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Make Your Processes Work Again

Organizations of all types and sizes execute work-through processes. Whether simple or complex, processes degrade in effectiveness over time. What was once fit for purpose becomes ineffective, inefficient, and a barrier to success. Needs change and customers, employees, and suppliers require better ways of doing things. Growth itself drives a need for change. When an organization expands by 20% or more, nearly every process breaks and needs replacement or overhaul. The Kaizen Blitz may be your answer to rapidly improve your business processes.

What Is A Kaizen Blitz? It’s A Fast And Powerful Solution

A powerful tool-based method for making processes work again is the kaizen blitz. The name comes from Kaizen, which is Japanese for “to make better” and Blitz, which is German for “Lightening fast.” Together they make for a series of fast steps for driving improvement based on customer defined success. Kaizen Blitz is a team-based, rapid, repeatable problem solving and implementation methodology. Each successive short cycle of change brings you closer to the optimal state.

Kaizen Blitz Phases

The kaizen blitz is split into 3 phases, the length of which is determined by the complexity of the challenge.

• Preparation

• Kaizen Event

• Implementation

Success Factors

A kaizen blitz requires at least 4 elements for success:

• An issue that people care about

• Disciplined adherence to the 3 phases

• A team that is focused and prepared

• Leadership support

Kaizen Blitz Benefits

The following are some of the key benefits you will obtain when you implement a Kaizen Bliz:

• Challenges the organization to stretch itself to achieve dramatic improvements

• Empowers cross functional teams to identify creative improvements and solutions and to implement quickly

• Uses simple tools and processes to evaluate work activities to identify and eliminate non value added work

• Bases improvements on data and analysis

• Emphasizes quick decision making by informed leaders

• Delivers quantitative Improvements measured in terms of increased revenue, decreased costs, improved utilization, improved cycle times, and improved customer service

• Delivers qualitative Improvements such as increased employee/customer satisfaction, service quality, process robustness, and a culture of continuous improvement

Case Studies

Business Issue

$10B integrated Energy Company that provides power generation and services for industrial and retail residential consumers is growing by rapid acquisition and unable to close their books in a timely manner impacting financial reporting speed and accuracy and effectiveness of key processes.

Approach Used

Five-day Kaizen event spanning baseline of process, identification of improvements, implementation of quick hits and plan for more significant change.

Results

Within 90 days, the team stabilized the process and reduced the peaks associated with new acquisitions. Flow provided Lean Six Sigma training to key stakeholders. The financial closing process was improved by 300% and resources were freed up to drive a variety of key improvements.

Business Issue

A producer of rubber products for the O.E.M. marketplace needs to reduce quality-related customer complaints significantly within year.

Approach Used

Four-day Kaizen to analyze data and identify the root causes of the quality-related customer complaints followed by 90-day implementation.

Results

Defects were reduced by more than 48 percent by the team within the 90-day implementation window.

A Simple Way to Increase Profits (Key Concepts)

Setup is the activity that takes place between your process steps, that white space between the blocks in your process map, the completely non-productive time while changing a production line from one product to another. So, should Setup Reduction be important to you (and your company)? Calculate the burn-rate including overhead for your operations in dollars per minute. Do those expenses stop when your production stops?:

• Employees clock out and patiently wait for the line to start again

• Utilities and lights are shut down along with the line

• Air conditioners, fans or heaters turn off

• Your mortgage or lease payments stop also

Of course, they don’t. Not only do your expenses not stop, but the lost profit on the products you could be building is lost also. If you could magically, instantaneously convert your production line(s) from product A to product B, you would gain back the money tied to those expenses and reap the profits from the added production. Setup reduction techniques enable this line transformation to take place at minimal impact to your operations.

Key Concepts Of Setup Reduction

Setup reduction is also known within the lean manufacturing body of knowledge as Single Minute Exchange of Dies or SMED for short. The moniker comes from the work of Shingo at Toyota who was first challenged to get to changeover times on the order of hours, then tens of minutes, and finally, the goal of a single minute. There are dozens of books on the subject but we boil the process into its key steps for you here.

