The business issue:
The company in question was facing a number of important issues that resulted in the need to make significant improvements in cost management and control.
Emerging Eastern European competitors were entering the market place and had the ability to provide similar goods at a lower price. This gave a number of options; to move production to a country with a operating environment similar to Eastern Europe allowing the company to benefit from the same cost savings in manpower and materials; or to significantly increase productivity on existing sites. The company chose the latter option.
Another issue impacting the company was the introduction of 'low cost' brands by a number of retailers. This increased the need for competitive pricing even though the company's products were viewed as a higher quality alternative.
As a direct result of these significant pressures a clear 'burning platform' existed and the company decided to roll out a massive re-design programme across multiple factories focusing on productivity and cost control.
The company's approach:
The company decided to set up a number of projects across multiple sites; these projects were internally led but were supported by several external companies. Magma Projects was chosen to support a critical site for one of these projects. Following an initial analysis where quantifiable savings and opportunities were identified and agreed, a 12 months project (implementation phase) was designed. As with all Magma projects, a structure ensuring a high level of ownership by the customer was designed and Magma Projects worked hand in hand with the internal business development unit to drive the changes. They also shared the risk in delivering the improvements.
The project focused on two main themes: Re-organisation (Structural) and Continuous Improvement (Shop floor controls and behaviours). Magma Projects lead the implementation of new tools and behaviours at all levels within the organisation. Shop floor control was radically improved by upgrading production planning and installing short interval controls (SIC) which enabled variances to plan to be analysed and acted upon.
Operators and supervisors were trained to carry out root cause analysis when they identified variances to plan and were empowered to make changes. OEE (Overall Equipment Effectiveness) was installed as a key performance indicator for plant efficiency and productivity measures were developed for measuring people effectiveness. These changes were supported day to day by the project team through constant follow-up, support and coaching - all with the aim of delivering the project benefits and targets on time and in full.
Improvements were measured through new and existing key performance indicators against a robustly agreed base (starting point). OEE increased by more than 25% across all lines which combined with some labour re-allocation directly resulted in an increase in productivity of 44% from project inception. Both of these improvements lead to obvious savings on the bottom line.
Magma Projects work focuses on both the hard and soft results within project environments. Hard results are the initial goals, however to ensure the sustainability of results Magma Projects focuses on behavioural change. The company now sees significant increases in ownership for performance at all levels, particularly at the shop floor and within the supervisor populations. This change in attitudes begins to build the continuous improvement culture that the company requires to respond to future challenges.
Following this successful project Magma Projects were asked to spend some time at another production facility and do a 5 week pilot. Another external consultancy had been working there for 12 months and had failed to deliver any major improvements in productivity. Magma Projects worked for 5 weeks on one selected line where they installed short interval controls and basic problem solving at operator level. Within 5 weeks OEE had doubled.