Profitability Boost through Peer Best Practices
A few plants were performing adequately in profitability, but most were struggling. Each plant performed some operational functions with great expertise and others areas needed improvement. People have a tendency to think they have done the best they can.
Lobbied the President for opportunity to bring all Plant Managers together each quarter at a different plant location to discuss operational improvements. Gained approval, started with the best plant locations, and moved through all locations of the company.
Implemented program to share best practices between plants. Created BOB Program (Best Of Best), wherein each plant had something to share with the others and, therefore, became more receptive to changing their own areas in need of improvement.
All plants became more profitable on bottom-line performance, improving between 10-25%. Operations at every plant became stronger, sharing knowledge and best practices and learning from one another’s expertise. The management team learned that peer interaction between locations can produce impressive results.
Critical Turnaround of Failing Operation
Plant location was losing $1 million per year in its operation. This was the company’s largest location in size and dollar volume. Many past Directors had attempted to turn the location around and failed. The plant had a bad reputation for cooperation.
Transferred to the location as a promotion and began the process of assessing all areas of operation: production efficiency, safety, quality, material usage, staffing, etc. Adopted an attitude of honesty to the people and the plant. Explain areas in which they were performing well and areas that needed immediate improvement. Met with the plant on a regular basis to keep open communication. Campaigned through the entire process with a "whatever it takes" attitude.
Within two years, reduced direct labor by 30%, reduced indirect labor by 10%, turned bottom line profit into a 400% turnaround to $3 million, and reduced accidents by 50%. The plant received the President’s Award for Overall Safety Program.
Leveraging Internal Resources for Safety & Cost Improvements
Costs were to high in the distribution process moving finished goods to the trailers. Injuries were also increasing at a 25% rate in the distribution center. The existing plan to implement improvements to the distribution center was cost prohibitive in terms of materials and outside labor/contractors.
Researched both inside and outside the company for the best economic solution available. Resolved the hardware material situation with purchase of a less than two-year-old system from Pets.com for 10¢ on the dollar. Utilized current Maintenance and IS staffs to implement/install the plan/design in-house.
Created an 18-month payback on a $2 million project. Injuries were reduced in the distribution center by 50% in the first year.
Standardized Procedures Improve Maintenance & Training
New maintenance mechanics were brought in with very little or no knowledge of current plant equipment. The company’s equipment was unique to the industry. It was taking too long to repair and perform preventative maintenance procedures on equipment.
Worked with Maintenance and Engineering to determine the best way to accelerate the learning curve. Identified standardized repair and PM procedures and established Maintenance & Order Procedures (MOP) program in which a pictorial, systematic procure printed out with each work order.
Repairs improved up to 50% and maintenance support staff needed 25% less training.
Production Revamp Delivers One-Year ROI
Production in the assembly portion was dropping 50% on certain new products. In addition, the physical strain increased due to product weight changes. No existing equipment was available to address the circumstances presented, and the company was resistant to change.
Searched for an equipment manufacturer to partner in development of increased throughput of product while developing ergonomic solutions.
Within 18 months, the new equipment and concept proved a 20% overall increase in unit cost savings, delivering a 12-month ROI, a $400,000 single plant annual labor savings. Engineering changed their way of looking at current situations and developing innovative approaches.
Strategic Partnership Prompts Lucrative Sales
Pillowtex was struggling to sell US-made goods in Canada. Production and transportation were possible, but Canadian consumers would buy Canadian goods before they would buy US-made goods. It was not feasible to build a new plant location in Canada at the time.
Identified and partnered with a Canadian firm with Sales/Marketing to produce goods in a Canadian plant under Pillowtex’s labels. The strategic alliance created a win-win situation, and sales increased 5%, totaling $15 million.
Restructured Bonus Program Enhances Performance
Plant locations had an outdated bonus program and did not fit current performance standards expected out of the manufacturing locations. Some locations were making great bonuses, but putting out sub-par products.
Restructured the bonus program to fit current climate of metric measurements and created accountability through all processes and functional areas of the plant.
All plants increased their bonuses by $200,000 and in return saved the company $1.1 million the first year through performance enhancement. The management was able to figure out how to make this a win-win proposition.
Startup Success Boosts Regional Sales
American Fiber Industries needed to expand its business to handle Midwest & East Coast sales. The company was looking outside for help to handle identification of a new plant location.
As East Coast Operations Manager, volunteered to direct the full implementation of the new location, reporting directly to the President/Owner. Identified 250,000 sq. ft. facility. Reported directly to the President/CEO with complete responsibility for P&L of the division setup, hiring and training 300 employees, and establishing efficient two-shift operation for $30 million facility.
Operation was set up and running within six months and bottom line profit was 15% of sales within two years.
Safety Initiatives Diminish Workers' Comp Costs
Workers’ Compensation costs were exceeding $1 million annually at the location and accidents were increasing 50%. California was not manufacturing-friendly when it came to labor laws, and the state’s Workers’ Comp costs were climbing.
Created a position of Safety Coordinator to follow each case with the insurance company's Case Manager. Worked with the plant on manager and supervisor training programs and developed several programs, including a Job Safety Analysis for each job (fulfilling the state’s SB198 Senate Bill), wherein all equipment prior to installation and startup went through a safety/operator walkthrough and analysis.
Within 12 months, Workers’ Comp costs were reduced by 70% and accidents were down 50%, saving the company $700,000 to the bottom line. Safety was a good indicator of facility health: achieving these results had a positive effect on other areas.
Performance Bolstered through Review System Revamp
Employee reviews were being conducted annually, and primarily reflected what the worker had done within the 30 days prior to the review. It had always been done this way.
Created a performance report that each manager and supervisor could make quick reference to each month. The monthly reports allowed quick input of positive or negative remarks, so when it came to review time, they had an entire 12 months of reference in which to review employees.
The new process made reviews much more comprehensive, and also created a continuous performance out of the employees throughout the year, knowing that it was 12 months of review not only 30 days. Providing these tools to the managers and supervisors made them much more effective in performing their jobs, as well.
Streamlining Product Development Accelerates Time-to-Market
New products were rolling out with problems in production and quality. It took 30+ days to get new product to market. So many areas of the company had a hand in the process, from marketing/design through shipping to customer, a consolidated effort was necessary to stem problems.
Developed a steering committee to meet on a bi-monthly basis to discuss current issues and attempt to develop a better way to move new concept product through the departments. Within three months, the team developed a framework for a new program called the NPI system. By using this system, problems were communicated immediately and worked through quickly.
New products now took only 3-5 days to get to market. This was clearly an evolving process and enhancements were made to the system, like pre-testing on component materials, allowing the new product process to move much quicker. The steering committee agreed to meet each quarter to discuss improvements and enhancements.
Inventory Management Benefits Accuracy & Cost
The facility could not locate finished goods on demand and had to take four physical inventories per year. Most personnel held the attitude that “it has always been done this way.”
Assembled a cross-functional team to discuss possible improvements, including representatives from IS, Engineering, Distribution, and Maintenance.
Within six months, established procedures for a Radio Frequency (RF) System. Cycle counts were conducted. Inventory was only taken once a year to satisfy the outside auditors. System was 98% accurate and saved $40,000 annually in inventory labor, not to mention improving on-time delivery with improved location of finished goods.
|