Turn Internal To External

Look at all the time and activities you perform between stopping production of product A until the first good delivery of product B. This time is referred to as internal time because it is inside the shutdown of your line. Many of those activities and all the waiting can be accomplished while the production line is still running. Why wait until production stops to go get your tools or the next set of fixtures. Staging the required parts, tools, and people adjacent to the line as the last parts are being made moves those process steps from internal steps to external steps.

External Time is all the time outside of the line shut down. In other words, while the line is running production. Basically, you have all the time from the start of a production run to the end of a production run to clean up from the last changeover and to set up for the next changeover. To use a common analogy, how often do you see a pit crew at any NASCAR or Indy race start getting ready after the car has pulled off the race course and into the pits. Once that car stops, a well-trained team hurdles the wall, armed with all parts and tools required to complete their job. Once they are done, the driver can speed back into the race while the pit crew cleans up their tools, discards old tires, and prepares for the next pit stop.

Turn Serial To Parallel

If we continue to focus on the internal time that remains, do we accomplish each step of the changeover in sequence one after the other? If we examine the changeover steps, we often find that many tasks can be accomplished while other team members accomplish unrelated tasks. Not all activities can be done in parallel but many can. Some things are obvious but many are not. It takes some experience and process analysis to know with certainty, but even a novice can take steps in the right direction. More complex setup reductions with multiple team members require detailed “choreography” to gain the most efficient (and shortest) internal time.

If we go back to our race analogy, we send enough team members over the wall to change each tire, fill the fuel tank, catch and remove the spent tires, clean the grill, etc, in a finely tuned “dance.”

Use Clever Tools

Once we have moved as much of the work to external time, and paralleled as much of the remaining internal time, there still remains many setup reduction tools and tricks within the mechanics of the changeover. Tool carts, check sheets, alignment aids, and quick-release clamps are but a few ways to speed up the internal activities. The specifics of your operation will determine exactly which tools are needed. An experienced setup reduction practitioner will have his own “bag of tricks.” If you are new to the game and need help, find someone who has done a few setup reduction events. Their outsider perspectives and experiences from across many setup reductions will prove invaluable.

To complete the race picture, the pit crew uses single-pump jacks or even air lifts in F1 racing. The lugs are already attached to the wheel. The fuel dispenser has an insert release nozzle to begin the flow.

And the final bit is they measure their performance and practice with the goal of a flawless pit stop.

Your operations may not need all the dazzle of a highly-tuned pit crew but just as you can’t win a race sitting in the pits, your company cannot make money while production lines sit “in the pits” either.

Benefits

Our experience at Flow Consulting is that most companies underestimate the gains to be made in setup reduction activities. If you spend a few minutes thinking of what an extra shift of production each week would do for your company financially, you are heading in the right direction. You will find setup reduction will deliver multiple gains.

• Increased production time converts directly to higher capacity without increasing direct labor

• Short setup times make changeovers from one product to the next less costly and allows for shorter production runs without added costs, and ultimately with less inventory in your ‘work in progress,’ or WIP

• Focused setup reduction typically improves labor efficiency since it creates a defined sequence of activities including pre- and post-work to be accomplished while the production line is still in operation.

If your answer to the extra shift question is the extra capacity doesn’t gain you anything, look for other areas to improve — such as sales.

Case Studies

Business Issue

A U.S. Pharmaceutical Company’s higher demand and product mix were causing our client’s plant to fall behind in distribution-center stock levels, revenue, and profit contributions. High-speed tablet manufacturing equipment ran in large batch sizes to maximize tablet count output but were not able to keep up with all products required within the month. Production runs range from 6 to 240 hours depending on product and demand. Changeover times averaged 33 hours.

Approach Taken

A setup reduction, fast changeover kaizen event was run with members of production, planning, quality, and maintenance.

Results

The 33-hour average changeover was reduced to 6 hours with consistently demonstrated results just over 5 hours. The added capacity provided an extra 3 billion tablets per year and a profit contribution of more than $20 million from this one plant.

