MRN recently sent a senior consultant to a manufacturing facility where they were experiencing low productivity, inventory issues and a diminished level of profitability. The consultant addressed each challenge during his five-month stay.
Situation #1: No clear manufacturing disciplines in place to drive an efficient and profitable organization.
Solutions:
- Developed a monthly production schedule that included all products. Broke that down into weekly and daily production plans.
- Installed hourly production reporting and addressed issues at regular team meetings.
- Staggered lunches and breaks to improve machine utilization and to achieve a steady production state.
Result: Throughput increased by more than 25%
Situation #2: Inventory Control. Receipts and issues not disciplined. BOMs incorrect.
Solutions:
- Corrected BOMs and the use of backflushing in the ERP system to control raw material issuance.
- Cycle counting was put in place as well as month-end inventories to clean up broken procedures and reduce variances.
- Justified a better ERP system to be installed this year.
Result: Material variances were reduced by $500,000 on an annualized basis.
Situation #3: Unacceptable profitability level.
- Leaned out the management team by removing duplication of duties.
- Right-sized the direct and indirect workforce. Moved some associates to second shift.
- Converted temps to permanent team members.
- Re-organized the factory floor to further improve throughput efficiency incorporating team input.
Result: The result of all activities were the highest months of Sales and Revenue in company history! All products were available in inventory for immediate shipment!
