Manufacturing Case Study: Capitalizing on Capital Investments with Transformative Change

By Chris Geraghty, Kepner-Tregoe

Big Investment/Big Problems: After a major investment in equipment, a manufacturer was struggling with high waste, downtime and planning deficiencies; and overall workflow was not conducive to producing at the lowest possible conversion cost.

In many situations, such as this one, a program of Continuous Improvement (CI) could provide evolutionary changes over time. But the situation here was immediate and the need for change directly affected the bottom line. To begin recouping the capital investment, the organization wanted to identify and bridge performance gaps in a way that would ensure sustainable performance.

At Kepner-Tregoe, we use a structured process for these major, targeted improvement projects. It begins with analysis. In this case, a combination of operational data analysis, personnel interviews, plant studies and observations were used to identify the potential improvement projects and quantify financial return. The projects were prioritized to determine the critical few with the biggest ROI. KT and the client executive team selected projects and set an ROI goal of 5:1.

Critical to any change project are capability development and project planning. People are what drive performance. It is essential to transfer the skills needed to achieve and sustain change. At this manufacturer, we combined problem solving and decision making skill development and application with a “learn and do” approach to project management, working side-by-side with project managers to develop robust plans for the selected projects.

During the project, we worked with the client project managers to strictly follow the tasks of the project plans, successfully completing the necessary systems, process improvements and knowledge transfers needed to achieve the targeted objectives within a strict timeframe and to sustain them going forward.

At the conclusion of the engagement, the plant surpassed goals. In addition, crew- members had become actively engaged and involved in the decisions impacting line performance. Results included:

  • 47% improvement in operational efficiency, driven by the desire to beat shift targets and disappointment if targets were not met
  • 50% reduction in changeover time, achieved by active participation in risk assessments by crew members
  • A new focus on eliminating waste and achieving stated performance goals using a daily management discipline

Transformative improvement projects benefit from the strong capabilities that CI programs have developed for gathering data and eliminating waste. Projects leave behind significant improvements that incremental, Six Sigma projects can fine-tune. But organizations seeking transformative change can’t rely on CI alone. The catalysts for a major targeted improvement vary but a revolutionary, not evolutionary approach is valid. To complement CI programs or before initiating a new CI program, major improvements can be achieved by focusing resources with a rapid, systematic approach to sustainable change.

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