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Tag Archives: manufacturing

Case Studies

Lean Operational Improvements

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Background

Battery Systems Manufacturing

  • In need of cash flow improvements
  • Lacking operational disciplines
  • No metrics

A manufacturer and supplier of custom batteries for medical, commercial, and military needed rapid and measurable improvements in cash flow and performance for customers. They were lacking management processes and disciplines for key operational processes, creating instability.

The company engaged The ProAction Group to develop and implement plans to sustain and continuously improve specific gains, develop an overall operational strategy to drive ongoing systemic improvements, and introduce to management best practices in Lean, supply chain, engineering, and other areas.

Actions Taken

  • Standard Work
  • 5S training
  • Re-balanced work cells

The ProAction Group worked with the client to create Leader Standard Work and Standard Work Instructions for their manufacturing lines. Employees completed 5S training and 5S was implemented in all manufacturing work cells. A process to complete Day by Hour boards was established and they measured items

that included Safety, Quality, Delivery, Cost, and Morale. Rebalancing of all the manufacturing lines was also accomplished.

Implementation Impact

  • Work cell WIP from 6hrs to 2.46hrs
  • Cycle time reduction 7-21 seconds
  • $/labor hour reduced 17%-58%

Creating stability using Lean Manufacturing processes allowed the company to reduce Work in Process (WIP) from 6 hours to 2.46 hours and improve labor hours per unit for all manufacturing work cells. Re-balancing the work stations allowed for product cycle time reductions that were between 7-21 seconds or 3%-28%. Utilizing Lean processes, Standard Work, 5S, A3 problem solving, visual factory aides, and line balancing increased units per labor hour 17%-35% and reduced labor hour per unit by 17%-58%. Work cell employees were reallocated to new lines that improved overall capacity for the facility.

About The ProAction Group

The ProAction Group helps private equity firms increase investment returns by providing variable operating resources. Pre-acquisition, we quantify risks and opportunities, helping clients refine valuations, avoid bad deals, and prepare post-deal value creation plans. For portfolio companies, we work with management to identify and implement high-impact revenue growth and profit improvement initiatives. We focus on four sectors: consumer products, manufacturing, distribution, and business services. We have experts in marketing, sales, manufacturing, supply chain, and human capital development. We were founded in 1995 and are headquartered in Chicago.

For Further Information

Timothy Van Mieghem tvm@proactiongroup.com 312.371.8323

Case Studies

Lean Transformation Enables Smooth Product Launches and Drives EBITDA Improvement

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Background

Equipment Manufacturing

  • New Product Launches
  • Plant Layout Change

There would be no “snow days” in the forecast for a leading manufacturer of plowing and spreading equipment. The company was preparing to integrate a new acquisition and to launch two new products. To accommodate this growth, a major layout change and freeing up floor space was required at one of its facilities. Despite a lean effort for over a year, the plant’s performance was lagging behind the company’s other sites.

Actions Taken

  • Led Lean Transformation
  • Guided Product & Production Preparation Process
  • Supported Strategic Planning

The ProAction Group reinvigorated the Lean transformation effort at the client’s plant with a hands-on application of Lean tools. We employed Value Stream Mapping to assess the opportunity and then began eliminating waste in the facility. The team used 5S, Visual Management, and Takt Time Management to streamline operations. Quick Changeover and Total Productive Maintenance were implemented to minimize downtime. We introduced metrics which allowed the plant to manage for daily improvement in its processes, including first-pass Standards of Work which eliminated costly re-work.

We led the Product & Production Preparation Process which ensured a timely and successful launch of the new products. The team employed a Design for Value approach with a focus on quality. We optimized the arrangement of people, machines, materials, and methods to maximize work-flow and minimize waste.

ProAction also supported the client in constructing their strategic plans. We
guided the roll-out of Lean practices across the entire enterprise. We conducted organizational capabilities assessments and recommended staffing changes. We also recommended sourcing activities to support the company’s expected growth.

Measurable Results

  • 14% Labor reduction
  • 25% Free floor space
  • Successful New Product Launch

The Lean transformation put the plant back on track to meet performance expectations. We reduced the labor cost by 14%. Changing the plant’s layout improved the work-flow by 32% and reduced the occupied manufacturing area by 25%, freeing up space for the production of its new products.

About The ProAction Group

The ProAction Group helps private equity firms increase investment returns by providing variable operating resources. Pre-acquisition, we quantify risks and opportunities, helping clients refine valuations, avoid bad deals, and prepare post-deal value creation plans. For portfolio companies, we work with management to identify and implement high-impact revenue growth and profit improvement initiatives. We focus on four sectors: consumer products, manufacturing, distribution, and business services. We have experts in marketing, sales, manufacturing, supply chain, and human capital development. We were founded in 1995 and are headquartered in Chicago.

