Copyright 2008 © The Manufacturing Optimization Group; all rights reserved.
CASE STUDY SUMMARY – A Delivery Catastrophe Resolved
By James Shearer, Principal and CEO The Manufacturing Optimization Group, Inc.
The information in this case study summary is accurate in substance and context. Titles, processes, and the company’s name and industry have been disguised to protect the identity of the actual company.
LUDVON Industries (LUDVON), a durable goods manufacturing company, was alienating customers and losing market share due to deplorable delivery performance. Significant & immediate improvement was required.
Due to a number of reasons, including a lack of investment in capacity and a deterioration of existing production machinery and equipment, LUDVON had developed an extremely serious delivery problem. The products were electro-mechanical devices and the company utilized injection molding, painting, machining, and assembly/packaging as the most common processes. Orders were an average of two weeks past due in an industry that absolutely required on-time delivery (some products were literally months past due). The Customer Service Department was insensitive to the customer’s plight. Customers were abandoning LUDVON in favor of competitors. Market share was declining.
LUDVON was on a very steep slope to ruin. Immediate, consistent improvement in delivery was required to salvage existing customers and regain lost customers.
The requirement was for a very coordinated, broad problem solving effort that addressed a number of critical shortcomings simultaneously. Improvements in delivery performance had to start almost immediately to stop the customer exodus. As the newly appointed general manager, I launched an immediate effort to make the needed improvements.
The concept was to first install a sense of urgency in the top management team. The team had to understand how serious, potentially fatal, the problem was. LUDVON needed full support from all key managers in order to successfully solve the problem.
A serious, complicated problem, especially one of this magnitude, was best solved using a team - utilizing the talent, experience, and skills of a very select group. The top management team carefully identified and selected those employees who could contribute the most to solving our delivery problem. These employees formed the problem-solving team.
We also used a highly structured problem solving approach to analyze and solve the delivery problem that included the following steps:
The team functioned by using fact-based analysis & decision making (utilizing accurate and timely data and information, not opinions or guesses). The structured approach, described above, provided a framework for this fact-based analysis but still allowed for & promoted very creative, out-of-the-box thinking.
The problem solving team easily agreed on the problem definition – consistent, almost entrenched inability to provide key products on time to customer specified delivery schedules.
The team then identified one true root cause and several underlying or contributing causes. The root cause was more or less obvious – we didn’t produce enough of the right products at the right time to satisfy demand.
Identifying and eliminating the numerous contributing causes or factors then became the key to permanently solving the problem. The team identified the following elements as contributing factors to the root cause:
A very serious, potentially fatal problem had now been well defined and a root cause with a number of underlying contributing causes had been accurately determined. Through extensive individual and team effort, we developed corrective actions for each contributing cause identified. Each of the corrective actions became a project in its own right and was individually managed as such. Some, but not all of the corrective actions developed & implemented are listed below.
As a result of these corrective actions, past due amounts were reduced by an incredible 99% (from as high as $1 million past due on a daily basis to consistently less than $10K past due on a daily basis)! Had this critical problem not been solved as quickly and thoroughly as it was, the business almost certainly would have collapsed.
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Last modified: 02/10/08
Copyright © 2004 The Manufacturing Optimization Group