Process Improvement Initiative Lowers Costs, Improves Service
Situation: A metals processing plant had grown rapidly in volume due to a recent facilities rationalization. The expansion was causing growth issues in the form of unacceptable late deliveries and high labor costs.
The client believed the plant bottleneck was the final step in the production stream – the packing department, which often caused shipping deadlines to be missed. Ops Partners was asked to confirm whether the packing department was indeed the constraint, and, if so, recommend process improvements.
Approach: Ops Partners mapped the entire production process and interviewed the stakeholders. The team then reviewed all available order data, including late deliveries, and specific processing details such as machines used, material types, and inventory locations. Capacity constraints were not isolated to the packing department, as the client initially believed. Close examination of the data identified a significant gap between plant-wide process resourcing and incoming demand, which resulted in the plant’s efficiency running at half of optimum levels. One company manager summed it up best, “We are taking two shifts to do one shift’s worth of work.”
Ops Partners conducted a detailed, hands-on review of the material picking and staging methods, as well as machine loading processes. We interviewed the company’s cutting tool suppliers to understand best-in-class processing methods for material removal. After conducting the detailed analysis, we were able to recommend a number of process improvements to increase throughput and reduce labor costs.
Results: Ops Partners recommended almost 30 improvements, requiring a capital investment of $45k, that cut the flow time in half, while halving the number of labor-hours currently used, resulting in an annual savings of $750k. The most significant changes were an increased feed rate at a number of machines, a rearrangement of storage locations for high use material, the creation of staging locations next to several machines, and a transition to “man to man” picking processes instead of the “zone” approach in use at the time. Our client chose to enact all recommendations, reducing some headcount while concurrently adding work to the plant with the resulting capacity increase.