The team mapped the changeover process and converted from a single operator approach to a 4 person changeover team. The work was broken into 4 standard work packages with roughly equal work content. Variation from operator to operator was accounted for by helping whatever operator was behind once one’s own package was complete. A tool cart was developed to hold needed tools and supplies and a pre-stop checklist was created and used to prep the tool cart prior to each changeover. The team consisted of two senior-level operators and two low-skill operators. The setup reduction team was identified as an entry-level training position for new hires moving into the tablet manufacturing operations. Operators gained vital experience breaking down and cleaning the equipment prior to getting involved in the higher responsibility production roles.

Business Issue

The fourth largest industrial coatings manufacturer recognized its need to reduce long lead times on products to close the widening gap between themselves and its three front runners. Production schedules and lead times were severely affected by slow production line changeovers.

Approach Taken

Applied setup reduction techniques and other lean production principles during a cross-functional Kaizen-type problem solving session.

Results

Changeover times were reduced from an average of 36 hours to less than 4 hours. This allowed more responsive, customer-driven production schedules. By unlocking production capacity, our client increased its annual profits by $3.8 million and placed it on par with its top three competitors.

Business Issue

A global manufacturer of pharmaceutical products was experiencing frequent packaging line stoppages of a common over-the-counter cough syrup. Production costs had risen to erode margins on this product.

Approach Taken

After a brief data collection period in which line stoppages were recorded for cause, location, and duration — a kaizen team was assembled. The team was given the goal of increasing overall line throughput from 23,000 bottles per shift to 35,000 bottles per shift. The team used a combination of root-cause analysis, setup reduction / SMED techniques, and Standard Work techniques to improve line performance.

Results

Line output increased to approximately 30,000 bottles per shift immediately. After two months of operation and incorporation of remaining setup reduction changes proposed by the kaizen team, line output rose to a stable output of 51,000 bottles per shift, a 122 percent increase. The cost of implemented changes was less than $5000. Results ultimately were accomplished within the duration of the 3-day kaizen, changes to the line equipment were implemented to overcome root causes of several key problems.

Level Loading Your Factory Can Dramatically Improve Performance

Most factories are driven to perform by some internally focused deadline — get all of your production out by the end of the year, or by the end of the quarter, by the end of the month (this is what we see the most), or even by the end of each week. Level loading your factory is exactly the opposite of this mentality — let’s produce the same every day, and even every hour, more in line with customer demand!

The Definition of Level Loading In Lean Manufacturing

But first, let’s describe what we mean by level loading. Level loading is often called production leveling, or production smoothing. It is a technique for reducing the unevenness in operation which in turn reduces waste. It was vital to the development of production efficiency in the Toyota Production System and lean manufacturing.

Beginning the Journey – How To Get Started With Lean Level Loading

Begin your lean operations journey by looking at the shipping volume or dollars shipped every day in your business over a one-year period. Most manufacturing operations will have peaks that occur at the end of the year, at the end of the quarter, at the end of the month, and even at the end of each week. Be sure to look at the entire data set for the year.

Here is the sequential approach you should immediately consider if you see peak shipping times in your business:

• If your business always peaks at the end of the year, immediately take steps to level load across the 4 quarters first.

• If your business peaks at the end of each quarter, immediately take steps to level load across the 12-13 weeks in each quarter.

• If your business peaks at the end of each week, immediately take steps to level load your shipping volume across the five days of the work week.

Understanding your business’ operational shipping peaks, and then developing a plan to address smoothing these peaks through level loading is often the first successful step in implementing a lean manufacturing transformation. Ultimately, the goal becomes a steady pace (Toyota uses takt time to describe this) moving toward one-piece flow.

