At a Glance
- A large Turkish manufacturing company engaged Renoir to analyse their manufacturing process and identify opportunities for improvement.
- Our analysis revealed that over 90% of all tractors built failed the final production test and that 50% of these failures were due to missing materials.
- At the end of the project, the manufacturer had reduced their inventory value by 24% and achieved an average increase in First Pass Yield of 40%.
Key results
40% increase
in average First Pass Yield
3% increase
in gross margin
24% reduction
in inventory value
Introduced a company-wide management control system
Established a New Product Development (NPD) planning and reporting tool
Background
Our client is one of the largest tractor manufacturers in Turkey. Today, our client has established a significant presence in the export market, with over 4,500 tractors produced annually.
Analysis
Our client had achieved record sales the previous year. However, management was dissatisfied with the financial returns from this success. Convinced that there were additional opportunities, they invited Renoir to analyse their manufacturing process.
Our findings revealed that:
- Over 90% of all tractors built failed the final production test due to unrealistic target setting based on required production rates.
- 50% of failures were due to missing materials.
- There was a disproportionate level of work in progress required.
- There was a high volume of finished goods that were not required by the dealerships.
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Project Approach
The project team consisted of Renoir consultants and seconded company employees (the Task Force), who worked as an integral and vital part of the process after receiving training. The initial phase of the project involving Renoir lasted 30 weeks. Management wanted the company-Renoir partnership to create an environment in which systems and processes would drive future improvements long after the programme had finished. The project team focused on identifying opportunities, assessing savings and achieving targets.
Management Action Teams (MATs) were later introduced to create cross-functional teams comprising internal management and staff, as well as Renoir and Task Force members. These teams were tasked with identifying and quantifying opportunities through improved control and execution. They had to agree on and commit to the annualised benefit to the organisation as these opportunities were realised.
“You’ve done exactly what I wanted. I have visibility.”
– General Manager
Implementation
New Product Development (NPD)
Focus
- To improve the time taken to bring new products to market and ensure that engineering change orders (ECOs) are implemented promptly and effectively.
- To ensure the accuracy and effective implementation of Bills of Materials (BOMs) in logistics, the warehouse and production.
- Install an effective review and management system to identify and correct operator-influenced downtime and failure to achieve daily targets.
Desired Outcome
- Implement a project management system to increase visibility of new products being prepared for the market.
- To ensure profitability and increase the likelihood of positive reception and maximum sales.
- To implement a management system that ensures ECOs are effectively implemented in the production area.
Supply Chain & Planning
Focus: The aim is to install a rigorous management control system that provides visibility, ensuring the supply chain supports the planning process and improving the cost-effectiveness of the production department.
Desired outcome: Developing an increasingly stable plan in conjunction with the sales department will give the logistics team more opportunities to negotiate favourable terms with suppliers. This will improve warehouse accuracy and value, and reduce the number of missing parts, thereby improving First Pass Yield (FPY) performance in production.
Production & Quality
Focus:
- To maximise the use of all available resources to increase output and the percentage of tractors that pass the First Pass Yield (FPY) test directly from the production line.
- To enhance the effectiveness of the management control system and problem-solving skills.
Desired outcome
- To increase the FPY percentage to a minimum average of 50% per week.
- To enable the production operation to optimise production processes and ensure work in progress (WIP) does not exceed two days’ production.
- To establish an effective and comprehensive management control system, spanning team leaders, production foremen, the production manager and the rest of the organisation.
Sales/After Sales
Focus:
- To review current practices for handling customer complaints and equipment breakdowns.
- To establish a cost-effective approach to spare parts supply, in conjunction with production, to reduce the level of warranty claims.
Desired outcome
- To improve customer satisfaction by resolving complaints professionally and promptly.
- To reduce the number of warranty claims by working more closely with the production, quality and new product development teams.
- To increase the frequency of sales forecasts and improve communication between the sales, planning and logistics departments.
- To gain a better understanding of the relative merits of regional distributors.
Results
Management and Coordination
- Established an interlinked and interdependent management control system across the organisation.
- Introduced review and commitment meetings to implement agreed cross-functional solutions across departments.
Performance Measurement and Reporting
- Revised or introduced KPIs for daily, weekly and monthly reporting to enable fact-based decision-making regarding performance variances.
- Developed an after-sales reporting system to track customer complaints and tractor failures, enabling root cause analysis (RCA) and targeted discussions with product development and suppliers.
- Enabled the effective distribution of repair and replacement costs to the relevant parties via the After Sales system.
Operational Controls and Problem Solving
- Implemented routine interval controls (RIC) in production, quality assurance and the warehouse to enable prompt issue resolution and root cause analysis (RCA) of persistent problems.
- Launched 5S programmes in the production area and warehouse, providing employee training and conducting regular audits to ensure compliance.
Inventory and Supply Chain Management
- Improved stock availability and inventory accuracy by freezing weekly plans and setting a target of 95% sales forecast accuracy, which aided supplier price and delivery negotiations.
*We have intentionally omitted client-specific details to uphold strict confidentiality.
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