The Client
A Cleveland-based, midsize manufacturer of custom components serving Fortune 100 OEMs
The Challenge
The client had suffered employee turnover and attrition of business processes over time. They had recently upgraded their legacy ERP system and found no noticeable improvements. In addition, business results were beginning to sag. Quotes were bogged done in the cost-estimating process, resulting in missed opportunities. Customer shipments were late and returns were up. Quality issues were beginning to plague all aspects of production. Overall, there was a perception that processes were ad hoc and reactive with many crises.
Day-to-day challenges included:
- Reactive processes, limited planning capability
- Limited visibility to orders and inventory
- Lengthy cost-estimating process with deep backlog, resulting in numerous late quotes and missed opportunities
- No clear execution priority on open orders
- No clear order life cycle
- Planning processes for materials required manual review of every component
- Frequent material outages impacting production areas, resulting in late customer shipments
- Growing inventory levels on many items while needed items were out of stock
- Increasing customer returns based on production quality issues
- No sales- and operation-planning processes
- Production scheduling processes were cumbersome and varied by the production area
- Part-design processes were incomplete with little effort spent on production design or quality specifications
- Lengthy account end-of-month processes that lagged weeks behind calendar month-end
- IT support processes were nonexistent
The client recognized its current operational issues were creating a financial drain on the company that was further compounded by the downturn in the economy. The client selected Haverstick Consulting to improve the processes while business was down in anticipation of the market recovery.
The Haverstick Approach
Haverstick Consulting’s strategy for solving the client’s business challenges focused on first evaluating the overall processes, then drilling into areas of attack based on impact.
Initial focus was given to engaging front office employees at all levels, reviewing their day-to-day processes as they occurred. Haverstick worked with sales, marketing support, engineering, HR, accounting, IT, operations management, materials management, customer service, and executive management.
Based on interviews, observations, and working with the client’s team, Haverstick created role-based process maps to visually represent the work, pain areas, and barriers to improvement. The process maps were created for each department, key roles, and cross-departmental process.
Haverstick mapped the information conversion across the front office. This information flow and conversion is analogous to the material conversion of a production floor. Furthermore, the information flow is also tied to the production activity, as orders, inventory, material purchases, and production schedules are key interface points.
Haverstick Consulting worked with the client to identify and analyze data sources from transactional systems, to supplier reports from customers, to financial reports. The data allowed the team to confirm findings and assess trends in the business. Haverstick Consulting then performed a gap analysis of the current state against the desired state needed to achieve the client’s desired improvement targets.
Haverstick Consulting and the client collaborated to implement process improvements in a phased, incremental approach. In particular, the engineering product design, cost estimating, quoting, and order-management processes were overhauled.
The Result
Using an incremental approach allowed the client to enjoy many sustainable benefits over the life of the project, allowing the team to enjoy momentum. These benefits are:
- Standardized service levels and reliable service delivery to internal and external customers
- New order policies and scheduling processes to meet emerging trends in demand, such as kan ban and VMI
- Order life cycle management with clear process to be taken at order acquisition, order planning, shipment, and order accounting
- New views into order book and inventory levels
- New order planning reports that allow for clear priority setting
- New scheduling processes that manage order priority while balancing machine utilization
- Decreased costs per transaction
- Increases in planning and new planning processes
- Fewer material issues impacting production
- Increases in on-time shipments
- Increases in quality
- New estimating and quote process, based on iterative design and quote-customer needs
- More quotes per engineer, based on new quote methods with fewer quotes overall
- Higher quality quotes and higher win ratio
- Product launch process to improve reliability at key handoff between design and production
- Part design collaboration with production samples managed on same priority as production orders
- IT trained on process reliability
- Tracked IT reliability via QUALITY DAY concept
- Five-day close for month-end accounting
- Interim financial reports provided to enable managers to influence financial results
- Improved project-level cost tracking and analysis provided to managers
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