- Situation: Chemical Processing company transportation and logistics costs of $86 million a year were running higher than the new COO expected from her experience in similar industries. Competitive benchmarking had mixed messages; hard to compare apples and oranges and finding good data on competitors was elusive. No new opportunities were apparent, and in fact costs were projected to increase.
- Approach: We use a highly leveraged consulting model where the company’s internal business experts are coached through their own data collection and analysis. Other consultancies take the approach of conducting interviews, mining data, and doing the analysis for the client. We do this work with our clients. We call this process Baseline. We help the team turn data into understanding, understanding in to a plan, and a plan into action by making waste and variation visible. We put the data up on the wall, identify undesirable effects, do cause and effect analysis, write problem statements and create improvement plans. Then we quantify the benefits and charter the just–do-it policy changes, launch project teams and capture the savings. This approach garners a deeper understanding of their processes and aids in giving the business process owners the autonomy to confidently use the knowledge gained for future activities.
- Result: Detailed project plans and teams with ownership were put in place – resulting in reduced logistics costs of 5% within one year.
- Situation: The shipping dock was clogged. A growing make-to-order building supplies manufacturer was running out of room to stage customer orders. Product would move to the shipping dock and ‘park’ wherever there was room. Then when it came time to load the delivery trucks it was a treasure hunt across the whole dock to find all of the customer orders. With an additional 30% growth expected the current condition couldn’t continue. What to do?
- Approach: various alternatives were considered to expand dock space and to do more vertical storage. A sampling of finished goods on the dock suggested that there were more than a few items on the dock longer than expected. A full aging of the dock inventory found that out bound delivery planning was falling behind and the expected next day shipping had grown to several days.
- Result: no need to spend $100,000 capital on increasing finished goods storage space, instead purging the shipping dock of unnecessary goods and a few extra delivers over a couple weeks enabled the shipping department to catch back up thus avoid the planned capital investment and at the same time reducing customer order lead time by 15% and improving working capital cash flow.
| Inventory Reduction
- Situation: A growing building supplies manufacturer was running out of room and wanted to convert warehouse space to make room for a new product line. The plan was to change from traditional pallet fork trucks and pallet racks to expensive Very Narrow Aisle lifts and racks at a cost of almost $500,000.
- Approach: While compressing the warehouse footprint by going to VNA would have freed up the needed space for the new production equipment it would come at a cost and would only buy a few years of breathing room. Rather than suggest other solutions we did a little tutoring on inventory turns, demand segmentation, inventory aging, and statistical safety stock.
- Results: After gathering the inventory transactions and calculating consumption, demand standard deviation, and new order points the business leaders realized that if they purged the dead inventory and tightened up their purchasing parameters they could comfortably reduce their inventory by 50%, doubled inventory turns. Now they wouldn’t need as much warehouse space, and so the project to move to very narrow aisles was canceled saving precious capital that was used toward paying down debt. Cash flow also improved as they burned off their excess inventory.
- Issue: Oil producer was experiencing long and unpredictable plant maintenance turnarounds. Outage durations consistently exceeded plans and budgets resulting in lost production and excessive maintenance costs.
- Solution: Applied lean techniques including:
- SMED (task separation, conversion, and simplification to complete outage tasks outside the outage window),
- Constraint Reduction (e.g., dramatically improved critical path management),
- Visual Controls (e.g., optimized Outage Command Center),
- Streamlined Collaborative Planning (e.g., earlier and greater involvement of contractors and cross functional personnel), and
- High impact metric capture and utilization (e.g., shift in focus from “Cost only” to Cost and Duration).
- Result: Greater Profits – More stable outage planning and execution process with a reduction in outage durations of 10-15% resulting in increased production valued at $25 million increase in annual profit. Reduced Costs – Decrease in outage costs valued at $2-3 million annualized. Improved Collaboration – Significantly improved collaboration among all groups, greater performance reporting transparency, and improved continuous improvement through capture and application of lessons from one outage to another.
|Global Machined Products Manufacturer
- Issue: Too many warehouses, ever increasing distribution costs
- Solution: Optimizing the current manufacturing and distribution network showed significant savings by relocating product lines and consolidating manufacturing and distribution footprint. A 2 DC solution was selected from 30 potential North American DC sites for parts distribution and imported finished goods.
- Results: Reduction of 16% in total logistics cost
|Industrial Components Distributor
- Issue: High inventory
- Solution: Used six sigma tools to identify that 40% of the inventory in the distribution center was obsolete
- Results: Converted 70% of the dead inventory into cash through sales
|Automotive Processing Center
- Issue: Desire to delay needed expansion
- Solution: Used lean flow and inventory management techniques
- Results: Reduced manufacturing capacity utilization from 97% to 61% in 12 months, delaying a $25M investment by 7 years
|Paper Industry Supplier
- Issue: Cash flow constraint
- Solution: Used lean sigma techniques in their accounts payable process
- Results: Increased cash flow by $186K/month
|Automotive Parts Distributor
- Issue: Warehouse storage capacity
- Solution: Statistical safety stock to improve both inventory turns and order fill
- Results: Reduced distribution center storage capacity utilization from 96% to 81% in 6 months, delaying a $30M investment by 5 years
|Industrial Supplies Distributor
- Issue: Slow moving raw material inventory
- Solution: Implemented integrated commodity team management techniques and multi echelon inventory planning
- Results: Improve total supply chain inventory turns from <4 to >6 on $100M
|Plumbing Supplies Distributor
- Issue: Acquisition integration, increased sales, need for quicker delivery
- Solution: Design distribution racking layout and product slotting optimization
- Results: Lower shipping and warehousing cost with improved delivery lead time