Enterprise Agility: Becoming the Most Agile Manufacturer of Capital Equipment
Injection Molding Machine Manufacturer $100mm Sales Revenue
This company produces extrusion machines and sheet lines, injection molding machines and die cast machines. The company was enjoying a reputable position in the industry, having positioned itself in a niche market of producing machines with customer-selected components and features, a "bell & whistle" niche.
However, intense competitive pressures were forcing the company to rethink how it manufactured its products. To remain competitive and hold its command in the "customerization" segment of the market, the company needed to substantially transform the way it produces machines.
The firm was losing orders everyday because of deliveries, in addition to losing money. The company needed to concentrate on satisfying the demands of the market, which meant designing and building the best quality product in the shortest time possible. Rockford Consulting Group was retained to develop and implement a company-wide operational strategy: "Enterprise Agility" through the use of flexible cells, supply chain agility, streamlined business cycles, and new information technology.
Our findings revealed the current environment was characterized by outdated CAD/CAM and MRP systems; an ineffective equipment layout, physical material flow, and scheduling; excessive material handling; and a lack of an outsourcing strategy.
Because of the inefficient layout and poor equipment age and condition, direct labor hours were high. Material handling was excessive causing high indirect labor hours. Inventories were high, and process steps were repetitive such as post-painting and re-assembly. In addition throughput time was excessively long.
We recommended upgrades to the current operating system, CPU, memory, data base software, and applications software. Our recommendations included state-of-the-art software, integrated with standard programmable logic controllers(PLC's), and personal computers.
Our study revealed that the low volume wide variety mix of machines and
components were a good fit for flexible manufacturing cells. To
overcome problems associated with frequent set-ups, new universal or
modular fixturing and tooling were required for quick changeover. We recommended the following:
• Major upgrades in manufacturing process technology
• Major upgrades in computer technology in the factory and office
• The redesign of material supply chain logistics
• New flexible, cellular physical equipment arrangements
• Quickchange tooling/fixturing and new NC programs
• Implementation of supplier partnership programs
• The addition of a 2 experienced and trained professional buyers
• The addition of a 5 experienced and trained manufacturing engineers
• The reengineering of business processes using team-building approaches
• Extensive management training in integrating high performance strategy with daily operations, team-building, empowerment, and effective communications
• High involvement and team-building for all personnel during the redesign and transition to a new competitive organization
• The redesign of the organization structure to accommodate fast response/short lead times
• The redesign of reward systems to “close-the-loop” on high performance and motivate individuals to continuous improvement
• Training for production employees in the effective use of new equipment and process technology, quality control and continuous improvement techniques
• A refocusing of the entire organization to serving the end customer as a top priority
• An integrated and comprehensive approach to managing the transition
The results of our review were as follows:
• Annual cost reduction of $12.5-15.6 million in purchased materials, direct labor/overhead
• One-time reduction of raw materials and work-in-process inventory of $13.6-18.0
• Reduction of total throughput time from receipt of order through shipment of 40-50%
• A direct and indirect labor manpower reduction of 50-60%
• Quick-changeover and flexible make-to-order capability
• Company-wide operational speed and agility to process and ship customer orders
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