Case Study: Engineering Company
Client Requirement
This engineering company is a specialist valve manufacturer. They are market leaders because of their technical excellence. They had a reasonably strong order book, but were potentially prejudicing their position in the market place through failures to deliver, and their extended lead times. They also had high inventory levels. Their customer service level was around 60%, and they had around 3 Inventory turns per annum.
Solution proposed and delivered
Richard Watkins identified a Project Leader who was appointed Operations Director. A small team was established to bring about the changes. He identified a need to get a number of people to understand how to operate an effective Planning and Control process. A core of around 22 people were identified to go through a series of courses, which were carried out over a two month period. The local Business Link agreed to assist with 40% of the cost of this Education. This education helped to establish an effective planning process. Lead times were slashed from around 8 weeks in total to around a week. Data accuracy was substantially improved. Discipline was introduced around working to a formal computer generated Work-to-List.
The reduction in lead times resulted in a radical reduction in their purchasing commitments for a month, with the positive benefit on their cash flow.
Cost/Benefit
- The cost to this company was around £ 10,000.
- The result was improved customer service, less work-in-process, and a dramatic fall in inventory – 15%, within two months of the completion of the training exercise.