Critical Steps to Move to Level Loading

While this sounds easy, leadership must recognize that there will probably be a deep cultural resistance to level loading versus end-of-period crisis management. Here are three specific actions that we recommend to our clients to change this culture:

• Schedule lean production reviews at the end of the new expected shipping period. For example – if the business is trying to move from a quarter shipping period to a weekly shipping period, schedule quick reviews every Monday morning. Discuss specific corrective actions that need to be taken if the targets were missed. Follow up on those corrective actions every Monday.

• Change the metrics of the key operations leaders most responsible for implementing load leveling in their production facility — metrics drive change.

• Some managers have great difficulty moving from an end-of-period crisis style of management to a more planned level loaded style of management required in a lean manufacturing transformation. If the first two approaches are not working, and there is continued resistance to the lean manufacturing transformation, these managers may have to be replaced.

Case Studies

Business Issue

We have a client that ships valves to the oil and gas industry in Asia. This facility panics at the end of every year, every quarter, and every month. More than 80% of all its products were shipped out in the last three days of each month. Repeated shipping targets were missed for the following reasons:

• Last minute quality issues.

• Scheduling issues with client inspections.

• Not enough final test equipment capacity (the test equipment sat idle the first three weeks of the month, but local leadership was asking for millions of dollars in additional final test equipment).

Approach Taken

The general manager of the business and I flew out there to spend the last five days of a quarter to begin to understand personally what was going on in the facility. It was unmitigated chaos – and more importantly, the local leadership wanted us to see how hard they work working in this chaos. We quickly realized that the facility did not need to the millions of dollars in test equipment. They needed to level load the facility.

Because the facility shipped $250 million of product per year, it became a simple step to determine that they needed to ship $1 million per day, and when the general manager stated that would be the first step on their lean journey, the local leadership clearly did not believe that this simple approach could solve a lot of their problems.

Once the GM returned to corporate headquarters, he scheduled a daily 6 pm phone call with the plant manager in Asia (6 am his time, as he drove to the office). He only asked one question: ‘Did you ship $1M dollars yesterday?’

For the first two weeks, the facility did not ever meet the measurement. The local leadership begin to realize that the GM was going to call every week day. The first month there was only a slight improvement over the typical chaotic end-of-month, and once again, they missed their target. During the second week of the second month the facility began to occasionally hit the one main dollar minimum goal. This improved during the third month when they hit the $1 million daily goal once during the first week. But by the end of the fourth month they understood that every day they needed to ship at least $1 million.

Results

The results included the following:

• Quality dramatically improved across the board.

• Clients began to comment that customer inspections were much easier to schedule.

• The final-test equipment was more consistently used and far exceeded necessary capacity when level loaded.

• Overtime decreased by over 70% within 6 months.

Business Issue

We have a client that ships block windows for private residence bathrooms. The had trained their customer to get their orders in by Thursday and then would promise to have their windows shipped out by the following Friday.

Their orders come in based on a residence build from many different contractors, and the master scheduler would compile a Monday list of product based on orders received the previous week. The glass shop would work overtime on Monday and Tuesday, while the assembly shop was mostly trying to find activities to fill their day, and shipping was nearly completely idle. Then on Tuesday afternoon through Thursday, the assembly shop worked overtime to assemble the block windows, with no regard to how each order would end up in shipping from a sequencing standpoint – the production operation ran batches of the types of windows needed.

Then, beginning Thursday afternoon, shipping began to be deluged with miscellaneous arrivals of product that were not linked by residence, only by the type of window that came to shipping in batches. The shipping area became totally chaotic as people searched to put together the residence packages and moved product around all through the day Thursday and into Saturday most weeks. Remember, this is glass, so the damage that occurred was far too high after products were supposedly completed. The trucking companies were often left waiting for open bays and open orders during the last two days of the week.

Approach Taken

The solution, while it was resisted heavily by some key operations leaders’ familiar with the original chaotic approach, was implemented as follows:

1. Move to a sales model that took orders every day, and promised a one week cycle time regardless of the day ordered.

2. Set up the lines by types of products made.

3. Start each residence assembly line across the entire set of assembly lines at the same time, regardless of the type of assembly — this ensured that each full residence package would arrive at assembly within two hours.

