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The Situation: IXPA was asked to help turn around a drinkware manufacturer’s very low production volume of laser-engraved items, which was resulting in an average monthly business loss of $245,000. With a target of 500,000 units per month, the actual production of just 66,000 units per month was having a major impact on its ability to meet customer demand. The company was having to re-spray 43% of all its painted products, and had a scrap rate of 3.2%. Drying time of the paint-like product averaged 8 hours instead of the promised 2.5, while the volume of the paint-like product was 2.2 grams per unit instead of the quoted 0.6 grams.
The Solution: IXPA’s partner in the USA appointed an interim plant manager to carry out an initial assessment of the production facility, its capabilities, and the skills of its employees. A range of process improvement targets were then defined, which included:
A skilled and experienced interim plant manager was sourced and appointed to apply lean manufacturing principles to support these improvements.
The Outcome: Just 6 months after implementing the improvements, the involvement of an interim plant manager meant the turnaround in volume production was so significant that the total annual production savings were $23m, with material annual cost savings of $2.59m. The company had increased capacity from 66,000 units per month to 493,714 units, reducing the cost per unit from $14.07 to $4.11. Material cost per unit had fallen from $1.63 to $0.55, and labor costs had plummeted from $8.17 per unit to $2.11. Moreover, the previous scrap rate of 3.2% had been more than halved to 1.5%.