Case Study I
An adhesives and sealants company was interested in lowering its manufacturing and supply chain costs. Orr & Boss conducted a two day assessment of its factory. One of the key findings was the best way to immediately improve its cost position would be to focus on material yield improvement. Orr & Boss was able to point out several opportunities to improve yield performance. Most of these related to the management and use of wash water and changeover improvements. Also, we made several recommendations to the filling line improvements.
Results: The company improved yield performance by 1.5% which increased its overall sales margin by 0.5%.
Case Study II
Orr & Boss conducted a worldwide, cooperative benchmarking study related to manufacturing and supply chain issues for the market leaders of a category of products sold into the automotive industry. The suppliers that participated in the benchmarking assignment were each interested in understanding how their costs and profits compared to the industry average as well as the best-in-class performers. Specific aspects of the companies’ operations were benchmarked for facilities located in North America, Latin America, Western Europe and regions within Asia Pacific (primarily China).
Results: The in-depth analysis, which factored in comparisons with best practices and opportunities for lean manufacturing techniques, identified total annual savings of $6 million dollars. A detailed actions plan was developed to obtain those savings. Orr & Boss led the implementation phase of the assignment for our client. We ended up exceeding the annual savings estimate by 20% through implementing lean manufacturing techniques, reengineering inefficient business processes, rationalizing products and raw materials, and reducing waste streams.
Two Perspectives, Working Towards One Goal
The Orr & Boss approach is to solve problems jointly with our clients, not simply for them. This collaborative effort leverages a client’s understanding of its own business with our objective view and expertise in problem solving.
Case Study III
An adhesive and sealant manufacturer had grown by acquisition. The company had several plants in the same region of the country and was in a position where it needed to cut its costs. Orr & Boss conducted an analysis of its manufacturing and supply chain operations and identified the cost savings that the company could expect to realize as a result of a plant consolidation. Orr & Boss also identified the Capital Expenses, One-Time Costs or expenses, and Double Operating Costs associated with consolidating the plants. After making our recommendation, Orr & Boss managed the project to shutdown the plant and consolidate production in another plants.
Results: The plant consolidation effort resulted in a 2% margin improvement for our client. The project results in a one year payback.
Case Study IV
Production costs for a mid-sized resin manufacturer were well above industry norms and significantly above best-in-class producers. The competitive environment was becoming increasingly worrisome for the company, especially in light of the influx of less expensive Asian imports. Productivity at the company’s facilities was low and despite very competitive labor rates, unit costs were high. A comprehensive analysis of all facilities revealed poor production layout, inefficient business processes, inadequate equipment, and improper equipment utilization. Using our manufacturing expertise, Orr & Boss assisted the client in making major quality and efficiency improvements to manufacturing plants. A combination of physical redesign of process lanes, production redistribution, reengineering of critical processes and minimal amounts of capital investment were employed to maximize efficiencies and utilization.
Results: The changes to the plant layout and processes resulted in a 50% reduction in production cycle time. The improved efficiencies allowed the company to maintain its current level of production with a smaller workforce, resulting in a 15% reduction in production costs on a unit basis.
Case Study V
Planning & Scheduling
A European based coatings 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.
Results: 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%.
Case Study VI
A regional coatings company, with operations in Asia Pacific, Europe, and the Americas, was struggling with profitability and competitiveness. The company was being forced into making smaller and smaller batches of more customized products. This led to higher manufacturing costs and lower profitability. Orr & Boss developed a costing system for the client that took into account labor, material efficiency, and changeover costs associated with its products. This information was then fed into its pricing strategy. As expected, there were a large number of products that were unprofitable when the true cost were known. Conversely there were a few number of products that were extremely profitable. With this information, the company was able to raise prices on some of its smaller moving products that were unprofitable and also concentrate its sales and marketing effort on its core products that drive its profitability.
Results: The results were that the company was able to significantly improve their profitability. Some of the profitability improvement was generated through increasing prices on slower moving customized products but much of the productivity increase was generated by focusing its efforts on its high moving core products where the company had a competitive advantage.
Case Study VII
Product Line Rationalization
A mid-sized European coatings producer was experiencing flat sales and lower than average profitability. Relatively few products accounted for the vast majority of the company’s sales and profitability. The end result was excessive finished goods and raw material inventory costs, increased production complexity, poor product differentiation and customer confusion. Orr & Boss conducted a detailed analysis of its product line and recommended a 40% reduction in the number of SKUs that the company produces.
Results: As a result of our analytical based approach to product line rationalization, the number of active SKUs in the product line was dramatically reduced. Those products eliminated represented only a small fraction of total company sales. In addition, sales improved on its core products. Over a two-year period, the effects were profound: The increased focus on the key products valued by customers allowed the company to obtain an 8% increase in total sales and record company profit. Furthermore, there was an immediate impact of a 10% reduction in manufacturing costs and a 40% reduction in inventory.