My first job when starting work in the automotive industry, I was tasked with managing the logistics of the biggest production line.
There were many problems with the line. They didn’t build to sync, they often ran out of raw materials and would often have to work evenings and weekends to satisfy customer demand.
Fire fighting has a direct impact on productivity
We were having regular special deliveries from our suppliers and having to call in a transport company to send additional stock to our customers because we hadn’t produced the right parts for the collection. The relationship between the supply chain team and operations was poor and there was a lot of tension in the end to end supply chain.
These problems were having a direct impact on the bottom line. The production line had circa 40 workers and the vast majority of them would be working overtime most Saturday mornings. The supply chain department was spending most of their time fire-fighting and changing production plans, rather than proactively planning and systemising their approach to materials ordering.
We had a local transport company on standby and they would often be at our site twice a day to take enough to the customer to ensure they didn’t stop production.
Ordering special deliveries from our supplier could have a double impact. They would charge us for a special delivery onto site, but sometimes we would even have to pay them to change their production.
All in all it was a very expensive way of doing business. This resulted in the general manager regularly calling management meetings, trying to find out the root cause and questioning everyone to find out who was to blame. It was a very fraught and unsettling time for all concerned.
Developing the systems
I spent time developing systems and structures in the supply chain, so that we had a way of translating the bill of materials into a call off schedule for our suppliers. I worked with the quality department to get materials checked as they arrived.
We increased our inbound checks. We monitored bins, so that we could see where production was hiding their quality issues and instigated monthly stock checks until we were able to ascertain where we were losing stock. We then worked with both our suppliers and the production line to help understand the problems and implement solutions
I set up a weekly meeting with the production manager to agree the build for the following week. At this meeting I confirmed that we had the raw materials in place to build and that it would satisfy the customer requirements.
We introduced key performance indicators (KPIs) against the production line and the supply chain, so that we could identify where we were having problems.
And once I proved that it would work on 1 production line, we created procedures so that we could consistently manage production requirements and then we rolled it out across all the other production lines within the company.
Sometimes production still built out of sync, resulting in a shortage of materials, or we might get our plan wrong, or the customer might change theres, but special deliveries became the exception rather than the norm. Overtime levels decreased significantly and the quality of our products increased.
Relationships in the company improved and staff became more motivated.
The supply chain department then had more time to look at their planning, to implement systems, while at the same time, being much more productive,
Which set us up for success when we won the new Toyota project and I was asked to take on the logistics side of the project. This meant liaising with operations, quality and purchasing, as well as the production teams and designing a work flow to ensure the materials flowed through the system as efficiently as possible.
Instead of holding buffers at each stage of production and at the clients location, we were building to order
It was still more efficient to bulk build, but the work in progress was much lower than the other production lines. Packaging was smaller and production was based on the Kanban system of just building to order.
This also meant that even more so, I was ordering materials to just satisfy demand, rather than holding it just in case…. A lot more risky, as inventory was now down to days, rather than weeks!
Which meant that I had to be more assertive with the production line. When they built out of sync, we would run out of stock and couldn’t build what the client wanted, which then resulted in me having to replan, so that we could still satisfy client requirements.
Benefits of introducing systems
So things weren’t perfect. However having the right systems and structures in place, meant that when things did go wrong, we were able to pick ourselves back up quickly and hit the ground running.
Having procedures in place, meant that we could train new starters quicker, so quality didn’t dip when there was a change in personnel. The introduction of KPIs also meant that performance improved, the quality of the finished goods improved and the motivation of the entire workforce improved. After all Peter Drucker was right when he wrote “What gets measured gets managed.”
If this is something you are struggling with in your business, please feel free to reach out to me by clicking on the button below.