Lost into profit
The Situation
For 6 consecutive years, the company was making losses, two years before my onboarding they move into a new facility with the ambitious footprint to expand local manufacturing capability and growth the market. Complete manufacturing lines were set-up with substantial overhead cost by ordering from European feeder factories, shipped to China.
The Task
Streamline the sales, operations, supply chain and help turn the company back into profit.
Local China market was very competitive combined with the fact that the products were for methodological and process industry, certification of the new production line and products took months.
The Action / Approach
Spent two-month understanding the day-to-day operation of the organisation, the process, getting to know the people and their duties.
I restructure and change the product line by product line structure to a matrix organisation. Drove a team culture, ensure there were plans in place to cross-training industrial engineers. Procurement team were acting as the back-up, and so learn the other products.
Next, I review all CAPEX investment and pland for new production lines. I took everything that was possible to source local out of the import list. Must say I did get some puch back from my European colleagues, but I had a task ahead of me.
Following that, I locally manufactured products bill of material, analysed all parts purchases from the European feeder factory or European supplier. Then work with the Supply Chain manager to either source the part directly from the original supplier or source them locally. It turned out taht may of the parts could be localised, cutting cost by as much as 40%.
I then set-up an operational excellence programme across the organisation. I started putting cross-department people into the Operational Excellence Training Program and assigned them projects that took 2 to 3 months sprints. I monitor, coach the teams and steer the projects to ensure the objectives were delivered on time. Some examples of projects were reducing throughput time, optimising product lien layout for smooth flow, just-in-time manufacturing, implementing Kanban, quality improvement, etc.
Last but not lead, I work with Sales to recaptured lost market, build back damaging relationships with customers in China. I also led the team to expand the market to foreign countries (export) and convince peers that the product out of China from My factory was of equal quality as the feeder factories.
The Result
After 12 months the business turned around, the loss was less than it has ever been over the past six years, product gross-margin improved and sales grew.
Overall on-time delivery performance did not improve despite the factory improved performance for locally manufactured products, but this was due to another reason.
After two years, the business hit black zero and generating 2-4% coats saving annually, product quality improved significantly, and the Export market grew by 90%.