Lean Transformation Boosts Manufacturing Efficiency.
The Situation.
A global sports equipment brand had an established supply chain of internal manufacturing plants and third-party suppliers in the Far East. The six internal manufacturing plants had been acquired into the group as part of a previous buy-and-build strategy and, as such, had been operating in silos and at perceived maximum capacity. The group's internal and external supply chains experienced disruption pre- and post-COVID, resulting in season orders being delivered late to the global distribution centres with the subsequent knock effect of sales forecast not being achieved.
The Task.
Financial and supply chain performance from the internal manufacturing plants had become unsustainable in the medium to long term. The Private Equity owners wanted to improve the existing internal manufacturing supply chain. If this were not possible, they would consider transferring the manufacturing operation to third parties in the Far East.
The Actions .
An interim Global Manufacturing Director was appointed to review the internal manufacturing operations. His mission was to design a global strategy that aligned manufacturing operations with the R&D teams to manufacture and supply best-in-class products at the lowest cost and with the shortest lead time. The board approved the manufacturing strategy, which focussed on the following critical pillars;
Quality and focus on Continous Improvement
Issue: To address historically inconsistent quality standards and product recalls, a consolidated best-practice QMS needed to be in operation across all the manufacturing plants. Lean Manufacturing had only been implemented within the UK, which presented an opportunity for broader adoption within the group.
Actions :
The Group defined a Best Practice QMS standard and a road map for its adoption and application within all the internal manufacturing plants.
A lean academy was adopted so that key members of each manufacturing plant could complete Green and Black belt training.
A lean manufacturing roadmap was designed and implemented across all the internal manufacturing plants. It included 5S, operator skill matrix, OEE, Value Stream Mapping, Balanced Scorecard KPIs, and Level 1, 2, and 3 daily “stand-up “ reviews.
Results: Within 12 months, the capacity of all the manufacturing plants increased by 29% due to the adoption of Lean Manufacturing. A new standard manufacturing QMS was implemented to improve overall product quality, resulting in no product recalls being experienced for the 2022 and 2023 seasons.
S&OP and DDMRP
Issue: Historically, the sales and manufacturing teams had not collaborated to align manufacturing capacity with the global sales forecast. This resulted in the previous season's order being delivered late to the Global Distribution centres, resulting in the non-realisation of sales potential.
Actions :
S&OP best practice methodology was adopted across manufacturing plants, planning and sales teams.
DDMRP was successfully piloted and rolled out across all the manufacturing plants, establishing buffers of critical components within each plant.
Results:
S&OP was successfully adopted, which aligned the internal manufacturing capacity with the sales forecast
Critical component availability within the internal plants increased from 88% to 99%, and the lead time was reduced from 150 to 90 days.
The 2022 & 2023 season orders were delivered to the Global Distribution Centres on time.
Make or Buy
Issue: Due to insufficient capability within the internal manufacturing plants, third-party suppliers were utilised, which, in some cases, were more expensive. This resulted in increased COGS, resulting in erosion of margins.
Actions :
Lean Manufacturing programme was launched to remove waste from the current manufacturing processes and increase productivity.
A global procurement focus was launched to review all COGS product costs, utilising the Pareto principle to ensure that all sourced raw materials or components were purchased at the lowest price.
The manufacturing operations in the USA could be centralised and aligned with those of the EU plants.
Results:
Within 12 months, the capacity of all the manufacturing plants increased by 29% due to the adoption of Lean Manufacturing, which then eliminated the need for a third-party contractor.
Overall, improved productivity and a smarter procurement approach reduced COGS costs by €5.5M for the 2023 seasons.
The Results:
Adopting lean manufacturing and a consolidated QMS improved the internal manufacturing plants' performance. The overall lead time was reduced from 150 to 90 days, and the group sales forecasts for the 2022 and 2023 seasons were exceeded as a direct result of the improved availability and quality standards.
The Top Three Lessons Learned.
1) Multicultural employee engagement
Securing the engagement of each manufacturing plant was strictly necessary to ensure the strategy's successful adoption. Taking time to visit, understand and build relationships with the global plant teams was worthwhile and a critical part of the programme.
2) Adoption of data and visual communication
Adopting data ensured that informed decisions could be made which was pertinent when the decision was particularly emotive, for example, relocation of manufacturing operations. Visual communication was also very effective in achieving engagement with the programme, particularly in a multi-cultural context, e.g., Value Stream Mapping and Daily Lean meetings, as opposed to written context.
3) Programme Planning Template and KPIs
The use of standard and detailed programme templates was an excellent methodology for capturing all the critical workstreams and ensuring that they were completed within the required timescales. Such planning tools and KPIs ensured that momentum was maintained and all milestones were achieved. Team calls were also an excellent method for engaging with the global teams while fostering a Global team spirit in delivering the project.