Results

Within one week of full implementation, glass breakage at shipping had dropped by 80%, overtime dropped by 90%, and customer delivery performance improved dramatically.

Getting Started

Level loading production should be one of the first steps in your lean transformation initiative. To reiterate, understand your current shipping peaks, and then take steps to move to smoothing your operations by demanding steady output every month, every week, every day, and maybe even every hour!

Turning excess into capital.

Case Studies

Business Issue

A growing building supplies manufacturer was running out of room and wanted to convert warehouse space to make room for a new product line. The plan was to change from traditional pallet fork trucks and pallet racks to expensive Very Narrow Aisle lifts and racks at a cost of almost $500,000. This was a significant capital expenditure for a small business with annual revenues of $30 million.

Approach Used

While compressing the warehouse footprint by going to Very Narrow Aisle warehouse concepts would have freed up the needed space for the new production equipment, it would come at a steep cost and would only buy just a couple of years of breathing room. Rather than suggesting other solutions Flow conducted training on inventory turns analysis, demand segmentation calculations, inventory aging analysis, and calculating appropriate statistical safety stock.

Results

After working with key leadership to understand the inventory transactions and calculating consumption, demand standard deviation, and new order points, the business leaders realized that if they purged the dead inventory and tightened up their purchasing parameters, they could comfortably reduce their inventory by 50%, in effect doubling inventory turns. Now they wouldn’t need as much warehouse space, and so the project to move to Very Narrow Aisles was cancelled, saving precious capital that was used toward paying down debt. Cash flow also dramatically improved as they burned off their excess inventory.

$100,000 in capital while increasing storage space.

Case Studies

Business Issue

The client was running out of room to stage finished customer orders. Product would move to the shipping dock and ‘park’ wherever there was room. When it came time to load the delivery trucks, it was a treasure hunt across the whole dock to find all of the customer orders. With an additional 30% growth expected, the client knew that the current mode of operation would lead to chaos.

Approach Used

Flow Consulting worked with leadership to evaluate various alternatives to expand dock space that included a plan to add more vertical storage. A quick inventory aging review concluded that finished goods were arriving on the dock out of sequence; order produced earlier than needed were clogging the limited dock space. A purge and a change to the production scheduling routine got the dock flowing again.

Results

The business avoided spending $100,000 capital to increase finished-goods storage space, while also reducing customer order lead time by 15%.

Reduced warehouse OT & and reduced shipping errors.

Case Studies

Business Issue

Rapid growth of manufacturer and distributor of restaurant supplies struggled with warehouse space and shipping capacity.

Approach Used

Redesigned warehouse flow to reduce operator travel time and installed a carousel storage system integrated with SAP along with SAP Warehouse Management and custom RF transactions.

Results

Reduced warehouse OT by 80 percent, increased warehouse capacity by 25 percent and reduced shipping errors by 50 percent.

Storage usage reduced less than 75% within 6 months.

Case Studies

Business Issue

An automotive OEM parts distributor covering a five-state area was running out of room at its single 300,000 sq. ft. distribution center. The distributor was considering a $25 million expansion to be completed within 18 months. Current warehouse capacity exceeded 95.8% of available space. This left little room for new products or efficient part locating. The distributor asked Flow Consulting to do two things:

1. Determine what steps could be taken to increase the current facility’s storage capacity, and

2. Determine how soon the new facility would need to come on-line based on current growth rates at the current facility.

Approach Taken

Flow Consulting leveraged its expertise in warehouse operations, procurement, supply chain management, and statistics to develop five steps that would dramatically increase the capacity of the current facility. Implementation time-line for each of the steps was completed in weeks, not months. The steps taken were:

1. Re-balance the storage and rack types, move some product to push back and flow through racks, and adjust pallet rack-beam spacing to create a dense cube.

2. Consolidating partial pallets is labor intensive, but finding the opportunities to combine the pallets took a new WMS report.

