Process Improvements With Measurable Results
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Self-funding, non-technology manufacturing operations improvement initiative for a branded foods business line within the North American network. Objectives: Improve service; reduce costs; simplify processes for new ERP technology
Scope of Project:
- Production planning
- Inbound materials
- Raw materials processing
- Packaging/fill line
- Quality assurance
- Finished goods inventory
- Operating cost 11%
- Annual savings $5.5M
- Head count 8%
- Break even point 5 mos.
- ROI (12 month) 4.0x
- Unplanned downtime22%
- Machine turn rate80%
- On-time customer delivery98%
ClientCo, is the North American division of a global $10B diversified foods producer. Brands include numerous household products and foods. Senior management sought operations improvement as new technology [an ERP system] was being deployed. The effort focused on bulk products sold to other producers, as well as branded and private label consumer products sold to national grocery chains.
The Phase I effort [eight weeks] analyzed all aspects of manufacturing production operations from planning and scheduling through finished goods inventory. Over 175 non-technology improvements were identified and incorporated into a five-month, self-funding implementation work plan, coordinated with the ERP deployment schedule. Examples:
- Filler Line Issues - Approximately 30-40 near term, non-technology improvements depressed machine performance by at least 30% on average from conservatively established targets. Examples: Inconsistent vendor performance created deformities in bottles creating jams, off-spec production. Employees failed to properly adjust conveyor rails for container size variations; understaffing and poor performance measures in front end staging created downtime; delays; improper cleaning of filler mechanism resulted in excessive air in bottles/underfills.
- Production/Costs Standards - Extensive investment was directed toward updating standard labor, cost and productivity data. However, minimal effort was made to uncover the root causes of productivity gains/losses. No data on customer priorities or competitive capabilities [e.g., lead times, packaging options] was included. Standards maintenance efforts were primarily focused on the needs of the finance and accounting organization.
- Minor Maintenance/Housekeeping - Underinvestment in low cost maintenance equipment and root cause documentation [see 2, above]. Example: purchase of a heavy duty vacuum cleaner [$150] dedicated to the capping machine reduced over-torque of bottle caps [product destruction] from 14% to less than 1% within three days of implementation.
- Packaging Inventory Discipline - Failure to promptly update packaging inventory, destroy expired supplies [e.g., adhesives] and outdated materials [e.g., caps, labels] created packaging error rates twice those of comparable peers.
After the Phase I effort, The Lab worked with ClientCo internal teams to implement the self-funding non-technology improvements and coordinate streamlined business processes with the new ERP technology.