Kaizen Event Increases Profit Margin by 22%
Our Client determined that they had a failing product line. The margin on the line in question was -3% and they needed to know whether it was worth trying to salvage or if they should drop it and reallocate the resources to a new product that was about to go into production. The reasons for this deficiency weren’t apparent.
They either had to hire more operators to run the new product line or move the existing operators from the failing line. In order to make a decision based on data, they looked to LSSE for help analyzing the situation.
After a two day evaluation, it was decided that we would try to save the existing product line. A Kaizen event would be conducted to focus on eliminating the wastes in the process and attempt to make it profitable.
The objectives of this event were to accomplish the following:
- Implement 1 safety or ergonomic improvement per team member
- Increase weekly output to 5000 units
- Reduce lead time and WIP by 50%
- Implement Standard Work
- Improve 5S score by 1
- Implement control chart to maintain improvements
A LSSE Lean expert joined a cross functional team to tackle this project. The team was made up of a CNC machine operator, Wire EDM operator, quality inspector, maintenance technician, document control coordinator, manufacturing engineer, quality engineer, and a prototype machinist. This team was selected in order to combine operational knowledge with fresh perspective.
It’s important to involve unbiased, or outside, people in order to bring new perspective to a situation. All too often we put on blinders and say “we do it this way because that’s the way it’s always been done”. If you come into a process improvement event with that mindset, you’re probably going to get results very similar to what you started with. That’s why it’s important to organize a diverse team and come in with the willingness to change.
With the help of the Lean training provided by LSSE during this event, wastes were identified and value added activities were optimized. We focused on creating a cell that operated at the rhythm of the takt time. We discovered that in order to meet takt one of the operations in the cell didn’t need to run continuously. This meant that we could free up an operator on each shift and still meet our daily production needs. By reducing the number of operators in the cell we were able to lower costs on the part and use the operators in the newly developed product line.
The results of this event gave our Client the ability to not only keep the product line in question, they were also able to reallocate resources to a new line. Effectively they were able to do more work with the same number of people they currently had. By implementing the core concepts of Lean Manufacturing we were able to achieve the goals needed for success.
The success of this event increased the profit margin by 22%, freed up 2 operators to run the new product line, and resulted in an annualized savings of $496,237.