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  This loss-making company suffered from very slim margins, competition having driven prices close to variable cost. A major problem was the age and quality of the company’s machines. There had been a historic lack of investment by the parent company, because of poor profitability. With too many old machines, the client’s variable costs were above those of competitors.

We were invited to address manufacturing problems which included poor stock control, capacity utilisation, low machine speeds and poor labour productivity.

We first tackled planning. This ignored factors such as availability of labour, efficiency of machines and good versus poor quality production. Consequently shortfalls against production plan were common, leading to failure to meet customer needs. To counter this, sales were constantly interrupting production to ask for urgent needs to be met. Sound planning and scheduling systems were installed.

Machine downtimes were high, with high levels of repairs. Standards were unrealistic. As maintenance activities were almost always different from plan, there was little control of maintenance labour, whose records did not correspond to actual happenings on the ground. Tight controls were introduced.

Machine layout was improved to create a more logical and efficient flow within production. This also reduced work-in-progress. New performance measures were introduced – e.g. machine efficiencies and capacity utilisation were accurately tracked. Waste records were introduced where previously there had been none, allowing focused action to reduce waste levels.

Labour control had been based entirely on standard costs, with no record of what people actually did. Recording systems were introduced, and with it an ability to control labour more efficiently. A few key management changes were recommended.
These actions stemmed losses, buying time for management to develop a new marketing strategy.

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