The manufacturer of frozen baked goods wanted to reduce overall operating costs in their production facility, while simultaneously increasing throughput capabilities. However, they lacked visibility into top areas of direct and indirect labor overspend, prioritization plans to improve throughput, and the management skills required to action top performance variances.
Carpedia was invited to assess their largest manufacturing plant, which identified the following opportunities:
- Direct labor was poorly managed, lines were consistently over-crewed, and labor standards included many non-value add positions
- Indirect labor department headcounts were heavy and not reflective of workload
- There was a lack of visibility into the root cause of scrap and yield loss, leading to an inability to manage and address variances
- There was a significant loss of throughput caused by planned downtime (i.e. breaks and lunches, sanitation and changeovers, etc.)
The project targeted reductions in both direct and indirect labor spend while improving throughput via downtime reduction and smarter planning.
Key initiatives included:
- Analyzing SKU-level labor standards to lower overall crewing requirements.
- Establishing new scheduling practices aligned with the updated standards.
- Equipping indirect managers with real-time planning and reporting tools to match crews to workload.
- Implementing break-coverage strategies on critical lines to boost throughput.
- Installing yield-loss tracking and reporting for greater visibility.
The Results
The plant achieved its most profitable year in history, supported by a stronger management performance system to sustain gains.
Measured outcomes:
- 6.5:1 ROI on engagement
- 126% of estimated benefits realized
- 26% reduction in direct labor cost per pound
- 19% reduction in indirect labor spend
- 34% reduction in giveaway rate
- 29% reduction in scrap rate
The success led to three additional engagements across the company’s other facilities.