3. Continually purging excess, slow moving and obsolete items needs to become a routine, not a crisis task.

4. Bulk corrugated and pallet suppliers were nearby, which reduced the need for more than a couple days’ supply freeing valuable space.

5. Statistical Analysis revealed that storage of too many of the wrong items and too few of the right items caused slow inventory turns and poor service levels.

Results

The original 95.8% storage usage was reduced to less than 75% within 6 months and additional steps were identified to continue capacity improvement as the business grows. The $25M expansion thought to be needed within 18 months, was successfully delayed by more than 5 years.

Recognizing the need to change purchasing leadership.

Case Studies

Business Issue

An automation company was facing constant material shortages and increasing costs of purchased materials.

Approach Used

1. An intensive 2-day Procurement Snapshot was performed, which included interviews, personnel assessment, cost-data analysis and process reviews

2. Several key problem areas were identified

3. Engineering and Purchasing employees were trained to keep preliminary product development costs to a minimum

Results

1. Recognition of need to change purchasing leadership and with the support of Flow Consulting, locate and interview a replacement purchasing leader

2. A 20 percent reduction in overall material costs for subsequent automation products

3. A 50 percent reduction in materials shortages within three weeks

Increased yields while reducing delivery cycle time.

Case Studies

Business Issue

Less than ideal yields of fresh produce in the transition from raw product through the packaging and distribution process.

Approach Used

Comprehensive review of the areas where the highest fallout of product occurred, reviewing the entire value chain from the farm to the grocery store.

Results

Using Lean concepts and project management skills, Flow Consulting increased yields to the grocery store by more than 30% with projects in packaging and distribution, while reducing their delivery cycle time by 20% — significant in a time sensitive business.

Potential savings in purchased materials.

Case Studies

Business Issue

The new CEO of a design-to-order higher-technology company has been facing eroding margins because of intense pressure on the bottom-lines of its customers. The new CEO needed a quick assessment of potential savings in his purchased materials and specific recommendations for implementation.

Approach Used

Flow consultants began with a quick and hard-hitting analysis of the company’s total purchasing expenditures. They also interviewed key personnel in Engineering, Purchasing and Finance to identify process issues and attendant strengths and weaknesses. Clear issues in long-term supplier relationships with no cost reductions and Engineering/supplier-price negotiations were identified.

Results

Flow Consulting identified a 10 percent cost savings in future cost-downs by working with the company’s top 15 suppliers. In addition, at least a 20 percent reduction in future costs in new components was identified by putting in place processes to have Engineering involve Purchasing in all phases of supplier-price negotiations. Also, Engineering and Purchasing employees are being trained in Strategic Sourcing tactics and cost avoidance.

15 percent cost improvements after the first year.

Case Studies

Business Issue

Different purchasing teams in different business units were not leveraging their volumes across a division.

Approach Used

Led management through QFD to identify course of action. Set up commodity teams, trained commodity team leaders and supported leaders in their kickoff commodity team meetings.

Results

15 percent cost improvements after the first year.

Saved $1.9M over three months.

Case Studies

Business Issue

A $100M manufacturing company (oil and gas) lacked a strategic sourcing strategy linked to driving continued savings. Flow Consulting was asked to help them achieve significant cost savings by creating a new strategy.

Approach Used

Flow Consulting worked with the internal team of purchasing agents and the finance organization to identify $5.2M in annual savings. These cost savings where implemented with a variety of sourcing strategies within 23 cost-reduction projects identified in areas such as:

• Data Mining and Analysis

• Commodity Strategies

• Supplier Risk Analysis

• Competitive Bidding and Negotiation

• Long-term Contracts (preferred suppliers)

Results

Flow Consulting together with the internal team helped the company save $1.9M over three months by implementing 9 of the 23 identified reduction projects. This was done through a combination of coaching and project management. The result was a return-on-investment ratio in excess of 50-1 in terms of consulting fees and expenses.

More than $15 million in annual operational savings.

