Challenge: A food processing company broke into a new market with an innovative product but soon encountered manufacturing hurdles. The challenges included an inability to project production accurately when creating stock and a decline in efficiency driven by an increase in SKU variety. Despite ascending sales and a well-received product launch, the company's profitability began to wane.
Solution: I recommended a strategic shift from the long-standing Make-To-Stock approach to a Make-To-Order model, encouraging customers to submit timely orders. This paradigm change in production planning aimed to minimize daily product variety, thereby slashing changeover times and heightening efficiency.
Implementation: The transition took ten weeks, from initial plan endorsement to executing the final touches. The client opted for a bespoke solution, integrated seamlessly into their existing ERP system. A comprehensive Manufacturing Execution System was devised to digitize all production processes. Digital workstations were installed within the production area to enable supervisors to receive and update tasks on the fly. This gave the Production Manager the tools to craft precise plans up to three days in advance and forecast output for the following week. Moreover, the Procurement Department gained a more predictive inventory management capability, forestalling ingredient shortages.
Result: The intervention delivered profound cost savings, including a 32% labor cost reduction per pound of manufactured product due to fewer changeover operations and reduction in overtime due to better planning. Additional 3.4% cutback in waste overheads, as product expiration and overproduction were curbed. Additionally, the modernized production planning process afforded full visibility into progress and heightened departmental efficiency across the board.