National Industrial Manufacturer Improves Inventory Process
Client
The client is a leading supplier of hydraulic and motor-pumps, generator products and integrated systems, electromechanical primary and secondary actuation system components; nose wheel steering systems; cockpit controls; power and load management systems; pressure sensors and fluid debris monitoring products. The client serves commercial and military aviation, aerospace, military weapon; marine and off-road markets worldwide.
Business Challenge
One of the client’s divisions was experiencing a significant increase in inventory levels. The client had experienced a major increase in inventories with a corresponding decrease in customer on-time deliveries. Short-term tactical improvements in inventory positions were required along with a comprehensive program for addressing people, process and technology issues throughout the organization. The client needed to identify tactical solutions to rapidly reduce inventory while also developing a plan to increase customer on-time performance. Additionally, the client wanted a comprehensive strategic plan for improving processes and systems toward world-class operational metrics.
Solution
Phase I included identifying quick inventory reduction and process optimization opportunities, quantifying the benefits, prioritizing the initiatives, executing the most urgent initiatives that could realize immediate benefits, while establishing the metrics and tools to direct, support, and measure the improvements. Phase II included identifying future operations recommendations and the implementation plan. The team identified the process, system and data integrity improvements required to reach the desired future state. Phase III included the full execution of the recommended plan.
Results
As a result of Phase I, several improvement activities were launched and completed. These included improving the forecasting, receiving, inspection, MRB, planning and purchasing processes. Over $1.8M in production of stock was pushed out due to improvements in the forecasting process. Total improvements over four (4) months resulted in a 38% reduction in inventory with no negative impact to customer on-time performance. Additionally, a comprehensive set of management metrics and supporting processes to manage the results of the metrics was deployed.
The future operations vision presented a strategy and implementation plan to move the organization from sub-optimal processes to world-class processes and performance. This plan included recommended changes to the organization, processes, and systems. Lean manufacturing concepts and tools were tightly integrated with advanced planning and procurement techniques to realize additional improvements to inventory positions and on-time customer delivery. The implementation plan is currently being executed. The Revere Group expects additional inventory improvements of 30% and a 20% increase in on-time customer service to 95%.