Re-Implementing the SAP Warehouse Management Module in a Chemical
Manufacturing Operation

SITUATION
This particular client, headquartered overseas, produces a variety of chemical products for commercial applications, including additives to paints, packaging and motor oil products. It has a reputation for consistent quality and above average customer service.

Eighteen months ago, the client added a warehouse management (WM) module to its SAP system with a goal of enhancing material movement between the warehouse and production areas through the use of automated picking lists and RDIF scanners. However, the implementation of the new module was poorly executed and resulted in minimal knowledge of and compliance to procedures at the process operator level.

A physical inventory at year-end resulted in over $500K in write-offs. Six months later, another inventory count found an additional $287K in material variance. Faced with these challenges, the company engaged LEP to assess the opportunities for improvement and propose a way forward.

APPROACH

The analysis confirmed that the WM module works as designed,
but it is not user-friendly, particularly with lack of proper training.
LEP recommended and the client agreed that it was necessary to re-implement the system by:

• Preparing a process flow map of the current system to determine interfaces and breakdown points.

• Simplifying the current system flow to capture the five major
  operator interfaces identified during the analysis, while eliminating
  the use of phantom locations.

• Designing and delivering operator training (on-the-floor) that
  establishes the value of accuracy, stresses the ultimate simplicity
  of the system and restores operator confidence.

• Implementing an error tracking system to perform root cause
  analysis and provide a basis for operator feedback.

• Reviewing historical volumes to construct an ABC analysis of both
  raw materials and finished products.

• Utilizing the ABC analysis to reconfigure the warehouse with an
  orientation towards the production area.

• Establishing a continuous process improvement team to sustain
  the results captured by the project.

RESULTS
All project objectives were met. The year-end physical inventory resulted in less than $10K in write-offs. The client realized a 10:1 return on investment.

Pigment Manufacturing
With a Supply Chain Focus

SITUATION
A division of a Fortune 500 corporation, providing pigments to a variety of end users including auto and architectural glass, had a history of meeting profit expectations and customer demands.But, as the parent company increased focus on inventory management and profit performance, the plant could no longer maintain its customer service level and was experiencing low inventory turns, decreased on-time delivery, increased rush orders, and lower throughput. The supply chain issues were further exacerbated by a plant culture that was resistant to change.

Faced with these and other challenges, management engaged
LEP to assess the opportunities for improvement and propose
a way forward.

APPROACH

Working closely with the client, LEP designed a highly leveraged project involving teams of client personnel to address the key soft spots in the SAP system.

• Raw Materials Team focused on issues that caused materials shortages.

• Inventory Accuracy Team trained personnel to use the system and
  increase accuracy.

• Intermediates Team focused on the flow of materials in process.

• Finished Products Team focused on reduction of lead time and
  improvement of on-time delivery.

• Aged Inventory Team focused on the reduction of aged inventory.

RESULTS
Project benefits are project to exceed $1.3 million dollars, and the project attained break even six weeks ahead of schedule.

• Reviewed primary SAP modules and aligned processes with system requirements.
  

• Reduced Aged Inventory by over 30 percent and root causes were identified and addressed.
  

• Eliminated plant-related raw materials shortages.
  

• Eliminated WIP (Intermediates) as a reason for production delays and increased availability in bottleneck production areas in excess of 85 percent.

• Reduced lead time on custom orders by 50 percent.

• Client achieved a reputation as having the highest standards in the industry.

• Client plans to expand Lean into the production area.

Heavy Trucking/Cab Manufacturing

SITUATION
A truck manufacturer rated 4th in worldwide sales desired to lead the heavy duty trucking industry and be the major player in the world. The organization enlisted LEP to help them maximize their profitability and increase their competitive edge through cost reduction measures to decrease hours per truck and increase quality by implementing Lean systems. Specifically, the company needed to:

• Decrease hour per truck times.
• Implement systems for controlling quality, cost, and service relative
to on-time delivery and track problems to the source.
• Create a sense of urgency among front line leadership and the
ability to work together effectively.
• Create a cooperative culture between departments

APPROACH

Our approach and improvement efforts were focused on the following:

• Enhance the manufacturing processes and systems to control quality, reduce cost, and provide for competitive on-time delivery through cycle time reduction.
  

• Develop a focused company leadership team.
  

• Provide Supervisory education and training for all levels to improve
  communication lines and teamwork for goal attainment.
  

• Reduce turnover among Plant Supervision.

RESULTS
Achieved annualized savings in excess of $14,500,000 – Promised 3:1 ROI; delivered 27:1 ROI. Company moved from No.4 to No.3 in sales worldwide by completion of the project.

• Reduced hours per truck by 33 percent

• From 18.57 HPT to 12.3 HPT

• Increased throughput 21 percent

• Streamlined production planning process

• Implemented reporting and monitoring system for continuous improvement.

• Initiated Lean Teams in the area of SMED and the elimination of waste.

• Cross-trained workforce for production planning and flexibility.