Lean Implementation Smartmapping ©

Situation:

A valve manufacturer needed to reduce it prices by a minimum of 20% in order to be competitive in the market place. It also needed to significantly improve its order fulfilment performance (delivering on-time, in-full, and to customer specifications) from the current estimated level of 50%.

The board decided to embrace "lean manufacturing" principles throughout its operations to help cut cost, reduce lead times, and improve delivery performance.

The brief was far reaching and encompassed all areas of the business. The first task was to educate the senior management team in lean manufacturing principles and ensure an understanding of the issues involved in achieving improved performance. Project objectives were to:

1. reduce manufacturing costs by 25-30%
2. increase order fulfilment performance to above 95% from 63%
3. reduce manufacturing lead times by 50%.

• Analysed sales data to provide clear picture of product profitability, complexity and volumes
• Identification of high-value and high growth potential customers through ABC analysis of the existing customer base
• Used Smartmapping^© as a tool to identify opportunities for improvement in operations (order placement to delivery for customer orders, requisition to payment of suppliers).
• To create meaningful maps, data gathering had to be done to quantify the magnitude of the gains to be realised. An example was the rate of failures and rework throughout the manufacturing process including at the final inspection process.
• A critical measure was the ratio of actual processing time to lead time. From analysis we found the processing time in the order of 2  6 hours and the lead time varying from 10  28 days.
• Implemented planning and scheduling rules, reducing Work-in-Progress, and component and finished goods stock
• Implemented 5S activities, sorting what was needed at the workstations and what was not, creating an environment of a place for everything and everything in its place; cleaning and colour coding items followed, with standards created.
• Facilitated mini-projects to overcome traditional but flawed routines
• Changed layout and workstation designs
• Evaluated supplier performance, identifying poorly performing suppliers and their impact on receipt of orders on time; collaboratively worked with suppliers to redesign information flow and communication processes.

• reduced direct manufacturing costs by 6% and indirect costs by 20%
• increased order fulfilment performance to 94%
• reduced inventory by 35%, increased stock turns and reduced working capital
• reduce manufacturing lead times by 18%