A medical manufacturing company saw skyrocketing raw material input costs due to market conditions and were unable to see a pathway to maintain profitability.
They had attempted internal improvements, but had not been able to develop a comprehensive, sustainable program to drive improvement.
They invited Carpedia to perform an assessment which uncovered the following themes of opportunity:
- Lack of alignment in sales and operational planning that caused inventory imbalances and stockouts
- Production capacity constraints caused an inability to effectively handle volume increases
- Weak inventory and procurement practices were causing working capital and production downtime issues.
Carpedia partnered with the client to improve production uptime, decrease inventory, and install a culture that was based on sustainable improvements.
Key changes included:
- Implemented cross functional S&OP systems and processes providing new planning discipline and improved behaviors
- Improved procurement strategies, closely integrated with operational requirements and significant material cost savings
- Implemented new strategies for materials management
- Improved warehouse design for effective flow
- Improved inventory strategies to reduce working capital
- Trained and coached leaders in Active Management behaviors to ensure better planning, communication, follow-up and problem-solving
The Results
The engagement led to an improvement in production uptime and a decrease in inventory days on hand. Improvements to PPV helped mitigate large material supply cost increases.
Leadership is confident that the changes to their operation and culture will be sustainable.
Specific results include:
- 2.7:1 ROI
- 19% improvement in production uptime
- 28% decrease in inventory/average days on hand
