$400 MM Commercial Electric Motor Plant
Business Case
Summary
- Poor performing plant acquired from GE (6 Sigma), could not ramp up for new products/growing demand.
- Poor on-time delivery to customers only 68% and over 4,000 customer PPM causing serious business risk.
- Costs out of control (inventory and scrap double target; overtime 4X target; premium freight 5X target; labor productivity 41% below target.
- Improved Equipment maintenance to add capacity and reliability.
- Created “model line” for key products (40% of volume) with level pull based on customer demand, kanban, visual management, standardized work and rapid problem solving.
- Transformed production planning process and shop-floor control to support pull system.
| Metric | Before | After | Change |
|---|---|---|---|
| On-Time Delivery | 68% | 95% | +27 ppt (+40%) |
| Customer PPM | 4,036 | 1,400 | -2,636 (-65%) |
| Labor Productivity (units/hour) | 15.18 | 23.52 | +8.34 (+55%) |
| Overtime % of Hours | 29.7% | 8% | -21.7 ppt (-73%) |
| Inventory Carrying Costs | $420k | $210k | -$210k (-50%) |
| Scrap | $144k | $72k | -$72k (-50%) |
| Premium Transportation | $92.8k | $18.5k | -$74.2k (-80%) |
- Plant-wide capacity increased 38% in 10 months with minimal investment.
- Regained customer confidence and continued growth.
- Generated $1.3 operating cost reduction & $2.8 MM cash flow
- Since 2008 Corporation has grown from $1.4 billion additional to $4 billion revenue.