Client Case: Value Chain Optimization
MachineryCo’s lead time was reduced by 50 percent, from 8 weeks to 4 weeks with the first pass of improvement effort. Process costs were reduced by 18 percent, improving the firm's overall profitability. Through these value chain improvements, MachineryCo was able to increase its competitive position and market share.
MachineryCo is a mid-sized specialty custom machinery manufacturer that was emerging from a period of slow growth to address poor performance due to an inability to ship products on time and achieve the lead times desired by customers. They had been focusing mostly on sales and marketing for the past few years, and believed the next critical step was to begin to address why many of their customers failed to reorder and complained about long lead times. Improving their value chain to reduce delivery times was critical for MahineryCo's competitiveness.
MachineryCo had not previously embarked on any process improved initiatives and had sought to correct the lead time issue through additional overtime and help, all of which served to drive up costs without addressing the underlying causes.
What We Did
Anderson Lyall was asked to help identify and address the underlying cause of the missed deliveries and long times. Our mandate was to work with top management and operational personnel to identify constraints to delivery performance and develop and implement appropriate corrective actions.
Anderson Lyall worked closely with the MachineryCo's line and functional management to identify and map the core business processes, and their sequence and interaction. We traced the flow of information and material through the process system and identified areas of time loss and capacity constraints. We organized and prioritized these constraints into opportunities for improvement, targeted at specific processes within the business system. Baseline metrics, including processing times and process costs were established to measure the improvement effort. With the assistance of management, we organized the firm's personnel into process improvement teams, assigned to target the waste and inefficiency identified in the analysis phase of the project. These teams were trained in the basic principles of Lean thinking, and how to improve processes by reducing or eliminating non-value-adding activity (NVA). We guided the improvement teams to attack the causes of time loss within the targeted processes, assisting them to redesign and streamline the processes to achieve faster velocity of workflow. Improvements which were implemented were locked in with new standardized work.
MachineryCo made a clear choice around its path forward for process excellence that was embraced by all stakeholders. As a result, the velocity of work flowing through the core business processes in the Sales, Administrative, Engineering and Shop Floor processes increased markedly. Lead time was reduced by 50 percent, from 8 weeks to 4 weeks with the first pass of improvement effort. Process costs were reduced by 18 percent, improving the firm's overall profitability. Through these improvements, MachineryCo was able to increase its competitive position and its market share.