Success Story: TVO Across Four Global Divisions (CS202a)
Rapidly improving global operations and supply chain capabilities in a diverse business unit and global environment.
This story is for CEOs who:
- Want to instill a culture of excellence across multiple business units and geographical locations
- Need to quickly develop world-class supply chain capabilities to serve a global client base
- Want to implement a standardized Management Operating System (MOS) and KPIs across multiple plants in a highly-complex global market
Maine Pointe’s Total Value Optimization™ approach included:
Leader and Organization Improvement (LOI)
- Creating and implementing a management reporting system and associated dashboard for tracking projects and organizational goals
- Conducting focus and alignment (F&A) sessions to help personnel at all levels get behind leadership’s goals
- Delivering training to over 450 leaders from supervisor to executive level to equip them with the skills to manage a high-performance culture
- Aligning organizational goals with plant management and ensuring individual accountability throughout all levels
- Developing a Management Operating System (MOS) that identified and quantified operating problems in real-time and rolling it out across all plants globally
Sales and Operations Planning (S&OP)
- Implementing a S&OP process to include new, fully integrated inventory management controls to remove slow-moving inventory and produce inventory only as required
- Introducing an inventory management control process linked to the S&OP process to remove slow-moving inventory and reduce inventory levels enterprise wide
- Developing and implementing a Management Operating System (MOS) that was rolled out across the organization
- Shifting maintenance from reactive to proactive across the organization identifying, categorizing, and determining root cause for major process losses and implementing solutions to eliminate them
- Driving additional throughput gains by creating opportunities to improve OEE performance by up to 50% reduce plant footprint and, for one division, consolidating four plants to three
- Developing documented standard procedures and implementing a system to ensure compliance
- Developing and implementing a maintenance management process that incorporated operational intelligence into the planning process
- Developing a strategic plan to reduce costs and improve service for the client and its 3PL, rail, ocean and less than load (LTL) carrier partners
- Facilitating negotiations between the company and short-list service providers
- Examining the movement of intermediate products to maximize efficiencies and reduce a disproportionately large use of trucks
- Working with major Class I railroads to reduce transportation costs and improve transit times
- Negotiating with senior management of international steamship lines to get container and vessel capacity to appropriate levels for our client’s new needs
- Screening and prequalifying 3PL warehousing/packaging companies, railroads, barge lines, ocean shipping companies and international freight forwarders
- Developing a shared database for scheduling, managing and tracking the programs, related documents and managing the intellectual capital process
- Helping deliver the insights required to effectively turn data into information and information into action
Case Study 1: A multibillion-dollar nylon manufacturer (US)
Maine Pointe was engaged to work with the manufacturer and its rail, road and ocean carriers to help them respond to market changes. Our solution involved implementing a radical new way of approaching the market place with a reconfigured distribution network built on strong, collaborative relationships. This led to a dramatic shift in the company’s products and the markets it served. As a result, through a consolidation of carriers, the client’s carriers benefited from an 80% growth in volumes and a 22% margin enhancement. At the same time, our client, the nylon shipper, transformed its procurement and logistics operations to improve product transit times from 7-12 days to less than 24 hours for internal shipments while improving global deliveries to intermediaries and end-customers by two to three weeks. This enabled the company to grow from $1.8bn to $2.3bn within two years. In addition, our client was able to reduce working capital by $30M annually.
Case Study 2: Manufacturer responsible for 40% of laminated architectural and automotive glass worldwide (USA/EU/Asia)
This division had two plants with higher operating costs per unit compared to the third, despite having similar functions and operations. The client’s plans included opening a new plant in China which was expected to have even lower operating costs. Maine Pointe was engaged to improve overall equipment effectiveness (OEE), reduce waste and energy costs and implement a standardized management operating system (MOS), reporting system and set of KPIs to track performance in all four plants.
