At a Glance
- One of the world’s largest tractor manufacturers was experiencing inaccuracies in its Materials Requirement Planning system and problems with vendor management, leading to material shortages and problems meeting production schedules.
- Renoir Consulting was engaged to assess the company’s processes and develop a programme to improve performance.
- Renoir then implemented a 30-week project called “SCORE” to improve on-time delivery and increase inventory turnover by addressing the root causes of material shortages.
Key results
80%
increase in inventory accuracy
US$1.3mil
worth of inventory reduced
Background
Our client is one of the largest tractor manufacturers in the world, headquartered in Asia. They have a strong brand presence both domestically and internationally, producing a wide range of tractors for different brands.
They operate three plants in their home country and have an extensive network of dealers and service centres. In addition to tractors, the company has various interests in the manufacture of agro-industrial engines, gearboxes and transmission components, hydraulic pumps and cylinders, and many more.
The Challenge
The company was experiencing inaccuracies in its Materials Requirement Planning (MRP) system and problems with vendor management. These were causing material shortages and problems in meeting production plans.
Renoir Consulting was engaged to assess the processes and assist with a programme to improve the company’s performance. A detailed study of the entire process identified opportunities in the following areas:
- Errors in the Bill of Materials (BOM)
- Inventory inaccuracy
- Materials Requirement Planning (MRP) schedule inaccuracy
- Production line stoppages
- High inventory levels
- Vendor failures
- Buyer skills issues
- Material traceability
Project Approach
A 30-week project called “SCORE” was rolled out to improve on-time delivery and increase inventory turnover by addressing the root causes of material shortages.
A project team was set up consisting of a project manager and consultant from Renoir, and four people from the client’s office who formed the Task Force, with a steering committee headed by the Vice President Operations and a plant manager; and two Management Action Teams (MATs) from the project focus area. Both the Task Force and the MATs received extensive training to prepare them to become key change agents for the organisation.
Tractor manufacturer saves US$1.3mil on inventory
Tractor manufacturer saves US$1.3mil on inventory
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“Previously, we struggled to find a set of truly effective systems. Now that new processes are established, we are much clearer about what to do and where to act. We will get the desired results if we follow the new system.”
– Chief Operating Officer (COO)
Implementation
We kicked off Renoir’s Focus Process™ with the project team revisiting the opportunities identified during the evaluation. This helped to secure buy-in and ownership, and to prepare plans for change and implementation.
The following initiatives were implemented over the course of the project:
New systems and processes
- Developed and implemented systems for checking, verifying and correcting bill of materials (BOMs) and appropriate stock record formats for all areas.
- Overhauled the cycle counting process.
- Carried out bin accuracy and material location studies.
- Developed and distributed location lists to production cell supervisors.
- Established a new Quality Deviation Approvals (QDA) logging process.
- Carried out trials by testing the MRP system to ensure schedule accuracy before going live.
- Implemented engineering change management system and improved daily planning system.
Inventory
- Identified the root cause of excessive inventory changes in the production plan.
- Implemented a well-structured Material Planning and Inventory Management system that enabled plant management to see the impact of plan changes and buyers to track inventory levels on a daily basis.
- Identified excess and surplus stock to enable schedule adjustments and avoid duplicate orders in the event of supplier delays.
- Developed and distributed component tracking formats to all buyers.
- Implemented a daily MIS dashboard for both the plant and store to provide management with immediate access to performance data.
“The internal systems are now stable. We have very good control and confidence with internal factors. We should use the same techniques to solve the external problems of the plant.”
–Â Vice President Operations
Results
70%
increase in MRP accuracy
53%
improvement in monthly delivery compliance for agricultural equipment
US$1.3mil
reduction in inventory
reduction in BOM errors from
13% to 1.3%
*We have intentionally omitted client-specific details to uphold strict confidentiality.  
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