Background
Thanks to the early success recorded from the results in our previous collaboration with the client, they recorded a reduction in overall annual operating costs. Additionally, our projects also helped ease the pressure in the profit margin that comes from the rising costs of raw materials, an industry-wide shortage, and new environmental regulations by the government.
To extend the effects of these results to more areas in the organisation, the client decided to extend our collaborative partnership for another 20 weeks.
Project Approach
Based on the results we achieved in the first project, we identified three workstreams with the following objectives:
- Plant production and planning
To improve production efficiency while reducing the cost of production. - Research & Development
Improve the process and lead time of product development while enhancing the quality of the formula. - BPR (Business Process Reengineering) and Organization Redesign
To optimise the organizational structure while improving efficiency in the business processes.
Project Implementation
The project was split into three workstreams. After 20 weeks, this is what was achieved:
Workstream I: Plant production and planning
- Improved and fine-tuned the current management control system (MCS) to lower the in-process inventory level, reduce production cycle time, and reflect more accurate efficiency measures. This allowed stakeholders to identify the root causes of problems faster and more accurately, assess staff skillsets, address performance gaps, and encourage a bottom-up culture of improvement in the company.
- Monthly inventory of excessive paints generated has been put in control has been reduced overall thanks to the implementation of the MCS.
- Simplified the stocking process by streamlining unnecessary intermediate materials.
- Merged two shifts into one, resulting in reduction of energy consumption as well as the staff overtime costs.
- Introduced a more cost-conscious model to recruit and train temporary staff during the peak season. This is particularly needed in the industry with significant peak (tight resources) and low season (excessive resources) without supplying full permanent manpower.
- Designed a by-product manufacturing base selection model which allows for a more scientific assessment on where the product should be made.
- Built a procedure to better manage substandard goods, with clear roles and responsibilities, and a periodical review system.
Workstream II: Research & Development
- Designed and implemented and MCS that focuses on product development, quality, and cost. The system allows stakeholders to improve visibility and progress tracking, resulting in a more effective product development management and a reduction of lead time in product development.
- Improving the quality and efficiency of sample-making through a better allocation of sampling tasks by individual staff.
- Established and implemented the project (product) launching process, with clearly defined criteria to improve efficiencies in development, avoid unnecessary resources deployment, and increase the accuracy of data entry.
- Established a platform to initiate internal knowledge sharing and transfer, which will lead to less trial and errors and improve efficiencies.
Workstream III: BPR and Organization Redesign
- Identified new business opportunities through site observation, activity listing, analysis in workload-related data, utilisation measurements, and ‘span of control’ review in the current organisation.
- Streamlined operations in over 10 departments by up to 26%.
- Proposed an integration model for a wood coatings channel (within the same region) which will avoid the duplication of efforts in approaching same prospects via different channels.
- Introduced a customer service-oriented approach with an improved integration of customer service functions between sales and supply chain to simplify the communication channels with customers.
- Proposed a review mechanism to judge the need of current physical regional sales offices. Most of the small sales offices would be integrated into the four major regional offices unless there is a specific need regionally.
- Proposed a strategic structure customised to the need of marketing department that will help increase front-line efforts and regional promotion, while marketing team can concentrate better on branding activities.
“These projects have brought us a new way of thinking, and we have truly benefited from them.”
Plant Production Manager
Results
Every department involved in this project achieved a significant and measurable improvement in performance.
60%
Quality in formula/sample making improved
17%
Production efficiency increased
3:1
ROI
30%
Product development lead time reduced
12%
Labour and utility costs reduced
The client’s goal was to lay the foundations for future gains through robust management control systems and developing a culture of continuous improvement. Thanks to our input, they are now in a better position to meet the challenges of an extremely competitive market.
