Reducing Cost on a Global Scale
A $3.6B leading manufacturer of industrial controls in Shanghai, China supplies devices for monitoring and automating manufacturing processes to the chemical, oil and gas, paper, food, pharmaceutical, mining, electric, water, and scientific industries.
A corporate mandate to consolidate global manufacturing, engineering and integration services revealed that integration services accounted for a significant portion of what amounted to $300M in project operations spend with labor costs accounting for most of the integration services expenditure. The overarching challenge was to evaluate, measure and improve the integration process and develop a pilot program that would inform the global standard to be implemented across six countries in North America, APAC and EMEA.
Leveraged the DMAIC process and Lean methodologies to identify issues around high inventory costs, space constraints and cost compression demands by customers. Two part solution featured:
1) The development of a cabinet integration manufacturing process that entailed:
- Conveyance system for easy transport of cabinets to designated work content areas
- Establishing a TAKT time and One Piece Flow
- Implementing Standardized Work procedures
- Installing Kanban / Pull Systems
- Creating a Quality at Source Inspection system
- 5S & TPM Maintenance program
- Balancing lines by building cross trained teams
2) Fundamental to the success of the above was the creation of a document control center and a production planning and control office which included:
- SIOP (Scheduling, Inventory, Operations, Planning)
- Documentation flow aligned to manufacturing flow
- The development of space planning software to facilitate FAT activities and optimize the efficiency of space used. This software addressed flexibility and scalability concerns and facilitated reporting across manufacturing operations.
- The implementation of the Automated Drawing Generator which coordinated the activities of over 100 project managers 60 countries and interfaced with Auto CAD to streamline the design process and eliminate re-work resulting from lags in drafting time
The Shanghai-based pilot has produced a blueprint for reducing 80 integration services vendors down to 6 globally as well as reducing inventory levels by $2 million in Shanghai. This pilot will be adopted by the global network of cabinet integration centers as it has:
- Increased the cabinet production capacity by 100%, now capable of producing 5000+ cabinets a year (previous capacity: 2300)
- Improved the footprint requirement for staging, FAT testing and customer acceptance
- Reduced the cycle time required to produce a cabinet by 50% In addition, the space-planning tool increased efficiency by 120% and the Automated Drawing Generator is able to produce CAD renderings that would normally require two weeks of a draftsman now in just 10 minutes.