhere

Objective

  • Stop the bleeding and the pain
  • Understand if there truly were capacity issues or if the situation was just a symptom of current ways of working
  • Achieve stability, then visibility, then capability
  • Establish a better way of production that will regain control and give the company a breathing space
  • Prove the concept and roll-out across all product lines

The Approach:

Benchmarked current performance against the competition to identify where they were against the rest.

Analysed current processes, methods and flows to identify bottlenecks and opportunities.

Defined and designed a new way of working.

Reviewed product portfolio to select a pilot to demonstrate potential and would have the biggest impact for the business.

Roll-out successes across all areas.

Toolkit

  • Factory redesign
  • Lean tools and techniques from VSM to cellular design
  • Work balancing and competency and skills matching
  • Single piece flow and Kanban concepts
  • Meaningful, accurate and timely KPIs at point of use
  • Visual Factory

The Ask:

A traditional Scotland based luxury goods company was acquired by a global giant who defined, following Big 4 strategy review, that the business model required changing. The task was to develop a rapid deployment plan and an implementation programme that minimised business disruption during the crossover.

Results and Benefits

  • New facilities designed and sourced in line with future requirements
  • Complete cessation of producing non-core brands
  • Phased exit from supplying retailer brands
  • Cessation of all trading activities
  • Assets refocused on productive high profit brands
  • Retailer allocation of products to allow rapid export expansion
  • Future workforce selection and successful redundancy programme
  • Effective stakeholder management
  • On-time and on budget delivery of original plans (£45.0m)
  • Divestment of non-core brands
  • Avoided business disruption
  • Significant increase in unit price and subsequent profitability

Challenges:

  • Dated production and office facilities in contrast to the owning company’s philosophy.
  • Non-performing brands consuming management time and production resources
  • Too much emphasis on retailer brands and non-branded products.
  • Contract manufacturing at marginal costing to make the numbers work.
  • Trading product rather than direct selling at significantly reduced margins.
  • Ageing assets consuming excessive overheads, cost and reducing levels of efficiency and productivity.
  • Retailers forcing the unit price point down.
  • Difficulty with trade unions.
  • Ageing workforce with minimal succession planning for core skills.
  • Lack of employee training and development across all functions.
  • Producing cheaper products to sustain nominal profitability.
  • Ineffective marketing defining the product position incorrectly.

Implication

  • A continued expansion into non-branded product areas leading to a continued slide in profitability.
  • Lack of continued support from the new owners, and possible re-sale.
  • Mediocre future performance and a risk of failure, assets, workforce and markets.

Objective

  • Develop and deliver a plan to achieve the strategic roadmap in all aspects.
  • Removal of dependence on retailers and non-branded activities.
  • Re-design and source new facilities for production and headquarters.
  • Relaunch the business in accordance with the owners philosophies.
  • Engage and upskill the workforce.

The Approach:

Develop a plan for a plan incorporating the Big 4 strategic review, the owners philosophies, local management interpretations and workforce stakeholder management including the Scottish government and unions.

Prepare quantified budget assumptions for the end to end transformation.

Engage retailers proactively to minimise business continuity disruption.

Develop an effective communication programme to avert bad press and workforce action.

Toolkit

  • Strategy simplification
  • Data collection & analysis
  • Value Stream Mapping
  • Product costing assessment
  • Design for future manufacture
  • Solution verification
  • Supplier positioning
  • Customer and market positioning
  • Stakeholder management
  • Brand value assessment
  • Forward capacity modelling
  • Workforce assessment
  • Workstream management
  • Steering group management
  • Key Performance Indicators
  • Business impact sensitivity modelling
  • Budget modelling