The company had problems with meeting market demands and profitability. The project focused on a new management system and operational knowledge of how to use it to take corrective action, as well as greater understanding and knowledge of production.
The factory, with over 500 employees, is owned by an American group that manufactures building materials. The corporate group employs 20,000 people worldwide. The factory is built around three production units; pure line production, stand-alone production, and a distribution centre (a warehouse for packing and deliveries). For a long time, it had problems regarding profitability, and at the same time it could not deliver the volumes that the market wanted.
An initial analysis conducted by Mantec found several problems.
- Production managers were seldom in the production facilities, due mainly to a requirement to attend a large number of meetings.
- There was widespread disrespect for working hours and a lack of understanding of how the behaviour of individual operators affects outputs.
- There was no focus on lagging activities or action to get back to the right levels.
- Cross-functional work was lacking.
- The organisation was very good at gathering data but no action was taken on it.
- Plans did not take into account known capacity variations and real-time availability.
- The planning system was not used for detailed planning of activities, and data in the system had not been updated for several years.
Based on the initial analysis, Mantec and the client decided to undertake a project aiming to raise productivity and production volume, reduce scrap, and increase delivery accuracy.
A management control system, created to achieve predictability in operations, was rolled out in two steps.
Step 1 – was initiated immediately after the project started, aimed to institute daily deviation management based on current plans and follow-up opportunities.
Step 2 – was to ensure proactive behaviour, achieved by creating the conditions to always reach the week’s volume and productivity goals, by early identification of deviations from plan (at shift level), analysing the cause and taking corrective action. In addition, reality-adapted (occupancy and capacity match) production plans were introduced.
Other key focus areas
- planning the design and implementation of a regulatory framework so that maximum capacity was used while avoiding overcrowding;
- introducing a structured approach to enable early identification of quality defects, rework requirements and lack of technical availability. This included embedding a problem-solving structure to help identify and resolve root causes, which greatly reduced the amount of rework; and
- increasing efficiency through measures to increase utilization (OEE) by creating more runtime, shortening cycle times and eliminating unnecessary steps. Simple rules were introduced to reduce non-value adding time.
In order to effectively improve the current workflow, it was natural to involve the operators throughout the project, to take advantage of their knowledge. Consequently, changes were implemented smoothly, because the operators had an understanding of them and felt that they had influenced and participated in their design.
Benefits to the client of successfully implementing the project include:
- a new management system and an operational knowledge of how to use it to take corrective action;
- greater understanding and knowledge of production;
- productivity increase of over 14%;
- reliability of supplied material increased from 16 % per unit to 97%;
- produced volume increased by 25% while quality costs fell by 25%.
Overall, the project ROI amounted to about 400%, corresponding to annualised savings of SEK 62M (appr. EUR 6.9M) for the client organisation.