57% Labour Productivity Increase at an Electrical Component Manufacturer
The Situation
ElectricCo*, a European electrical component manufacturer, was facing a need to reduce cost. With new owners, the pressure to improve performance quickly was already high, and a sudden market downturn exacerbated the situation. Sales volume had dropped by over 20% across their largest plant. Especially hard hit were some of the higher-end products, such as the precision machined components. The leadership of ElectricCo did not have an easy job ahead of them, having spent the previous years continuously focussed on improving, and it did not feel to them that there was much opportunity left, especially if investments in new equipment would be harder to come by.
Productivity improvements focused on reducing operating costs were at this point crucial, and quick action was required.
Leadership reached out to Stroud to help with a series of 60-Day Breakthroughs. First on the agenda was the precision machining area. ElectricCo assembled an improvement team of plant operators and leadership tasked with tackling fast, sustained cost reduction alongside a Stroud facilitator. With a minimum target of a 20% productivity improvement, it would not be an easy task.
Finding Hidden Opportunity
The team first needed to find enough opportunity to reach the goal. Whilst several small optimisations seemed possible, even getting everything that people had in mind done would not get close to 20%, and there certainly wasn’t time to focus on them all. The team needed more and looked to “Explore the Impossible” by applying a Zero-Based Analysis tool. Comparing the actual performance to the theoretically perfect performance (zero downtime, zero waste, instantaneous changeovers, and running at the theoretical maximum speed) exposed huge chunks of previously unseen opportunity. Whilst it still wouldn’t be easy, there was at least a viable path to success.
Problem Solving and Implementation
The team set about the task ahead. The opportunities uncovered with Zero-Based Analysis in the precision machining area were systematically realised through a combination of strong technical problem-solving by abandoning the need to guess, taking ownership for solving the problems quickly, and focusing on the task with a results-first mindset. Over the next 8 weeks, the team delivered a 24% rise in productivity without any CAPEX, with some of the highlights for the team being:
Almost doubling the speed of a key machine by systematically digging deep into the problems themselves rather than relying on experts or the manufacturer in the hope that they would fix the problems.
Reducing the man-hours required to operate a critical piece of equipment by a factor of ten.
Involving a large section of the workforce in the initiative, driving understanding, commitment and daily actions to eliminate any waiting in manual processes quickly.
The team was not finished there. With plenty of opportunities still left on the table, the team embarked on another 60 days of improvement, lifting productivity by another 33%.
The Results
Energised by this and applying the same approach, the plant drove similar improvements across all major departments. The in-year saving targets went from impossible to well on their way to being achieved within a few months. Management now had the time to begin creating a plan to achieve next year’s targets with more than enough time to get a head start.
Across all departments, ElectricCo achieved 1.5MM€ of annualised savings. The level of results and how the team achieved them, opened eyes, and soon the CI groups across all plants were keen to learn how to apply the Zero-Based approach across all of their facilities.
*We take our client’s confidentiality seriously - the names are fictional, but the results are real!
Like this case study? You might like:
