reducing costs globally
A $3.6B leading manufacturer of industrial controls in Shanghai, China supplies devices for monitoring and automating manufacturing processes to the chemical, oil and gas, paper, food, pharmaceutical, mining, electric, water, and scientific industries.
A corporate mandate to consolidate global manufacturing, engineering and integration services revealed that integration services accounted for a significant portion of what amounted to $300M in project operations spend with labor costs accounting for most of the integration services expenditure. The overarching challenge was to evaluate, measure and improve the integration process and develop a pilot program that would inform the global standard to be implemented across six countries in North America, APAC and EMEA.
Leveraged the DMAIC process and Lean methodologies to identify issues around high inventory costs, space constraints and cost compression demands by customers. Two part solution featured:
The development of a cabinet integration manufacturing process that entailed:
• Conveyance system for easy transport of cabinets to designated work content areas
• Establishing a TAKT time and One Piece Flow
• Implementing Standardized Work procedures
• Installing Kanban / Pull Systems
• Creating a Quality at Source Inspection system
• 5S & TPM Maintenance program
• Balancing lines by building cross trained teams
Fundamental to the success of the above was the creation of a document control center and a production planning and control office which included:
• SIOP (Scheduling, Inventory, Operations, Planning)
• Documentation flow aligned to manufacturing flow
• The development of space planning software to facilitate FAT activities and optimize the efficiency of space used. This software addressed flexibility and scalability concerns and facilitated reporting across manufacturing operations.
• The implementation of the Automated Drawing Generator which coordinated the activities of over 100 project managers 60 countries and interfaced with Auto CAD to streamline the design process and eliminate re-work resulting from lags in drafting time
The Shanghai-based pilot has produced a blueprint for reducing 80 integration services vendors down to 6 globally as well as reducing inventory levels by $2 million in Shanghai. This pilot will be adopted by the global network of cabinet integration centers as it has:
• Increased the cabinet production capacity by 100%, now capable of producing 5000+ cabinets a year (previous capacity: 2300)
• Improved the footprint requirement for staging, FAT testing and customer acceptance
• Reduced the cycle time required to produce a cabinet by 50% In addition, the space-planning tool increased efficiency by 120% and the Automated Drawing Generator is able to produce CAD renderings that would normally require two weeks of a draftsman now in just 10 minutes.
re-shoring, margin growth
A $24M New York-based manufacturer of hardened pressure sensors supplies devices for monitoring processes to the chemical, oil and gas, mining, electric, water, and scientific industries.
The independent company was acquired by a larger firm in a similar industry. The parent company moved most of the production to an overseas facility in Malaysia. The firm's main product is under competitive pricing pressure and the firm has had significant difficulty with customer satisfaction, regularly missing deliveries and continuing to push out lead times. At the time of engagement, lead-time was at 18 weeks.
Engaged workforce to learn challenges with the process, supply chain, and administrative procedures. Worked with the team to create new work cells and new processes, eliminating waste and surfacing new ideas daily. Worked with the supply chain to improve delivery lead-times, delivery consistency, and material quality. Designed and built new automated calibration station bringing together many stakeholders from manufacturing, engineering, sales, and suppliers of parts to the calibration station.
Through the course of the project –
50% of production transferred from Malaysia to US
lead time was reduced to 6 weeks from 18 weeks
90% of production transferred from Malaysia to US
lead time cut to 2 weeks
lead-time cut to 72 hours, 95% of production transferred from Malaysia to US
• The firm increased sales by 530%
• Customer satisfaction is at its all time high
A California-based manufacturer owns approximately 80% of the market share in the Safety/Emergency Shutdown Systems sector of the process control and automation industry
High failure rate on flagship product, a fault tolerant controller based on a Triple-Modular Redundant architecture.
Employed Six Sigma based methods to investigate issues surrounding the problematic assembly process and discovered workmanship and component specification issues. Root cause analysis also revealed that the rigors of product testing were inducing failures as a result of excessive stress inflicted on the hardware.
Control measures to remedy the failure rate related causes included:
• Standardization of the assembly operators and test engineers training program
• Addressing component design issues resulting from lower specification tolerances than what was required
• The development and implementation of a data reporting system anchored by a complex algorithm designed to identify trends in the failure modes of the assembly process
• Lead times were reduced from 16 weeks to 6 weeks.
• 12% reduction in cost savings yielded an annual savings of $18M
• 57% decrease in testing cycle time
• 20% overall cycle time reduction
• product flow doubled through final assembly phase resulting in a 25% increase in output with only 10% increase in resources
• This initiative enabled the company to achieve a 45% increase in sales, 20% of which was gained through an increase in efficiency alone