For Further Information

Timothy Van Mieghem tvm@proactiongroup.com 312.371.8323

Case Studies

Space Utilization and Line Balancing

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Background

Point-of-Purchase Display Manufacturing

  • Grown from $5M to over $20M in 4 years
  • Pursing acquisitions, but had limited space
  • Lacked line balance and unable to fill orders on time

A stock and custom Point-of-Purchase displays manufacturer had labor and work flow inefficiencies, could not fill demand in the current facility, and was also pursuing near term acquisitions. Their actual labor hours per part were much higher than
their quoted labor hours per part. Based on current operating practices, the existing facility was over capacity and could not support additional volumes.

The company engaged The ProAction Group to demonstrate how line balancing would increase production per labor hour and throughput, develop a Future State Facility Layout to achieve the improved throughput, and free up space for acquisition work.

Actions Taken

  • Process maps, Gap analysis, 9-Box Inventory Analysis
  • Line Balancing

The ProAction Group worked with the client to demonstrate how a line could
be balanced and what an improved flow throughout the plant could achieve. Process maps, a Gap Analysis, and 9-Box inventory analysis were conducted. Line balancing allowed WIP inventory to be eliminated in the production line as well as increased production per labor hour and plant throughput. A model outlining space requirements at various growth levels was created to quantify the space/facility they currently need (based on the new processes/flows) as well as what they will need in the future.

Implementation Impact

  • Improved labor hour/part 11-74%
  • Production per labor hour improved 30%
  • 200% improvement in production per sq ft/ labor hour
  • 3X growth in capacity
  • Production area reduced from 4,200 to 1,600 sq ft

The project demonstrated the ability to improve the level of performance on the plant floor. The specific SKU’s that were rebalanced achieved an 11% to 74% labor hour per part improvement and production per labor hour increased by more than 30%.

By sustaining these efforts and expanding them throughout the facility, we modeled a 200% improvement in production per sq ft per labor hour. In the end, the improvements allowed the company to avoid moving to a larger facility (in essence we freed up capacity in their current facility that they didn’t know they had).

The new plant layout showed a reduction of the Production area from 4,200 sq ft to 1,600 sq ft, allowing 2,600 sq ft for ongoing growth. With continued line balancing and adding minimal equipment (i.e. tables), the client could now handle 3 times the production on 1 shift in 2,500 sq ft.

This was all completed in 30 days.

About The ProAction Group

The ProAction Group helps private equity firms increase investment returns by providing variable operating resources. Pre-acquisition, we quantify risks and opportunities, helping clients refine valuations, avoid bad deals, and prepare post-deal value creation plans. For portfolio companies, we work with management to identify and implement high-impact revenue growth and profit improvement initiatives. We focus on four sectors: consumer products, manufacturing, distribution, and business services. We have experts in marketing, sales, manufacturing, supply chain, and human capital development. We were founded in 1995 and are headquartered in Chicago.

For Further Information

Timothy Van Mieghem tvm@proactiongroup.com 312.371.8323

Case Studies

Increase Throughput

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Metal / Plastics Manufacturer

Background

Sheet metal and plastic molding manufacturing

  • Needed throughput increase
  • Quality suffering
  • Customers threatening to leave

A sheet metal and plastic injection molding manufacturer was missing customer delivery dates and could not keep up with demand. Elongated lead times and defects were testing customer loyalty. They needed stabilization fast or would lose their customer base. Lines were consistently waiting on material and the wide range of builds completed (100 to 225 per week) was not cutting it. Morale suffered with the stress and this was coupled with dissatisfied customers. The second shift focused on cleaning / counting parts and was not able to build sub-assemblies.

The company engaged The ProAction Group to determine the current state of supply availability and drive the internal schedule and external sourcing plan to ensure consistent material flow.

Actions Taken

  • Developed processes
  • Visual aids for material flow
  • “Available to Build” modeling

The ProAction Group worked with the client to develop processes, standard work and tools to manage material flow. Process improvements allowed the second shift to re-focus their efforts on production (rather than sorting / cleaning) and to complete inspections in-line as part of each operation. Visuals around the assembly lines were utilized so employees could see when lines were “open to build” and material was delivered on-time.

Schedule attainment was focused on a weekly basis and then by shift and by day. The use of an “Available to Build” model allowed the client to manage fabricated and sub assembly parts more efficiently.

Implementation Impact

  • 300%+ increase in throughput
  • Builds increased from 100 to 360 per week
  • Defects decreased over 50%
  • On-time delivery issues were addressed
  • Inspection 5 days to 2.5 days

In less than 2 months, we increased throughput by over 300% and eliminated the backlog, correcting on time delivery and slashing quality defects by 50%.

