Company
A global manufacturer that produces commercial vehicle parts.
Challenge
The company faced major issues, including underperformance across multiple production facilities, and excessive and misaligned product inventory. Additionally, the company wanted to relocate but needed a sufficient business case to do so.
Support
Crowe performance improvement specialists developed a comprehensive solution that addressed all aspects of the company’s underperformance. Across multiple engagements, our team relied on its extensive experience in operational efficiency improvement, demand planning, inventory management, working capital reduction, footprint consolidation, relocation analysis, and freight and warehouse cost reduction.
Solution
Our services helped the company to see an annualized EBITDA impact of more than $15 million, which resulted from operational improvements across four production facilities. The company also reduced net working capital and annualized carrying cost through inventory optimization and implementation of inventory controls. Additionally, the team evaluated the company’s existing business case for relocation and recommended consideration of an alternative facility location.
Challenge details
The company experienced operational underperformance across multiple production facilities, which led to below-industry-standard product margins and net profit levels. Missed production schedules also caused unacceptable customer delivery performance.
The company also maintained excessive and misaligned product inventory at nearly all locations. And because this happened during a rapid rise in interest rates, the financial carrying costs strongly affected cash flow.
While dealing with performance issues, the company also wanted to relocate its high-volume production to an international location but lacked a sufficient business case to justify the capital expense.
Solution snapshot
The Crowe team helped this company improve plant-level operating performance and throughput by implementing operational excellence principles and lean manufacturing best practices, including line balancing, cycle time and downtime reduction, prestaging of material, Kanban techniques, and optimal production sequencing.
Our team also implemented foundational standard work related to planning, inventory control, and production scheduling to reduce excess inventory levels. While we were implementing parameters based on enterprise resource planning to improve buyer behavior monitoring, our team also developed comprehensive dashboards to monitor ongoing inventory metrics.
Finally, our team analyzed the business case for relocation, highlighting numerous critical oversights and omissions. We identified and rectified incorrect operational and financial assumptions so the company could have a clear view of the benefits and drawbacks to relocation.
Transformative initiatives in performance improvement
See how our team can help you maximize the profitability and performance of your business.
Takeaways
With Crowe guidance, the client also achieved the following results:
- Increase in operational efficiency
- Increase in throughput
- Increase in units per labor hour in a constrained subassembly production cell
- Millions of dollars of annualized savings from eliminating contract labor resources in one facility
Improving business performance requires investing in and implementing the right strategies, technologies, and processes throughout your company at the right time. Contact our team to see how we can help with your performance improvement needs.
people