It’s common practice in the manufacturing industry for customers to require annualized cost saving programs from their suppliers. These programs are becoming more and more aggressive as time goes on. With so many companies worldwide that are competing for a share of the market it is increasingly important to operate at maximum efficiency.
In some instances it is possible to achieve these goals by making slow steady improvements that positively impact quality and cost. However, some situations require a more radical transformation. When our Client was told by one of their biggest customers to reduce a product line’s cost by 15% or lose that business to China, they knew a change was needed and it needed to happen fast. They understood the value outside perspective could give to their situation and together with LSSE, worked toward a solution.
It was decided that a Kaizen event would be the most effective means of transformation. The scope of this event was to accomplish the following:
- Implement 1 safety or ergonomic improvement per team member
- Reduce lead time and WIP by 50%
- Increase productivity by 20%
- Optimize inspection
- Improve 5S score by 1
- Implement control chart to maintain improvement
Prior to the project scope definition, LSSE performed an onsite assessment of the process in order to determine whether or not the cost reduction being asked for was feasible. A product matrix was created to show the products historical production rate, scrap costs, overhead, contribution to margin, and long range forecast. A mutual consensus was reached and the decision was made to move forward with the Kaizen event. The event consisted of 9 internal team members and 1 LSSE facilitator. The team was made up of participants from every department within the organization.
LSSE uses a 5 day Kaizen event model. Day 1 consists of Lean Manufacturing training for all team members. This is used to teach the core concepts behind Lean and plant the seed of “Lean Thinking” in the minds of participants. Training and understanding the implementation of the skills you learned is key to developing a lean culture.
The following day is used to capture the current state and map the value stream. Team members collect machine cycle times, operator cycle times, WIP counts, travel distances, perform 5S audits, and identify wastes. The information is brought back to the group for discussion. A future state is then mapped out.
On day 3 a production cell was created. This cell was based on the concept of continuous flow processing instead of the batch processing that was occurring prior to the event. The area was rearranged and all the relevant processing steps were brought into the cell.
The fourth day consisted of creating a new standard work process and executing to that process. Operators were evaluated as they ran production in the new cell and slight modifications were made to enhance ergonomics and maximize efficiency.
On the final day of the event all the team members presented the project to the company. The presentation showed the evolution from an aging process with excessive waste to a lean cellular process.
The results of this event gave our Client the ability to not only keep the product, but their orders were actually increased. By implementing the core concepts of Lean Manufacturing we were able to achieve the goals need for success.
The results of this Kaizen are an example of what is possible when an organization is willing to take on the challenges of change in pursuit of improvement.
This event resulted in a 67% increase in productivity, 94.8% decrease in lead time and a total cost savings of $151,230.
In the competitive global OEM market, organizations are constantly forced to reevaluate their processes and provide cost savings to their customers. With the continued progression of China’s industrial capabilities, manufacturing companies in the US are striving for ways to reduce waste and lower operating costs.
When faced with the challenge of reducing the price on a product line by 15% or losing the work to an overseas competitor, our Client partnered with LSSE to come up with a solution. The results not only met the expectation of the customer, but they exceeded them by simultaneously reducing lead time and improving quality.