The business was on the verge of losing its largest customer due to poor supply of products.
The client is a supplier to one of the major DIY sheds and was experiencing extreme difficulties in meeting the current level of orders. Production was around five weeks behind schedule and the customer was threatening to cancel the contract. There were also frequent stock-outs. To compound matters, suitable labour was in short supply locally and as a result, excessive amounts of overtime were being worked, including week ends. This had led to adverse cost variances and the company was loss-making.
We were asked to recommend and implement a way forwards and having examined the manufacturing business model, our solution was based upon:
Revising the factory layout to ensure that production flowed smoothly
Reorganising the raw materials stores allowing stocks to be reduced and parts located correctly
Devising a system of "kitting-up" so that each job could be prepared in advance and processed accurately
Producing a series of key performance indicators and reports to monitor and control labour productivity
The project was quoted on a fixed-fee basis and was completed on time. As a result, factory efficiency improved from 52 to around 85 performance using our new measures; an increase of 60%. Within three weeks, the backlog of orders was eliminated and stock-outs became a thing of the past. Savings were in excess of £500,000 per annum.
MANAGING DIRECTOR - "I just can't believe that we have improved the factory so much in such a short space of time."