Flow Consulting Assessment and Intervention Case Study
Flow Consulting performed an operations assessment for a private equity firm at a manufacturer that supplies key components for the trucking and fire truck industry. The private equity firm asked for both an assessment and a project plan with payback for improving performance in areas identified for improvement. The operations assessment was performed over five days, by a two-person team.
During the assessment phase, Flow Consulting determined that there was an opportunity to improve labor productivity by as much as 50% across the entire plant if the client implemented the key aspects of LeanSigma manufacturing. Additionally, Flow identified significant opportunities to improve the manufacturer’s purchasing processes. Flow Consulting also provided the private equity firm with a one-year intervention plan to help them target the most significant opportunities for improvement.
After the private equity firm completed the acquisition, the newly appointed CEO of the acquired company immediately engaged Flow Consulting to implement LeanSigma manufacturing in the two highest volume product lines, and coach the procurement team in best practices for Lean to improve cash flow in the procurement arena. Meanwhile, the CEO focused on developing relationships with key customers and improving the sales of the firm, knowing that Flow Consulting was focused on the internal aspects of supplying product to customers.
A two-person team worked with the operations team to collect the appropriate data and then they facilitated a lean manufacturing kaizen in the highest volume product line. This kaizen produced the following results:
| Description - Project #1 |
Before |
After |
| Capacity |
65/shift |
90+/shift |
| Resources |
40
employees |
38
employees |
| Mfg cycle time for basic product |
5
days |
4 hours |
| |
|
|
Once the initial Lean implementation was complete, the Flow team transitioned from an implementation role to a coaching role. They coached the client team through the Lean implementation in the second product line. The client team performed all data collection, data analysis, and process design functions. The Flow team facilitated this process and challenged the team to develop a manufacturing process that was as streamlined as possible. The client team achieved impressive results as outlined below.
| Description |
Before |
After |
| Capacity – Product A |
30/shift |
40/shift |
| Capacity – Product B |
20/shift |
25/shift |
| Resources |
18 employees |
18 employees |
| Mfg cycle time for basic products |
1 day |
2 hours |
In addition to the immediate impact of the implementations, these kaizens resulted in a checklist of more than 100 action items to drive continually improved flow, improved quality, and better control of incoming materials. The production process improved so dramatically that the operators are able to occasionally take one hour at the end of the shift to address any open action items as a team, resulting in continued improvements.
One team member also worked with the Purchasing Manager and CFO to begin implementing Best Practices for Lean Procurement with the following results:
- Replenishment Times were obtained to better estimate inventory needs (kanbans).
- It was mistakenly reported to the CEO that AP balance was about 30 days. Flow’s investigations verified that AP was actually at only seven days and reinforced the team’s belief that they could achieve a 45-day balance. Within months, the team achieved 30 days ($600k improvement) with goals of reaching 45 days, then 60 days.
- Detailed commodity plans were created with Engineering and Procurement to ensure that all employees understood the strategy for each vendor.
- A two -day training seminar, “Negotiations for the Buying Team,” was held for engineering, procurement and key shop personnel to reinforce the importance of controlling information flow and speaking as one team when interfacing with suppliers
Based upon the tremendous success of the projects executed in the first year that they worked with Flow Consulting, the CEO of the firm challenged Flow Consulting to help him transform his organiztional structure to align with Lean Six Sigma as well as transfer knowledge to his employees and train them in the concepts of Lean Six Sigma while tackling significant business issues through process improvement projects. He asked Flow Consulting to provide input into the organizational structure, provide LSS training and facilitate specific project improvements as follows:
- The third major manufacturing line in the shop is being completely redesigned by the employees utilizing the lean skills being taught and their prior experience in the two previous manufacturing Kaizens.
- All hand-written labels are being replaced with computer generated labels; saving time and improving quality.
- The Receiving to AP process is being streamlined.
- A team has achieved a 90% reduction in stock-out and expedite activities.
- A team is using Lean Six Sigma methodology to ensure quality and capacity goals of a new paint line being installed in the facility.
- Flow Consulting also facilitated one of the process improvement teams through an Administrative Kaizen. Phase 1 of the kazien focused on the identification and prioritization of improvement projects. Phase 2 of the kaizen focused on brainstorming and action plans to implement solutions to issues. The kaizen team has seen a significant improvement in the accuracy of the paperwork that is provided to manufacturing and is in the process of implementing controls to quantify the reduction in errors and ensure that quality continues to improve.
- Flow Consulting facilitated the client through a process to organize the manufacturing team based upon value streams (product families). The organization was transformed into two teams that were completely responsible for the entire value stream of their respective products. The next step under consideration will be to align the internal sales organization based upon these same value streams, so that each team would control their success from when the customer calls to order the product until the product is delivered to the customer.
The client has identified a Black Belt candidate who has now transitioned to having full responsibility for process improvements and will only use Flow Consulting for special needs like utilizing new tools and techniques that they have not used previously, or tackling issues that their internal resources have not been able to solve. In 18 months Flow Consulting has transitioned from being the onsite consultant (10 – 15 days per month) to being a coach and resource (6-12 days every 6 months).
Over the last 18 months the client has realized a 20% improvement in profitability. They attribute a significant portion of this improvement to the impact that Flow Consulting has had on their team’s performance. The client feels that their team is positioned to achieve continued growth in their profit margins while also increasing capacity and revenue.
The private equity firm has used Flow Consulting to assess three subsequent acquisitions and Flow Consulting is actively involved in improving one of those acquisitions.
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