Lean Implementation for Food Ingredients Manufacturer
CLIENT CONTEXT & PROBLEM
The client is a 70-year old food ingredients manufacturer with INR 500 crore turnover. Few years back, the client started a Joint Venture(JV) with an international conglomerate, where the JV partner contributed to 60% of their business. The client was facing challenges in meeting customer service levels. The On Time in Full (OTIF) delivery levels have been falling consistently in the last four years, reducing JV partner confidence. The JV partner had raised serious concerns about service levels, and had discussions with few other business houses in the region for a new venture, in the same business line.
APPROACH & SOLUTION
Consoul team examined all those factors that may have an influence on the OTIF. The current process was mapped in detail from the customer order receipt until the finished goods reached the customer warehouse. Created the current-state Value Stream Map, in terms of time and money.
Based on process mapping, two areas were identified to focus, the in-process quality rejections, thereby increasing the lead time and high level of inventory. While breaking it down further, more challenges were observed - Lack of KPIs in function, Ambiguous communication, Cluttered information flow, Capability of people , Lack of clarity in the quality plan, Lack of review mechanism for KPIs
Solution Highlights:
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A detailed plan of action keeping the challenges in mind was made along with a sustainable technology solution. This addressed the challenges related to, business process (method), materials, machines, people, information flow, and sustainability of results. This was presented to the management and agreed upon the way forward.
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The implementation started with a change in reporting structure within a function, the job responsibilities of each within the team, SOPs of operations and communication, formats for information sharing and authorities for amending information shared, the person responsible for communication across functions, and single point of contact for each function, review mechanisms and timelines for review, KPIs to review and escalation matrix and generation of new BI reports from ERP to monitor and review KPIs.
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During implementation, there were certain challenges in terms of review mechanisms and its escalation, which was addressed and redefined.
BUSINESS RESULTS
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Service level improved to 60% within four months and touched 95% in the seventh month.
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The inventory levels came down from 33 days to 15 days during the same period, improving the cash flow of INR 5.6 Crore and INR 67 lakhs bottom-line improvement.
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Surpassed target of 78% of service levels, and the same achieved within the time frame of 7 months
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Received the status of tier 1 supplier from JV partner
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The results are still visible with the client and they have never fallen back in their service levels, making it a sustainable solution through SOPs and technology support.