Case Studies

Business Issue

A private equity firm asked Flow Consulting for an assessment and a project plan with payback for improving performance in areas identified for improvement. Flow Consulting performed an operations assessment for a private equity client last year at a manufacturer supplying key components for the trucking and fire truck industry.

Approach Used

During the assessment phase, Flow Consulting determined that there was an opportunity to improve labor productivity by as much as 50 percent across the entire plant — if the client implemented the key aspects of LeanSigma manufacturing.

Additionally, Flow consultants identified significant opportunities to improve the manufacturer’s purchasing processes. Flow Consulting also provided the private equity firm with a one-year intervention plan to help the client realize the number of opportunities for improvement available to them.

The report provided to the leadership of the private equity firm was very well received. To request a “scrubbed-to-protect-the-innocent” version of the report, e-mail reesebourgeois@flowconsulting.com.

Results

After the acquisition, the private equity firm and the new CEO of the acquisition immediately engaged Flow Consulting to:

1. Implement LeanSigma manufacturing in the highest volume product line, and

2. Develop procurement strategies and improve cash-flow in the procurement arena.

Meanwhile, the CEO focused on developing relationships with key customers and improving the sales of the firm, knowing that Flow Consulting was focused on the internal aspects of supplying product to customers.

Several Flow consultants worked with the operations team to collect the appropriate data and then facilitated a lean manufacturing kaizen in the highest volume product line.

The kaizen produced the following results:

In addition to these results, the kaizen resulted in a checklist of more than 100 action items to continually drive improved flow, improved quality and better control of incoming materials. The production process improved so dramatically that the operators are able to occasionally take one-hour at the end of the shift to address these open action-items as a team, resulting in continued improvements.

Flow consultants worked with the Purchasing Manager and CFO to begin implementing Best Practices for Lean Procurement, with the following results:

• Replenishment Times were obtained to better estimate inventory needs (kanbans)

• AP balance moved from 7-days to 30-days ($600k improvement): with goals of reaching 45 then 60 days.

• Detailed commodity plans were created with Engineering and Procurement to ensure that all employees understood the strategy for each vendor.

Based on the above success, Flow Consulting has been engaged to drive similar operational improvements for another product line while simultaneously transferring LeanSigma skills to key employees.

Competing Companies Combined

Business Issue

Two separate private equity firms jointly employed Flow Consulting to study the potential benefits of combining two companies that each of the two firms owned. The two companies competed in providing sales and installation of a specific component within the housing industry — to protect their identities we will not divulge that component, but combined sales for the two companies exceeded $200 million.

The key questions asked of Flow Consulting:

1. Could two major facilities be consolidated into one facility using state-of-the-art Lean Manufacturing concepts?

2. Which IT systems would support the new combined entity best?

3. What would the operational and purchasing savings be?

Approach Used

Flow consultants worked with both Purchasing teams to determine the opportunity for savings based on volume, different price points obtained at the same suppliers, and an analysis of leveraging existing China-sourcing initiatives to a larger degree.

Flow consultants also focused on applying lean principles working with both Operations Managers to come up with product flows that could be accomplished in the smaller of the two facilities. Thanks in part to extensive past experience in consolidating operations, Flow consultants delivered a detailed cost analysis for moving the larger facility operations to the smaller facility.

Flow consultants dove into the costs of Operational and Purchasing line items in their P&L, including detailed and exact numbers on the amount of manpower supporting all of the numbers. They then modeled these inputs into a financial statement that clearly illustrated the outcomes of the efforts in Purchasing and Operations, along with the costs savings of moving to one facility.

Flow consultants also provided the financial leadership in developing three-year quarterly financial statements (income statement, balance sheet and cash flow), forecasting the impacts of Purchasing and Operations synergies, including the consolidation of facilities.

The Flow Team also led the effort to assess the IT capability of each company and provide recommendations on the future integration of IT systems to support the combined companies in the future.

Results

More than $15 million in annual operational savings were realized in the following categories:

• $4 million in purchased products

• $4 million in labor as a result of the lean product flows and a reduced labor rate at the smaller facility

• $7 million in manufacturing support and distribution costs as a direct result of the lean product flows and reduced inventory

A lean manufacturing operation versus outsourcing.

