A large commercial seating manufacturer received an order for 200 custom-made bar stools for each team in the 2014 Super Bowl. The manufacturer rushed the order out the door in time for the game with logos for the Pittsburgh Steelers and the Seattle Seahawks. The only problem? The Steelers weren’t playing in the Super Bowl. In fact, they didn’t even make the playoffs.
This was only one example of our client’s increasing problems within their organization. The company struggled to deliver its customized products in a timely manner, at a high level of quality, and at a price that consistently generated profit. In short, here were there major areas of concern:
Customers: They were losing huge customers and by the time they hired Blue Pearl, they had already lost 35% of its most profitable customers. The account managers and sales group suffered from low morale and lack of confidence.
Waste: Incorrect orders, shipping, returns, re-processing the same order multiple times, disorganized warehousing practices, language barriers between the staff, and, more, significantly added to the manufacturing costs. Perhaps the biggest area of waste was unused bar stool legs costing over $200,000 from a supplier that had gone out of business in 2008.
Process Understanding: The manufacturing process was a mess from supply delivery to customer shipping. The warehouse was disorganized. The manufacturing process took place on different floors, with consecutive stages of the process sometimes separated, without reason, by as much as 3 stories. These factors led to low labor morale, wasted time, increased injuries, and increased costs in areas ranging from overtime to insurance premiums.
Process Variation: Despite their process being fairly standardized, they treated each order as if it was their first.
Value Identification: The company was always rushing to complete projects, putting more emphasis on getting the shipment out the door than on how the shipment was completed or even if it was correct in every respect of the order.
Blue Pearl sat down with leadership and asked them to tell the story of the company. We were informed of an 85 year old company that had grown to an international seating supplier from very modest beginnings. We were told of the previous generations of owners that took great pride in their seats and would frequent their customers’ establishments and brag that everyone was sitting on their seats.
We also looked at their assets. Their ownership, while overwhelmed and out-of-touch, desired to be engaged. Some of their laborers, though unskilled, had been there for years. They had the space, the equipment, and, the ability, without significant overhaul, to make huge improvements.
Blue Pearl built a 3D model of their factory and proposed 3 different manufacturing flows. We researched and proposed appropriate SKU systems and strategies for different sourcing and procurement, reenergizing the sales team, the labor force, and getting management to interact with its employees.
We also proposed a plan for reaching out to current customers, former customers, and measuring new customer acquisition. Finally, we proposed a solution for injecting some of the pride back into the company.
First, and foremost, we cleaned, organized, and made the warehouse an efficient storage of raw materials waiting to be manufactured and finished goods waiting to be shipped out to customers. We sold the unusable materials so that only product that could be guaranteed for quality was in the space. We then mapped out three paths through the warehouse, clarifying how supplies were to be moved throughout the warehouse. We evaluated different SKU systems and found one that worked for their product and level of sophistication.
There was, as a result of the newly renovated warehouse and an effective manufacturing process, about 3 floors of empty space. They were able to use these floors to expand their product line, which we also helped setup as they began to manufacture tables. In addition, the sales team was given their own floor –one that was remodeled and comfortable, adding excitement and charging the team’s morale.
The factory was now organized, waste minimized, and the process standardized and simplified as much as possible. It was a rebirth. Gone was the company that had lost connection with its clients and staff, and had patched together processes as it went along. There was now a company approaching a future connected to its clients, with employees that were excited to come to work, and with a roadmap for expansion and a path to implement growth.