Our client, one of the world’s leading manufacturers of tractors, enjoys a considerable presence in the export market.
4% to 45%Increase in
First Pass Yield
in gross margin
24%Reduction Inventory Value
The challengeDespite enjoying record sales from the previous year, the company was looking for opportunities for improvements. After an analysis of their manufacturing processes, we discovered that:
- Over 90% of tractors built failed to pass the final production test.
- 50% of failures were a result of missing materials.
- A disproportionate level of work in progress was required.
- A high number of tractors were not needed by the dealers.
What we did
Set up the Project Team to identify hidden opportunitiesRenoir consultants partnered with the client’s taskforce to focus on opportunity identification, savings assessment, and target attainment.
Set up Management Action Teams (MATs) to realise these opportunitiesThe Management Action Teams (MATs)—comprising the company’s managers and staff—worked with the Project Team to execute processes and annualise the benefits.
Linked various departments to one management control systemInstead of working in silos, the different functions came together as one to manage the entire business process. The result was better communication, commitment and collaboration.
Reviewed Key Performance Indicators (KPIs)KPIs were revised daily, weekly and monthly based on the performance reports, thus enabling the management to tweak the variances according to their goals.
Improved operationsFirst Pass Yield (FPY) dropped to 50% per week, thus optimising the production processes and ensuring that work-in-progress (WIP) did exceed two full days’ worth of production.
Resolved daily issues promptly
Improved stock availability
Improved new product development
Minimised “missing parts” by improving logistics and warehousing
Improved after sales
ResultsAt the end of the transformation project, the company received exactly what they needed — visibility of hidden opportunities. The employees, too, received a benefit: knowledge transfer. They now have the know-how to drive future improvements. Here is a summary of what we helped the client achieve:
- Increased First Pass Yield average from 4% to 45%.
- Increased gross margins by 3%.
- Reduced inventory value by 24%.
- Introduced company-wide management control system.
- Established NPD planning and reporting tool.