As part of addressing throughput, the process improvements also led to the following:

  • Reduced the time require to inspect finished good from 5 days to 2.5 days
  • Second shift’s main job was cleaning and counting parts but the process improvements and rearrangement of the assembly lines freed up time so they could now also build sub-assemblies
  • Morale on the shop floor increased

About The ProAction Group

The ProAction Group helps private equity firms increase investment returns by providing variable operating resources. Pre-acquisition, we quantify risks and opportunities, helping clients refine valuations, avoid bad deals, and prepare post-deal value creation plans. For portfolio companies, we work with management to identify and implement high-impact revenue growth and profit improvement initiatives. We focus on four sectors: consumer products, manufacturing, distribution, and business services. We have experts in marketing, sales, manufacturing, supply chain, and human capital development. We were founded in 1995 and are headquartered in Chicago.

For Further Information

Timothy Van Mieghem tvm@proactiongroup.com 312.371.8323

Case Studies

Case Study: Unified Processes Free Up Resources

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For our client, putting out fires had become a way of life. Their cycle times were long enough to cause customer complaints and there were multiple culprits, including long lead times, stoppages/bottlenecks during the manufacturing process, and inefficient labor management. These issues were also driving up per unit costs. The result was an operation that was constrained in terms of both physical space and capacity. Two core products manufactured by our client are sold as matched sets, so inefficiencies in the materials sourcing and manufacturing of one product inevitably impacts the other. Resolving the problem meant envisioning the process for both products as one unified, interactive system. The ideal future state would pave the way toward a substantial impact on EBITDA.

Background:

  • Long manufacturing and component lead times
  • Constrained capacity and floor space
  • Underutilized labor

ProAction improved operations flow by realigning relationships:

  • Lean Implementation. Using Value Stream Mapping tools, we were able to identify cycle-times and then dig deeply into processes. We made it our mission to weed out activities that weren’t adding value. As often happens when there are process inefficiencies, we discovered “hidden factories,” workflows that generally developed over time to compensate for existing problems. We also determined where waste and sourcing constraints were impacting the manufacturing process.
  • Layout Changes. We implemented one-piece flow on the manufacturing floor, and Takt-time metrics to ensure that output expectations created a steady rhythm on the line.
  • Possible Futures. Our client wanted a clear path forward, so we identified several potential future state scenarios, including an ideal future state that would increase product velocity, balance line operations, introduce takt and one-piece flow concepts, and reduce labor costs and work in progress.
  • Elbow Room. Our Lean Process evaluation included future state plant layouts for our client’s current facility to accommodate our recommended improvements. This included layouts compatible with expansion and even new facilities.
  • Insourcing/Outsourcing Redistribution. We identified outsourcing opportunities that reduced cost of components, lead times, and in-house component inspections by almost $3,100/unit. We also discovered that insourcing one major component would reduce lead time by over 360 hours.

Actions Taken:

  • Implementation of Lean Manufacturing principles
  • Restructuring of manufacturing lines and materials sourcing
  • Development of an actionable plan to reach the ideal future state

Impact:

  • Manufacturing lead time for both products dropped by 50-66%
  • 12-39% reduction in labor hours ($3,300-$3,800 per unit savings)
  • Elimination of overtime needed to meet current demand
  • Reallocated overtime creates 33% capacity increase
  • More visible, easier to manage “one-piece flow” process
  • 5% to 15% additional savings in receiving, inventory control and shipping
  • Both product areas can now accommodate 100% more assemblies than before within the same footprint

ProAction is an operational consulting firm that works with Private Equity firms to do three things:

  • The first is during due diligence.  We complete a Q of Ops pre-close (similar to a Q of E but with a focus on Operations instead).  We bring a deep and granular operational focus to the diligence team; we evaluate the scalability of an operation and quantify “hidden” opportunities to increase EBITDA and reduce Working Capital beyond management’s plans.
  • The second is post close.  After you acquire a company we act as a resource extension working with your management team to accelerate the path to realizing your investment thesis.  We implement lean manufacturing, global & strategic sourcing, quality systems, sales and operations planning, and inventory planning as needed.
  • Finally, we conduct an operational diligence on “stale” portfolio companies (sort of a sell-side Q of Ops).  The PE firms that hire us to complete this review are most often frustrated with the gap between their expectations and company performance.  In some cases, the PE firm is tired of the additional attention the portfolio company requires.

We focus on three sectors: consumer products, manufacturing, and distribution. We have experts in Lean Manufacturing, Six Sigma, Sales and Operations Planning, Inventory Strategy, Sourcing, Logistics and Human Capital Development. We were founded in 1995 and are headquartered in Chicago.

For Further Information:
Timothy Van Mieghem
tvm@proactiongroup.com
The ProAction Group, LLC
445 North Wells Street Suite 404
Chicago, IL 606546
Tel: (312) 371-8323
www.proactiongroup.com

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