The challenge
An industry leader, our client is the world’s largest manufacturer and distributor of sporting equipment (specific sport) and related apparel and accessories. The business has worked closely with the sporting community nationally through to club level for over 80 years including involvement with school, junior and disability programs. Our client’s tradition of excellence has also seen the company awarded three Australian Export Awards and an induction into the Helms Foundation Hall of Fame in the U.S.A. for outstanding achievement.
Despite their success, the business has been greatly affected by declining participation by 2-3% per annum over the past 20 years. Changes within the sport have also generated a greater demand on product variety, with over 600 different lines manufactured. To meet demand, the business has been forced to manufacture smaller batches
more frequently driving up inventory and draining cash flow.
Determined to maintain their reputation and position in the market place, senior management highlighted the need to evolve the organisation to meet the expectations of a new business environment. Their objective was to provide a tailored ‘just in time’ solution to meet customer requirements.
our solution
Our first step was to conduct a thorough business diagnostic review including the use of our customised Lean Waste Audit to ensure all issues were recognised and appropriately prioritised. The review identified numerous areas for improvement, including:
- Lack of plant KPI’s to measure performance and manage improvements;
- High levels of stored finished goods and obsolete stock (void warranty);
- Declining staff morale and increasing safety concerns resulting from erratic production scheduling and disorganised working environment;
- Increased customer price sensitivity and expectations of shorter lead times;
- Lack of capacity planning to accommodate customer demand; and
- Lack of SOP to aid production and consistency.
The results of the audits and follow up staff interviews were used to develop a customised LEAN Program and implementation plan with the objective of reducing overall
inventory across the business.
Recommendations included:
- Implementation of Visual Management system and the design of standard work instructions for all critical processes;
- Implementation of an effective Pull System to optimise in-progress inventory levels, improve on-time delivery performance and simplify production planning
procedures;
- The implementation and maintenance of effective housekeeping standards (5S) to ensure a clean and safe working environment for all employees;
- Conduct team workshops to train and implement the new processes involving all relevant staff and ensure establishment of a ‘continuous improvement’ culture to assist the business take control of its operations.
results delivered
After working closely with staff and senior management a number of significant improvements to the business have been achieved. Training of staff in the use and
implementation of key Lean tools has contributed to the establishment of an embedded continuous improvement culture and process while uplifting morale and employee
engagement.
Results delivered include:
- Clearing away of all non-essential items through 5S and the establishment of regular continuous improvement meetings to ensure maintenance of new systems;
- Value of WIP and finished goods in first 7 months of Pull System implementation reduced by over 20% or $200K (further gains projected) freeing up working capital and minimising warranty obsolescence; and
- Implementation of updated and relevant performance metrics to ensure volume production culture is erased including tracking of returns and complaints to return focus on quality and customer service.
testimonial
"The Lean implementation has brought an understanding and knowledge of Lean tools and how to implement them. As a result we have been able to reduce inventory in both raw material and finished goods, reduce claims and improve customer service outcomes. Phalanx has created a long term strategy and set of tools to create a continual improvement structure within the organisation. We are pleased with our outcomes to date and the direction that the Lean process is taking us toward.”