Case Studies

Business Issue

A mid-market private equity firm requested due diligence on a pending acquisition with an interesting twist — the company would be a carve-out and the manufacturing and logistics portions of the business would not come with the acquisition. Flow Consulting answered the question: Should the new carve-out spend money on capital and infrastructure to replicate manufacturing and distribution, should manufacturing be outsourced, and/or should distribution be outsourced?

Approach Used

One Flow consultant worked with the potential carve-out to completely understand and estimate the costs of replicating a Lean version of their manufacturing and distribution. A second Flow consultant worked with potential suppliers to obtain multiple quotes on outsourced solutions so the two manufacturing solutions could be compared financially. Flow Consulting also brought in an experienced logistics professional to develop a cost model for outsourced logistics so the two distribution models could be compared financially.

Results

After exhaustive analysis, the clear direction pointed to investing in a new lean manufacturing operation versus outsourcing, and the delta was approximately 15 percent greater profits — a significant, and somewhat surprising conclusion. The logistics analysis indicated break-even for internal distribution versus using a third-party logistics provider. Subsequently, Flow Consulting recommended keeping distribution and logistics internal to reduce the amount of change that would be introduced as the company transitioned to the new model.

Savings based on nearly $100M in spending.

Case Studies

Business Issue

Two companies were considering merging and both were Equity owned. Identify potential sourcing savings due to leverage.

Approach Used

Sourcing data collected and organized by Flow. Facilitated leverage and best-price discussion with representatives from both companies.

Results

Identified six percent in potential savings based on nearly $100M in spending, and approximated timing of implementation by quarter.

Free more than $2 million in inventory.

Case Studies

Business Issue

PE client requesting upside operations assessment for well run garage-flooring manufacturer.

Approach Used

Site visit, extensive data analysis, and follow up report.

Results

Identified ability to free more than $2 million in inventory in $25 million revenue business by implementing basic inventory management processes.

Due Diligence.

Case Studies

Business Issue

Owners of a cosmetic products packaging company acted on a client clause where each owner had to make an offer to own 100% of the company. One of the owners contacted Flow Consulting to conduct a one-week study to determine the true EBITDA potential if the company were to implement Lean Operations.

Action Taken

Flow Consulting gathered data in advance of the one-week on-site assessment and provided a thorough analysis of both the potential gains to be made along with project plans and costs.

Results

The Flow Consulting assessment concluded that EBITDA opportunities with the company’s current multiple locations could be increased from EBITDA of 3% to a projected 11%. If a new single structure solution was pursued, EBITDA could grow to 19%.

Late purchases reduced by more than 80 percent.

Case Studies

Business Issue

New Purchasing manager in complex industry was not meeting expectations of the hiring manager even though the work history of the new purchasing manager had been excellent.

Approach Used

Flow consultants interviewed the hiring manager and the new manager. They were then able to identify the gaps in performance expectations and the specific action plans of the new manager. Flow consultants coached the new manager in specific techniques to help him meet the expectations of the hiring manager.

Results

The new Purchasing Manager is now considered one of the top two managers onsite at his level, and he has reduced late purchases by more than 80 percent. In addition, he has built an organization that is now considered the best organization within the business.

Leading with no prior management experience.

Case Studies

Business Issue

The new General Manager of a large family-owned home improvement business had no prior management experience, but the second generation owners had asked him to lead the business because of his drive and proven interpersonal skills.

Approach Used

Flow consultants began with an interview to ascertain the key leadership gaps, and scheduled weekly one-on-one visits to close those gaps.

Results

The General Manager became highly-effective because of the detailed training he received in the use of leadership, task management, and follow-up techniques. He was able to remove a member of his support staff that should have been removed years before. He then implemented an incentive system that rewards department managers for profitable growth. The new General Manager then implemented significant inventory reduction techniques in three of the five departments — Furniture, Carpet and Building Supplies.