Oxford Holt & Company

Manufacturing capacity improvement

This privately owned manufacturing company was experiencing considerable growth and was on target to improve sales by 30% year-on-year over a period of 4 years.  However, the facility was rapidly becoming overloaded, overtime was endemic and productivity was suffering.  Key staff were struggling to cope, morale was falling and customers were being let-down.  As a result, we were asked to undertake a complete review of operations and to recommend how the position could be improved.  The initial focus was on overcoming the short-term capacity issues, however a longer term growth strategy was also required.

The project was undertaken using Six Sigma methodology and Lean principles.  It commenced with the derivation of a set of current performance-related metrics that measured the main aspects of the business.  These were particularly revealing and what become clear at the outset was that although there were pockets of excellence, many areas of the company were underperforming.  Essentially, there was no real correlation between production requirements and resources - both raw material and manpower.

In-house staff were fully involved throughout and their day-to-day frustrations were highlighted. 

The project was delivered on time and within budget.  The initial report highlighted more than 50 recommendations that were used to formulate a prioritised action plan for the client's staff to follow.  A member of management was tasked with implementing the findings and the project paid for itself on the first recommendation alone!  Savings were based on an improvement in productivity of c10% and were conservatively projected to be c£60,000 per annum, although in reality, the figure is likely to exceed £100,000.  More importantly, the improved productivity generated additional output that was used to remove the backlog of orders over a two month period.

Manufacturing efficiency

The client was a supplier to one of the major DIY sheds and was experiencing extreme difficulties in meeting the current level of orders.  Production was around five weeks behind schedule and the customer was threatening to cancel the contract.  There were also frequent stock-outs.  To compound matters, suitable labour was in short supply locally and as a result, excessive amounts of overtime were being worked, including week ends.  This had led to adverse cost variances and the company was loss-making.  We were asked to recommend and implement a way forwards. 

Having examined the manufacturing business model, our solution was based upon:

  • Revising the factory layout to ensure that production flowed smoothly
  • Reorganising the raw materials stores allowing stocks to be reduced and parts located correctly
  • Devising a system of "kitting-up" so that each job could be prepared in advance and processed accurately
  • Producing a series of key performance indicators and reports to monitor and control labour productivity

The project was quoted on a fixed-fee basis and was completed on time.  As a result, factory efficiency improved from 52 to around 85 performance; an increase of 60%.  Within three weeks, the backlog of orders was eliminated and stock-outs became a thing of the past.  Savings were in excess of £400,000 per annum

Lean manufacturing

The client had grown rapidly from a cottage industry to a multi-million pound business in a highly competitive market.  Although the manufacturing function was coping with current requirements, demand for the products was escalating and management wished to improve productivity within a Lean Manufacturing framework.  Initial diagnostic studies revealed that there was significant scope for improvement:

  • The flow of work was irregular.  It was also restricted by bottlenecks and excessive WIP
  • Use of floor space was particularly poor
  • Housekeeping and standards of safety had been neglected
  • Individual working methods were falling short of industry best practice

After mapping the processes we devised an improved factory layout encompassing a Pull system of production that moved towards Single Piece Flow.  Raw materials were fed by Kanbans and stocks controlled by Visual Management where possible.  A 5S approach to housekeeping was instigated to ensure that the improvements would be sustained.  The entire process was controlled and monitored using a series of simple KPI's that also enabled basic product costings to be derived for the first time at the company. 

As a result of the Lean Manufacturing project, labour productivity was increased by 12% and use of floor space was improved by around 60%, in addition to a number of other less tangible benefits.  £110,000 per annum savings meant that the consultancy fees were recouped within 3 weeks. 

Manufacturing operations

The client is a long-established manufacturer from a traditional UK industry.  During the past few years sales turnover had been static and profits declining, mainly due to an influx of cheaper products from the Far East.  Although several new machines had been installed, the operations and processes from within the remainder of the production facility had not been examined for many years. 

Our brief, therefore, was to review all aspects of manufacturing and to recommend how the client could raise productivity, leading to a more competitive position in the market.   Recommendations included:

  • Changing shift patterns
  • Re-deploying surplus manpower
  • Improvements in working methods
  • Devising a series of KPI's

The report was delivered on schedule and within budget.  Implementation occurred over a period of several months, without any IR difficulties.  The client is now operating at the same level of output, but with fewer staff and less overtime and shift premiums.  Resultant savings were around £250,000 per annum.

Factory layout

This company was only formed during the mid-1980's and had rapidly grown from humble beginnings to a multi-million pound operation.  The production facility, which comprised of two units totalling 60,000 square feet, was now wholly inadequate and was impacting upon the overall efficiency of the business:

  • Materials, WIP and finished goods were scattered everywhere
  • There was no clear flow of work
  • Further expansion was virtually impossible

The company had recently acquired a new 100,000 square foot facility and aimed to consolidate operations onto this site.  Our brief was to provide a factory layout that solved the previous problems and catered for Single Piece Flow, from the raw material stores fully through to the finished goods warehouse.  This meant that products that were planned for production at the start of the day could be despatched the same day.

In this instance, the factory layout was introduced to the client, accepted and simply handed-down to supervisory staff for implementation.  The transition went smoothly and we were not asked to change any single aspect of the layout.  Other than the obvious benefits of providing the client with a layout for the new factory, productivity was improved by around 4%, meaning that on savings of £40,000 per annum the consultancy fees were recouped within 4 weeks

Cost savings evaluation

This client had a dilemma - a supplier that claimed to be able to provide cheaper and better raw material had approached them.  The budget was c£1.0m per annum and the potential saving around 20%.  On the face of it, the decision looked obvious.  However, there was a snag - the client had to take large amounts of material that was of a variable quality.  Some was better than the specification - but some was also worse. 

Our brief was to compare the two suppliers and to recommend the best option.  This entailed evaluating the raw material in terms of the main issues, including:

  • % of good vs. reject 
  • Supplier delivery and reliability
  • Material yield through the machining processes
  • Extra labour required to cope with the re-work

Initially, deliveries were analysed in terms of useable material.  The good quality material was then tracked through each part of the machining process to determine scrap and wastage levels.  Having compared the two suppliers both statistically and logically, the conclusion was reached that the original supplier was the best.  Although substantial savings could be made at the purchasing stage, costs escalated throughout the process and these savings were subsequently negated.  The project was concluded successfully, on budget and within the agreed time scale.  Use of the correct supplier was estimated to have saved the company around £65,000 per annum.