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Case Studies

Cost savings through operational efficiency for manufacturer

February 19, 2024 | Operational Excellence

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At a Glance

A programme designed by Renoir for a client focused on achieving the following:

  • A cost reduction of an estimated more than US$800,000 in the client’s local currency through an increase in operational efficiencies and the reduction of overtime and manning
  • Improvement of operational and customer service performance indicators, particularly quality, on-time delivery and lead times, in order to penetrate the market further in a tough economic climate
  • Development of action plans to relocate its Extrusion Division
  • Create not just behavioural change, but also a cultural change in the way that client management & staff view their business.

Key Results 

↑ 34%

packed production

↑ 86%

productivity

↑ 21%

inventory turn

Background

The client has made its mark as one of the leading aluminum manufacturers in the Southeast Asian region and as one of the largest manufacturers of sheet and foil products. It was incorporated in the 1960s.

The Challenge

A three-week analysis was conducted, focusing on 3 divisions in the client’s organisation: Extrusion, Sheet & Foil, and Specialty Coatings. The next four steps were taken:

  1. Identify improvement opportunities
  2. Estimate the potential value to the client if these opportunities were realised
  3. Design an implementation programme
  4. Establish the new employee behaviours, ways of working and KPIs required for change

Considering the many potential benefits identified during the analysis, the client agreed to move forward to a business performance improvement programme.

What We Did

The 46-week Project was split into 4 main steps:

  • Definition: Engage client staff to analyse improvement areas
  • Development: Design new work methods, systems, standards, behaviours and structure.
  • Implementation: Make the change happen through newly designed systems.
  • Follow Up: Reinforce the changes to ensure new ways of working to become the client’s work culture.

Project planning & control

A central steering committee, to ensure the project’s direction stayed on track, was appointed and consisted of client Senior Management and Renoir Project Management.

Management Action Teams

One of the major vehicles driving changes was the Management Action Teams (MATs). These are the cross-functional teams within a work stream. 

They consist of managers, process technologists, supervisors, operators and administration staff. The MATs met at least once each week to address issues and discuss how to make progress on all goals. The following MATs were set up:

Material Transformation
Die Shop
Finance & Costing
Administration
Value Analysis

Order to Remittance
People & Development
Team Leader
Rationalisation

Statistical Process Control
Organisational Analysis
Information Technology

Renoir’s Focus Process™ and strategic business alignment

In the first week of the Project a Focus Process™ workshop was held with the client’s Senior Management Team. This workshop achieved the following: 

  • The development of a new business vision and mission
  • The agreement on the set of client values that are required to achieve the business vision and mission
  • The identification of the business objectives that will support the new vision & mission statement
  • The identification of Key Result Areas (KRAs) and Key Performance Indicators (KPIs). This balanced scorecard would reflect the agreed top level business objectives and would be the scorecard from which all other scorecards would roll down to other organisational levels.

Implementation

Following the business alignment, the combined team of Renoir consultants, the client Task Force and the MATs began to address the issues that were impeding better performance, developing solutions, streamlining processes, reviewing and defining roles & responsibilities.

The Results

Some of the activities and achievements included:

The development and installation of a comprehensive master scheduling system

The development, installation and training of new management planning and control systems and new ways of working

The development and installation of a process control at critical machine centres

A new cost reduction programme and the development of a costing model

A review and reduction of the manpower levels and requirements

Management training, development and culture change programmes

The identification of opportunities for process improvement through the further installation of IT systems

Development of a Continuous Improvement Team (CIT)

Increase cost savings through operational efficiency.

Further Reading

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