A European based materials science company had high raw material and production costs. In addition, stock-outs were frequent. The root cause was determined to be inadequate production planning and scheduling processes that resulted in frequent process changeovers, excessive amounts of equipment downtime and poor asset utilization.
A two pronged solution was adopted that allows the company to effectively plan and schedule all production. Major products, those that account for the majority of the company's sales, are now planned based on a master production schedule. Minor products, those that are ordered infrequently and in small volumes, are managed using a re-order point, re-order quantity system.
- Through improved planning and scheduling, the company was able to significantly reduce equipment downtime and changeovers, providing the needed capacity with no capital investment.
- Operations and production costs were dramatically reduced due to an 80% reduction in overtime, a 90% reduction in expedited orders as well as significant reductions in product obsolescence, substitution and reformulation.
- In addition, stock outs were reduced by over 90% and inventory turns were increased by over 30%.