A successful food products manufacturer recently negotiated a long-term agreement with a major customer. At the same time, the company was engaged in executing a diversification strategy. These distractions took focus away from the core business, and cost increases began to erode profits. Management hired an outside firm to consolidate US and Canadian operations in an effort to control costs. When the capital outlay proved to be prohibitive, the company engaged The ProAction Group to lead its Lean effort and unlock cost savings.

Using Value Stream Mapping, the ProAction team quickly assessed the current state of operations and identified a preferred future state. Bridging the gap required the use of numerous Lean methods including Kaizen events, 5S, Quick Changeover, Visual Management, and Total Productive Maintenance. Equipment downtime was a significant drain on operations, which we targeted with a Six Sigma project. We eliminated waste by changing the line layout to improve product flow. Most importantly, we developed a series of metrics to monitor improvements and track cost reduction.

The ProAction team reduced work-in-process inventory and removed obsolete equipment to free up existing floor space within the company's operations. As a result, the company's Canadian operations were absorbed into its US operations without the large capital expense previously assumed. The additional space also enabled the company to acquire and integrate a strategic player, which increased revenue by more than 50%.

• Output improved by 75%
• Equipment uptime (OEE) increased 50%
• Labor was reduced by 20%
• Scrap rates deceased by 15%
• Changeovers went from 5 hour to less than 30 minutes

Cost reductions added $1.5 MM to EBITDA. Improved inventory management reduced working capital by $2.4 MM. The increased production also allowed the company to fulfill a 60-day demand surge with a key customer, adding $0.75 MM in additional margin