Maine Pointe’s multi-disciplined teams deployed OEE, lean and fundamental supervision tools to drive throughput performance and lower total costs. We developed and implemented a Management Operating System (MOS) that identified operating problems in real time, identified, categorized, and determined root cause for major process losses and implemented solutions to eliminate them. In addition, we introduced a maintenance management process that incorporated operational intelligence into the S&OP and manufacturing planning process to ensure reliable delivery.
As a result, the plants in this division realized more than $29M in annualized profitability, including savings of $24M in yield and throughput, $2M in annualized energy savings. In addition, overtime was reduced from 30% to 15%, yielding annualized labor cost savings of $2.6M, dormant projects on the ‘active’ list were reduced by 40% and overall equipment effectiveness (OEE) reached >80%.
Case Study 3: The world’s largest manufacturer of solar control and safety window film for automotive and building applications (UK/US)
Maine Pointe was engaged to improve the quality for customers and strengthen various assets for improved profitability. The division had a healthy business performance of $220M in revenue and 25% EBITDA but wanted to grow by 15% per annum over the next 5 years. The client’s market was seasonal and, historically, had limited annual growth of only 2%. Our TVO™ approach included implementing a Sales and Operations Planning (S&OP) process, lean methodology including remapping layout with a focus on SMED (single minute exchange dyes) to reduce changeover time and a real-time Management Operating System (MOS). We introduced an inventory management control process linked to the S&OP to remove slow-moving inventory and reduce inventory levels enterprise wide. Maine Pointe also helped renegotiate the company’s agreement with its long-term LTL carrier.
As a result, the client realized a 35% improvement in productivity, a 48% reduction in inventory and a 49% reduction in transportation cost. The overall financial impact was in excess of $30M, including $11M in improved EBITDA, and $18M decreased working capital requirement.
Case Study 4: Leading manufacturer and supplier of chemicals for rubber processing and related industries (USA/EU/Asia)
This division operated at 11 locations worldwide. Leadership was taking a ‘one size fits all’ approach to communication, regardless of country and culture. This, combined with unclear management objectives, reduced the effectiveness, efficiency, and quality of the product. In addition, maintenance work was reactively rather than proactively planned and executed, and annual overtime was at 19%. Maine Pointe implemented leadership focus and alignment (F&A) and rolled those goals down to the supervisory level through the ORCI (Owner, Responsible, Consulted, Informed) accountability process across all locations. We developed and implemented a Management Operating System (MOS) with continuity and relevant key performance indicators (KPIs) as well as disciplines, meetings, procedures and behaviors required to effectively turn data into information and information into action. We introduced a Maintenance Management Operating System which increased proactive maintenance work by 67% and decreased annualized contractor spend by over $500K.
The ResultsWorking closely with the client’s team, Maine Pointe’s Total Value Optimization (TVO)TM approach to supply chain transformation exceeded the client’s savings targets, delivering the following benefits:
- Released $10M in cash in just eight weeks to drive self-funding momentum
- Delivered $125M in EBITDA improvements across the organization
- Added a total of $150M in cash to the bottom line
- Enabled one division to grow from $1.8bn to $2.3bn within two years and reduce working capital by $30M annually
- Instituted improvements with rail providers that significantly reduced cost and improved transit times from eight days to just one day
- Reduced 3PL costs by 10% while significantly improving service worldwide
- Delivered enterprise wide focus and alignment training
- Rolled out a standardized management operating system and KPIs across all plants
- Helped lay a foundation to enable the company to emerge from a bankruptcy situation as a well-positioned specialty chemicals and performance materials company with market-leading global standing
Lessons learned for other executives
- Global organizations can realize significant, sustainable savings in a relatively short time through the Total Value Optimization™ approach
- Increasing supply chain and operations efficiency begins with enhancing basic metrics and reporting, as these provide the essential data for performance improvement initiatives and end-to-end visibility
- Creating strategic advantage in a complex global environment requires real-time insights from operational data to improve performance, visibility and insight
Success Story: TVO Across Four Global Divisions (CS202a)