A Tier One Supplier

The situation on arrival

An automotive Tier One supplier, not making money and unable to figure out what’s going wrong.

Revenue was a problem and margins had eroded, both traceable to an inefficient operating system and a lack of operating discipline. The plant was heavy on inventory — much of it unwanted or obsolete. The place looked more like a warehouse than a factory. Development lead times were long, setup times were long, breakdowns were frequent, and sound process knowledge was thin on the ground.

What we did on the floor

Lean thinking, taught practically on the shop floor, so the people doing the work could enact the changes as demonstrated. We had to first bring in a proper understanding about lead times both within and with the customers. This helped eliminate multiple demand changes from the customers within the same day. Manufacturing processes were reorganised to pull and flow, problem solving assumed priority, supply chain principles were redefined, inventory got consumed or modified to requirements where possible. Warehouse appearance changed to a factory look with more empty floorspace than that used for production.

New product development lead-times were long, the processes envisaged were inefficient and expensive, demanding more men and equipment than necessary. Teaching them the lean way of thinking enabled them to develop more efficient processes, eliminating setup changes and setups themselves in many cases, shortening the throughput times. Disciplined material flow sequenced to daily demand improved cash flow and released money pressures. They had come close to achieving working with less than one day’s inventory (as an efficiency measure) when Covid struck and lockdown was announced.

What changed

The warehouse began to look like a factory, running on three days of raw material inventory.

It could have gone below a day. It did not, because of a deliberate trade-off: customers were asking for more safety stock to counter uncertainties at the same time the lean operation was being set up. That is an honest constraint, and worth naming — lean does not run in isolation from what your customers demand of you.

Revenue increased, cash flow improved. More to the point, the work became smooth, systematic and predictable.