In each instance, the manufacturing process relationships and product cycle-times were all accurately measured and mapped to replace frequently outdated inaccurate and outdated systems data. An end-to-end digital twin was created of the whole manufacturing process, including the entire order to cash cycle. Finite capacity planning tools displaced infinite capacity MRP scheduling. Customer orders were prioritised against actual capacity on a daily basis.
Lead times were typically reduced from months or week to days or hours. Working Capital embedded in redundant Work-in-Process and Finished Inventories was reduced proportionately. This released significant quantities of cash for investment elsewhere in the business. The consequent business transformation led to more and increasingly profitable Sales, greater Productivity and better Cash-Flow.
Factory Of The Year Award
Background: UK automotive plastic moulded component manufacturer. Implemented demand flow manufacturing to meet the needs of a new, web-based B2B sales policy. The commitment to same day shipment of all orders placed before 1pm. In an environment with several thousand SKUs, this became especially worrying. It drove up significant “just-in-case” or redundant inventory.
Action: Guided by the digital model, processes were linked and synchronised in a flow. Replenishment demand from finished goods inventory (FGI) Kanban and dual-card Kanban was driven upstream through assembly to the moulding machines. This replaced inherently inaccurate demand forecasts. Batch sizes were reduced to calculated “days of demand” quantities that produced what was actually needed much faster, and none of what was not needed.
Benefits: The benefits included greater Productivity, reduced waste, improved same-day customer service by 63%, with total first-year cash benefits of £600,000. The MD and all his staff were delighted to be awarded a “Management Today” Factory of the Year Award.
£100s Millions In Cash Released From Redundant Working Capital
Background: Global UK-Scandinavian pharmaceuticals manufacturer of tablets, creams, solutions, syringes and other biomedical instruments. Several of their facilities were up against a capacity “glass ceiling” to business improvement. Consultants had advised them of no other way through without still more significant investment.
Action: Together, we pioneered productivity transformation from push-based batch production of forecast “orders” to pull-based, demand fulfilment of individual customer orders. Customer demand from the packaging lines pulled replenishment demand sequentially from discrete, mathematically sized reserves of semi-finished inventories located between processes. Lab capacity was also increased through parallel productivity gains while results and regulatory documentation were synchronised with production to further enhance product flow.
Benefits: Industry regulated batch quantities were reconciled with In-Progress and Finished inventory levels and customer demand. £100s millions in cash was released from redundant Working Capital across multiple small to mid-size facilities were reinvested in R&D. This was without detriment either to product availability or staffing levels as sales increased proportionately with productivity gains.
Reduced WIP By 65% Finished Goods By 45% Obsolescence By 25%
Background: Finnish manufacturer of plastic moulded mobile phone components in China supplying high volume, limited life-cycle, high variability products to Nokia. The Finnish management was under pressure to deliver just-in time (JIT) to their customer but were being forced to do it from Just-in-Case inventory.
Action: Reduced batch quantities to minimum run quantities just sufficient to recover the time lost to set-ups. Machine set-up times were optimised with batch quantities and inventory. Productivity and overhead recovery were also improved in this way, so there was no need to invest in additional equipment. Deployed finite capacity planning tools to redefine the mix vs. capacity criteria of plastic moulding machines. Defined new factory layout utilising old and new machines.
Benefits: Reduced WIP by 65%, finished goods by 45%, obsolescence by 25%. This released $2.75m of cash from product sold, not at discounted rates but at full market price, which did not have to be reinvested in more inventory.
Working Capital Reduced By $4 Million Within 3 Months
Background: AC purchased a run-down plant in central China machining and assembling drill bits and hammers for quarrying. They had to totally refurbish it while actually having to increase production.
Action: Implemented a lean, pull-based, demand driven production system, to improve productivity and reduce waste and costs.
Benefits: After plant refurbishment the factory footprint was reduced by 25%, response time to customer order was reduced from 6 weeks to 1½ weeks. Working Capital was reduced by $4m within 3 months of implementation.
Order Lead Time Reduced By 70%
Background: Saudi manufacturer of large chillers, medium and smaller HVAC units, to meet year round Middle East demand, had outgrown their current facility.
Action: Created the design/layout of a new factory in a Mixed Model flow and synchronised production of the copper and sheet metal components to seamlessly meet demand from the assembly lines.
Benefits: Order lead time was reduced by 70% and a reduction in inventory provided first year cash saving of $18m with a $2m annualised saving thereafter.
First Year Cash Savings €3m Annualised savings €2m
Background: German manufacturer of packaging and labels. Large annual blanket orders could be called off in irregular quantities at monthly intervals. Big batches of products were made ahead of real demand to maximise overall equipment efficiency (OEE.) The frustration was that several months of stock were frequently scrapped as a result of short notice changes to print designs.
Action: Established a variable finished goods inventory Kanban system and a demand driven, finite capacity production planning tool using output from the digital twin. This optimised OEE with lead time and inventory while reducing set-up times to compensate for smaller batches.
Benefits: Management team improved quality, productivity with first year cash savings of €3m and annualised savings of €2m.
95% Scheduled Demand Available To Production Within 2 Days Instead Of 2 Weeks
Background: US pharmaceutical facility in France manufacturing mostly veterinary products. Conflict with the labs releasing raw material early to production that was not needed while what was needed was being held up to gain testing performance efficiencies.
Action: Synchronised pre-production laboratory testing of raw materials with batch production through visual planning boards and a Kanban pull system.
Benefits: Reduced raw material inventory by €7m and made 95% of scheduled demand available to production within 2 days instead of 2 weeks, so order fulfilment was not constrained by laboratory resource planning.
Manufacturing Lead Time Reduced From 3 Weeks To 3 Days
Background: German machine-intensive and robotic assembly plant, producing hydraulic valves and motors. They were debating over a costly and time-consuming capacity upgrade.
Action: Customised planning tools that optimised overall equipment efficiency with batch size while reducing set-up times to compensate for smaller batches. Linked this to a pull system driven to customer demand.
Benefits: Increased capacity by 18%, without increasing the number of machines. Reduced inventories by €4m, improved customer service levels and reduced manufacturing lead time from 3 weeks to 3 days.
Order Lead Time Reduced By 80% To 3 Days
Background: Global electronics sub-contract manufacturer of surface-mount technology boards, and box build products had recently acquired a facility in the Czech Republic. Local management had been made to promise significant improvements.
Action: Designed and managed a factory transformation from ‘make-to-forecast’ to a lean, pull driven ‘make-to-order’ demand flow environment.
Benefiits: Reduced waste and rework, improved productivity and inventory management, with first year cash savings of $8m and order lead time reduced by 80% to 3 days.
Reduced Production Footprint By 75%
Background: Manufacturer of micro electric motors and gearboxes supplying the automotive and aerospace industries in a rambling 3-storey facility. Product was made in batches driven in size by “efficiency” considerations that were often larger than the order quantities. Much of the surplus would subsequently be “lost in storage” driving up costs, extending lead-times and losing business.
Action: Redesigned the factory layout from the digital twin so that all 13 product families were produced in two mixed-model flow lines on just one floor of the building instead of three.
Benefits: Reduced the production footprint by 75%. One floor was sub-let and the top floor transformed into an employee recreation area complete with palm-trees. Further, the demand-driven production system met all customer on-time in-full (OTIF) requirements, inventory turns increased from less than 2 to 15, releasing £3m of now redundant inventory for investment in the business.
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